WO CHUN WAH v. CHAU KWEI YIN AND OTHERS

[English Translation – 英譯本]

HCPI 903/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL JURISDICTION

PERSONAL INJURIES ACTION NO 903 OF 2014

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JUDGMENT

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INTRODUCTION

1.  This is a personal injuries action arising out of an industrial accident which took place on 1 June 2013.  The Plaintiff’s case is as follows.  He was a decoration worker employed by the 2^nd Defendant.  On the day of the accident, he was sent by the 2^nd Defendant to the 1^st Defendant’s site situated in Ngau Tam Mei, Yuen Long, to build an iron shack.  An iron framework of over 2 metres in height was already erected inside the iron shack.  The iron framework had no fences.  The Plaintiff was assigned to carry out panel installation work on the iron framework in order to construct a loft.  The wooden panels used were 6 feet long and 3 feet wide.  He placed the tools and the wooden panels on the iron framework.  He installed two wooden panels.  As he was about to install the third panel, he inadvertently stepped on the corner of the panel not supported by the iron framework, lost balance, fell from the iron framework together with the panel, and injured his back.

2.  A year later, on 11 September 2014 the Plaintiff commenced this personal injuries action in the High Court to claim damages against the 1^st Defendant, the causes of action being negligence and occupier’s liability.  On 13 November 2014, the Plaintiff amended his statement of claim to include the 2^nd Defendant in his claim.

3.  Around the same time, on 14 November 2014, the Plaintiff lodged with the District Court an employees’ compensation application against the 2^nd Defendant (DCEC 2408/2014).  The case was heard before Deputy District Judge Josephine Chow on 14 and 15 September 2016.  The 2^nd Defendant appeared in person, unrepresented.  He had not taken out any employees’ accident insurance policy.  He denied that he was the Plaintiff’s employer.  In her judgment handed down on 26 September 2016, Deputy Judge Chow found that the 2^nd Defendant was the Plaintiff’s employer and ordered him to pay employees’ compensation in the sum of $602,380 to the Plaintiff.  The 2^nd Defendant did not lodge an appeal against that judgment.

4.  On 20 October 2015, the 3^rd Defendant was joined as a defendant to this personal injuries action.  The 3^rd Defendant was a Board established under the Employees Compensation Assistance Ordinance, Cap. 365 (hereinafter “the Board”).  The Board was established for the purpose of protecting the entitlement of employees and others to compensation for work-related injuries.  If an employee is unable to claim from the employer the compensation which the employer is liable to pay, he can apply for payment of the compensation from the Fund held by the Board.

5.  In this action, the 1^st Defendant reached a settlement agreement with the Plaintiff, agreeing to pay the Plaintiff $80,000 to settle the claim without admitting any liability.

6.  Before this trial commenced, the Plaintiff and the Board had also agreed upon the quantum of compensation at $1,420,000.

7.  The 2^nd Defendant was not represented and appeared in person.  He has not reached a settlement agreement with the Plaintiff.

THE ISSUES BETWEEN THE PLAINTIFF AND 2^ND DEFENDANT

8.  In para.1 above, I summarized the Plaintiff’s case.  He claims damages on the following basis: he was an employee of the 2^nd Defendant, who owed a duty of care to him under the employment contract and in tort, including (inter alia) the duty to provide safe working environment, equipment and process, and of the duty to take appropriate measures to prevent him from falling while working at a height of over two metres; the 2^nd Defendant was in breach of those duties; and as a result the Plaintiff was injured.  The Plaintiff’s allegations are set out in detail in his amended statement of claim.  In view of the 2^nd Defendant’s defence, it is not necessary for me to go into those allegations here.

9.  The 2^nd Defendant’s defence is as follows: he was not the Plaintiff’s employer but was instead employed by the 1^st Defendant as an odd job worker at the site.  On the day of the accident, he went past the site and saw the Plaintiff sitting on the ground with another worker standing in front of the Plaintiff.  The Plaintiff claimed to have fallen, and then stood up and said he was not going to continue with his work. The 2^nd Defendant left the site to continue with his work.  When he returned, he saw that the Plaintiff had changed his clothes.  Upon the Plaintiff’s request, he drove the Plaintiff to the road junction.  The Plaintiff got off at the road junction and left.  He neither saw the Plaintiff fall from the iron framework nor heard the Plaintiff cry out for help by reason of injuries.  He says that the Plaintiff walked with a limp on his first day of work and claimed that his daily wage was $600, i.e. his monthly wage was $18,000. He questions the Plaintiff’s claim that his monthly income was $27,000.  In short, the 2^nd Defendant denies that he was the Plaintiff’s employer, but has not refuted the allegation of breach of duty of care; he seems to take issue with the Plaintiff’s claim that he had fallen from height and sustained injuries and his claim regarding his pre-accident income.  He has not put forward a case that the Plaintiff was contributorily negligent, nor has he adduced any medical expert evidence to refute the Plaintiff’s allegation on the injury he sustained.

10.  Based on the facts as stated in the pleadings of the parties, the issues in dispute are:

(i)   whether or not the 2^nd Defendant was the Plaintiff’s employer;

(ii)   whether or not the 2nd Defendant was in breach of the duty of care;

(iii)   whether or not the accident alleged by the Plaintiff had occurred;

(iv)   whether or not the Plaintiff sustained any injuries and (if so) the details thereof; and

(v)   if the rulings on the abovementioned facts are in favour of the Plaintiff, the quantum of damages to which he is entitled.

WHETHER OR NOT THE 2^ND DEFENDANT WAS THE PLAINTIFF’S EMPLOYER

11.  Mr Szeto, Counsel for the Plaintiff submits that, based on the principle of “issue estoppel”, that the 2^nd Defendant was the Plaintiff’s employer is a fact beyond dispute.  “Issue estoppel” is a well-established legal principle.  Where a factual issue had been determined by the court in previous proceedings, none of the parties to those proceedings is allowed to reopen the same issue in subsequent proceedings (See: Nu Life International Ltd v Healthy Living Products International[1] and Chan Chi Shing v Chan Shu Kuen (in bankruptcy) & Ors[2]).

12.  Both in his defence and in his testimony in court, the 2^nd Defendant stressed that he was merely an odd job worker employed by the 1^st Defendant at a daily wage of $600 and that he was not the Plaintiff’s employer.  In DCEC 2408/2014, the Plaintiff claimed employees’ compensation against the 2^nd Defendant in respect of the same incident, alleging that the 2^nd Defendant was his employer. The 2^nd Defendant appeared in person, put forward the same defence, and gave evidence in court.  Deputy District Judge Josephine Chow rejected his evidence and found that he was the Plaintiff’s employer.  This is a determined fact, and it is not open to the 2^nd Defendant to argue this factual issue again in this action.  That he was the Plaintiff’s employer is a fact beyond dispute.

DUTY OF CARE TO BE BORNE BY THE 2^ND DEFENDANT

13.  As the Plaintiff’s employer, the 2^nd Defendant owed a duty of care to the Plaintiff.  Even though it is not expressly provided for in the employment contract, this duty of care is an implied duty indispensable to any employment contract.  Furthermore, an employer owes a duty of care to the employee in tort.  The duty of care implied in the employment contract is more or less the same as that in tort.  In the present case, in light of the undisputed facts, it is not necessary for me to describe the duty in detail.  The duty of care would include, at the very least, the provision of safe working environment, equipment and process, and the taking of appropriate measures to avert the risk of employees falling from an elevated place of work.

14.  In addition, the Factories and Industrial Undertakings Ordinance, Cap. 59, makes provisions to ensure the safety and health of industrial workers.  Applying the relevant definition in section 2 of the Ordinance, the site in question was an “industrial undertaking”; and in relation to that industrial undertaking, the 2^nd Defendant, as the person for the time being having the management or control of the business carried on in that industrial undertaking, was the “proprietor” of that industrial undertaking.  Section 6A of the Ordinance imposes various statutory duties of care on a proprietor.  He is required to ensure, so far as is reasonably practicable, the health and safety at work of all persons employed by him at the industrial undertaking.  Such duties include the provision and maintenance of plant, systems of work and arrangements which are safe and without risks to health; the provision of such information, instruction, training and supervision as is necessary to ensure the health and safety at work of the employees; and to ensure that the employees work in an environment which is safe and without risk to health.

15.  The Construction Sites (Safety) Regulations made under the abovementioned Ordinance also contain specific provisions to protect employees working on construction sites.  The work carried out by the Plaintiff was construction work.  Therefore, the site at which the Plaintiff carried out his work was a “construction site” as defined in section 2 of the Regulations, and the 2^nd Defendant was “the contractor responsible for the construction site” or “the contractor who [had] direct control over the construction work carried out in the construction site” within the same definition.  Rules 38A and 38AA of the Regulations respectively provide that the contractor responsible for a construction site and the contractor who has direct control over the construction work carried out in the construction site shall ensure the safety of employees working at a height.  The contractor is under the statutory duty to identify the hazardous conditions of employees working at a height in the construction site, rectify the hazardous conditions, and safeguard employees against all hazardous conditions.  Rule 38B of the Regulations further provides that a contractor shall take adequate steps to prevent any person on the site from falling from a height of 2 metres or more, such steps to include the appropriate provision, use and maintenance of working platforms, guard-rails, barriers, toe-boards, fences, coverings for openings, gangways and runs, and the like.

WAS THE 2^ND DEFENDANT IN BREACH OF THE DUTY OF CARE?

16.  The Plaintiff stated in his witness statement that in order to carry out his work, he had to stand on the iron framework which exceeded 2 metres in height and which was unfenced.  In both his defence and his witness statement, the 2^nd Defendant neither admitted nor denied these allegations. Nor did he advance any specific defence.  Although I had made known to him that I would be lenient when dealing with any application by him to amend his defence and adduce new evidence, he only stressed that he was not the Plaintiff’s employer and questioned the Plaintiff on who his employer was. However, this is a determined fact and not open to argument again.  The 2^nd Defendant also stressed that he was not present at the scene when the accident occurred and did not witness how the accident happened.  In view of the 2^nd Defendant’s defence and statement, he could not and was not in a position to refute the Plaintiff’s evidence on the height of the iron framework and on the 2^nd Defendant’s failure to provide fences.  Hence, based on the undisputed evidence of the Plaintiff, I find that the 2^nd Defendant has breached the duty of care owed by the employer to the employee in contract and in tort, and has also breached the statutory duties imposed on him by the Factories and Industrial Undertakings Ordinance and the Construction Sites (Safety) Regulations.

THE ACCIDENT AND ITS CAUSE

17.  The Plaintiff stated in his witness statement that he fell from the iron framework and was injured.  A fellow worker passing by helped him up sitting on the ground.  Then the 2^nd Defendant arrived at the scene.  Later, the 1^st Defendant also arrived and instructed the 2^nd Defendant to drive the Plaintiff to the hospital for treatment.  However, the 2^nd Defendant only drove him to the road junction leading to the hospital, and instructed him to go to the Accident and Emergency Department of the hospital on his own.  Except for the evidence concerning the Plaintiff’s fall from the iron framework, the evidence of the 2^nd Defendant is consistent with that of the Plaintiff, save that he did not mention the 1^st Defendant had been to the scene and that he said it was the Plaintiff who requested to be driven to the junction of the site.

18.  Although the 2^nd Defendant has not admitted that the Plaintiff fell from the iron framework on the relevant day, this accident was a material fact in DCEC 2408/2014 and is a determined issue. Furthermore, as far as the overall evidence is concerned, the evidence of the Plaintiff is consistent with that of the 2^nd Defendant:  for instance, the Plaintiff told the 2^nd Defendant that he fell from the iron framework.  His evidence tallies with the injuries described in the contemporaneous medical records, such as redness and swelling on the back and at the coccyx, fracture of the lumber vertebrae, and so on.  I accept the Plaintiff’s evidence on the accident.

19.  As regards the cause of the accident, as DCEC 2408/2014 was an employees’ compensation application which was a claim based on strict liability, the cause of the accident was not a material fact in that case.  The principle of “issue estoppel” is not applicable. However, according to the indisputable evidence of the Plaintiff, the gap between every two I-beams of the iron framework was about 3 feet wide.  He placed the wooden panel on the iron framework at an oblique angle and inadvertently stepped on the corner of the panel not supported by the iron framework, as a result of which he fell from the iron framework together with the panel.  Such process and working environment were clearly unsafe.  The 2^nd Defendant failed to identify and rectify the hazardous conditions of the Plaintiff who was working at a height on the iron framework and to safeguard him against all hazardous conditions.  He also failed to take adequate steps to prevent the Plaintiff from falling from a height of 2 metres or more by, for example, installing fences on the iron framework and providing appropriate instructions.  Had he discharged such duty of care, the accident could have been avoided.  I therefore hold that the 2^nd Defendant’s breach of the duty of care was the cause of the accident.  As the 2^nd Defendant has not put forward any allegation of contributory negligence, the Plaintiff is not required to contribute to the 2^nd Defendant’s liability.

THE PLAINTIFF’S INJURIES

20.  Although the Plaintiff’s fall from the iron framework and resultant injury was a material fact in DCEC 2408/2014, the court in that case made no finding as to his injuries.  The Plaintiff has provided the medical records pertaining to the period when he underwent treatment in Pok Oi Hospital and Tuen Mun Hospital.  On 21 January 2016, the Plaintiff’s orthopaedic expert (Dr Ko) and the 3^rd Defendant’s orthopaedic expert (Dr Wong) jointly examined the Plaintiff’s injuries and prepared a joint medical report.  The 2^nd Defendant, on the other hand, has not adduced any orthopaedic expert evidence.  Below is a summary of the available medical evidence.

21.  The Plaintiff’s X-ray and CT examinations revealed fracture injuries to his lumber spine at L1 and coccyx, but with no neurological deficits.  He underwent spinal orthopedic treatment for 12 weeks to alleviate his pain.  During his rehabilitation, he underwent 12 months of physiotherapy at the same time.  Subsequently, he received further physiotherapy from government and private therapists.  The fracture injuries at lumber spine L1 and coccyx caused him pain and stiffness at the back and coccyx.  He was given intermittent sick leave for a total of 703 days.  Both orthopaedic experts opine that the Plaintiff’s injuries were compatible with the accident described by him and that the treatments he received were appropriate and sufficient.  They both agree that there was no evidence that the Plaintiff had suffered from any injuries prior to the accident which could have led to his present condition.  They disagree only on the question of whether the Plaintiff’s coccyx had sustained fracture injury.  However, this disagreement is purely academic as X-ray examination shows that the Plaintiff’s coccyx has fully healed.

22.  At present, the Plaintiff is still suffering from persistent low back pain, particularly on the left side.  Such pain usually appears after prolonged standing or sitting or after walking for more than 30 minutes.  He feels painful when in a squatting position, and has to refrain from lifting objects weighing over 3 kg.  Both orthopaedic experts agree that the Plaintiff’s claims are consistent with the sequelae condition of the fracture injuries.

DAMAGES CLAIMED BY THE PLAINTIFF

23.  Based on the aforesaid findings, I further hold that the Plaintiff successfully proves that the 2^nd Defendant’s breach of the duty of care caused the aforesaid injuries to him.  The 2^nd Defendant is liable for damages.

24.  According to the Plaintiff’s “Revised Statement of Damages”, he claims from the 2^nd Defendant damages under the following heads, in the total sum of $4,871,113.20:

(1)   Pain, suffering and loss of amenities: $400,000;

(2)   Pre-trial loss of earnings: $1,149,120;

(3)   Future loss of earnings: $2,920,680;

(4)   Pre-trial special damages incurred: $33,238;

(5)   Loss of earning capacity: $324,000; and

(6)   Future medical expenses: $44,075.20

25.  Prior to trial, the Plaintiff and the Board reached an agreement on the quantum of damages payable to the Plaintiff, namely $1,420,000.   Later in this judgment I will set out in detail the basis on which they reached the agreement.  However, as the 2^nd Defendant is the party liable to pay damages, this agreement is not binding on him; nor am I bound by this agreement in assessing the quantum of damages.  This agreement can only be seen as an agreement or consensus between the Plaintiff and the Board.  Should the quantum of damages assessed by me be higher than the agreed amount, the Plaintiff cannot apply to the Board for relief in respect of the difference.  Should the quantum of damages assessed by me be lower than the agreed amount, the Board may also have no authority to pay the Plaintiff an amount higher than what has been agreed.

PAIN, SUFFERING AND LOSS OF AMENITIES (“PSLA”)

26.  Citing the following cases as authority, Mr Szeto has made a downward adjustment of damages claimed under this head to $350,000.  In Lawati Bhawani Bikram v Ting Kau Contractors Joint Venture[3], the injured person was unloading a portion of a crane when a part of the machine fell on him and pressed him into a squatting position.  He sustained injuries including fracture of L1 vertebra which affected the spinal discs at L1/L2. His injuries were more serious than those of the Plaintiff herein.  The Court of Appeal assessed the quantum for PSLA at $420,000.  The assessment was made in September 2002.

27.  In Leung Lee Jasmine v Go Fresh (Hong Kong) Company Limited[4], the injured person suffered from posterior displacement of coccyx and fracture line at coccyx, as well as desiccated L4/5 disc with associated annulus tear. Her injuries were more serious than those of the Plaintiff herein.  The District Court awarded her $350,000 as damages for PSLA.  The assessment was made in September 2016, which was temporally close to this action.

28.  In Choi Wing Chai v Li Bing[5], the injured person suffered from fracture of L1 vertebra leading to nerve compression and decreased spinal flexion.  His injuries were clearly more serious than those of the Plaintiff herein.  The High Court awarded him $350,000 as damages for PSLA.  The assessment was made in September 1997.

29.  In Chan Chi Shing v Chan Shu Kuen[6], the injured person suffered from collapse and compression fracture of L4 vertebra, and comminuted intra-articular fracture of calcaneum of the right ankle. Surgical treatment was required, but residual disability still remained after surgery. His injuries were also clearly more serious than those of the Plaintiff herein. The High Court merely awarded him $350,000 as damages for PSLA.  The assessment was made in 2009.

30.  In Lam Cheuk Leung v Erawan Co., Ltd (林灼良 訴 毅利華有限公司)[7], the injured person suffered from fracture of L1 vertebra, as well as fracture of the calcaneum bones of both feet and fracture of the right toe.  His injuries were also clearly more serious than those of the Plaintiff herein.  The High Court merely awarded him $300,000 as damages for PSLA.  The assessment was made in 2003.

31.  Mr Leung, Counsel for the Board, has provided another series of decided cases for comparison purposes.  In Lai Jianxing v Sakoma (HK) Ltd[8], the injured person fell from atop a container on board a barge into the bottom of the hold.  He suffered from fracture of L1 vertebra.  Upon recovery, he experienced intermittent back pain after physical exertion and with changes in weather. His injuries were similar to those of the Plaintiff herein.  The High Court awarded him $250,000 as damages for PSLA.  The assessment was made in September 2011.

32.  In Tsang Tsun Keung v Ko Wang International Trading Ltd[9], the injured person fell from a height of 3 metres and suffered from fracture of the L2 vertebra and left ankle soft tissue injury.  The High Court, taking the view that he had exaggerated his injuries, merely awarded him $180,000 as damages for PSLA.  The assessment was made in December 2010.

33.  In Khan Amir v Kwok Yui Chor and Mak Wah Cho[10], the injured person was hit by a machine in the back and lumber region, resulting in multiple fractures in the L2 to L5 lumbar spine and fracture of the L3 spine vertebral body.  Spinal stenosis might be developed at a later stage.  The High Court awarded him $300,000 as damages for PSLA.  The assessment was made in October 2010.

34.  Having considered the aforementioned authorities, I am of the view that the injuries suffered by the injured persons in the authorities cited by Mr Szeto were more serious than those of the Plaintiff.  Apart from vertebral fractures, those injured persons sustained other serious injuries. The authorities cited by Mr Leung are more similar to the circumstances of the present case, especially Lai Jianxing v Sakoma (HK) Ltd in which the injured person suffered from a wedge collapse of L1 in the spine with no injuries to the coccyx.  His injuries, treatment and sequelae conditions were similar to those of the Plaintiff.  Damages were assessed in September 2011 at $250,000.  Viewing the aforesaid authorities as a whole, those injured persons who were awarded more than $300,000 in damages had all sustained more serious injuries than those of the Plaintiff.  Even with adjustments made by reason of time difference, I consider that the appropriate award is $280,000.

PRE-TRIAL LOSS OF EARNINGS

35.  The Plaintiff claims $1,149,120 for pre-trial loss of earnings.  As an alternative basis of claim, he says that he operated two decoration companies which earned an average monthly total profit of $20,153.17 for the year 2012/13.  In this action, he uses this income, plus the income he received as a daily-rated decoration worker, totalling $27,000, as the base figure for his claim.  He claims a total sum of $721,035, which represents loss of earnings and employer’s MPF contributions in respect of 703 days of sick leave plus two months in which he recuperated and looked for a new job.  From then on until commencement of trial, which spanned 22 months, the Plaintiff says he was only able to obtain employment with a monthly income of $12,000. He claims a total sum of $346,500, which represents the difference in his income and employer’s MPF contributions before and after the accident.  The total alternative claim under this head is $1,067,535.

36.  In DCEC 2408/2014, based on a daily wage of $800 and 26 working days per month, the District Court held that the Plaintiff’s monthly income was $20,800.  The Plaintiff and the Board calculated the quantum of damages under this head on the basis of this income, 703 days of sick leave, another two months for recuperating and looking for a new job, and the monthly salary of $12,000 for the new job.  I consider that using the aforesaid figures as the basis for calculating damages is reasonable and also fair to the 2^nd Defendant who is not legally represented.  I assess the total award under this head at $758,744 (i.e.: $20,800 × (703 ÷ 30 + 2) × 1.05 + ($20,800 - $12,000) × 22 × 1.05).

FUTURE LOSS OF EARNINGS

37.  As regards the Plaintiff’s ability to work following recovery, the Plaintiff’s orthopaedic expert and the Board’s orthopaedic expert hold different views.  Dr Wong opines that the Plaintiff can return to his pre-accident work, although he would be less efficient and would not be able to move objects weighing more than 45 kg.  On the other hand, Dr Ko opines that what the Plaintiff did prior to the accident was physical labour, and it would not be suitable for the Plaintiff to move objects weighing 10 to 15 kg, nor would it be suitable for him to work on a ladder.  Dr Ko opines that the Plaintiff can only engage in work that involves prolonged sitting, such as cashier, warehouse attendant or petrol station attendant.  I agree with Dr Ko’s opinion. According to the data of the Census and Statistics Department, the average monthly income for such types of work is $12,000.

38.  The Plaintiff and the Board have also agreed to use the aforesaid monthly income of $20,800 to calculate the future loss of earnings.  The Plaintiff is now aged 50 and can be reasonably expected to work until he is 60.  According to Table 7 of Personal Injury Tables Hong Kong 2016, the appropriate multiplier is 9.37.  Based on these figures, the Plaintiff’s future loss of earnings including MPF contributions is $1,038,945 (i.e.: ($20,800 - $12,000) ×12 × 9.37 × 1.05).

PRE-TRIAL SPECIAL DAMAGES INCURRED

39.  The Plaintiff and the Board have agreed on the pre-trial special damages at $33,238.  This sum is based on actual expenses, and the 2^nd Defendant has raised no objection.  Therefore, I make an award of $33,238 under this head.

TOTAL QUANTUM

40.  The damages under the 4 heads above add up to $2,110,927 (i.e.: $280,000 + $758,744 + $1,038,945 + $33,238).  The Plaintiff has abandoned his claims for loss of earning capacity and future medical expenses.  After deducting compensation of $80,000 which the Plaintiff has obtained from the 1^st Defendant and the sum of $602,380 awarded to the Plaintiff in DCEC 2408/2014, the net total damages to be awarded to the Plaintiff in this action is $1,428,547 (i.e.: $2,110,927 - $80,000 - $602,380).

COSTS ORDER: LEGAL PRINCIPLES

41.  Mr Szeto seeks an order that all of the Plaintiff’s costs in this action be paid by the 2^nd Defendant. The 2^nd Defendant has defended the Plaintiff’s claim and judgment has been entered against him. Following the principle that costs are to follow the event, he should pay all of the Plaintiff’s costs in this action.

42.  Mr Szeto also seeks an order requiring the Board to bear the Plaintiff’s costs since its joinder on 20 October 2015. He submits that up to the commencement of trial the Board had never offered to pay any damages. Therefore, pursuant to the principle that costs are to follow the event, the Plaintiff should be entitled to costs even if he were awarded damages of $1. Ms Leong, on the other hand, seeks no order as to costs.

43.  Both counsel refer to paragraphs 66 and 67 of the judgment of Bharwaney J in Kwan Kam Pui v Fung Wah （馮文）& Ors[11]. In that case, the Judge reviewed the Employees Compensation Assistance Ordinance and compared the 1991 edition of the Ordinance with the 2002 edition. He took the view that the Ordinance did not impact on the court’s wide discretion in awarding costs. He laid down two principles on costs: (1) where the Board joined in the proceedings to dispute liability and quantum, and judgment was entered in favour of the employee, then the usual costs order should be for the Board to pay all costs of the successful employee, not merely costs from the date of the Board’s joinder; and (2) where the Board disputed quantum only, the usual costs order should be for the Board to pay the costs of the employee from the date of the Board’s joinder. Bharwaney J had this to say[12]:

“66. In my judgment, the usual order should be made against the ECA Fund Board, as is made against an employer defending the proceedings against whom a judgment for damages has been obtained. Such usual order is to pay the entire costs of the action, not just costs from the date of the intervention by the ECA Fund Board, in cases in which the ECA Fund Board has intervened and disputed liability and quantum or has obtained an order to set aside interlocutory judgment for damages to be assessed in order to dispute liability and quantum. The taxation of such costs would ensure that any costs and expenses which were unreasonably incurred would not be allowed on the taxation. The costs of necessary steps taken to prosecute a claim to judgment ought to be recoverable in a case in which the ECA Fund Board intervenes to dispute liability, even though those steps were taken before its intervention. Interested parties such as insurance companies and MIB who join in the proceedings and obtain an order to set aside a default judgment that had been regularly obtained are usually made to the plaintiff’s costs in obtaining such judgment. A similar order should be made when the ECA Fund Board joins in the proceedings and obtains an order to set aside a regularly obtained default judgment.

67. Where the ECA Fund Board intervenes in order to dispute the injured employee’s claim on quantum only, then the usual order ought to be the one made by Master Lung, as he then was, in Lau Tuen Ping v Law Wai Kwong and Anor, namely, that the ECA Fund Board ought to pay the costs of the proceedings from the date of its joinder.”

Citing paragraph 67 of the judgment of Bharwaney J, Mr Szeto contends that the Board should pay the Plaintiff’s costs from the date of its participation in this action. Ms Leong, however, submits that the paragraph is merely obiter and not binding on me. The issue in that case was whether the court had jurisdiction to order the Board to pay costs payable by the employee before the Board’s intervention. I therefore accept Ms Leong’s argument that paragraph 67 is obiter. That said, I am broadly in agreement with Bharwaney J’s opinions but would add the following observations.

44.  First, I also agree it is beyond doubt that the court has a wide discretion in awarding costs. In Chak King For and Wong Chun Fai & Ors[13], B Chu J also said that in exercising this wide discretion, the court is entitled to order the Board to pay the employee’s costs, as much as it is entitled to order the employee to pay the Board’s costs.

45.  As to the two principles on costs as stated by Bharwaney J, I am of the view that he was only pointing out the usual costs orders which should be made by the court. He was not laying down an invariable rule. These two principles on costs are merely a starting point in considering the appropriate costs orders; which is to say, the court should make these usual costs orders unless there are special reasons. As far as I know, it is only in special circumstances that the Board will take part in such actions (see paragraph 50 below). Hence, I take the view that in making costs orders, the court should, apart from considering the outcome of the proceedings, also take into account the functions of the Board, the reason(s) for its participation in the proceedings and the attitudes of both parties in the proceedings.

46.  As Bharwaney J pointed out in Kwan Kam Pui v Fung Wah （馮文）& Ors, the non-intervention attitude taken by the Board prior to 2002 contributed to the depletion of the Board’s funds. If, for any reason, the employer and his insurer failed to attend court to defend the action, the employee could readily obtain judgment and even exaggerate the amount claimed. This mechanism was also open to abuse by non-employees to obtain damages by deception. This was one of the main reasons for the amendment of the Employees Compensation Assistance Ordinance in 2002. The amended Employees Compensation Assistance Ordinance allows the Board to participate in the proceedings under various circumstances.

47.  In participating in the proceedings, the Board’s function is neither to contest the employee’s claim in place of the employer nor to help save public funds, but is to ensure that employees in need can obtain such damages as they are entitled to. The Board has a duty to screen out unmeritorious or inappropriate claims to ensure (inter alia) that this assistance mechanism will not be abused, its recipients will not exaggerate their claims, and public funds will not be used for improper purposes. Therefore, unless it is necessary to contest false claims or suspected fraudulent claims, the Board should not adopt an antagonistic attitude in the proceedings. It should act as a filter and adopt an impartial attitude in the proceedings so as to assist the court in coming to a correct ruling.

48.  In the performance of the Board’s functions, there is an important difference between disputing liability and disputing quantum. Where the Board disputes liability, for example whether there is an employment relationship between the plaintiff and the defendant, whether the accident occurred, whether the employer is in breach of the duty of care, whether the employee is liable for contributory negligence and so on, the Board’s position is no different from that of the actual employer. It may be that in some circumstances it is necessary for the Board to adopt an antagonistic attitude in the proceedings in order to perform its functions. In such circumstances, the most appropriate and fairest approach is to apply the principle that costs are to follow the event. Where the Board disputes liability and quantum and judgment is entered against it, it shall pay all costs of the successful employee, not just costs from the date of joinder. This is precisely the usual costs order which Bharwaney J referred to in paragraph 66, namely the first principle.  I entirely agree with and support this principle.

49.  However, where the Board disputes quantum only, the employee is successful even if the Board manages to prove that the damages claimed by the employee are excessive. Hence, the principle that costs are to follow the event is not necessarily fair and applicable in any circumstance. In my view, the court must take into account the functions of the Board. If costs depend solely on the outcome of an action, the Board may, as it was prior to 2002, be forced to adopt a relatively conservative attitude, thereby repeating the mistake and depleting its funds. This is not in the public interest. On the other hand, it is unfair to a successful employee if he is not compensated in costs which then have to be paid out of the damages awarded. Therefore, in exercising its discretion, the court has to strike a balance between the two. This then depends on the reason(s) for the participation of the Board and its attitude in the proceedings on the one hand, and the employee’s attitude in the proceedings on the other hand.

50.  The Board will not join in the proceedings for no reason. The proceedings in which it participates are mostly those involving substantial claims and in which the employer has not taken out any accident insurance in relation to the employee and will not defend the claim or engage a lawyer to do so. The Board joins in these cases for the obvious reason that they will constitute a heavy burden to the fund. Where the Board does not dispute liability, in participating in an action it shall not assume an antagonistic role but shall instead assume a filtering role and, in the absence of the employer or his legal representative, submit appropriate authorities to the court for consideration, draw the court’s attention to relevant evidence and facts, assist the court in making a correct assessment, and so on. If the Board is not doing more than what it can properly do, its participation in the aforesaid manner will not increase the employee’s costs. This is because, even if the Board does not participate, the employee still bears the burden of proof and will inevitably incur costs personally. The Board’s participation will assist the court in making a balanced assessment which is also in public interest.

51.  The amount claimed by the employee, the amount of damages that the Board agrees to bear (if any), and the amount of damages awarded by the court, are indicators which can very aptly reflect the attitudes of both parties in the proceedings and whether the Board’s participation is reasonable and of assistance to the court. In my view,with the amount of damages awarded by the court being the base figure, the parties may reasonably differ within a range of which the upper limit is an amount not exceeding the said base figure by one-third and the lower limit is an amount not less than two-thirds of the said base figure. In other words, if the amount of damages claimed by the employee exceeds that awarded by the court by one-third, the amount claimed is prima facie outside the range of reasonable dispute and it is reasonable for the Board to challenge the amount claimed and take part in the proceedings to safeguard the interest of the fund and the public. I have to make it clear that these upper and lower limits are set arbitrarily and are neither absolute nor conclusive, and they may be varied in the light of the factual circumstances. If the Board succeeds in screening out unreasonable claims by an employee, then in my view the Board is in substance the successful party and there is no reason to order it to pay the employee’s costs. Viewed another way, if an employee is caught unreasonably inflating the amount he claims, why is the Board still required to compensate him out of public funds for the costs he has wasted with intent to mislead the court and even defraud public funds?

52.  Therefore, in my view, in respect of costs of disputes over quantum, the major considerations are the reason for the Board’s participation and the attitudes of both parties to the proceedings. Where the Board plays an antagonistic role, the court should apply the “costs follow the event” principle as the starting point. If the Board loses the case, it should be ordered to pay the employee’s costs from the date of its participation. Where the Board only plays a filtering role, the proper starting point remains that the Board shall pay the employee’s costs, but the court may, in light of the attitudes of both parties to the proceedings and the difference between the amount of damages awarded by the court and the amount claimed by the employee, make such costs orders as it thinks fit. The factors to be considered by the court include: whether the Board has only assumed a filtering role or has assumed an antagonistic role, whether it has adopted an unnecessarily antagonistic attitude, wasted time, raised unnecessary, frivolous or technical issues, etc; whether the employee has inflated the claim, adduced false evidence, misled the court, misled the Board, made an act or omission which caused the Board to raise unnecessary issues. Where the amount claimed by the employee is outside the range of reasonable dispute, the proper starting point in considering costs is that both parties shall bear their own costs. In appropriate cases, the court may even order the employee to pay part or all of the Board’s costs.

COSTS BETWEEN THE PLAINTIFF AND THE BOARD

53.  The Plaintiff met with the accident in question on 1 June 2013. He did not start by claiming employees’ compensation against the employer, but instead commenced a personal injuries action against the 1^st Defendant on 11 September 2014 on the ground of occupier’s liability. Only two months thereafter did he claim employees’ compensation against the 2^nd Defendant and amend the Statement of Claim in this action to claim damages for personal injuries against the 2^nd Defendant. In both DCEC 2408/2014 and this action, the 2^nd Defendant denied that he was the Plaintiff’s employer. However, the 2^nd Defendant neither engaged a lawyer nor adduced medical expert evidence as directed by the Registrar of the High Court. The Board knew that the 2^nd Defendant did not take out any accident insurance in relation to the employee. The Plaintiff was claiming damages of as much as $4.8 million-odd. In such circumstances, the Plaintiff would very likely enter default judgment against the 2^nd Defendant, in which case the Board would have to assume liability to pay substantial damages. It was understandable and reasonable for the Board to apply to join in this action as a defendant on 13 October 2015.

54.  Other than arranging for a joint orthopaedic expert report, the Board did not participate actively in this action, nor did it file a defence disputing liability. The Plaintiff filed the Revised Statement of Damages on 30 May 2016, revising his claim to $4,871,113.20. He claimed $400,000 as damages for PSLA and $324,000 as damages for loss of earning capacity. He claimed that he could only earn $8,000 a month after the accident and was unable to work for 946 days in total. The Board filed an answer on 20 July 2016. The Board did not raise any substantial disputes. Relying on Dr Wong’s opinion, it pointed out that the Plaintiff could perform his pre-accident work albeit with reduced efficiency. It took the view that damages for PSLA should be $250,000, which is lower than my assessment by less than 11% only. The Board was of the view that the Plaintiff could earn $11,240 in his new work, which is merely 6% lower than the base figure adopted in its settlement agreement with the Plaintiff. Moreover, the Board contended that the Plaintiff did not suffer from loss of working capacity and even if he did, the damages in that respect should not exceed $50,000. On the whole, I see no reason for criticizing the impartial attitude which the Board has adopted in these proceedings.

55.  As regards the final outcome, I have assessed the damages payable to the Plaintiff at $2,110,927 before deducting therefrom the damages paid by the 1^st Defendant and the compensation awarded to the Plaintiff in DCEC 2408/2014. The amount claimed by the Plaintiff exceeds the above base figure by 2.31 times and goes way beyond the range of reasonable difference. A possible reason for such difference is that, having reached a settlement with the Board, the Plaintiff waived or reduced some of his claims. Nevertheless, as far as his claim against the 2^nd defendant was concerned, the Plaintiff is not bound by this settlement agreement and may still proceed with the claim pursuant to the Revised Statement of Damages. However, having considered the relevant cases and figures, I do not think that his claim has any prospect of success. The Plaintiff has, on any view, seriously inflated his claim. This may be a result of his lawyer taking an overly aggressive approach; all the same, the Plaintiff has to take up his responsibility. Had he not inflated the amount claimed, the Board might not have participated in this action.

56.  To sum up, as the Plaintiff inflated his claim, and it was reasonable and necessary for the Board to participate in this action. Its attitude in the proceedings was impartial, which is beyond reproach. The settlement agreement reached between the Board and the Plaintiff and my assessments were mainly based on the authorities and arguments put forward by the Board. In my view, the Board only played a filtering role, and its participation assisted the court in arriving at a correct assessment and also accorded with public interest and justice. Having considered the circumstances of this action as a whole and balancing the Plaintiff’s interest with public interest, I conclude that it is not proper to order the Board to pay the Plaintiff’s costs. The Board performed its function by screening out unreasonable claims; on the contrary, the Plaintiff seriously inflated his claim. In such circumstances, it is wholly unreasonable to order the Board to pay the Plaintiff’s costs. Therefore, I make no order as to costs, and each party shall bear its own costs.

CONCLUSIONS

57.  In summary, I find that the Plaintiff was an employee of the 2^nd Defendant and that the Plaintiff sustained personal injuries as a result of the 2^nd Defendant’s breach of duty of care. I find that the 2^nd Defendant is liable to pay to the Plaintiff damages of $1,428,547 together with interest on the principal of $1,395,309 at the rate of 2% per annum from 18 November 2014 to the date of this judgment, and interest on the principal of $33,238 at half of the judgment rate from 1 June 2013 to the date of this judgment, and thereafter interest on the outstanding principal at judgment rate until payment.

58.  Turning to costs, I order that the 2^nd Defendant shall pay the Plaintiff’s costs, such costs to be taxed in accordance with the Legal Aid Regulations, and that there be no order as to costs between the Plaintiff and the 3^rd Defendant.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Edmund Cham, Solicitor.