KWONG CHEUK SING v. SKY FIELD CONSTRUCTION LTD AND OTHERS

DCEC 2198/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 2198 OF 2013

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

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

REASONS FOR DECISION

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

A.　INTRODUCTION

1. These proceedings were instituted on 9 December 2013 pursuant to the Employees’ Compensation Ordinance (Cap.282) (All references to statutory provisions in this decision, unless expressly stated, are references to this Ordinance) in respect of the personal injuries the applicant, a concrete repair worker, sustained in an accident (“Accident”) that took place on 20 November 2012 allegedly in the course of employment with Sky Field Construction Limited (“Sky Field”).

2. By two subsequent amendments made on 22 May 2014 and 12 May 2015, the applicant respectively added two additional respondents to these proceedings, namely Chan Yiu Fai, and Li Wai Chiu (“Li”) trading as Cheung On Engineering Co (“Cheung On”) as the 2^nd and the 3^rd respondents.  The applicant alleged that Sky Field was the principal contractor and that the 2^nd and the 3^rd respondents were the sub-contractors.

3. By a summons dated 22 April 2016, the applicant applied to join Lam Kwok Ping (“Lam”) trading as Cheung On (who is referred to as the “Intended 4^th respondent”) as the 4^th respondent.  This joinder application was made 17 months after the expiry of the 24 months’ time limit stipulated by s. 14 for the bringing of proceedings for the recovery of compensation by an employee against an employer.

4. Lam objected to the application.  As Sky Field did not object to it and the 2^nd respondent was neutral as to the application, this court excused them from attending the substantive hearing of the application.

5. At the substantive hearing on 5 September 2016, the applicant and Lam were respectively represented by Counsel Mr Yip and Mr Poon. Sky Field and the 2^nd respondent, having been excused from attendance, did not attend the hearing.  The 3^rd respondent was served with the summons and the notice of the hearing, and was absent.

6. After hearing arguments from counsel, I acceded to the applicant’s application by joining the Intended 4^th respondent as the 4^th respondent to these proceedings.  These are my reasons for the decision.

B.　 Background Information

7. The followings is taken from the background information set out in an accident report (“Accident Report”) dated 22 April 2015 compiled by the Labour Department.

(1) The place of the Accident was at unit C, 1/F., 116-122 Kwok Shui Road (“Site”).

(2) Sky Field was appointed as the principal contractor by the owner, “Freudenberg & Valene International Ltd” (“科德堡有限公司”) (“Owner”) to undertake the renovation works (“Works”) at the Site.

(3) By a sub-contracting agreement signed between Sky Field and Li, Sky Field sub-contracted the entire Works to Li who claimed to be the responsible person of Cheung On.

(4) Li assigned the Works to the 2^nd respondent who later introduced the applicant to work at the Site without any written employment contract.

8. It is not in dispute that the applicant obtained from the Labour Department on 28 January 2015  the Accident Report along with a number of other documents, which included a record of interview of Li (“Li’s Statement”) taken by an officer of the Labour Department on 2 May 2013.   The sub-contracting agreement referred to in para 7(4) above was dated 8 November 2012 (“Subcontract”), and which Sky Field provided to the applicant’s solicitors on 10 February 2015.

C.　APPLICANT’S EXCUSE FOR THE DELAY

9. Since this joinder application was made out of time, the applicant would need to show to the satisfaction of the court the existence of a reasonable excuse for having failed to make the claim against the Intended 4^th respondent within time: s 14(4).

10. The applicant’s excuse, according to the two affirmations the applicant had filed - one filed on 22 April 2016 in support of the present application, and another on 14 April 2015 in support of his previous application to join the 3^rd respondent – was: first, the applicant did not have the information as to the identities of all the relevant parties until he had obtained the relevant documents on 28 January 2015 from the Labour Department. Secondly, Sky Field had shifted its pleaded case and only put forth a positive case after the time limit had expired. Thirdly, Li’s statement contained allegations that did not seem to be consistent with the relevant documents. The applicant therefore stated that he could only make an informed decision to make the joinder application after he had been served by Sky Field on 7 January 2016 with the witness statement of Law Po Ting (transliteration) (羅寶珽) (“Law’s statement”), in which Law affirmatively denied that Sky Field had subcontracted the Works to Li or the 2^nd respondent.

11. Mr Yip submitted that before the 3^rd respondent was made a party to the proceedings, Sky Field had only maintained a bare denial without pleading a positive case. It was not until Sky Field served its re-re-amended answer filed on 14 August 2015 that it, for the first time, alleged that  the Subcontract was signed by Li as Cheung On’s responsible person only, but that the Works had been subcontracted to Cheung On, which bore a business registration number of 51430244 (“B.R.No.”) and that its sole-proprietor was Lam.   

12. Mr Yip submitted that Sky Field’s pleaded case was far from clear as it was unclear whether it was averred that Li or the Intended 4^th respondent was Sky Field’s subcontractor. The applicant was therefore placed in a difficult situation. The difficulty was further compounded by the assertions in Li’s statement which contained allegations by Li that he was the de facto person responsible for the entire Works, including the provision of the quotation to the Owner as well as the entry of the Subcontract by using Cheung On’s name. In the circumstances, it was submitted that the applicant had a good reason to wait until Sky Field had served Law’s statement before the applicant could properly issue the joinder application.  

D.  ORIGINAL CONSENT TO BE JOINED

13. Mr Yip further submitted that no prejudice would be caused to the Intended 4^th respondent by joining him as this stage. Referring to the consent summons the solicitors for the Intended 4^th  respondent enclosed with their letter dated 31 May 2016 in which the Intended 4^th respondent had agreed to be joined to these proceedings, Mr Yip said that the Intended 4^th respondent had never complained of any prejudice despite the expiry of the time-limit.  It was stated that were the 2^nd and 3^rd respondents legally represented instead of having acted in person, the consent summons could have been signed and made an order in terms.  Absent an explanation from the Intended 4^th respondent for its change of position, the court, it was submitted, should conclude that there was no prejudice.

E.　GROUNDS OF OPPOSITION

E.1　No reasonable excuse

14. Lam opposed the joinder application by relying on his opposing affirmation as well as the affirmation of Chan Kin Wo (“Chan’s affirmation”), who was the solicitor for the Intended 4^th respondent.

15. Mr Poon, on behalf of the Intended 4^th respondent, identified three periods during which it was contended that the applicant should have had sufficient information to enable him to join the Intended 4^th respondent. It was argued that the applicant had failed to put forward any satisfactory explanation for these three periods of delay.

E.1.1　From 20 November 2012 to 28 January 2015

16. First, Mr Poon urged this court to reject the applicant’s explanation for the delay on the ground of the late availability of the documents (on 28 January 2015) from the Labour Department. It was contended that even without the Accident Report and the other documents from the Labour Department, the applicant, had he acted promptly, should have been able to ascertain the identity of the principal contractor by making a request to the 2^nd respondent who, as a sub-contractor, is statutorily obliged under s24 (3), to supply to the applicant the name and address of the principal contractor. Had such request been made, the applicant would have likely, it was contended, ascertained from the 2^nd respondent the identity of the Intended 4^th respondent before 28 January 2015.

E.1.2　From 28 January 2015 to 7 January 2016

17. It was suggested by Mr Poon that by 28 January 2015, the applicant already had the B.R. No. of the Intended 4^th respondent from the documents that he had obtained from the Labour Department. By using the B.R. No., the applicant could have conducted a business registration search and discovered that it was Lam, not Li, who was Cheung On’s sole-proprietor.  Thus, Mr Poon argued that the applicant’s excuse that he had to wait until Law’s statement before taking out the joinder application was not valid.  

E.1.3　From 7 January 2016 to 22 April 2016

18. Lastly, Mr Poon contended that the applicant was not able to put forward any valid reason for a further 3 months’ delay between Law’s statement on 7 January 2016 and the issuance of this joinder application.

E.2　No s.24(6) notice

19. According to s 24(6), before making any claim or application against a principal contractor, an employee is required to serve a written notice on the former (not later than 2 years from the date of the accident in accordance with the time-limit stipulated in s.14).  Mr Poon argued that since no such notice as required by s.24 (6) had been served; the applicant should have given an explanation for this failure. However, the applicant had not done so and the court should take that into account when determining whether the applicant should be allowed to join the Intended 4^th respondent out of time.

E.3　The case against the Intended 4^th respondent was flimsy

20. It was Poon’s contention that the court should not grant indulgence to add the Intended 4^th respondent when the applicant’s case against the latter was flimsy.

21. The merits argument is essentially based on the respective pleaded cases of Sky Field and the Intended 4^th respondent in the related Personal Injuries proceedings the applicant instituted in the High Court, HCPI 1122/2015 (“PI claim”) against the parties in these proceedings as well as the Intended 4^th respondent.

22. Since, Mr Poon suggested, it was going to be Sky Field’s pleaded case in the PI Claim that the Subcontract was null and void, the case against the Intended 4^th respondent was weak.  The proposed pleaded case Mr Poon relied on was para 2(b) (iv) of Sky Field’s draft re-amended defence in which Sky Field alleged that the Subcontract had been concluded by the 3^rd defendant (the 3^rd respondent here) without the authority of the 4^th defendant (the Intended 4^th respondent).

E.4　Prejudice

23. Lastly, Mr Poon contended that since there was no evidence that the Intended 4^th respondent knew of the Accident, the late joining of the Intended 4^th respondent outside the two years’ time limit would mean that Lam had been deprived of an opportunity to preserve evidence.

F.　 Applicable legal principles on “reasonable excuse”

24. Both counsel have cited several court decisions[1] in their skeleton submissions on how the courts have in past cases determined the question of “reasonable excuse”.  It is however my view that a previous decision of a court, short of providing instructive guidelines as to the grant or refusal of an extension of time, would serve little useful purpose because the categories of what constitute “reasonable excuse” are not closed and this sort of application is mostly fact-sensitive.

25. One case that has provided useful guidance is the Court of Appeal decision of Tsang Loi Fat v Sun Fook Kong (formerly known as Sung Foo Kee Ltd (transliteration)[2] , which I had referred to counsel at the hearing. In that case, the Court has provided instructive guidance by listing a number of relevant factors a court may take into account when determining whether an explanation nay constitute “reasonable excuse”.

26. Based on the authorities counsel have referred to and the case of Tsang Loi Fat, the parties are in broad agreement that the test should be one of justice and merits, and the applicant bears the onus of showing that there was reasonable excuse for the whole period of delay. In considering the reason for the delay, the court should take into account various factors that may include whether the applicant’s failure to make a claim before the expiry of the prescribed period was induced by the conduct of or words said by, among others, a third party. In addition, the court should also have regard to any prejudice that might be occasioned to a respondent to the application[3].

G.　 Discussion

G.1　Whether the applicant has shown reasonable excuse for the delay

27. In relation to the first period of delay Mr Poon complained of, I do not think the facts support Mr Poon’s argument that a s.24 (3) notice could have yielded the necessary information to enable the applicant to ascertain the identify all the relevant sub-contractors including that of the Intended 4^th respondent.

28. First of all, the applicant, before the commencement of these proceedings, had already been informed by the Labour Department that Sky Field was the alleged principal contractor. Hence, the difficulty the applicant faced was not the lack of information regarding the principal contractor but rather its sub-contractor(s). Section 24 (3) notice is about the giving of a notice to a sub-contractor for the disclosure of the identity of the principal contractor. Hence, I do not think this provision is relevant.

29. In any case, I believe that it is unlikely that the 2^nd respondent would have been in a position to provide any information beyond what he had stated in his answer filed on 17 August 2015, in which only two parties had been alluded to, namely Li and a person named called Fung Kin Ping (transliteration) (馮建平). There was no reference at all to the Intended 4^th respondent. In the circumstances, the giving of a s.24 (3) notice to the 2^nd respondent would have obviously been a futile exercise.

30. Insofar as the 2^nd and the 3^rd periods of delay Mr Poon have complained of, they substantially relate to the applicant’s alleged failure in having taken prompt action after the B.R. No. was available to him by 28 January 2015.

31. It is indeed the case that by 28 January 2015, the applicant had already had the B.R. No as it was stated in the Subcontract, which copy had in fact been attached to Li’s statement (which was available to the applicant’s solicitor on 28 January 2015) as “Attachment 2”. However, it seems to be the applicant’s explanation that he had only had the B.R. No when the applicant’s solicitors were provided with a copy of the Subcontract by Sky Field on 10 February 2015. In either case, whether the B.R. No. was available to the applicant on 28 January or 10 February 2015 is not material, for the applicant’s reason for delay did not hinge upon the availability of the Subcontract.  As a matter of fact, according to a business registration search extract on 2 March 2015 Mr Yip submitted to court, the applicant had indeed conducted a search on the B.R.No. that confirmed Lam to be the only owner of Cheung On.

32. The applicant’s explanation was that although the Intended 4^th respondent had been alluded to by the B.R. No, the applicant, due to all the apparent inconsistent allegations that were contained in Li’s statement and  Sky Field’s re-re-amended answer containing the positive assertions for the first time, could only make an informed decision to make the joinder application after Law’s statement.   

33. After having considered all the pleadings, including those of the PI Claim exhibited to Chan’s affirmation, I think the applicant’s complaint about the way Sky Field had pleaded its case has merit.  Before the 3^rd respondent was added as a party to these proceedings, Sky Field did not put forth any positive case but only made a bare denial when it certainly could have pleaded the assertions presently contained in the latest answer.  On Sky Field’s present pleaded case in these proceedings, it seems that it was alleged that it had entered into the Subcontract with Li acting as Cheung On’s responsible person. This plea would however appear to be quite inconsistent with its proposed amended defence in the PI claim by alleging for the first time that the Subcontract as null and void.

34. In light of the seemingly confusing stance Sky Field, as the alleged principal contractor, has been adopting, I consider that it is reasonable for the applicant to have adopted a more cautious approach in evaluating all the evidence before he could make a decision to add a new party, for such an application would have costs implication (as Mr Yip has pointed out).

35. In Li’s statement, Li had made allegations that could have given an impression that he was, apart from the alleged responsible person of Cheung On (which was owned by Lam) [4], responsible for the entire Works including the acceptance of the Works from the Owner. In Li’s statement, it was alleged that owing to the alleged reason that Cheung On was not a registered contractor with the Buildings Department, he had used Sky Field to obtain the Works from the Owner[5].

36. These assertions, in my view, could not be lightly glossed over as they did not seem to be bare allegations. The two attachments to Li’s statement - the Subcontract and a document headed “Quotation” dated 6 November 2012 (“Quotation”) – seemed to suggest that Li, instead of Sky Field, was responsible for the entire Works.  In the Subcontract which was attached as attachment 2, it showed that Li had signed on behalf of Cheung On as the responsible person. The Quotation (which was attachment 1) was an agreement between Sky Field and the Owner regarding the price for the Work. What, however, seemingly a strange feature that I have noticed, is that the authorized person who had signed on behalf of Sky Field was named Paul Li. There is no evidence that Paul Li was Li. It is however a coincidence that the surname was the same as Li. It is probably that Paul Li might have in fact been Li, who had indeed been instrumental in obtaining the Works instead of Sky Field as Li has seemed to have alleged in Li’s statement.

37. The allegations contained in Li’s statement when read in conjunction with Sky Field’s also seemingly confusing stance, in my judgment, deserved serious consideration especially bearing in mind that Li’s assertions did not seem to be bare allegations. These allegations seem to suggest that the  relationships between Sky Field and Li on one the hand, and Li and the Intended 4^th respondent on the other were not those reflected in the relevant documents such as the Subcontract. The convictions of Sky Field and Li[6] for their respective alleged roles of the principal contractor and employer consequent on the prosecutions brought by the Labour Department would have justified the applicant’s belief that the identities of the principal contractor and sub-contractor had been established before joining the Intended 4^th respondent, irrespective of the information disclosed in the business registration search of the Intended 4^th respondent.

38. In the circumstances, I consider that the applicant was justified in issuing the joinder application after he was served with Law’s statement that Sky Field had adduced as evidence to support its pleaded assertions.  In view of Sky Field’s stance and the allegations contained in Li’s statement, as well as the documents such as the Subcontract and the Quotation, I consider that it was not unreasonable, as a prudent litigant, to have another 3 months after Law’s statement to bring the joinder application. The applicant, in my judgment had provided a reasonable excuse for the delay.

G.2　Is the claim against the Intended 4^th respondent meritorious?

39. It has been suggested that the applicant’s case against the Intended 4th respondent was only marginal and I should not grant indulgence for the late bringing of the claim.

40. According to the analysis above, I do not consider that the case against the Intended 4^th respondent was weak as Mr Poon has contended.  In light of documents that were placed before me, I consider that the Intended 4^th respondent was the correct party to be added so that all the matters in dispute in relation to the identities of the principal contractor and sub-contractor(s) can be properly determined at trial.

41. I do not consider that the pleadings filed in the PI claim are relevant to these proceedings. In any event, not only are the pleadings  not able to show that the case against the Intended 4^th respondent was weak, they seem to fortify the applicant’s assertions that it was necessary to join the Intended 4^th respondent.  

42. In any event, the pleaded case of the Intended 4^th respondent in the PI claim, as Mr Yip submitted, looks suspicious.  According to the amended defence (at paras 3 and 4) of the Intended 4^th respondent filed in the PI claim,  the 3^rd respondent and the 4^th respondent had both been using “Cheung On” as their trade names. The relationship between Li and Lam seemed to be also extremely close and intricate in that the 3^rd respondent had occupied the same warehouse which the Intended 4^th respondent had used to place his business registration certificate.

43. The pleaded case of the Intended 4^th respondent when considered against the latest averments of Sky Field as well as the assertions Li made in his statement to the Labour Department all seem to suggest that it would not have been possible to have taken any of the assertions made either by Sky Field (in these proceedings as well as in the PI claim), Li (in Li’s statement) or the Intended 4^th respondent (in its amended defence in the PI claim) at their face value.

44. In the circumstances, I respectfully disagree with Mr Poon that the case against the Intended 4^th respondent is weak.

G.3　Any prejudice to the Intended 4^th respondent?

45. It has been suggested that prejudice would be caused to the Intended 4^th respondent as he did not have any knowledge of the Accident or the Subcontract. The Intended 4^th respondent, in my judgment, has not demonstrated any prejudice that he might suffer were the Intended 4^th respondent joined to the proceedings.

46. First, as Mr Yip has submitted, no explanation had been given for the Intended 4^th respondent’s resiling from the consent that the Intended 4^th respondent had given shortly before he filed his affirmation on 10 August 2016 in opposition to the joinder application. Secondly, Lam could not state what prejudice would be caused to him were the Intended 4^th respondent joined to the proceedings.  Finally, Mr Poon was not able to, apart from a vague suggestion that “the evidence, in particular as to the role of Intended 4^th Respondent, cannot be preserved as well”[7], to specify any prejudice.  

47. Last but not least, I also do not consider that the applicant’s failure to give a s24 (6) notice to the Intended 4^th respondent has prejudiced Lam.  Section 24 confers on an employee an additional remedy against a principal contractor in additional to his direct employer, a sub-contractor.  The s24 (6) notice seems to be applicable to the giving of notice to a principal contractor.  In the present case, the Intended 4^th respondent does not seem to have been added as the principal contractor but as a sub-contractor. It is therefore questionable whether the s24 (6) notice is applicable.  In any event, even if this requirement were applicable to the Intended 4^th respondent, Mr Poon has not suggested that the failure to comply with s24 (6) will impose a complete bar to the applicant’s claim against the Intended 4^th respondent.

H.　CONCLUSION

48. For the foregoing reasons, I allowed the applicant’s application to join the Intended 4^th respondent as the 4^th respondent in these proceedings.