CHAN SIU LING v. TONYEAR INVESTMENT LTD. t/a Kwan Shing Restaurant

CACV 216/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 216 OF 1998

(On appeal from E.C.C. No. 182 of 1998)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. This appeal raises a point as to the operation of s.10(5) of the Employees' Compensation Ordinance, Cap. 282 ("the Ordinance"). In order sensibly to identify the point, some brief explanation of the scheme of the Ordinance is necessary.

The scheme of the Ordinance

2. As appears from the preamble to the Ordinance, the purpose of the Ordinance is to provide for the payment of compensation to employees who are injured in the course of their employment.

3. Such compensation is payable in cases of temporary incapacity; whether total or partial (see s.10) and in cases of permanent incapacity, whether total (see s.7) or partial (see s.9).

4. Compensation for temporary incapacity takes (usually) the form of periodical payments. Compensation for permanent incapacity takes the form of a lump sum payment. It will in some cases be immediately apparent that the injury suffered by the employee will be permanent; in other cases, it may take time before it can be ascertained (by the machinery which the Ordinance prescribes for the purpose) whether that will or will not be so. It may therefore happen that the injured employee will, at first, receive compensation, by way of periodical payments, for temporary incapacity but will, eventually, be found to be entitled to receive compensation, by way of a lump sum payment, for permanent incapacity.

5. Of course, the sooner it is established whether or not the incapacity suffered by the employee is permanent, the better; the employer and employee will each want to know where he or she stands. Certainty is generally, if not always, preferable to uncertainty. But, in the nature of things, it may take some time to establish whether the employee's incapacity caused by the injury is or is not permanent; whether because of the nature of the injury (lower back pain is a good example of a case in which it may take a long time for the condition to stabilise) or because of inevitable bureaucratic delays.

6. In order to inject a degree of certainty into such cases, where otherwise a long drawn-out state of uncertainty might prevail, s.10(5) provides that an employee who has received periodical payments for temporary incapacity shall, after a time, be deemed to have suffered permanent incapacity, thus bringing to an end his right to receive periodical payments for temporary incapacity and triggering his right to receive compensation for his injury by way of a lump sum payment. This provision applies to an employee who has received periodical payments for temporary incapacity for 24 months or for such further period being not more than 12 months as the court may allow in any particular case.

7. S.10(5) reads as follows :-

"10(5) An employee who has received periodical payments under this section for a period of 24 months from the date of the commencement of the temporary incapacity or for such further period being not more than 12 months as the Court may allow in any particular case shall no longer be entitled to periodical payments under this section but shall be deemed to have suffered permanent incapacity and the provisions of section 7 or 9, as the case may be, shall apply to the employee."

8. We now have to consider how this operates.

The operation of s.10(5)

9. What s.10(5) envisages, as it seems to me, is an employee who has received periodical payments for temporary incapacity for 24 months and wants to go on receiving such periodical payments for such further time, not exceeding 12 months, as might be needed in order to establish that he has suffered permanent incapacity. The employee can, if the court allows, go on receiving periodical payments for up to 12 months longer, and so postpone the descent of the statutory guillotine, which would, otherwise, come down at the end of 24 months. How does this work, on the facts of the present case?

The facts

10. The employee suffered injury due to an accident at work on 17 December 1995; she hurt her back and has, ever since, suffered from lower back pain. The employer made periodical payments to her, by way of compensation for temporary incapacity, until 31 January 1998, a period of over 24 months following the date of the accident. But then the employer stopped making payments, before it had been established whether the employee's incapacity was in fact permanent (this has still not been established). On 13 April 1998, the employee applied to the District Court, for an order for continuation of the periodical payments for up to 12 months after 31 January 1998; in substance, an order under s.10(5).

The employer's objection to the employee's application

11. The employee's application came before the court (His Honour Judge To) on 10 August 1998. But the employer objected to the employee's application. The employer argued that the application was time barred. The employer relied on s.14(1) of the Ordinance, which provides that, except where otherwise provided by the Ordinance, proceedings for the recovery of compensation shall not be maintainable unless (among other things) the application for compensation with respect to the accident causing the injury, being an application to the court by an employee under s.18A(2), has been made within 24 months from the occurrence of the accident. (An application to the court by an employee under s.18A(2) is an application to the court for enforcing the employee's claim to compensation, and the employer argued that an application under s.10(5) was an application under s.18A(2) to which the limitation period specified in s.14(1) applied.)

The employee's answer to the objection

12. The employee argued that s.14(1) did not apply to an application under s.10(5). She relied on the introductory words of s.14(1) "Except where otherwise provided by this Ordinance"; and argued that an employee could not be expected to make an application for such a postponement until after the expiration of the prescribed 24 months.

The judge's decision

13. The judge rejected the employee's arguments. He held that the limitation period prescribed in s.14(1) applied to an application for compensation for temporary incapacity, whether for periodical payments during the first 24 months from the date of commencement of the temporary incapacity or for such further period as the court might allow under s.10(5). Was he right?

Conclusion

14. I find myself constrained to disagree with the judge. For my part, I do not consider that s.14(1) applies to, what is in substance, an application by an employee under s.10(5). An application under s.10(5) is merely an application to postpone the descent of the statutory guillotine for longer than the 24 months otherwise prescribed; and it can only be made after the 24 months has expired. Such application is not, as it seems to me, an "application for compensation" at all. The employee is already receiving compensation for temporary incapacity under the Ordinance; indeed, that is a condition precedent to the operation of s.10(5) in the first place. It may be that the employee is receiving such compensation without any order of the court; or it may be that he is receiving such compensation under an order of the court; it is immaterial which. To treat, what is in substance, an application to the court under s.10(5) for a postponement of the descent of the statutory guillotine as if it were a substantive application to the court for compensation is, in my judgment, to misapprehend its true nature. S.14(1) simply operates to bar an employee who has failed to secure compensation from sleeping on his right to such compensation and then nevertheless seeking to obtain it by an application not made until after he has let 2 years pass by from the date of the accident. That is not this case. I would accordingly allow this appeal and remit the case back to the District Court to deal with the employee's s.10(5) application on its merits.

Rogers, J.A. :

15. I have had the advantage of reading the judgment of Godfrey, J.A. in draft.

16. The conclusion to which I arrive in this case brings about a result which is a little different from that to which Godfrey, J.A. has arrived but the ultimate effect is similar.

17. Whilst I agree that section 10(5) amounts, in effect, to a guillotine, which cuts off the total period for which the employee may receive periodical payments to 36 months from the date of commencement of the temporary incapacity, the application before the District Court Judge was a simple application for periodical payments for temporary incapacity. The relief sought on the Form 3 was that "the Respondent be ordered to make payments to the Applicant for her sick leave after 31.1.1998 for as long as such sick leave continues up to 12 months after 31.1.98 and costs of this application."

18. That was clearly an application under section 18A(2). Section 14(1) of the Ordinance provides that applications for compensation with respect to an accident (being an application to the Court by an employee under section 18A(2)) must be made within 24 months from the occurrence of the accident causing injury except in cases where the Ordinance otherwise provides.

19. In my view, section 10(5) does not otherwise provide. Section 10(5) is entirely silent as to when the Court may allow (in other words, "order") payments during the 12-month period following the initial 24-month period. Such application could no doubt be made at any stage once it is realised that they might be needed.

20. The application made by the employee which the Judge below was considering was simply an application for periodical payments for the months 26 to 36 after the accident. It was not an application to extend the time when the employee shall be deemed to have suffered permanent incapacity, although that would be a consequence of the order which the Court would make if it ordered periodical payments.

21. The application was therefore no different in principle than if the employer had stopped making payments at any time, for example, during the first 24 months after the date of the accident.

22. Section 14(4) reads :

"(4) The Court may receive and determine any application for compensation in any case notwithstanding that the notice required by subsection (1) has not been given, or that the application has not been made in due time as required by that subsection, if it is satisfied that there was reasonable excuse for the failure so to give notice or to make an application, as the case may be."

23. That power given to the Court to receive and determine applications made out of time should, in my view, be exercised liberally. In this case, payments had been made up until 31st January 1998. That was a period which was about 11/2 months longer than the 24-month period referred to in section 10(5). The application on behalf of the employee was filed on the 13th March. I can see no reason in this case why the Court below should not have exercised its discretion under section 14(4) to hear and determine that application. In my view, this appeal should be dismissed but with an indication to the District Court that it should proceed to determine the application for periodical payments.

24. It was argued on behalf of the employee that in the circumstances of the Ordinance, it would be most undesirable to construe section 14(1) as applying to applications for payment in excess of the 24 months since it would inevitably require the exercise of the Court's discretion to proceed with the matter in accordance with section 14(4).

25. In my view, there may well have been an oversight when section 10(5) was amended to include the potential additional period of 12 months and section 14(1) might well have been amended. That however does not justify a strained meaning of the Ordinance and in any event problems can always arise if an employer changes its position from being prepared to make periodical payments to one where it is not prepared to make any further payment whether it be a lump sum payment under the provisions of section 7 or 9 or further periodical payments under the provisions of section 10.

26. In my view, therefore, this appeal should be dismissed with the indication that I have referred to above that the District Court should hear and determine the matter.

Mortimer, V-P :

27. This appeal raises a short but difficult point. The statutory provisions are far from clear.

28. I gratefully adopt the legal and factual background set out by Godfrey JA in his judgment. The applicant injured her back in the course of employment on 17 December 1995. She was unable to work and she was given sick leave supported by medical certificates. This sick leave continued after the initial 24-month period. Her condition was such that a medical assessment of future loss of earning capacity could not be made at that time.

29. She made no claim under the Employees' Compensation Ordinance (Cap. 282) because her employer made payments to her on a regular basis. These payments continued for 25 1/2 months or 1 1/2 months beyond the 24-month initial period laid down in s.10(5) which provides:

"An employee who has received periodical payments under this section for a period of 24 months from the date of the commencement of the temporary incapacity or for such further period being not more than 12 months as the Court may allow in any particular case shall no longer be entitled to periodical payments under this section but shall be deemed to have suffered permanent incapacity and the provisions of section 7 or 9, as the case may be, shall apply to the employee."

The employer then stopped the payments. However, it appears that the applicant's medical condition was not yet capable of final assessment, whether under s.7 for permanent total incapacity; or under s.9 for permanent partial incapacity; or indeed whether she was likely to make a full recovery.

30. It was in these circumstances that she applied to the court below for an extension of the 24-month period to allow an assessment to be made under subsection (5) above. This application for an extension of the time before she would otherwise be deemed to have suffered permanent incapacity was met with the argument that this was an application under s.18A(2) which provides:

"An employee may, in the prescribed form and manner, make an application for enforcing his claim for compensation to the Court:"

and further, that the application was time barred under the provisions of s.14 which provides that an application under s.18A(2) must be made within 24 months from the occurrence of the accident causing the injury.

31. Undoubtedly, no application for compensation under s.14 was made until after the 24-month period. Also, it seems to me that the payments made by the employer were voluntary and were not "periodical payments" under s.10(5). Therefore, in order to obtain the payments which the applicant now seeks, it was necessary for her to claim them under s.18A(2).

32. In these circumstances although the Law Draftsman may have overlooked the point, I am unable to hold the application was one under s.10(5) for periodical payments for a further period. There had been no periodical payments under the section during the 25 1/2 months that voluntary payments were made.

33. It is also to be noted that one of the reasons why a formal application under the Ordinance was not made earlier was that the applicant thought she would recover from her injury. See her affidavit of 21 August 1998.

34. Fortunately, s.14(4) provides:

"The Court may receive and determine any application for compensation in any case notwithstanding that the notice required by subsection (1) has not been given, or that the application has not been made in due time as required by that subsection, if it is satisfied that there was reasonable excuse for the failure so to give notice or to make an application, as the case may be."

This gives the District Court a discretion to allow a claim even if the application is not made until after the 24-month period. As there is no dispute that the employer received notice of the accident under s.14(1); that she thought she would recover; and that voluntary payments were made by the employer for 25 1/2 months after the accident, it must be likely that the judge will exercise his discretion in the applicant's favour to allow the application out of time. However, this is not a matter for this Court.

35. In these circumstances and for these reasons, I would dismiss this appeal and hold that the judge was right in finding that the limitation period provided in s.14(1) applies to this application. The effect will be that the applicant will pursue her application under s.14(4) before the judge.

36. The consequence is this appeal is dismissed by a majority. There will be an order nisi for costs against the applicant/appellant.