AMJAD-UL-MAHMOOD v. PROFIT HILL INTERNATIONAL HOLDINGS LTD AND ANOTHER

DCPI 534/2017

[2023] HKDC 715

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 534 OF 2017

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BETWEEN

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DECISION

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Background

1.  Judgment was handed down on 21 March 2023. I shall adopt the same abbreviations and nomenclatures as in the Judgment.

2.  This Court found D2 is wholly liable to P’s injuries and damages and awarded damages in the sum of HK$247,515.00. However, since P has settled the related EC proceedings with D1 and received compensation in the sum of HK$338,000.00, his claim against D2 is dismissed.

3.  This Court found that D2 is liable to contribute and indemnify D1 under ECO and CLCO for the compensation made to P under DCEC 171/2016 together with costs. It is stated under paragraphs 120 & 121 of the Judgment that:-

“120. The sums claimed by D1 (which are not disputed by D2) are as follows:

EC Amount paid to P	$338,000
P’s own costs	$40,000
D1’s costs	$21,760.40
Interest	$106,602.66
Total:	$506,363 (round up)

121. I order that D2 do pay D1 the sum of $506,363 under the Contribution and Indemnity Proceedings.”

4.  D1 and D2 have brought to the attention of this Court that the above paragraphs failed to take into account s 25(1)(b) of ECO that the amount receivable by D1 should not exceed the damages awarded to P and invited this Court to revise the above Order under the “slip rule”.

5.  After exchange of correspondence, the parties, however, are unable to agree upon the exact figure recoverable by D1 from D2. The dispute is over whether costs in the EC proceedings should be subject to the proviso of s 25(1)(b) ECO, that it should be capped (together with EC compensation) by the common law damages.

6.  I have directed parties to file written submissions for the Court’s consideration.

Slip Rule

7.  The principles are well settled. As pointed out by Mr Gidwani for D1, apart from application by the parties under O 20, r 11, RDC, the Court has inherent jurisdiction to vary its own orders so as to carry out its own meaning and to make that meaning plain. The Court, however, has no power to correct its own mistakes: Godfrey JA, Skink Ltd (liquidation) v Comtowell Ltd [1998] 1 HKLRD 524, 543G.

8.  Under paragraphs 120 &121, this Court has indeed omitted to factor-in the damages awarded to P (the detailed analysis was contained in paragraphs 122 to 150 of the Judgment) when making the Order.

9.  This was a clerical error on the part of this Court as D1 was clearly asking for indemnity and contribution from D2 under s 25(1)(b) ECO which states:-

“25. Remedies against both employer and third party

(1) Where the injury in respect of which compensation is payable was caused in circumstances creating a legal liability in some person other than the employer (in this section referred to as the third party) to pay damages to the employee in respect thereof –

(b) the employer by whom compensation is payable, and any person who may be called upon to pay an indemnity under section 24 in the case of an employee employed by a sub-contractor, shall have a right of action against the third party for the recovery of any sum which he is obliged to pay as a result of the accident, whether by way of compensation or indemnity or by virtue of any agreement made with the employee prior to the accident, and may exercise such right either by joining in an action begun by the employee against the third party or by instituting separate proceedings:

Provided that the amount recoverable under this paragraph shall not exceed the amount of damages, if any, which in the opinion of the court would have been awarded to the employee but for the provisions of this Ordinance.” (emphasis added)

10.  The clerical mistake to be corrected is the figure of “EC Amount paid to P” as the Judgment has omitted to take into account the damages in the sum of $247,515.00, which is less than the EC Amount paid to P in the sum of $338,000.00.

11.  There is another clerical error under paragraph 4 of the Judgment when this Court referred to the $338,000.00 settlement sum. The said sum was exclusive of costs (rather than “inclusive” as stated).

12.  This Court considered P’s own costs and D1’s costs as stated in paragraph 120 should be on top of “EC Amount paid to P” in calculating the sum payable by D2 to D1.

13.  In D2’s written submissions now before me, Mr Tsui sought to argue that costs in the EC proceedings should also be subject to the cap of the amount of damages awarded to P.

14.  Mr Gidwani noted that the amount claimed by D1 (ie $506,363) was never disputed by D2. Moreover, Mr Tsui did not make clear calculation and figures of what amount should be payable to D1 by D2 in both his opening and closing submissions.

15.  Indeed no detailed calculation and elaboration was offered by Mr Tsui back then.

16.  Mr Tsui, nonetheless, did in his closing submissions mention that contribution payable by D2 to D1 should be capped at the amount of damages to P under his common law claim, and he referred to Kan Che Sing v Hop On Management Co Ltd [2020] HKDC 292.

17.  As such, Mr Tsui strictly speaking is not attempting to “re-argue” the issue under s 25(1)(b), though it is properly argued now.

18.  This decision deals with the interpretation of the proviso to s 25(1)(b) of ECO.

Section 25(1)(b) ECO

19.  The learned DDJ in Kan Che Sing held that while an employer can seek indemnity and contribution of its legal costs against the tortfeasor, the legal costs (like the compensation in the ECC) should also be capped by the common law damages under the proviso of s 25(1)(b).

20.  However, I have reached a different conclusion that legal costs in ECC should not be included in the equation of calculating the sums to be paid by D2 to D1.

21.  My reasons are as follows.

22.  It is not disputed that “any sum” under s 25(1)(b) is not limited to compensation under ECC but also costs which an employer is obliged to pay as a result of the accident: Wong Man Yip v Wah Kwong Construction Material [1995] 1 HKLR 85, per Mortimer JA.

23.  The same is adopted by the Court of Appeal in Yardway Motors Limited v Tam Siu Lun [2005] 2 HKLRD 118.

24.  The Court of Appeal, however, did not expressly state whether legal costs should be included in the calculation for the purpose of s 25(1)(b).

25.  Upon reading s 25(1)(b) on its own, and in particular its proviso, it would seem that legal costs should also be subject to the cap of common law damages, as argued by Mr Tsui.

26.  However, one must read s 25(1)(b) together with the other relevant sections, in particular s 25(1)(a), of ECO:-

“25. Remedies against both employer and third party

(1) Where the injury in respect of which compensation is payable was caused in circumstances creating a legal liability in some person other than the employer (in this section referred to as the third party) to pay damages to the employee in respect thereof –

(a) the employee may both claim compensation under this Ordinance and take proceedings against the third party in the Court of First Instance or, subject to the provisions of the District Court Ordinance (Cap. 336) relating to the limits of jurisdiction, in the District Court to recover damages:

Provided that where any such proceedings are instituted the court in which the action is tried shall, in awarding damages, have regard to the amount which, by virtue of paragraph (b), has become or is likely to become payable to the employer by the third party;” (emphasis added)

27.  When assessing common law damages, I agree with Mr Gidwani’s interpretation of s 25(1)(a) that costs in EC proceedings are not included in deducting P’s common law damages.

28.  Indeed, it has always been the practice of the Court in assessing damages in common law. Unlike compensation under ECO, costs in EC proceedings were never taken into account by the Court in the process.

29.  It could not be the legislative intent to give different treatments to legal costs in EC proceedings under the same section, ie excluding legal costs in the calculation of common law damages to P under s 25(1)(a) while including legal costs in the calculation of what an employer can recover from a tortfeasor under s 25(1)(b).

30.  The purpose of s 25(1)(a) is to avoid an employee getting more than the damages he could get under the common law while s 25(1)(b) is to ensure that the employer get to recover what he was obliged to pay under ECO from the tortfeasor.

31.  It would not be logical for legal costs of EC to be calculated when considering the amount an employer can seek from the tortfeasor but not calculated when assessing common law damages payable to an injured employee. It is the other side of the same coin.

32.  Further, if one takes a closer look at Yuen JA’s judgment in Yardway Motors, it is clear that legal costs should not be part of the computation under s 25(1)(b):-

“48. In my view, those words are by themselves ambiguous, but when one reads the rest of the section (and other parts of the ECO), one is driven to the conclusion that this section does not apply to a situation where both employer and third party were liable in common law to the employee. In other words, the ECO provisions cater only for the simple situation where the employer was not to blame for the injury, and his only liability to the employee was the statutory duty (under the ECO) to pay compensation. He can then stand in the shoes of the employee and recover what the employee can recover from the third party.

51. The employer’s right to recover whatever sum he has paid is subject only to the proviso to s.25(1)(b), which limits the amount he can recover to the quantum of damages which would have been awarded to the employee but for the terms of the ECO. This proviso, together with the proviso to s.25(1)(a), ensures that the employee does not recover - and the third party does not have to pay - anything more than the damages to which the employee would be entitled in common law. ….” (emphasis added)

33.  Unlike compensation, liability to pay legal costs (be it employee’s own costs or employer’s costs in defending the claim) is not a statutory duty under the ECO. Costs is not granted under the terms of the ECO. It is always a matter of discretion of the Court.

34.  Under s 25(1)(b), the employer who stands in the shoes of the employee can claim, on top of the EC compensation, legal costs against the tortfeasor. As under s 25(1)(a), legal costs is not meant to be part of the calculation.

35.  I therefore disagree with Mr Tsui’s interpretation.

The Amount Payable by D2 to D1

36.  In calculating the amount payable by D2 to D1, it is common ground that interest on the common law damages should be included.

37.  P would have been entitled to interest on PSLA at 2% pa from date of writ to date of Judgment, and interest on Pre-Trial Loss of Earnings at half judgment rate (4%) from date of Accident to Date of Judgment.

38.  As pointed out by Mr Tsui, D2 has made Sanctioned Payment to P which he obviously failed to accept by 7 April 2021.

39.  As such, interest payable on P’s common law damages should be:-

PSLA:

$127,500 at 2% pa from 9 March 2017 to 7 April 2021

= $10,409.60

Pre-trial loss of earnings:

$120,015 at 4% pa from 10 March 2014 to 7 April 2021

= $33,985.60

40.  The amount compensation under EC, as capped by s 25(1)(b) ECO, which D1 is entitled to recover from D2 would then be:-

$247,515.00 + $10,409.60 + $33,985.60 = $291,910.20

41.  D1 is therefore entitled to indemnity and contribution from D2 in the following:-

EC Amount paid (as capped)	$291,910.20
P’s own costs in ECC	$40,000.00
D1’s costs in ECC	$21,760.40
	__________
Total:	$353,670.60

42.  D1 is also entitled to interest on the sum of $353,670.60 at 4% pa from date of settlement of EC (4 October 2016) to date of Judgment (21 March 2023) ie 77 months:-

$353,670.60 x 77/12 x 4% = $90,775.50

43.  The sum payable by D2 to D1 is thus:-

EC Amount paid (as capped)	$291,910.20
P’s own costs in ECC	$40,000.00
D1’s costs in ECC	$21,760.40
	__________
Sub-total:	$353,670.60
Interest on $353,670.60	$90,775.50
	__________
Total:	$444,446.00 (round up)

44.  Paragraph 120 of the Judgment is thus amended as follows:-

“The sums claimed by D1 (which are not disputed by D2) are as follows:

EC Amount paid to P	$338,000
P’s own costs	$40,000
D1’s costs	$21,760.40
Interest	$106,602.66
Total:	$506,363 (round up)

D1 could only recover the EC Amount paid to P up to the amount of damages awarded to P (in the sum of $247,515 which is detailed under Quantum) and interest thereon. D1 is therefore entitled to the following:

Damages (with interest on top)	$291,910.20
P’s own costs in ECC	$40,000
D1’s costs in ECC	$21,760.40
Interest	$90,775.5
Total:	$444,446 (round up)”

45.  Paragraph 121 of the Judgment is amended as follows:-

“I order that D2 do pay D1 the sum of $506,363 $444,446 under the Contribution and Indemnity Proceedings.”

46.  Mr Gidwani in his submissions asks for costs against D1 with certificate for Counsel associated with this revision.

47.  As the present revision is part and parcel of the Contribution and Indemnity Proceedings, no further costs order will be made as it has been dealt with under paragraph 156 of the Judgment.

48.  As a result of this Decision, there would be corrigendum of the Judgment to paragraphs 4, 120 and 121.

49.  I am grateful for Counsel’s assistance.