LEUNG WAI LIN v. LAM SAN CHUEN t/a 123 STUDIO

DCEC 147/2017

[2018] HKDC 757

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 147 OF 2017

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REASONS FOR DECISION

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Introduction

1.  The present case is an application for determination and apportionment of compensation pursuant to ss 6 & 6A of the Employees’ Compensation Ordinance (Cap 282) (“ECO”).

2.  On 14 April 2015, Mr Cheung Tsz Fung (the “Deceased”) tragically passed away in a traffic accident at 26 years old, whilst delivering documents in the course of his employment as a photographer’s assistant.

3.  The Deceased was survived by his mother Madam Leung Wai Lin (the “Mother”), his father Mr Cheung Tak Wah (the “Father”), and his grandmother Madam Wai Fung Tim (the “Grandmother”).

4.  The respondent was the employer of the Deceased at the time of his passing (the “Employer”).

5.  The Mother is the applicant in these proceedings, making this application “for herself and on behalf of the family members” of the Deceased (the “Representative Capacity”).

6.  However, the Mother and Father divorced in 1994 and the Mother has lost contact with the Father since then.

7.  On 16 October 2017, the Employer made a sanctioned payment into court (the “Sanctioned Payment”).

8.  On 27 October 2017, the Mother in her Representative Capacity accepted the Sanctioned Payment.

9.  By summons dated 11 June 2018 (the “Summons”), the Mother in her Representative Capacity now applies to this Court for:-

(a) Leave to accept the Sanctioned Payment; and

(b) an order for apportionment of the Sanctioned Payment between the Mother, the Father, the Grandmother and consequential directions for payment out.

Lack of authority issue arising from the summons

10.  As the Sanctioned Payment was accepted within the time limit allowed by RDC O 22 r 15, and no interests of persons under a disability are involved, I raised queries with the parties as to why leave is required to accept the Sanctioned Payment.

11.  Mr Poon, who appears for the applicant, accepted that the request for leave was superfluous and done out of an abundance of caution, and need not be maintained. 

12.  As for the matter of apportionment of the Sanctioned Payment and consequential directions for payment out, I raised with the parties the fact that the Mother has lost contact with the Father since 1994.

13.  Given that fact, it is indisputable that the Mother does not actually have any authority to represent the Father and the Father’s interests in these proceedings (the “Lack of Authority Issue”).

14.  To fully explain how the Lack of Authority Issue arose in the present case, it is necessary for me to set out my observations as to the regime under ss 6 & 6A of the ECO and the practice which has developed under it (see generally, Annotated Ordinances of Hong Kong: Employees’ Compensation Ordinance (Cap 282) at §6.03):-

(a) The statutory scheme under ss 6 & 6A of the ECO, amended in 2000, provides inter alia for statutory compensation to be paid to family members of a deceased employee and apportioned according to the formula set out in Schedule 7 of the ECO.

(b) Compared to the previous regime which required the determination of who the dependents of the deceased employee are and the extent of their respective dependency, the new regime has a much greater degree of certainty and simplicity. 

(c) The new regime by its simplified mechanism is clearly intended to ensure family members of a deceased employee can more speedily receive statutory compensation, to alleviate any potential financial hardship.

(d) The effect of ss 6 & 6A of the ECO, on its face, is that statutory compensation would be paid to the family members of a deceased employee as a group (akin to a class remedy) and then apportioned accordingly.

(e) The greater simplicity and certainty of the new regime has led to an established practice where applications for determination and apportionment of compensation under ss 6 & 6A of the ECO are made by a single family member in a Representative Capacity for all other family members (given the reduced room for dispute between family members), as in the present case.

(f) This established practice is fully consistent with Form 2 of the Schedule to the Employees’ Compensation (Rules of Court) Rules (Cap 282B) (“ECR”), and reflects the purpose of the ECR in providing a brief code of practice appropriate to employees’ compensation cases: see Hong Kong Personal Injury Service (Vol 2) at §891.

(g) As a matter of practicality, in most cases the established practice is not problematic.  Whether requested by the court or of the applicant’s own volition, evidence of authority given by the other family members to the applicant can readily be produced.

(h) However, in rare cases where issues of lack of authority arise (as in the present case), the established practice may not be appropriate, as expressly envisaged by Rule 3 of the ECR (which provides that the standard forms of the Schedule shall be used with such variations and modifications as the circumstances may require).

(i) Where issues of lack of authority arise, the court must apply entrenched principles of procedural fairness and natural justice to ensure that the substantive rights of a non-party without notice of the proceedings are properly protected.

15.  In the present case, the effect of the Lack of Authority Issue would be to render the acceptance of the Sanctioned Payment irregular, and therefore liable to be set aside pursuant to this court’s inherent jurisdiction to regulate its own procedures:-

(a) The Mother clearly does not have authority to represent the Father, and indeed it appears likely in the circumstances that the Father has no notice or knowledge of the proceedings at all.

(b) However, the purported acceptance of the Sanctioned Payment by the Mother in her Representative Capacity would effectively substantively decide the amount of compensation due from the Employer to the family members of the Deceased as a class.

(c) Effectively, the Father’s substantive rights have been affected without any notice to him and any chance for him to be heard, contrary to principles of procedural fairness and natural justice.  For example, the Father might wish to contend (rightly or wrongly) that the amount of the Sanctioned Payment is too low.

(d) The Mother in her Representative Capacity, absent any authority from the Father, could not have properly accepted the Sanctioned Payment on behalf of all family members of the Deceased.

(e) It is well-established that, an irregular step remains irregular until an application is successfully made to the court to correct it: see Metroinvest Anstalt v Commercial Union Assurance Co plc [1985] 1 WLR 513 at 520C-D per Cummings Bruce LJ.

16.  I indicated at the hearing that, despite my great sympathy for the circumstances of the family members of the Deceased and particularly the Mother, I was not prepared to make any apportionment order until the very real concerns raised by the Lack of Authority Issue had been properly dealt with.  Both Mr Poon and Ms Kwong (appearing on behalf of the Employer) fairly acknowledged the problems arising from the Lack of Authority Issue.

Disposition: Joinder of Father to these proceedings & further directions

17.  Following discussion between this court and the parties, the parties sensibly agreed to the following orders and directions being made at the hearing by consent:-

(a) The summons be adjourned to a date to be fixed before a Judge with 1 hour reserved.  The applicant shall have leave to fix the hearing date immediately, not earlier than 30 September 2018 (the “Adjourned Hearing Date”).

(b) The Father be joined to these proceedings as an “interested party”, pursuant to Rule 24 of the ECR.

(c) The applicant shall apply to a Master to effect substituted service of the Application, the Summons, notice of the Adjourned Hearing Date, and any other relevant documents on the Father in a manner to be approved by the Master.

(d) Prior to the Adjourned Hearing Date and as soon as practicable, the applicant shall file (1) affirmation evidence on service on the Father; and (2) affirmation evidence on authority of the applicant to act on behalf of the Grandmother.

(e) There shall be a declaration that the applicant’s acceptance of the Sanctioned Payment on 27 October 2018 was irregular, and a consequential order that such acceptance be set aside.

(f) The applicant shall have leave to accept the Sanctioned Payment out of time up to and including the Adjourned Hearing Date.

(g) Costs of today’s hearing be reserved.

18.  With the Father joined to these proceedings and properly served, the Father will have been properly given an opportunity to raise any concerns or objections he might have.

19.  I leave it to the parties to submit to the judge on the Adjourned Hearing Date whether, following proper joinder of the Father, the rules under RDC O 22 permit the Mother in her Representative Capacity to accept the Sanctioned Payment, or some form of substantive order from the court is necessary.  Both parties have, in the spirit of settlement, indicated that they will apply a healthy dose of common sense in this regard.

20.  I also leave it to the parties’ own judgment as to whether any amendments need be made to the court documents and whether any other additional documents can be filed.

21.  Of course, every case must turn on its own facts and circumstances.  I do not purport to lay down any absolute rule of practice for ECO ss 6 & 6A applications that, where there is an issue of an applicant lacking authority to represent one or more family members, those family members must necessarily be joined to the proceedings.

22.  However, as a starting point, principles of procedural fairness and natural justice dictate that if the substantive rights of an individual are to be affected, he should be given notice and the right to be heard - very strong and cogent reasons would be required to proceed without joinder.

23.  I thank the parties for their assistance.