MUNG CHI KEUNG v. CHAN KAM WONG AND ANOTHER

DCEC299/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 299 OF 2005

--------------------

--------------------

DECISION

Background

1. In this matter the Applicant was injured as a result of an industrial accident on the 23rd November 1999.  He made a claim under the Employees Compensation Ordinance Cap.282 (in DCEC 510/2001) naming a Mr. WAN Lam-kwan as the 1st Respondent, and Hua Xing Engineering Company Ltd as the 2nd respondent.  The matter went to trial in June 2003, with the Court finding that neither Hua Xing nor WAN was the employer, but a Mr. CHAN Kam-wong was.  However Hua Xing was the principal contractor and was therefore liable.  The Court ordered Hua Xing to pay $2,074,865 in compensation.  However Hua Xing became liquidated since judgment day.  The Applicant then turned to the ECAFB for payment, but the latter refused to pay because Hua Xing was not “the employer” as stated in s.16 of the Ordinance, and so today the Applicant seeks an extension of time to make a claim against CHAN, which is time barred by 3 years and 4 months. 

2. It is not in dispute that this Court has a discretion to extend time, and the questions for today are:

(1)	Did the Applicant have a reasonable excuse for not having claimed from CHAN from the very beginning? If the answer is “No” we need proceed no further because the Applicant will fail in today’s application.
(2)	If the answer to Q.1 is “Yes”, the next hurdle for the Applicant is, did he have a reasonable excuse for not suing CHAN when the evidence at trial became clear that CHAN was at least “not unlikely” to be his employer? If the answer is “No” we need proceed no further because the Applicant will fail in today’s application.
(3)	If the answer to Q.2 is “Yes”, the next hurdle is whether there are other factors which I should consider before exercising my discretion to allow an extension of time.

3. In respect of Question 1 above, it is not disputed that the Applicant had known all along that it was CHAN who was paying the Applicant his wages, it was CHAN who had recruited workers including the Applicant, it was CHAN who had given instructions to scaffolding workers including the Applicant himself, and that WAN had served a Defence putting the Applicant on notice that the real employer was CHAN.  On the facts as they existed before trial, not on mere assertions in witness statements, therefore, the Applicant did not seem to have a reasonable excuse not to sue CHAN at least as one of the Respondents, which would obviously have been the safest thing to do.

4. However I accept that on the strength of CHAN’s witness statement the Applicant had thought, albeit wrongly, that CHAN was only his colleague, and that CHAN would testify on his behalf that WAN was the employer.  In other words this was the reason why the Applicant was reluctant to sue CHAN.  I realise that in deciding whoever at law was the Applicant’s real employer would not depend on CHAN’s making a bare assertion, whether it was inside a witness statement or whether it was in court, to say that the employer was WAN and not himself.  But, be that as it may, at the early stage of the initial proceedings in 2003, I am today willing to say that the Applicant at that time had a reasonable excuse not to join CHAN as a Respondent.

5. In respect of Question 2 above, it is not disputed that during trial it had become clear to the Judge and to the Applicant that there was a real possibility that CHAN was in reality the employer, not WAN: see Bundle page 143 B-C.  The question now becomes: Why did the Applicant not seek leave from the Court to join CHAN as a Respondent on the 18th (better still the 17th) June 2003, despite the time bar?

6. Counsel for the Applicant says the reasons were: (a) it was too much to start proceedings afresh, (b) especially in view of the fact that CHAN was not insured and unlikely to be able to pay any award made against him, (c) it would involve seeking adjournments and lengthy delays, and (d) it was “a difficult decision” for the Applicant to make.

7. I am unable to agree with the above.  Legal proceedings, if it is proper to be instituted, should never be described as “too much to start afresh”.  The Applicant had known from early times that Hua Xing and WAN were not insured, and that if he succeeded he would in any event be asking the ECAFB to pay.  CHAN’s financial status was no different from Hua Xing or WAN.  It must have been clear to the Applicant (at least to his legal advisors) that instigating proceedings against CHAN back in June 2003 would have meant that at least the ECAFB would be his safety net should CHAN be unable to pay.  As to lengthy delays, I cannot see how instigating proceedings against CHAN back in June 2003 could have involved a longer delay than by asking this Court as late as in April 2005 (or now in September 2005) for a grant of extension of time.  As to the point of “a difficult decision”, I am unable to see why this was so.  Put simply, the situation must be this:  If the Applicant sued CHAN, there was a probability he would obtain compensation, whereas if he did not, he would obtain nothing.  I cannot see why this decision was so difficult.  Accordingly I find that when the Applicant, having learned from the Court on the 17th and the 18th June 2003 that in all likelihood CHAN was the proper person to be sued, but decided not to sue immediately, he was not acting reasonably. 

8. It is said on behalf of the Applicant that despite Hua Xing not having been the employer, if it could not pay compensation, s.16 would enable the Applicant to seek payment from the ECAFB because the term “employer” in s.16 is to be interpreted liberally so as to include the principal contractor.  This may have been in the Applicant’s mind when deciding not to sue CHAN because he may have thought the ECAFB would substitute for Hua Xing, as the Applicant was given legal advice that despite the wording in s.16 referring only to a judgment against the employer, not the principal contractor, the ECAFB was nevertheless liable because of the wording in s.24.  I do not agree with this view because s.16 and s.24 deal with different matters.  But whether I am correct or not in my interpretation of the statute is not the real issue, because if the Applicant had firmly believed the ECAFB was liable to pay in Hua Xing’s stead, the proper action was to sue the ECAFB, not to wait for another 1 year and 10 months before seeking an extension of time to sue CHAN.  The Applicant says to sue the ECAFB would involve questions of statutory interpretation and likely to be litigated to the Court of Final Appeal level, which would be too costly and inconvenient.  But the Applicant was legally aided, and in any event, shying away from litigation is not, in my view, a reasonable excuse.  The Applicant also says that the 1 year and 10 months delay was spent in negotiating with the ECAFB for payment.  However the ECAFB had never indicated it was liable, and in any event the Applicant (if his belief was that ECAFB was liable) should have commenced proceedings against the ECAFB then negotiate, and not delayed his action in the hope that the ECAFB might change its mind.  Either way I do not find this to have been a reasonable excuse for the Applicant’s delay.

9. Even if I am wrong in finding the Applicant to have failed to pass the second question, I still need to take into account other factors of significance before I can properly exercise my discretion.  First, the Ordinance is designed to provide compensation despite an absence of fault, and so the employer is easily penalised.  The time bar therefore exists for the employer’s protection: see CHAN Wing-chuen  v  Sun Cheong Bleaching & Dyeing Factory Ltd [1989] HKDCLR 55.  This is further shown, in my view, by the fact that the time limit is only 2 years as against the 3 years limit for personal injury under common law.  Extension of time should therefore be guarded more tightly than under common law.  In any event, I note that today’s intended claim is very badly out of time, because it is out of time by 3 years and 4 months, i.e. over 150 % beyond the permitted 2 years.  This is a factor operating heavily against the Applicant.

10. The Respondent advances the argument of prejudice if leave was granted.  This is because the Applicant now seeks a claim against CHAN in the same amount as that awarded against Hua Xing at trial, namely $2,074,865 which is a huge sum on any view.  While a future court is not bound by this amount, the judgment sum must have a strong persuasive effect on any future proceedings.  But CHAN, who was locatable in 2003, is now nowhere to be found.  This means that if the Applicant sues CHAN, CHAN will default and judgment will be entered against him, which in turn means the ECAFB will be landed with the huge sum to be paid.  But the ECAFB cannot defend the proceedings because CHAN is not here to testify.  On the other hand, if today’s claim had been launched back in 2003 the situation might well be different.  CHAN has disappeared during the Applicant’s delay.  Furthermore, default judgment will in all probability be entered against CHAN in a sum most likely to be the same as, or at least close to, the previous judgment sum of $ 2,074,865 which will now bind him (and hence the ECAFB) when neither CHAN nor the ECAFB was even present in the previous proceedings.  The Respondent ECAFB says that the default judgment, which is more than likely, must be unjust due to the lack of a proper defence and the lack of a fair trial.  I find this argument powerful.

Conclusions

11. For the above reasons I find that although the Applicant had a reasonable excuse not to sue CHAN before June 2003, he no longer had a reasonable excuse after the 18th June 2003.  The things done after the 18th June 2003, whether in themselves were desirable or not, could not justify not suing CHAN and/or seeking the Court’s leave to extend time to sue him thereby delaying matter further.  The long delay, itself already out of time, I find to be unreasonable.  Even if it was reasonable, for reasons stated I am of the view that the prejudice caused to the ECAFB will prevent it from having a fair trial, not to mention the fact that if leave is granted today, in all likelihood the ECAFB will be landed with payment for a default judgment through no fault of its own.

12. In all the circumstances I consider it unjust and unfair to allow the Applicant the extension of time sought, and the application must therefore be refused.

13. Costs awarded to the Respondent ECAFB for today’s hearing and all “costs reserved” previously, with certificate for counsel, to be taxed if not agreed.