MOHAMMAD ZAMEER v. HOPKINS CONSTRUCTION LTD AND OTHERS

DCEC 2206/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 2206 OF 2012

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IN THE MATTER OF AN APPLICATION BETWEEN

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DECISION

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Application

1. The applicant alleges that he sustained injuries during his course of employment working at a site of renovation work at the Kowloon Hotel (the “Site”) on 25 April 2012.

2. On 14 December 2012, the applicant filed an application to claim against the respondent for compensation pursuant to the Employees’ Compensation Ordinance, Cap 282 (“ECO”).

3. On 30 July 2014, the applicant took out the present Summons to join Cheung Kwok Kwong formerly trading as Tak Fu Construction Company (“Cheung”) as the 2^nd respondent and “PHM Contracting Company Limited” (“PHM”) as the 3^rd respondent (collectively referred as the “intended respondents”); and to make consequential amendments to the Application.  He alleges that Cheung was his direct employer together with or alternative to the respondent and PHM was the principal contractor of the Site at the time of his accident.

4. Since the claim against the intended respondents is time-barred by the time of the taking out of the present Summons, the applicant, at this hearing, seeks leave to amend the present Summons so as to rely on section 14(4) of ECO to receive and determine the application against the intended respondents beyond the 24 months specified under section 14(1) of the ECO.  Leave for amendment of the present Summons is granted in the absence of oppositions from the intended respondents.

5. The respondent takes a neutral stance to the present application for joinder and is excused from attending this hearing.  The intended respondents oppose the present application.

The Law

6. The issue is whether the applicant has a reasonable excuse for his failure to make application for compensation against the intended respondents within the prescribed 24-month period. 

7. The court in Wong Man Tak v Shaws & Sons Ltd [1957] DCLR 85has interpreted the meaning of “reasonable excuse” as follows:-

“A reasonable excuse, in the ordinary sense of the phrase, means, in relation to a failure by an applicant to make his application for compensation within the prescribed period, that the failure was due to such cause or causes that it ought, as a matter of reason, to be excused…... The principle to be deduced from the foregoing is, I think, that an applicant has a reasonable excuse for not making an application to the court for compensation within the prescribed time if his failure were due to a cause or causes other than unreasonable conduct or an unreasonable decision on his part.”

8. The onus is on the applicant to show that there was reasonable excuse operating for the whole period of delay.

9. The power of the court to allow the application should be exercised liberally.  See Chan Siu Ling v Tonyear Investment Ltd (t/a Kwan Shing Restaurant) [1999] 2 HKC 348. 

Background

10. The facts relevant to the present application are not in dispute and are summarised chronologically.

11. By a letter dated 27 May 2013, the Labour Department informed the applicant’s solicitors that:-

(a) The director of the respondent said that the applicant was employed by Grandmax Engineering Limited (“Grandmax”) at the time of the accident. Grandmax was a contractor of PHM, the principal contractor of the Site.  The respondent and Grandmax appointed the same director.

(b) The insurance adjuster representing PHM denied that PHM was responsible for the applicant’s claim saying that the projects handled by PHM had been completed before the accident.

12. On around 29 August 2013, the applicant’s solicitors wrote to PHM for the in-out record of the Site as well as its confirmation on whether it was the principal contractor of the Site and the respondent and/ or Grandmax was its sub-contractor.  There has been no reply.

13. On the same day, the applicant’s solicitors wrote to the Kowloon Hotel for the in-out record of the Site.  On 13 September 2013, the Kowloon Hotel replied that it had no longer kept the record.

14. On 5 December 2013, the respondent filed an Answer, after almost a year’s delay.  In the Answer, the respondent said that it was not the employer of the applicant but Cheung was.  Cheung was also a contractor of Grandmax.  Grandmax was a contractor of PHM at the Site.

15. On around 3 January 2014, the applicant’s solicitors wrote to PHM for a constructive reply to the applicant’s intended claim against PHM, naming PHM as the principal contractor of Cheung who was the applicant’s direct employer on the date of the alleged accident.  There has been no reply. 

16. On the same day, the applicant sent a letter to an apartment in Tak Fu House, Tseung Kwan O (the “First Address”) for the attention of Cheung, asking for a constructive reply to the applicant’s intended claim against Cheung, being the applicant’s direct employer on the date of the alleged accident.  It was returned undelivered on 21 January 2014.

17. On around 27 February 2014, the applicant’s solicitors asked for Cheung’s contact address from the respondent’s solicitors.

18. On around 3 March 2014, the applicant’s solicitors received the business registration search of Cheung.

19. On around 3 March 2014, the applicant’s solicitors wrote to the Kowloon Hotel to ascertain the identity of the principal contractor of the Site. 

20. By a letter dated 27 March 2014, the Kowloon Hotel confirmed that PHM was the principal contractor of the Site.

21. On 25 April 2014, the limitation period for the applicant to commence action against the intended respondents expired.

22. On around 21 May 2014, the applicant’s solicitors sent a letter to an apartment in Bauhinia Garden, Tseung Kwan O (the “Second Address”) for the attention of Cheung, asking for a constructive reply to the applicant’s intended claim against Cheung.  There has been no reply. 

23. On 30 July 2014, the applicant took out the present Summons.  The Summons together with the affidavit in support were served on PHM as well as Cheung.  It was until then the intended respondents responded.

The stances of the intended respondents

24. It is Cheung’s case that:-

(a) PHM was the principal contractor of the Site.  Grandmax was the contractor of PHM.

(b) PHM asked Grandmax to look for workers.  Grandmax asked the applicant to work for them.

(c) Cheung was neither the employer of the applicant nor a contractor of Grandmax.  He just received $50,000 per month from PHM.  He was only the supervisor of the applicant.  PHM paid wages to Cheung to pass on to the applicant because of the mistrust between PHM and Grandmax.

(d) Cheung was imprisoned on the date of the alleged accident.

(e) Accordingly, the applicant has no reasonable cause of action against him.

(f) The delay of joining him has prejudiced his preparation of the case, chance of earlier settlement and costs.

25. It is PHM’s case that:-

(a) PHM admitted that it was the principal contractor of the Site.

(b) However, there was no project involved PHM at the Site on the date of the alleged accident.

(c) There were a number of projects managed by other contractors that did not involve PHM at the Site on the date of the alleged accident.

(d) PHM gave no reply to the letter of the applicant’s solicitors dated 29 August 2013 because it no longer possessed the complete set of documents in relation to the renovation work at the Site.

(e) Accordingly, The applicant has no reasonable cause of action against PHM.

(f) The delay of joining it has prejudiced its preparation of the case because of the disposal of most of the daily worker list and the person in charge of its project has left its employment.

Explanation for the delay

26. The onus is on the applicant to show that he has a reasonable excuse for the failure to apply for joining the intended respondents to these proceedings within the 24 months period.

27. The applicant’s explanation for the delay is that he only realized the respondent’s position that Cheung was his employer and PHM was the principal contractor, upon the service of the Answer on 5 December 2013. He therefore had insufficient time to carry out investigation over the true identity of his employer and the principal contractor. 

28. To this, the intended respondents disagree.  Cheung says that the application to join him should have been made soon after the service of the Answer.

29. PHM argues that the applicant should have applied to join it upon the receipt of the Labour Department's letter dated 27 May 2013 because by then the fact that PHM was the principal contractor of the Site was crystal clear. 

30. PHM’s argument ignores the fact that the information was indeed provided by the director of the respondent (also a director of Grandmax) who denied liability to the applicant’s claim by naming Grandmax and PHM without any documentary proof in support of it’s allegation. Further, in the same letter, it is also mentioned that the insurance adjuster representing PHM denied liability saying that the project handled by PHM had been completed two months before the alleged accident.  It refused to give further information.  In the circumstances, it was reasonable for the applicant to carry out investigation on the matter before he jumps to make application for joining PHM solely in reliance on the said letter.

31. In order to ascertain whether PHM was the principal contractor of the Site as well as the identity of the employer, the applicant sent an enquiry letter to PHM as well as the Kowloon Hotel for confirmation and information.  However, the former chose not to reply and the latter gave no constructive reply.

32. It was not until the filing of the Answer on 5 December 2013, the applicant was directly alerted of the stance taken by the respondent, but this time, Cheung, instead of Grandmax,  was named as the Applicant’s employer.  It is also alleged that Cheung was a contractor of Grandmax and Grandmax was alleged to be a contractor of PHM.

33. The applicant says that he was confused with this new allegation.  Such confusion was further complicated by his understanding of the role of Cheung in the past. He explained that he did not regard Cheung as his employer because it appeared to him that Cheung supervised his work on the direction of the director of the respondent and his wages were handed to him in cash sometimes by the said director and sometimes by Cheung.  He says that his understanding was further reinforced by Cheung’s recent enquiry with him on whether the applicant’s employer had paid the applicant compensation for the accident.  In the circumstances, he therefore needed some time to ascertain whether Cheung was his employer or supervisor. 

34. I find the applicant’s confusion is genuine which is further reflected by Cheung’s allegation.  In his affirmation, Cheung alleged that he was only the applicant’s supervisor.  He supervised the applicant’s work and passed the wages to the applicant for and on behalf of his employer on several occasions. 

35. Apparently, the conflicting allegations on the identity of the  applicant’s employer as suggested in the Labour Department’s letter, the Answer and the applicant’s understanding call for investigation.  There is no suggestion or evidence that the arrangement between PHM, Cheung, the respondent and/ or Grandmax was within the knowledge of the applicant.  In the premises, it is reasonable for the applicant to make investigation before applying to join the intended respondents to these proceedings. 

36. From the filing of the Answer, the applicant was only left with less than 5 months to investigate the matter before expiration of the limitation period.  In my view, the applicant’s conducts leading to the taking out of the Present Summons could not be regarded as unreasonable. 

37. Enquiry letters were sent to the intended respondents on 3 January 2014. 

38. Upon the return of the letter sent to the First Address for the attention of Cheung on 21 January 2014, the applicant approached the respondent’s solicitors for Cheung’s updated contact address on 27 February 2014.  The business registration search of Cheung was received on 3 March 2014.  It shows that both of the First Address and the Second Address are the updated registered addresses of Cheung.

39. In the absence of any reply from PHM, the applicant then tried to ascertain the identity of the principal contractor by sending a letter to the Kowloon Hotel on 3 March 2014.  A reply was only received on 27 March 2014.  There was less than one month before the limitation period expired and the role of Cheung has yet been ascertained.

40. Given the fact that the letters before action sent to the updated addresses of the intended respondents achieved no success, I do not find it unreasonable for the applicant to take some time to consider the further conduct of his case, to seek advice from and give instruction to his solicitors, and to make an attempt to investigate the matter by exhausting his own connections.  It was only until his attempt was of no avail, he was left with not many alternatives but resumed the previous unsuccessful exercise of sending another letter before action to the Second Address of Cheung on 21 May 2014.  The letter was not returned but met with no reply. 

41. The difficulty of identifying the employer of the applicant is indeed acknowledged by the intended respondents. First, Cheung, in his second affirmation, acknowledged the difficulty and complaint that the confusion was caused by the common director of the respondent and Grandmax.

42. Second, PHM, in reliance on the in-out record of the Site, seeks to argue that the applicant was recorded to have worked for different companies before the date of the alleged accident.  All these tend to show how difficult it is to ascertain the identity of the employer and consequently, the principal contractor.

43. By reason of matters set out above and coupled with the intervention of public holidays and waiting time for response, I accept the applicant’s explanation that the delay was caused by his genuine confusion over the identity of the applicant’s employer and consequently, the principal contractor, as well as the investigation conducted to clarify the matter.  By a review of the steps that he has taken, I believe that he intended to gather more solid evidence to establish the relationship among Cheung, PHM, Grandmax, the respondent and himself before joining the intended respondents so as to avoid suing wrong parties or undesirable costs consequence.  It was until he received neither opposition nor clarification from the intended respondents he then took out the Present Summons to safeguard his interests.  I do not find his decision or conduct unreasonable.

Cheung was employer or supervisor

44. Cheung seeks to argue that the applicant is not entitled to join him to the present proceedings as he was not his employer.  He alleges that he only received a monthly sum of HK$50,000 from PHM to act as the applicant’s supervisor and that he was imprisoned on the date of the alleged accident.  That said, Ms Lai representing Cheung confesses that this court should not be invited to determine the factual disputes in this case at this stage. 

45. Suffice it to say that it is common ground between the applicant and Cheung that apart from supervising the applicant’s work, Cheung had occasionally given wages to the applicant.  The issue as to whether those wages were given by Cheung as employer or supervisor of PHM or Grandmax is a matter for determination at trial. 

46. Further, I am satisfied that the payment records showing payments made by PHM to Cheung as disclosed by the respondent in August 2014 raise a solid challenge to Cheung’s allegation.  The payment records tend to show that Cheung had received from PHM substantial sums of money, occasionally more than a million dollars a month for his work at the Site.  The descriptions and the amounts of those payments appear to run counter to his allegation that he just received a monthly sum of HK$50,000 from PHM to act as the applicant’s supervisor.  Such payments and the role of Cheung call for an investigation.

47. By the same token, another argument of Cheung that the accident was false because of the applicant’s silence on the accident until the last day of work and his failure to file form E or seek immediate medical treatment are factual disputes to be resolved at trial which are not valid reasons to shut the applicant out of the litigation seat against Cheung.

48. Further, the fact that Cheung was imprisoned at the time of the alleged accident does not necessarily exclude the possibility that the applicant was his employee.  Employment agreement could be reached before or upon the commencement of the employment and would continue until the termination of it.  The imprisonment of an employer does not terminate the employment relationship automatically.

49. In my view, this is not a plain and obvious case that the applicant has no reasonable cause of action against Cheung.

Identity of principal contractor

50. PHM further argues that the applicant has no reasonable excuse not to apply for joining it upon receipt of the reply letter of the Kowloon Hotel dated 27 March 2014.  The argument is premised on the fact that the identity of the principal contractor was crystal clear to the applicant by then and that the liability of a principal contractor is distinct and separate from the direct employer.

51. Such argument gives no regard to the fact that the applicant would have no reasonable cause of action against PHM without first identifying the employer of the applicant was a contractor or subcontractor of PHM.

52. It is reasonable and indeed necessary for the applicant to find out the true identity of his employer before commencing his claim against  PHM as principal contractor.  As the letter to Cheung was returned undelivered in March, the applicant should be allowed some more time to identify the employer.

53. PHM's another argument that there was no project involved it and that the applicant might have been employed by some other parties at the Site on the date of the alleged accident does not advance its position any further.  Such argument is contrary to the allegation of the respondent, Cheung, the applicant and is a factual dispute for determination at trial.  Instead, it undermines its own argument that it is crystal clear that PHM was the principal contractor of the Site and that the applicant had no excuse not to join it to the present proceedings within the time limit as elaborated above.

Prejudice to the intended respondents

54. Cheung says that he would be prejudiced because he would have difficulty in asking for assistance of witnesses, gathering evidence, preparing the case or arranging earlier settlement and costs.

55. PHM says that it would be prejudiced due to:-

(a) no record of daily worker record is kept for more than one year;

(b) the difficulty to obtain information from the Kowloon Hotel and to locate internal record; and

(c) the resignation of the staff in charge of the Site in December 2013.

56. It is difficult to see how three months delay will prejudice the intended respondents in preparing the case let alone earlier settlement and costs.

57. In the absence of any specific details about the alleged prejudice caused to him and for reasons set out below, I do not find Cheung suffers any real prejudice.

58. I am not convinced that PHM suffers real prejudice by its alleged practice of not keeping the daily worker record for more than one year.  In fact, its affirmation only states that it did not keep most of those records.  It does not state all.  The unavailability of the record on the date of the alleged accident has yet been ascertained or verified.  I could not ignore the fact that PHM managed to produce the records from November 2011 to February 2012, less than 2 months before the alleged accident.  At any rates, it is hard to see how 3 months delay will have an impact on the availability of those record.

59. Sufficient regard should be given to the fact that PHM had actual notice of the applicant’s intended claim against it as far back as on 27 May 2013 through the intervention of the Labour Department or upon receipt of the letter of the applicant’s solicitor dated 29 August 2013.  From the reply given by the insurance adjuster representing PHM to the Labour Department, it is more likely than not that PHM has already carried out an investigation of the alleged accident and the relevant information and documents should have been gathered by then. 

60. In any event, the financial statements and tax documents of a business are required to be kept for 7 years.  The intended respondents should have the relevant documents to deal with the applicant’s claims against them.

61. The resignation of one of the staff in December 2013 was not caused by the delay.  Further, the resignation poses no bar to PHM to approach an outgoing staff or any other staff for evidence in this case.  A subpoena will be of assistance to the intended respondents whenever necessary.

62. I do not find the intended respondents suffer any real prejudice caused by the slightly over 3-month delay of making the present application.

Conclusion and order

63. By reason of matters set out above, I am satisfied that the applicant has reasonable excuse.  I am not impressed by any of the arguments raised by the intended respondents.  I exercise my discretion to allow the applicant’s application.

64. I order that:-

(1) Cheung and PHM be joined as the 2^nd respondent and the 3^rd respondent of the present action respectively;

(2) the applicant do have 14 days to file and serve the Amended Application as per the copy annexed to the present Summons; and

(3) the intended respondents do file and serve an Answer and a list of earnings within 28 days from the service of the Amended Application.

65. Although the applicant has succeeded this application, he is indeed asking the court for indulgence.  This application was necessitated by the allegation of the respondent in the Answer. The intended respondents cannot be said to be unreasonable in their opposition to this application up until the applicant put forward his reasonable excuse. 

66. In the circumstances, I make an order nisi that the costs of this application, including the costs of this hearing, be in the cause with Certificate for Counsel.  The applicant’s own costs be taxed in accordance with the Legal Aid Regulations.  In the absence of any application by Summons to vary the costs order nisi, it will become absolute after 14 days.