WONG SHU KEUNG v. KAM LUEN CONSOLIDATION LTD AND ANOTHER

DCEC 638/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE No. 638 OF 2010

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DECISION

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Introduction

1.  This is an application of MSIG Insurance (Hong Kong) Limited (“MSIG”) by summons dated 1 August 2013 (“the Summons”) for an order that the consent order dated 5 October 2012 whereby judgment on liability (“the Judgment”) was entered in favour of Mr Wong Shu Keung (“Wong”) against Kam Luen Consolidator Limited (“Kam Luen”) be set aside. Wong opposes this application.

2.  Kam Luen has acted in person by its director Mr Li Ho Cheong (“Li Junior”) since 11 March 2011. Li confirmed to this court that Kam Luen still insists on the validity of the Judgment and would solely rely on the submissions advanced by Mr Sun, appearing for Wong, to oppose MSIG’s application.

Background Facts  

3.  To deal with this application, it is necessary to go into some detail the background facts.

4.  On 25 June 2009, MSIG issued an employees’ compensation policy to Kam Luen covering the period from 25 June 2009 to 24 June 2010 (“the Policy”). It was stated in the Policy that the nature of Kam Luen was transportation with three employees being a tractor driver, a lorry driver and an outdoor clerk.

5.  Wong was allegedly injured in an accident taking place on 11 March 2010 (“the Accident”). The first documentary evidence relating to the Accident is a Form 2 dated 15 March 2010 filled by Wong. Wong stated in Form 2 that his then employer at the time of the Accident was Kam Luen. The insurer of Kam Luen was stated to be MSIG. He further alleged that he fell from a ladder when he was tidying up things for Kam Luen. As a result, he sustained multiple injuries.

6.  Wong altogether attended three interviews with the Labour Department. In an interview record dated 20 April 2010 compiled by one Mr Lam, occupational safety officer of the Labour Department, Wong disclosed that he was employed by Kam Luen as a general labourer starting from 1 January 2010 and his workplace was a deserted farm which was commonly known as Wo Fung. He undertook demolition and construction works at Wo Fung. At the time of the Accident, he was doing welding work as instructed by one Mr Li (“Li Senior”) and a container fell upon him. Wong was injured as a result. This was a totally different account of the Accident.

7.  In the same interview, Wong also disclosed that he was advised by Li Senior to lie about the true account of the Accident so as to avoid any trouble arising from the fact that he both worked and received Comprehensive Social Assistance at the same time.

8.  In the subsequent interviews on 29 April 2010 and 14 June 2010, Wong maintained the same account of the Accident and he said more about his employment. He contended that he did not know Kam Luen until the Accident and all along he received instructions from Li Senior and his wife, parents of Li Junior, was the sole shareholder of Kam Luen. He was paid in cash by Li Senior and his wife. It was only after the Accident that Li Senior told Wong that he should say that Kam Luen was his employer instead.

9.  Prior to his Employees’ Compensation claim made on 9 June 2010, Wong commenced a personal injuries action against Kam Luen in the High Court under HCPI 686/2010 (“the High Court Action”). Judgment on liability against Kam Luen was entered upon admission by Kam Luen by an order dated 8 September 2011. MSIG was so informed on 23 September 2011.

10.  It should be noted that the Judgment in the Application was entered on 5 October 2012 when Kam Luen appeared in person by Li  Junior before His Honour Judge Poon.

11.  Next came the hearing of assessment of damages on 10 April 2013 before Master J Wong. From the judgment of the learned master dated 6 May 2013, it can be seen that one week before the said hearing, MSIG made a late application to join as a second defendant of the High Court Action. The joinder application was heard by the learned master on the same occasion as a preliminary issue. MSIG’s legal representatives indicated to the learned master that MSIG had in fact repudiated the Policy. Wong was represented and opposed the joinder application whilst Kam Luen, legally represented, did not. In the end, the learned master allowed MSIG to be joined as the 2^nd defendant of the High Court Action.

12.  MSIG heavily relies on a document emanated from the High Court Action for this application. It is the written submission of Kam Luen filed on its behalf by its former solicitors Messrs David Ravenscroft & Co. dated 12 April 2013 (“the Written Submission”). In paragraphs 5 to 8, it was submitted that Wong was engaged by Kam Luen as a messenger only and welding job was outside the ambit of his employment with Kam Luen. It was pointed out that Wong’s own evidence was that he was asked by Li Senior to do the welding work and Li Senior was his employer and not Kam Luen nor Li Junior.

13.  It was further stated in the Written Submission that Wong was in fact was on the one hand employed by Li Senior personally to do the welding work at the workplace and at the same time employed by Kam Luen as a messenger. The Accident hence took place not in the course of Wong’s employment with Kam Luen but his another employment with Li Senior Li.

14.  Mr Reeves, appearing for MSIG, submits that such submissions prompted MSIG to review its position in the Application in the light of all the evidence filed in both the High Court Action and the Application. Subsequently, MSIG applied to join as the 2^nd respondent in the Application by summons dated 2 July 2013. In the supporting affidavit, it was made clear that the joinder was applied for with a view to defending the Action. Deputy District Judge Eric Tam granted the joinder application on 25 July 2013. Then came the Summons.

Principles

15.  Mr Sun, appearing for Wong, argues that MSIG has to show a defence with more than a real prospect of success in order to have the Judgment set aside. He submits that he is unable to find an authority with facts akin to the present situation and since the Judgment was entered by admission, the threshold should be higher than those of setting aside a default judgment.

16.  On the other hand, Mr Reeves relies on Wong Kam Fai v Yu Sai Wan trading as Wong Fai Construction Material Co & Ors, unreported, DCEC 91/1992, 13.1.1993 and Chan Ka Ki, suing by her mother and next friend HAU Kwai Yung Grandy v Lau Sin Ting and Anor., unreported, HCPI 900/2011, 19.11.2012 to show that this court has jurisdiction to allow the newly joined party to challenge liability of the employer even after judgment has been entered against the employer. In the former case, P. Cheung, J (as he then was) reviewed sections 43 and 44 of the Employees’ Compensation Ordinance, Cap. 282 and in the end, the learned judge allowed the insurer to apply to set aside a default judgment entered before the joinder.

17.  In my view, I do have jurisdiction to set aside the Judgment and MSIG has to convince me that it has a reasonable defence to Wong’s claim. I do not accept that MSIG has a higher burden because of the consent nature of the Judgment. The consent was given by Kam Luen and not MSIG.

18.  In passing, I should indicate my agreement with the observation of Bharwaney J in the case of Chan Ka Ki, supra. I agree that it is indeed good practice for the court allowing the joinder of an insurer to expressly spell out that the joinder is for participation on either some, or all, issues of liability and quantum. If this had been done in the present case, this application might have been avoided.

Discussion

19.  To me, the overriding concern is the merit of the defence of MSIG. I need little persuasion that it has a meritorious defence for the following reasons and in the interest of justice, in my view, MSIG should be given a chance to challenge the claim of Wong.

20.  The Written Submission indeed amounts to an unequivocal denial of an employer and employee relationship between Wong and Kam Luen at the time of the Accident, which is the very basis of the claim of Wong in the Application. This denial cannot sit comfortably with its prior consent to the Judgment in this Application. It is inexplicable why Kam Luen has consented to the Judgment despite its then lack of legal representation given its position shown in the Written Submission. Li Junior should not have accepted liability in the Application on the one hand and denied the employment in the High Court Action one the other.

21.  Mr Sun criticizes the defence of MSIG being solely dependent on evidence of other parties adduced in the proceedings and MSIG has no independent evidence to offer. I am yet to see the evidence of MSIG in the Application and I do not know whether there would be independent evidence to be filed. However, be that as it may, it does not necessarily mean that MSIG does not stand a good chance to disprove the alleged employment on the evidence adduced by Wong and Kam Luen. Whilst I do not propose to embark on a close scrutiny of all the documentary evidence adduced thus far, I observe that Wong would have a lot of questions to answer before he can establish his claim.

22.  Mr Sun further complains about the lateness of this application to set aside the Judgment, which was entered more than nine months before MSIG makes this application. Mr Sum points out there are ample documentary evidence to show that Wong was injured when doing welding work right after the Accident. He contends that if MSIG disputes liability of Kam Luen by reason of the fact that Wong was acting outside the employment with Kam Luen, MSIG should have acted promptly and not allowed the Judgment be entered by consent.   

23.  Mr Reeves first explains that MSIG has left the defence work to Kam Luen’s then solicitors in the belief that the interest of Kam Luen would be properly taken care of. He contends that it was possible that Wong was indeed doing welding work for Kam Luen though it was not within the ordinary business of Kam Luen. All along Wong alleges and Kam Luen accepts that Wong was injured in the course of his employment with Kam Luen. As a result, MSIG was misled. It was not until the clear denial was made in the Written Submission that MSIG could probably be alive to the fact that Wong was employed by another entity altogether.  

24.  The Written Submission was apparently based on the evidence filed in the High Court Action including the witness statement of Wong. I am not in a position to assess the evidence in the High Court Action and indeed I have no access to most of such evidence. Mr Reeves submits that Wong’s alternative employment with Li Senior personally was disclosed for the first time in the Written Submission and I have no reason to disbelieve him.

25.  Mr Sun seeks to water down the damaging effect of the denial of the employment relationship in the Written Submission and submits that it was made without evidential basis. I cannot readily accept this submission. In any event, given this sudden chance of position of Kam Luen, the consent underlying the Judgment is questionable. Further investigation is warranted and the merit of the claim of Wong should call for proper adjudication.

26.  In the premises, whilst I accept that MSIG could have acted more promptly, I do not think the delay is so serious that MSIG should be shut out and be deprived of a chance to challenge the claim of Wong altogether given the obvious merit of its defence.

Conclusions and Orders

27.  For the reasons given above, I believe that I should exercise my discretion to set aside the Judgment and allow MSIG to challenge both liability and quantum of Wong’s claim in this Application. I therefore accede to the application of MSIG and make an order in terms of paragraphs 1 and 2 of the Summons.

28.  In the Summons, MSIG asks for an order that MSIG do pay the costs of this application. I accordingly make a costs order nisi that MSIG do pay Wong costs of this application in any event, to be taxed if not agreed. There should be no order as to costs in regard to Kam Luen and I allow Wong’s own costs to be taxed in accordance with the Legal Aid Regulations.

29.  Lastly, the parties are directed to fix a date for a direction hearing within 28 days hereof.