LAI YUN PUI v. GAMMON CONSTRUCTION LTD

DCEC956/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 956 OF 2003

D E C I S I O N

1.  This is an application by the applicant for discontinuance of the proceedings herein against the respondent forthwith.  The applicant seeks costs of these proceedings, including costs reserved earlier, to be paid by the respondent to be taxed if not agreed.  The applicant also asks for its own costs to be taxed in accordance with the Legal Aid Regulations.

2.  The respondent is opposing the applicant’s application for costs on these grounds:

(1)     There was no agreement between the parties that the applicant upon acceptance of payment in the common law action would be paid costs in the Employees’ Compensation action.

(2)     The applicant has failed to accept an offer related to this contained in a letter dated 5 July 2006 from the respondent’s solicitors to the applicant’s solicitors which states:

“First of all, we must stress our clients’ stance that they do not agree that any liability attaches to them under both DCEC action and this claim herein.  In principle, our clients are not prepared to pay your clients’ costs of the EC action.  However, if your client agrees to accept our clients’ present offer of 250,000 plus costs of the common law action at District Court scale to be taxed if not agreed, our clients are prepared to consider paying your clients’ costs of the EC action, the amount of which is to be agreed, all to be taxed.  For the avoidance of doubt, nothing herein shall be construed as any agreement on the part of our client.”

3.  The applicant’s solicitor does not dispute that there is no agreement between the parties related to the costs of the Employees’ Compensation action that has been reached between the parties.  The applicant’s solicitor submits that before the payment-in by the respondent in the common law action there were telephone conversations between the solicitors for the respective parties where the applicant’s solicitor had been given to understand that the respondent would make an offer for global settlement.

4.  Then a payment-in was made in the common law action.  But before the payment-in, the parties had agreed that the Employees’ Compensation action would be stayed and that the parties would proceed with a common law action in which the plaintiff was claiming for a much larger sum.

5.  Then, in the common law action which was placed on the warned list, one of the respondent’s witnesses was hospitalised with cancer.  The respondent’s solicitors took the common law action out of the warned list.  The applicant’s solicitor then applied to restore the Employees’ Compensation action for hearing in order to continue with the Employees’ Compensation case.   The parties agreed to adjourn the Employees’ Compensation action to proceed with the common law action which was for a much larger sum claimed.

6.  The respondent’s solicitor submits that the general principle in an application for discontinuance is that the party applying for discontinuance should pay the costs of the opposite party.  The applicant’s solicitor submits that this is not a case where the usual principles should apply, as this is a  case where there are two actions - the Employees’ Compensation and the common law action - and the applicant’s solicitor had been under the impression that acceptance of the payment in the common law action was in the nature of an acceptance of an offer for a global settlement.

7.  In making my decision and in considering the issue of costs of the Employees’ Compensation action, I am of the view that I should step back from the arguments of the respective parties to consider where the justice of the situation lies.  In making this consideration, I have explicitly stated that it is not my role to consider whether the applicant is likely to establish liability in the Employees’ Compensation action or in the common law damages action.  That is a matter for the trial judge after a trial on liability.  It is not possible to assess the chances of the applicant succeeding on liability in either action simply by looking at the amount of damages accepted by the applicant in the common law damages action in the acceptance for payment-in.

8.   Having said that, in situations where an employee applies for Employees’ Compensation, the employee may be advised to file a common law damages action before the limitations period expires.  Where there are two actions related to the same accident it is often expedient to settle the two actions globally.  This is done so as to save costs of proceeding with either or both actions to trial.  It is an eminently sensible step to take.

9.  In this case, the parties had agreed to adjourn the Employees’ Compensation action and to proceed with the common law action to trial until the common law action was taken out of the warned list for reasons stated.  It is likely to be the case that the applicant considered that the Employees’ Compensation is likely to be subsumed by the common law damages and hence he decided not to proceed with both actions to trial.

10.  The defendant in the common law damages made payment-in to court.  This payment-in was accepted.  In the circumstances of the case, it is not surprising that the applicant’s solicitor came to the view that the payment-in was to be accepted as a global settlement of both actions.  Even though the respondent’s solicitor seeks to urge on me that the amount that was accepted by the applicant in settlement of the common law action is of a sum which is not as high as that claimed by the applicant in the Employees’ Compensation action, I am not able to arrive at the conclusion that the applicant ought not to have taken out the common law damages action or that this suggests that the applicant is conceding defeat on liability of either action, because there are reasons why people settle actions for a lower sum than that which they claim which cannot be disclosed.

11.  In my view, having regard to the circumstances of the case it is in the justice of the situation that the respondent do pay the costs of the Employees’ Compensation action.  Order 21, rule 2, states that:  “The court hearing an application for grant of leave” - this is an application for leave to discontinue an action:

“...may order the action ... to be discontinued ... against any or all of the parties against whom it is brought or made on such terms as to costs, the bringing the costs ... or otherwise as it thinks just.”.

12.  In my view, this is a case where I should depart from the usual principles of awarding costs against the party that applies to discontinue an action.  I therefore make an order in terms of paragraphs 1, 2 and 3 of the summons.

13.  I make an order that no further proceedings on similar facts be made by the applicant.