HONG CHUN TAK v. YIP KAN KEE CONTRACTING CO LTD AND OTHERS

DCEC 849/2017

[2021] HKDC 600

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 849 OF 2017

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IN THE MATTER OF AN APPLICATION BETWEEN

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DECISION

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1.  In this Decision, I will continue to adopt the abbreviations used in my judgment herein handed down on 24 March 2021 (“the Judgment”).

2.  In the Judgment, I held against R2 in the only issue on liability at trial, namely that R2 was the principal contractor within s24 of the ECO. Following from that I held that R2 was liable severally with R1, the employer, for payment of employees’ compensation to the AP, which in the Judgment I awarded at the total sum of HK$646,575 with interest.

3.  In paragraph 74 of the Judgment, I made a costs order nisi.  Since then, the AP and the Board have applied for certain variations.  The variations sought by the AP have been resolved.  What remains outstanding is the application to vary by the Board.

4.  At the time, I took the provisional view that the starting point in respect of the Board’s costs was no order as to costs and that it might be harsh for R2 to bear 2 sets of costs in conducting the same defence case, and in the Judgment I ordered on a nisi basis that there be no order as to the Board’s costs.

5.  The Board accepts that there should be no orders as to its costs against the AP and R1, but seeks an order that “R2 pays the Board’s costs in this action, with certificate for counsel, to be taxed if not agreed”.  It seems clear that by the said proposed order, the Board is now seeking against R2 costs it has incurred since its joinder on 15 May 2020.

6.  Pursuant to my directions, R3 and R2 have respectfully filed their submissions.  I have also directed that this matter would be disposed of on papers.  This I now do.

7.  R2, now acting in person, said that the costs order nisi was reasonable and correct and further pleaded that he had already incurred substantial legal costs and that the payment of the compensation of HK$646,575 was already a heavy burden on him.

8.  In its written submissions, the Board first argued that the starting point regarding the Board’s costs in this case should be the usual rule of “following the event” and not “no order as to costs”.  It submitted extensively that what Ribeiro PJ held in  Wo Chun Wah v Employees Compensation Assistance Fund Board (2019) 22 HKCFAR 495 in paragraph 46 at p 515, namely

“… where the Board has been joined as a party and properly carries out its “filtering” or monitoring functions, the appropriate starting point should generally be no order as to costs …”

was held in relation to Question 1 before the Court of Final Appeal, namely

“Question 1

Whether, upon proper construction of the provisions of the [ECAO], and in particular s.20B(3) thereof, the court has jurisdiction to order costs against the Board in common law damages claims to which the Board joins in pursuant to s.25A of the ECAO (“Joinder Cases”), and if so, whether there is a “usual order” or “starting point” on costs to be made or ordered in Joinder Cases where the Board (i) disputes liability and quantum, and (ii) disputes quantum only (See [Court of Appeal] Judgment §§14, 20, 32 and 34).”

and was held also in relation to costs sought by the applicant/plaintiff to be paid by the Board.

9.  It is submitted that, quite different from the usual cases where the Board’s stance would be opposite to that of the applicants’, the Board in this case shared the same stance with the AP against R2 in relation to the only issue the Board was given leave to be joined, namely, whether R2 was the principal contractor.  The Board said essentially that therefore what Ribeiro PJ said in paragraph 46 of that judgment (quoted above) is not quite applicable or apposite.

10.  In view of the fact that this court does not have the benefit of argument from R2, and particularly that I find myself persuaded by the Board’s further submissions that there are good reasons here to exercise my discretion to order R2 to pay its costs even if the starting point were “no order as to costs”, I find it not necessary to come to a view as to whether “no order as to costs” should be a general starting point in all employees’ compensation cases where the Board seeks to and is allowed to be joined as a party.

11.  I am persuaded by the following matters put forth by the Board concerning R2’s conduct in this action such that, even if “no order” were the starting point, I should exercise my discretion to order R2 to pay the Board’s costs:-

(a) R2 must have known that he needed to take out, or to ensure that R1 had taken out, a valid policy of insurance for the AP, and that failing which the Board might very well be called upon to pay the compensation to AP in R2’s stead. 

(b) To avoid liability to pay the employees’ compensation to the AP, R2 had been strenuously opposed, based on grounds that the courts have found to be unmeritorious, the application by the AP to join him as R2 and the joinder of the Board.

(c) Yet, his case was based on, what the court now has found, as stories made up by him and continued to be made by him during trial.

(d) By this court’s order made on 15 May 2020, this court held that it was appropriate to let the Board join to properly present the case against R2.

(e) The witness statement of Yip proffered by the Board was clear and detailed regarding the relevant facts.  R2 instead of responding to them directly, chose to file 2 supplemental witness statements, which merely denied barely what Yip said, but brought out other matters as excuses, which the court found as essentially lies.  Further time and costs were thereby spent.

(f) The court found the witness called by the Board, namely Yip, honest and reliable.

(g) After the Board was joined and faced with the witness statement of Yip, R2 continued with his lies and compounded them with the further lies and excuses. This court rejected his testimony as lies and came to a clear view that R2 was an unreliable and incredible witness.

12.  In a nutshell, the picture is that in order to avoid paying the compensation (unmeritorious, I would add) and with the potential liability to pay the Board’s costs in view, R2 continued to gamble (and lie) that he might be able to get away without being found liable; and now having been adjudged liable, he should be met with the consequences of that gamble.

13.  The Board reminded this court that it has found the Board’s conduct at trial proper and reasonable and that it has been ably assisted by its participation.  In the circumstances, I think it is fair and reasonable that the Board should be able to recoup its costs from R2.

14.  In the premises, I am satisfied that R2 should pay the Board its costs of this action incurred since its joinder, including the costs of this application, with certificate for counsel, to be taxed if not agreed.  I would vary my costs order nisi accordingly.

15.  My clerk will arrange this Decision to be interpreted to R2 in Punti should the need arise.