HOSSAIN MD FARUK v. KHAN, FAQERGUL formerly known as KHAN, WAJID trading as PESHAWAR AUTO DISMENTLING & GENERAL TRADING CO

CACV 156/2022, [2024] HKCA 351

On Appeal From [2022] HKDC 180

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 156 OF 2022

(ON APPEAL FROM DCEC NO 1221 OF 2017)

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REASONS FOR JUDGMENT
AND ASSESSMENT ON COSTS

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Hon Au JA (giving the Reasons for Judgment and Assessment on Costs of the Court):

A.  INTRODUCTION

1.  This is the respondent’s appeal against the Order (“the Order”) of District Judge Harold Leong (“the Judge”) dated 25 March 2022, where the Judge, after trial, gave judgment in favour of the applicant’s Employee Compensation claim against the respondent, and ordered the respondent to pay the applicant the sum of $38,133.33 together with interest and costs ([2022] HKDC 180) (“the Judgment”).

2.  The respondent was legally represented by counsel at the trial below and is now acting in person in the appeal.

3.  Despite the directions by the Registrar of Civil Appeal on 10 October 2023, the respondent failed to lodge any written submissions.  Subsequently, pursuant to an unless order given by this court on 18 March 2024, the respondent is debarred from lodging any written submissions unless done within seven days of the order, with his oral submissions limited to no more than 30 minutes at the hearing of the appeal.  The respondent was notified of these orders by post sent to the address he stated on the Notice of Appeal.

4.  The respondent failed to appear at the hearing despite having full notice of the hearing date.  We therefore decided to proceed to hear the appeal in the absence of the respondent.

5.  At the end of the hearing, we dismissed the appeal with costs to the applicant, to be summarily assessed.  We also indicated that we would hand down our reasons for judgment together with our assessment on costs in due course.  This is what we do now.

B.  BACKGROUND

6.  The factual background and the respective cases of the parties have been set out in [10] ‑ [13] of the Judgment and need not be repeated here.  In the context of the present appeal, we only need to highlight the following.

7.  The applicant is an asylum seeker from Bangladesh.  On 1 June 2017, he commenced the application for Employee Compensation (under DCEC 1221/2017, amended on 30 October 2017) against the respondent.

8.  Relevant to this appeal, it is his case and evidence in his application and at trial that:

(1)  He was employed by the respondent to work at a vehicle scrap yard (“the Yard”).

(2)  The Yard was overseen by the person-in-charge, Mr Qadir Gul (“Gul”).  It was Gul who discussed the terms of employment with him and who had given him day-to-day work instructions at the Yard, including those given on the day of the accident.

(3)  On 14 November 2015, during the course of his employment with the respondent, an accident occurred resulting in the applicant sustaining severe burn injuries.

(4)  Following the accident, Gul warned the applicant that, due to his illegal employment status in Hong Kong, he should not tell others that he was injured while working at the Yard.  That was why he later told various authorities, including the hospital and the police, that he was burnt by cooking oil at home.

(5)  The applicant was admitted to the hospital for treatment of his injury and was granted sick leave until 22 December 2015.

9.  The respondent’s case is, in essence, a bare denial and to put the applicant to strict proof.  He also specifically denied that there was any employment relationship between him and the applicant[1]. The respondent also filed a short witness statement (“the R’s Witness Statement”) stating that he operated the business at the Yard as a sole proprietor and ran it alone, and was solely responsible for hiring, and that he was not acquainted with the applicant and denied employing him in any capacity.

C.  THE PROCEEDINGS BELOW AND THE TRIAL

10.  Both parties were legally represented below.

11.  In February 2021, the trial of the application was fixed to begin on 15 February 2022 (with two more days reserved). However, about three weeks before the trial, on 24 January 2022, the applicant through his then solicitors applied by way of summons (“the Summons”) to vacate the trial, as the respondent would not be able to attend it in person. This was so as he went back to Pakistan in August 2021 and suffered a serious car accident.  He was then medically advised to have a long bed rest.  Coupled with the fact that in January 2022, the Hong Kong Government banned flights from Pakistan to Hong Kong due to the pandemic, he was therefore unable to come back to Hong Kong to attend the trial.

12.  The Summons was dismissed by District Judge MK Liu after a hearing, for the reasons set out in his decision dated 31 January 2022 (“Judge Liu’s Decision”)[2]. In essence, Judge Liu was of the view that, notwithstanding the respondent’s purported reasons for not being able to return to Hong Kong, there was no reason, despite legal advice otherwise, why the applicant did not apply to participate in the trial via VCF.  In the premises, there was no exceptional circumstance to justify vacating the trial date, which was a milestone date.

13.  The application was therefore tried before the Judge on 15 February 2022 as fixed.  Both parties were represented by counsel.

14.  Before the applicant opened his case, the applicant’s counsel informed the Court that two of the applicant’s witnesses (Mr Farid and Mr Sheikh Aptar) would not attend court to give oral evidence, and asked the court not to consider their witness statements.  This was unopposed by the respondent.

15.  On the other hand, counsel for the respondent then also made a last-minute application to rely on a medical report dated 20 December 2021 and for the R’s Witness Statement to be read out in court in his absence. The applicant’s counsel objected to the application.

16.  The Judge decided to exclude the R’s Witness Statement.  He explained this in the Judgment as follows:

“6. I have perused the said medical report which only concerned a road traffic accident of the respondent in Pakistan back on 12 August 2021. There was no medical evidence to certify that the respondent was medically unfit to travel or, indeed, give evidence via video conference facilities.

7. As such, I am not convinced that the court should treat the respondent’s witness statement any differently from those of Mr. Farid and Mr. Sheikh Aptar.”

17.  As the quantum of compensation was not in dispute ([29] of the Judgment), the only issue that required determination at trial was about liability.  More specifically, (a) whether there was any employment relationship between the applicant and the respondent (“Employment Issue”); and (b) whether the court should exercise discretion and deal with the applicant’s illegal employment as if he had been working under a valid contract of service (“Discretion Issue”).

18.  The applicant, as the only witness, gave evidence at the trial and was subject to cross examination by the respondent’s counsel.  The parties also made oral closing submissions immediately thereafter at trial.

19.  By way of the Judgment, the Judge after assessing the evidence ruled in favour for the applicant under both the Employment Issue and Discretion Issue, and awarded him compensation in the sum of $38,133.33.

D.  THIS APPEAL

20.  In the Notice of Appeal filed on 22 April 2022, the respondent (now acting in person) advanced five grounds of appeal, seeking to challenge the Judge’s findings on both the Employment Issue and Discretion Issue.  They can be summarised as follows:

(1)  First, the Judge erred in law in finding the existence of an employer-employee relationship between the applicant and the respondent.  Specifically, it is contended that: (a) there was no signed employment contract or sufficient evidence establishing an employment relationship; (b) the Judge did not provide an explanation for his findings regarding the existence of the employment relationship; (c) the Judge failed to consider whether the respondent had knowledge of or authorised Gul to hire the applicant.  (“Ground 1”)

(2)  Second, the Judge erred in law in applying the principles set out in Yu Nongxian v Ng Ka Wing [2007] 4 HKC 551.  It is contended that the Judge “erred in exercising his discretion in the absence of first establishing the employer-employee relationship”.  (“Ground 2”)

(3)  Third, the Judge erred in not allowing the R’s Witness Statement to be read out in court, in that he incorrectly treated the witness statements of the two applicant witnesses in the same manner as the R’s Witness Statement despite the fact that the respondent was unable to attend court due to injuries and a travel ban in Pakistan.  (“Ground 3”)

(4)  Fourth, the Judge failed to take into account the applicant’s prior instances of lying to various authorities.  It is contended that the Judge should not find the applicant a credible witness.  (“Ground 4”)

21.  We will deal with each of these grounds in turns.

D1.  Grounds 1 and 2

22.  The contentions raised under Grounds 1 and 2 revolved around the Judge’s findings and conclusions relating to the employer‑employee relationship between the applicant and the respondent.  These two grounds can thus be conveniently considered together.

23.  The proper approach for determining the existence of an employer-employee relationship is well settled and has been authoritatively laid down by the Court of Final Appeal in Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156, at [11] ‑ [18].  In short, the court should adopt an overall evaluative-impressionistic approach in deciding whether an employment relationship exists by taking into account various relevant factors.

24.  Furthermore, the respondent’s challenge against the Judge’s finding of an employer-employer relationship is a challenge against a finding of fact, which this court will only interfere on appeal if it can be shown by the respondent that the Judge misdirected himself in law or came to a decision which no judge, properly directing himself on the relevant facts, could reasonably have reached: Poon Chau Nam (at [22]).

25.  Bearing these principles in mind, there is nothing of substance under Grounds 1 and 2:

(1)  Although the Judge might not have set it out clearly in the Judgment, it is plain by reading it together with the transcript of the trial that the Judge accepted the applicant’s evidence that Gul was acting as the person in charge of the respondent’s business when (a) he discussed the terms of the employment and asked the applicant to work at the Yard; and (b) he gave various instructions to the applicant at work[3].

(2)  Further and in particular, the Judge had confirmed with the respondent’s counsel at his closing submissions that it was not the respondent’s case that Gul was “not employing [the applicant] on behalf of the respondent” (Transcript 19J ‑ N [AB137]).

(3)  When the above are considered together with the common ground that the respondent was the sole proprietor of the vehicle scrap business operating at the Yard, in our view, it was more than reasonably open to the Judge to conclude on the evidence that the applicant had established his employment relationship with the respondent.

(4)  In this respect, leaving aside the fact that this was not a factor relied upon by the respondent’s counsel below, in light of the above, the absence of a written employment cannot constitute an overriding factor to negate the finding of the employment relationship.  Ground 1 therefore fails.

(5)  Further, once it is not open to the respondent to challenge in the appeal the employment relationship as found by the Judge, Ground 2 as advanced must also fail.

D2.  Ground 3

26.  Ground 3 is also without any merit:

(1)  The Judge’s decision to refuse the R’s Witness Statement to be read out and relied upon at trial is an exercise of case management discretion, which is only subject to appeal in rare circumstances and the threshold for disturbing it is very high.

(2)  In our view, as rightly explained by the Judge, given that the respondent made an informed decision not to apply to give evidence at the trial via VCF, it would be entirely unfair to the applicant if the R’s Witness Statement was admitted, as the applicant’s counsel would not be able to cross-examine the respondent on his witness statement.

(3)  On the other hand, as R’s case and the R’s Witness Statement effectively amounted only to putting the applicant to strict proof of his application, there was no or no material prejudice to the respondent even if the R’s Witness Statement was not admitted.

(4)  In the premises, the Judge’s decision not to admit the R’s Witness Statement was plainly correct.

D3.  Ground 4

27.  Ground 4: paragraph (5) of the Notice of Appeal is as follows:

“The judge failed to take account of the fact that the Applicant has lied about the cause of his injury to various authorities on several different occasions, including the fire services officers, the doctors, the police, and the immigration officers, which demonstrate Applicant was not a credible witness.”

28.  This complaint on the credibility of the applicant on this basis was already advanced by the respondent’s counsel at the trial, and the Judge rejected it on the basis that the respondent had not challenged the applicant’s case under cross-examination that it was Gul who instructed him to lie about it.  See [22] ‑ [23] of the Judgment.  The Judge was again plainly right in his conclusion.

29.  Ground 4 is therefore devoid of merit, and should also be rejected.

E.  DISPOSITION AND COSTS

30.  For all the above reasons, the respondent failed in all his grounds of appeal.  We therefore dismissed the appeal.

31.  Costs should follow the event.  We therefore also made an order that the costs of this appeal should be paid by the respondent, to be assessed summarily.

32.  In this respect, the applicant handed up at the hearing a Statement of Costs for Summary Assessment (“the Statement of Costs”), seeking a total sum of HK$469,436 (on party and party basis) or HK$523,096 (on indemnity basis).  We directed the applicant to serve the Statement of Costs on the respondent within 14 days of the hearing (ie, by 26 April 2024).

33.  This is our summary assessment of the costs.

34.  First, the applicant has not made any submissions as to why costs should be awarded on an indemnity basis.  We also see no reason to justify that.  In the premises, we would not assess it on an indemnity basis.

35.  Second, the costs sought (ie, HK$469,436, which includes counsel fee of HK$150,000) as a whole is plainly excessive and unreasonable given the straightforward nature of the issues raised in the appeal, the very limited amount of papers involved, and the fact that the same firm of solicitors and counsel were already involved in the trial below.  In particular and for example, given these reasons:

(1)  The stated 35 hours incurred by handling solicitor and clerk (as interpreter) for “Attendance and correspondences with client” under item C1 is grossly excessive and unnecessary.

(2)  The stated 2 hours respectively incurred for “Attendance on the Respondent” (under item C2) and for “Attendance on Counsel” (under item C2) are unreasonable.

(3)  The stated 4 hours incurred by handling solicitor for “Preparation and perusal of Documents” (under item D1) is excessive.

(4)  Counsel’s fee of HK$150,000 (under item E1) is excessive.

36.  Further, the 3 hours for “Attending the hearing of the Appeal hearing” (under item D3) should be reduced to 15 minutes, which is the duration of the hearing.

37.  Finally, it is also well established that any costs incurred for preparing the Statement of Costs (now stated under item D4) is not allowable for summary assessment: see Practice Direction 14.3 paragraph 13.

38.  In the premises, on a nisi basis, we summarily assess the applicant’s costs at HK$150,000 (which includes HK$100,000 as counsel’s fee).  This nisi order shall become absolute 28 days from today unless the respondent makes an application by summons to vary it.

39.  We further order that the applicant’s own costs be taxed in accordance with Legal Aid Regulations.