Law Chi-keung v. Wai Keung Construction Engineering Co. Ltd. and Others

DCEC656/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES COMPENSATION CASE NO. 656 OF 2000

______________________

______________________

______________

R U L I N G

______________

1. In this matter I gave the applicant leave to discontinue his application for employee's compensation against the 3rd respondent on 1 February this year. There was insufficient time on that occasion to deal with the costs consequent upon that discontinuance and so I adjourned the matter, having given the parties leave to file evidence as to the circumstances in which this discontinuance comes about.

2. There is a dispute on the affirmation evidence and so I take the perhaps unusual course of having the parties give live evidence and be cross-examined on their evidence in order to come to a conclusion on this matter. The chronology is as follows:

3. The applicant was injured on 15 January 1999. He was working on the rooftop of a block of flats at Tuen Mun. He was engaged in erecting some formwork. A plank became detached from the formwork with the result that the applicant fell and sustained a serious hip injury.

4. He then issued this application for compensation on 26 July 2000. The 1st respondent was sued as his direct employer and the 2nd respondent was brought in as the principal contractor of the site. On 2 November these two respondents filed their answer in which there was a denial by the 1st respondent in particular that it was the employer of the applicant.

5. What happened next was the applicant apparently made enquiries of his own and, as a result of those enquiries, he came to the conclusion that the 3rd respondent, who is the principal shareholder and director of the 1st respondent, was his direct employer, and so on 4 January 2001 he applied and obtained leave to join the 3rd and the 4th respondents in this application. Suffice it to say that the 4th respondent is sued as a subcontractor but I need not pay any further regard to the 4th respondent for the purposes of this ruling.

6. On 10 February 2001 the 3rd respondent filed his answer denying that he was the applicant's employer. Then through the course of the summer, on the advice of his solicitors, the applicant tried to make further enquiries in order to try and verify his case that the 3rd respondent was his direct employer. Eventually it was decided that there probably was no case against the 3rd respondent.

7. The applicant then instructed his solicitors to write to the 3rd respondent offering to discontinue case on terms though that there should be no order as to costs. His solicitors wrote in that way, firstly on 3 October 2001, then again on 12 November 2001. It is right to say that by 12 November they had not had the courtesy of a reply to their letter of 3 October and so they wrote again and, on 14 November, they received a letter from the 3rd respondent's solicitors saying that they were taking the 3rd respondent's instructions on the matter.

8. There was further delay, then on 4 January of this year the applicant's solicitors wrote again reminding the 3rd respondent's solicitors. That did ultimately produce a reply on 7 January to the effect that the proposal that the discontinuance be on terms as to no order as to costs was not acceptable.

9. I must now decide how the costs should be dealt with.

10. The applicant's case is that he had had dealings with the 3rd respondent. Going back to 1993 they were acquainted with each other and between 1993 and 1996, according to the applicant, the 3rd respondent had provided him with employment. Then again he also employed him on one occasion in 1998. Then, so far as the employment which gives rise to this application is concerned, at that stage he had thought, judging by what others had told him, that his employer was the limited company, the 1st respondent, hence the application being initially brought against that company as 1st respondent.

11. He says he was then telephoned by the 3rd respondent who led him to believe that it was he who was his real employer. He had asked him for details of the accident and complained to him that this had all caused him a lot of trouble. He required him to provide him with witnesses of the accident so he could investigate it and he directed him to telephone a Miss Chan who works at the 3rd respondent's offices to give her all this information. It is this telephone call that led him to believe that the 3rd respondent was in effect admitting that he was the direct employer.

12. So, in view of that, these proceedings were brought against the 3rd respondent. It is only subsequently that it was discovered that an action against the 3rd respondent qua employer would probably fail. It is for that reason that the application was made to discontinue against the 3rd respondent.

13. But so far as costs are concerned, it is submitted by Miss Tong on behalf of the applicant that the fair order in all the circumstances is that both parties should bear their own costs based on the fact that the 3rd respondent in effect misled the applicant into the belief that the 3rd respondent was his direct employer on this occasion.

14. Of course, the usual order for costs on a discontinuance, which effectively amounts to an acknowledgement by the party seeking to discontinue that it does not have a case against the party sued, is that the party seeking to discontinue should bear the other party's costs. Of course, this is what Mr Au Yeung, who appears for the 3rd respondent, says I should do on this occasion.

15. This really turns on my view of the facts in this matter. Of course, the applicant bears the evidential burden of proof here to demonstrate that what he says is true.

16. The 3rd respondent has given evidence and he says that in fact he has never heard of the applicant, certainly not until all this blew up they had never met. He had certainly never employed him and they had never had the dealings that they allegedly had between 1993 and 1996 and again in 1998 and he certainly did not have the telephone conversation that the applicant says they had which resulted in the applicant joining the 3rd respondent in the application.

17. The applicant has of course given a rather detailed account of his previous dealings with the 3rd respondent and one must of course pay careful attention to that. The other matter is that he has the 3rd respondent's mobile telephone number and the 3rd respondent admits that he indeed does employ a lady called Miss Chan in his office. But he also says that this is not at all remarkable.

18. The 3rd respondent and his company, who are the 1st respondents, are a medium sized construction company. They are busy, they deal with these sorts of contracts on a day-to-day basis. Indeed, the 1st respondent employs a permanent office staff of six people. The 3rd respondent himself has his visiting card and on his visiting card he has his mobile telephone number. His company and he himself are quite well known in the trade. Regularly they employ labour on such contracts as they successfully tender for. So his details are well known in the trade as is Miss Chan who works for him and so he says this is not at all remarkable that the applicant should have the sort of details that he told me about.

19. Mr Au Yeung has also invited me to attend carefully to the inherent probabilities of this matter. His main point is this: the 1st respondent having denied that they employed the applicant in their answer, is it then likely that Mr Yu, the 3rd respondent, who trades through his company, the 1st respondent, he being, as I have already indicated, a principal shareholder and director, he would be most unlikely to make a telephone call and effectively admit a personal liability as the employer on this occasion.

20. I am bound to say I find that entirely compelling and I am afraid I do not accept the applicant's evidence on this occasion. I entirely accept the explanation of the 3rd respondent and the result is, subject to one question on costs, that the 3rd respondent should have his costs of this application but I will hear argument on whether the 3rd respondent should have his costs from the period of 3 October 2001 until 7 January 2002, that being the period when there was correspondence which was simply ignored or certainly not dealt with with the sort of proper despatch that one would expect.

(Argument re costs)

21. Although my initial reaction was perhaps to do something about the costs for that limited period between October and January, I think Mr Au Yeung is right on a true analysis of the situation here and that the costs of the application as well as the application to discontinue must be borne by the applicant with Legal Aid taxation.