GURUNG BISHAN v. PROFIT SPREAD LTD AND ANOTHER

HCPI 493/2015

[2022] HKCFI 862

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 493 OF 2015

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BETWEEN

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JUDGMENT

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Introduction

1.  In these contribution and indemnity proceedings, the 2^nd defendant (“Lermond Engineering”), having settled the main action with the plaintiff (“Bishan”), seeks full indemnity from the 1^st defendant (“Profit Spread”) pursuant to s 3 of the Civil Liability (Contribution) Ordinance (Cap 377) (“CLCO”).

2.  It is Lermond Engineering’s case that assuming the facts pleaded by Bishan in the main action were true, Lermond Engineering would have been liable to Bishan for breach of its common duty of care under the Occupier’s Liability Ordinance (Cap 314) (“OLO”) whereas Profit Spread would have been liable to Bishan in respect of the same damage as Lermond Engineering by reason of Profit Spread’s breach of its employer’s duty to Bishan, negligence etc. The settlement between Bishan and Lermond Engineering (“Settlement”) was bona fide and it is just and equitable for Profit Spread to fully indemnify Lermond Engineering.

3.  In its points of defence in these contribution and indemnity proceedings, which was filed prior to the Settlement, Profit Spread denies that it had caused or contributed to the Accident (defined in [6] below).

4.  Profit Spread did not appear at the trial of these contribution and indemnity proceedings.

Background

5.  Lermond Engineering was the principal contractor of the construction site at 30 Inverness Road, Hong Kong (“Site”). Lermond Engineering demarcated an area in the Site (“Area”) to Profit Spread for it to cut the steel bars to be used in another construction site at Prince Edward Road East, Hong Kong (“Other Site”).

6.  It is Bishan’s pleaded case that:

(1) In or around May 2012, he was employed by Profit Spread as a steel-fixer and bar-bender and was assigned to work at the Area.

(2) On 26 May 2012, he and his co-worker were instructed by their supervisor to cut a stack of 12 m long reinforcing steel bars of about 32 mm in diameter into two halves. The cut steel bars (“6 m bar”) were 6 m long and weighed about 45 kg.

(3) After cutting the steel bars, Bishan and his co-workers would place the 6 m bars on top of one of two stacks of steel bars (“Bar Stack”) in the Area.

(4) For this purpose, Bishan and his co-worker had to carry the 6 m bar and go over a Bar Stack, the top of which was about 80 cm above ground level. The ground was littered with various construction materials including bundles of loosely tied steel bars.

(5) As Bishan and his co-worker were reaching the ground level having gone over the top of a Bar Stack, Bishan’s left foot slipped on a bundle of loosely tied steel bars, which were wet as it had rained earlier in the day, and fell to the ground (“Accident”).

(6) As a result of the Accident, Bishan sustained injuries. His left ankle was swelling with maximal tenderness over the lateral malleolus.

7.  On 12 May 2015, Bishan commenced the main action herein against Profit Spread and Lermond Engineering for damages then estimated to be $10,786,483.16.

8.  Profit Spread and Lermond Engineering respectively filed notices of contribution and/or indemnity on 11 April 2016 and 24 May 2016, seeking indemnity by and/or contribution from each other in respect of any sum which Bishan might recover under the main action or such amount as might be found by the court to be just and equitable under the CLCO. There is no dispute that the damages that Bishan sought to recover from Profit Spread and Lermond Engineering respectively are in respect of the same damage.

9.  Bishan and Lermond Engineering settled the main action on 8 August 2019. The terms of the Settlement were set out in a consent order (“Consent Order”) granted on the same day. For present purpose, it is sufficient to set out the following provisions of the Settlement:

(1) On a “without admission of liability” basis, Lermond Engineering shall pay $450,000 (which was inclusive of interest and legal costs and any employees compensation, advance payment or settlement money that has been paid by or might be due from Lermond Engineering to Bishan under DCEC 1036/2013 (“EC Action”) in full and final settlement of Bishan’s claims against Lermond Engineering in the main action;

(2) Lermond Engineering shall pay Bishan the balance of the Settlement Sum in the amount of $217,350.40 (“Net Settlement Sum”) through the Director of Legal Aid within 28 days from the date of the Consent Order after giving credit to the following sums already paid by Lermond to Bishan under the EC Action:

(a) $70,649.60 being advance payment already received by Bishan from Lermond Engineering; and

(b) $162,000.00 being sanctioned payment made by Lermond Engineering, which sum would be paid out to Bishon through the Director of Legal Aid by way of joint application by Bishan and Lermond Engineering.

(3) Upon payment of the Net Settlement Sum, Lermond Engineering will be discharged from all further liability arising out of the Accident of and all causes of action under the main action.

10.  There is no suggestion that Lermond Engineering has failed to pay the Net Settlement Sum as stipulated under the Consent Order.

CLCO

11.  The CLCO provides by s 3(1) and (4) of CLCO:

“(1) Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).

…

(4) A person who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or not he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming that the factual basis of the claim against him could be established.” (emphasis added)

12.  On the proper interpretation of these statutory provisions, with reference to the UK Law Commission’s Law of Contract: Report on Contribution (Law Com No 79) (1977), Madam Justice Au-Yeung held in Li Shiu To v Cheung Pik Ng (No 2) [2018] 1 HKLRD 934 at [25]-[29], with which I agree, that:

(1) The provisions confer a right or an entitlement on the settling defendant to seek contribution from a third party upon a bona fide settlement.

(2) The function of the statutory assumption is to ensure that there is a reasonable cause of action by the plaintiff against the defendant such as to (1) make the defendant liable in law to the plaintiff in respect of the damage, and (2) enable the defendant to further make a claim for contribution in respect of the same damage against a third party despite the fact that there was a settlement between the defendant and the plaintiff.

(3) With respect to the proviso under s 3(4) of the CLCO, i.e. the underlined words in [11] above, emphasises, amongst others, the bona fide element of the settlement such that the defendant could not claim contribution from the third party if the defendant settles with the plaintiff in a situation where the defendant was clearly not liable to the plaintiff even if the plaintiff could establish the facts relied upon.

(4) The defendant must prove, among other things, that the third party is liable to the plaintiff (in the sense that the plaintiff is entitled to recover compensation from the third party) and that such damage is the same damage for which the defendant is allegedly liable to the plaintiff.

See also IMI plc v Delta Ltd (CA) [2017] Ch 27 at [51]-[61].

Would Lermond Engineering have been liable for Bishan’s claim assuming the facts relied on by Bishan could be established?

13.  Under s 3 of the OLO:

“(1) An occupier of premises owes the same duty, the common duty of care, to all his visitors, except in so far as he is free to and does extend, restrict, modify or exclude his duty to any visitor or visitors by agreement or otherwise.

(2) The common duty of care is a duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is visited or permitted by the occupier to be there.

(3) The circumstances relevant for the present purpose include the degree of care, and of want of care, which would ordinarily be looked for in such a visitor, so that (for example) in proper cases-

(a) an occupier must be prepared for children to be less careful than adults; and

(b) an occupier may expect that a person, in the exercise of his calling, will appreciate and guard against any special risks ordinarily incident to it, so far as the occupier leaves him free to do so.

(4) In determining whether the occupier of premises has discharged the common duty of care to a visitor, regard is to be had to all the circumstances, so that (for example)-

(a) where damage is caused to a visitor by a danger of which he had been warned by the occupier, the warning is not to be treated without more as absolving the occupier from liability, unless in all the circumstances it was enough to enable the visitor to be reasonably safe; and

(b) where damage is caused to a visitor by a danger due to a faulty execution of any work of construction, maintenance or repair by an independent contractor employed by the occupier, the occupier Is not to be treated without more as answerable for the danger if in all the circumstances he had acted reasonably in entrusting the work to an independent contractor and had taken such steps (if any) as he reasonably ought to in order to satisfy himself that the contractor was competent and that the work had been properly done.

(5) The common duty of care does not impose on an occupier any obligation to a visitor in respect of risks willingly accepted as his by the visitor (the question whether a risk was so accepted to be decided on the same principles as in other cases in which one person owes a duty of care to another).

(6) For the purposes of this section, persons who enter premises for any purpose in the exercise of a right conferred by law are to be treated as permitted by the occupier to be there for that purpose, whether they in fact have his permission or not.”

14.  An occupier is a person who has a sufficient degree of control over the premises as to put him under a duty of care towards those who came lawfully onto the premises. The test is one of control. There is no need for an occupier to have exclusive occupation and two or more persons may be occupiers of the same premises at the same time. In the case of a construction site, an owner who employs an independent contractor to execute works on the construction site is usually still regarded as having sufficient control of the site as to put him under a duty towards all those who might lawfully be on the site. See Wheat and E Lacon & Co Ltd [1966] AC 552 at 577-578 and Wan Tsz Nok and Tam Yuk Chi Onion v Hung Fai Electrical Engineering Ltd, HCPI 1117/2004, unreported, 17 November 2008, at [40].

15.  In the present case, there is no dispute that Lermond Engineering was an occupier of the Area being situated within the Site, of which it was the principal contractor. While Lermond Engineering permitted Profit Spread and its workers to use the Area for cutting steel bars to be used in the Other Site, there is no evidence that Lermond Engineering had excluded its common duty of care under the OLO to any visitor or visitors by agreement or otherwise.

16.  In this regard, Mr Chan Wai Yeung (“Mr Chan”), director of Lermond Engineering, testified to the effect that when the Area was handed over to Profit Spread, it was made clear that Profit Spread would be responsible, amongst others, for site safety (“當時我借畀佢嗰陣時已經講到明，呢個地方佢自己負責安全”). There is, however, no mention or agreement of exclusion of Lermond Engineering’s duty as an occupier under the OLO.

17.  It is further the unchallenged evidence of Mr Chan that Lermond Engineering had never inspected, or sent any safety officer to ensure safety at, the Area. Lermond Engineering accepts that it should have sent safety officer(s) to check (1) whether Profit Spread had fulfilled its obligation of maintaining a safe environment in the Area (e.g. to clean and tidy up floor) in the Area; (2) whether Profit Spread had maintained a safe system of work in the Area; and (3) to give instructions for appropriate arrangement in the Area to ensure safety there, especially on rainy days.

18.  I am satisfied and I find that Lermond Engineering had failed to take any step to discharge its duty as occupier under the OLO. For the purpose of s 3(1) and (4) of the CLCO, Lermond Engineering would have been liable to compensate Bishan for the damage he sustained in the Accident assuming that the factual basis of the claim as summarised in [6] above could be established. Or at least Bishan would have had a reasonable cause of action against Lermond Engineering so as to make it liable for such damage. See IMI Plc v Delta Ltd [2017] Ch 27 at [59].

19.  In any event, as mentioned above, Profit Spread was absent at the trial and did not raise any challenge to either Lermond Engineering’s liability or the bona fide element of the Settlement.

20.  Accordingly, the determinative issue in the present action is whether the Lermond Engineering can establish that Profit Spread would also have been liable to Bishan for the Accident (in the sense that Bishan is entitled to recover compensation from Profit Spread).

Liability of Profit Spread

21.  On the proper interpretation of s 3(1) and (4) of the CLCO, where the plaintiff and the defendant have settled and insofar as there are any overlapping material facts to be established in the main action and the third party proceedings, the statutory assumption would apply. In other words, in the third party proceedings, the defendant does not have to prove facts overlapping those in the main action. See Li Shiu To v Cheung Pik Ng, supra, at [34]-[37].

22.  In light of the statutory assumption and given that the factual basis of the claim against Lermond Engineering and Profit Spread is essentially the same, the only remaining issue is whether as a matter of law Profit Spread could be held liable on the assumption that the factual basis could be established.

23.  The duty of care owed by employers to employees at the common law was a single duty to take reasonable care for the employees’ safety. This was so even though it was convenient to think of the duty as involving the provision of safe co-workers, a safe place of work, safe equipment, a safe system of work, proper instructions and supervision and, where called for, adequate training. See Cathay Pacific Airways Ltd v Wong Sau Lai [2006] 2 HKLRD 586 at 593A-I and 596C-G.

24.  Profit Spread, as Bishan’s employer, owed him a duty to take reasonable care to provide a safe system of work in the Area. Such duty is non-delegable in that Profit Spread would not be able to escape liability even if the duty had been delegated and then not properly performed. See McDermid v Nash Dredging Ltd [1987] 1 AC 906 at 910F-H.

25.  On the facts of the present case, it would appear that as between Lermond Engineering and Profit Spread, the latter did in fact assume responsibility for ensuring site safety and cleanliness of the Area. This much is clear from paragraph 22 of the witness statement of Chong Lee Yun, director of Profit Spread (who did not appear at trial):

“根據弘潤 [i.e. Profit Spread]的慣常指示，楊指示工人在開料前清理所有在地盤地上的建築廢物，並與其他工人一起清理廢物。”

26.  According to Bishan, at the material time, the ground of the Area was however, littered with wet construction materials. Despite such state of the Area, Bishan and his co-worker were instructed to carry out works there, which work required them to walk over the Bar Stack. In the circumstances, Profit Spread had failed to discharge and thus was in breach of its duty as employer to provide Biashan with a safe system of work at the Area.

27.  Therefore, I am satisfied that, for the purpose of s 3(1) and (4) of the CLCO, Lermond Engineering has established the liability of Profit Spread.

Assessment of contribution

28.  Pursuant to s 4(1) of the CLCO, in any proceedings for contribution under s 3, the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage in question.

29.  Lermond Engineering seems to be suggesting that it should not bear any responsibility for Bishan’s damage as a result of the Accident and that Profit Spread should fully indemnify it for the Settlement Sum. It stresses that it had no control over how Profit Spread instructed its workers to carry out their jobs in the Area; or how they stacked the wet steel bars; or how they chose to walk over the wet steel bars in the Area.

30.  However, such submission do not sit well with Lermond Engineering’s own stance on its liability for Bishan’s damage, particularly its admission that it failed to discharge its duty as an occupier under the OLO. Accordingly, I do not consider it appropriate to attribute 100% of the liability for Bishan’s damage to Profit Spread.

31.  On the assumption that the factual basis of Bishan’s claim could be established, Bishan’s damage was primarily caused by Profit Spread’s instruction to Bishan to work in an environment that was unsafe. Accordingly, while Lermond Engineering had failed to discharge its duty as an occupier under the OLO, Profit Spread as Bishan’s employer should bear primary responsibility for Bishan’s damage having failed to take reasonable care to provide a safe system of work.

32.  In the premises, I find it just and equitable that Profit Spread and Lermond Engineering should respectively bear 80% and 20% of Bishan’s damage.

33.  I so allocate the Settlement Sum after taking into account the facts (1) that as between Lermond Engineering and Profit Spread, it was the latter who had primary responsibility over the state and condition of the Area; (2) that Lermond Engineering had no direct control or supervision over Bishan and the manner in which he carried out his duties in the Area; and (3) that Profit Spread was Bishan’s employer and, as such, liable to devise a safe system of work in the Area.

34.  Accordingly, Lermond Engineering should recover from Profit Spread the amount of $360,000, being 80% of the Settlement Sum.

Disposition

35.  For the above reasons, I order Profit Spread to contribute 80% of the Settlement Sum, which is equivalent to $360,000, with interest at judgment rate from the date of Lermond’s payment of the Net Settlement Sum until full payment by Profit Spread.

36.  I also make an order nisi that Profit Spread shall pay Lermond Engineering its costs of these contribution and indemnity proceedings, to be taxed on a party and party basis, if not agreed. The order nisi shall be made absolute within 14 days after to date.