MENG ZHU LIN v. XIE XIAO AND OTHERS

HCPI 722/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 722 OF 2001

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J U D G M E N T

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1. This is an appeal by the 6th Defendant against the decision of Master Jack Wong of the 25 March 2003 whereby he allowed the Plaintiff's application to disapply section 27 of the Limitation Ordinance. At the same hearing the Defendants' application to have the time bar issue tried as a preliminary point was disposed of. It was in effect the same issue.

2. The Plaintiff, a 25-year old stevedore at the time of his accident on 10 June 1998, was working on coaster cargo vessel, the "Rong Da 8" at Harbour Buoy B27 in Hong Kong waters. The cargo vessel was being loaded with bundles of plywood by means of a derrick crane operated on a lighter, the Sui Shun No. 99. He was struck by one of the loads which was being transferred by means of the lighter's crane from a larger vessel, the "Chemimoon".

3. Originally the derrick operator was assisted by a signal man on board the Rong Da 8 (who was a member of the lighter's crew). However his services appeared to have been dispensed with when the derrick operator felt he was able to have a clear view inside the coaster's cargo hold. He was trying to position one load with the assistance of a number of crew members inside the hold when he encountered some difficulty in placing it. He therefore raised the load by about half-a-metre and it was swinging. This motion was accentuated by the swell and it swung towards the Plaintiff who was moving in the hold on or near the already stacked plywood cargo and trapped and injured him. The obvious immediate cause was that the load had not been lifted high enough to give sufficient clearance to anyone in that position.

4. The accident was reported, as it had to be, to the Marine Police who carried out an investigation taking statements in the course of it. Meanwhile the Plaintiff, who comes from the Guangxi Province on the Mainland, was taken to the Queen Mary Hospital. His principal injuries were crush injuries to his lower abdomen and spine. He underwent operations on ten occasions. He was an in-patient for nine months and then returned to the Mainland for treatment in March 1999.

5. He was due to return to Hong Kong for follow up treatment in March 2000 but was unable to obtain a two-way permit to do so. Whilst he was in Hong Kong at the Queen Mary Hospital, the solicitors acting for the 6th Defendant, who still act on their behalf on the instructions of Ming An Insurance Company, made arrangements for the Plaintiff to be examined by a doctor. I will return later to the involvement of the solicitors concerned because it is a factor of substantial significance in the context of this appeal (and the original issue).

6. Although he was visited by several well-intentioned persons in hospital, who were concerned for his welfare and his difficulties, not being a Hong Kong resident, he was not given advice as to the formulation of a claim or an application for legal aid.

7. However, on his leaving Hong Kong, his employer obtained from him a letter of authorisation instructing Konfill Shipping Company Limited to claim compensation for him. It appears that on 20 July 1998, whilst he was undergoing a succession of operations in the Queen Mary Hospital his employer had already, of its own volition demanded compensation of the 6th Defendant. I accept that the Plaintiff was not aware of this at the time and was not aware of the legal niceties of formulating claims for compensation and litigation. It would be surprising if he were.

8. Sometime after he had returned to his native village in Guangxi in or about March 1999 he received a copy of the letter of 19 March 1999 from Holman, Fenwick & William which will feature large in due course. In passing I should state that this firm of solicitors is very experienced in shipping cases and now feature more frequently in personal injury litigation. For present purposes it is sufficient to state that this letter set out clearly that it was contended that the Plaintiff's own negligence caused the accident, that if he commenced proceedings in Hong Kong a substantial sum would be sought as security for costs, and, that if he lost the action he would have to pay the costs.

9. The Plaintiff had already incurred medical expenses of nearly $800,000; he was prohibitively poor. The ex gratia offer of $100,000 was hardly calculated to appeal to him. Quite apart from his understandable layman's ignorance of litigation he would have blenched at the cost of litigation in Hong Kong, as most of us do. He had no access to Hong Kong. I have little difficulty in understanding that the nature of his injuries and unemployability would have preoccupied him.

10. Eventually, by chance, he learned of the availability of Legal Aid in Hong Kong but was uncertain whether, as a Mainlander, he would be eligible. He wrote to the Chief Executive of the Hong Kong SAR. For some reason not clear to me the letter was sent not to the Legal Aid Department, the obvious channel for assistance, but to the Labour Department. It may well be that be Chief Executive's Secretariat is not well-versed in the system for redress on Hong Kong. Their subsequent letters were singularly unhelpful.

11. However the Labour Department helpfully sent a Legal Aid explanatory leaflet in October 2000. Although he made telephone contact with the Legal Aid Department in late 2000 and early 2001 there were difficulties in communication and he was unable to meet the Legal Aid Department's requirement that he should come to Hong Kong to pursue an application. In view of the fact that two previous applications for a two-way permit (one by his father to look after him when he was in hospital) had been rejected, I consider that he was justified in thinking that another application would be a waste of time.

12. Through an introduction to a Mainland lawyer he was able to have a civil claim statement drafted and he sent it to the Hong Kong High Court. This document is an admirably concise and short statement of the nature of his claim. It would find favour no doubt in the English Courts under the new Civil Procedure process. In due course some reform in Hong Kong's system will allow such statements to stand as the valid commencement of an action rendering otiose the archaic and in many cases barely comprehensible documents drafted by some lawyers.

13. The High Court with proper regard and concern for the unaided litigant referred the document to the Legal Aid Department. The Department wrote to him on 5 June 2001 with less than one week to go before the expiry of the three-year limitation period. Eventually he was issued with a Legal Aid Certificate on 16 August 2001. The Writ commencing his action in the Hong Kong High Court was issued on 27 August 2001 about 21/2 months after the end of the three-year period. Investigations were then carried out to lay the basis for the Plaintiff's case. On 6 July 2002 about eleven months later the Writ and a Statement of Claim were served on the 6th Defendant. I consider that the Writ ought to have been served immediately with the time kept open for service of the Statement of Claim. It was not unreasonable for a further eleven months to elapse.

14. I have no doubt that the Plaintiff was at a singular disadvantage by virtue of all his circumstances. I agree with the Master that the Plaintiff has provided an adequate explanation for the delay.

15. The delay has not disadvantaged or prejudiced the Defendant in any material respect. It is clear from the correspondence, to which Mr Tim Kwok on behalf of the Plaintiff has made detailed reference, that not only did the 6th Defendant have early notice of the accident, and of the potential for a claim, but instructed loss adjusters (or their insurers so instructed them) and had the benefit of experienced and established solicitors acting on their behalf, advising and evaluating the potential for settlement. I will refer to some of that correspondence because it sets the scene for the letter of 19 March 1999 from Holman Fenwick & William to which I have referred earlier.

16. There is a statement of the accident on notepaper of the 6th Defendant dated 10 June 1998 (the day of the accident) signed by Chan Li, the Master of the Sui Shun No. 99.

17. The next day (11 June 1998) is another record on that defendant's notepaper signed by Wan Hon Bing (the Defendant's supervisor in its Administration and Personnel Department). In a later affirmation he describes his work as including handling claims made by or against the 6th Defendant regarding cargo or personal injuries. The letter in question refers to "my company's barge Sui Shun 99", i.e. the 6th Defendant's barge. It repeats details of the occurrence. It is not clear to whom it was addressed (Ms Luk's position is not stated) but it is likely to be to the loss adjusters or the insurers.

18. The next letter is particularly significant. It is dated the 7th July 1998. On that date the Plaintiff was undergoing one of a number of operations to deal with his serious crush injures. The sender of the letter, Konfill Shipping Company Limited, intimated a claim on behalf of the Plaintiff to the 6th Defendant. It clearly alleged negligence on the part of the derrick crane operator "your employee". It set out a clear version of events. There is no reply it seems to that letter.

19. On 3 August 1998, Konfill wrote again to the 6th Defendant forwarding two letters relating to the matter. We do not know what those letters were.

20. Konfill wrote again on 18 September 1998 asking for updated information in relation to the latter's insurers. It referred to the Plaintiff still being in hospital, his current medical expenses and the ship owners claim against the 6th Defendant. This no doubt refers to any losses which the shipowner of Rong Da 8 might have arising out of the Plaintiff's claim, perhaps an indemnity.

21. On the 7 October 1998 the 6th Defendant wrote to the Loss Adjuster (Kay Leung & Co.) about the implications of the facts of the accident. Reference was made to the Plaintiff not wearing helmet, gloves and appropriate footwear for working. Whether or not he was, they have absolutely nothing to do with the accident which was caused by a weight trapping and crushing the lower part of his body. Nonetheless it was thought that those matters would be helpful in achieving "the proper settlement".

22. The 6th Defendant wrote to Konfill on 29 October 1998 asking for statements and receipts for the hospital charges as well as a copy of the Plaintiff's employment contract.

23. Konfill wrote to the 6th Defendant on 22 December 1998 notifying the total to date of the Plaintiff's hospital expenses and asking for them to pay. There was a follow-up letter on 7 January 1999 urging a definite answer to the matter of such payment.

24. The solicitors for the 6th Defendant come on the scene with a letter of 8 January 1999 to Konfill in response to Konfill's last two letters. They had been instructed by Ming An insurers for the 6th Defendant. That letter puts in issue causation or negligence. It states that the 6th Defendant was not the Plaintiff's employer (this had never been suggested) nor the vessel's agents in Hong Kong. It seems the vessel referred to must be Rong Da 8, the vessel on which the accident occurred. That too had never been alleged. It went on to remind the Plaintiff that he had a legal duty to mitigate his loss - it is difficult to see how this could be an issue at this stage - and to ask for copies of any medical reports available. This is a letter typical of insurers, through their solicitors seeking to keep abreast of the situation in which it might have to meet liability.

25. The solicitors wrote again to Konfill on 18 January 1999 with arrangements for a medical examination on their behalf. In fact the 6th Defendant arranged for its own representative to accompany the Plaintiff to the medical examination as set out in a letter to its brokers dated 25 January 1999.

26. Once again the solicitors wrote on 1 February 1999 to Konfill indicating that liability was still in dispute with the parties holding completely different views, and reminding the Plaintiff of the "duty to mitigate damages". There was a follow-up letter from the solicitors of 24 February 1999 asking to be informed when the Plaintiff was discharged from hospital.

27. On 3 March 1999 the Plaintiff returned to the Mainland to continue his treatment. Konfill wrote on his behalf to the solicitors for the 6th Defendant referring to an earlier letter to the 6th Defendant (of 20 July 1998) claiming all the hospital charges (now totalling over $835,000) and damages, which at that stage were quantified at $500,000 (HKD)).

28. At about the same time the Loss Adjuster instructed by Ming An wrote to the latter stating that they were closing their file, and, that as the accident was caused solely by the Plaintiff's own negligence only he was responsible. They enclosed a statement made by the derrick operator.

29. Just over one week later on 19 March 1999 Holman, Fenwick & Willan wrote to Konfill in reply. It is marked "Without Prejudice". The bulk of the letter however sets out unequivocally its stance on liability. It repudiated liability. The first seven paragraphs are concerned with the factual disputes as the basis for its views. The letter does not raise any question of the 6th Defendant not being liable in any event because it was merely a shipping agent for the owner of the lighter (if that indeed was the case). It had never raised it in any of the earlier correspondence nor had the 6th Defendant raised it itself. On the contrary, it had written and acted as if it did occupy the position of owner. The owner they identified incidentally is, like the 6th Defendant, a subsidiary company in the China Merchants Group.

30. In fact in paragraphs 4 and 7, the solicitors state unequivocally that the liability of the 6th Defendant depends on "whether the incident was caused by the negligence of the derrick operator of Sui Shun 99", and, "it is not for the crane operator of 'Shui Sui (sic) 99' and China Godown Wharf and Transportation Company Limited to prove that they were not negligent". In none of the correspondence referred to is there the attempt, express or implied, to exclude vicarious responsibility on the part of the 6th Defendant for Sui Shun 99 and its crew.

31. In the last part of the letter, specifically paragraphs 10 and 12, the solicitors on behalf of the 6th Defendant put forward what is clearly a "Without Prejudice" offer in the form of what any lawyer practising in this field would recognise as an 'ex gratia', nuisance value offer of $100,000.

32. Mr John Kerr for the 6th Defendants argues that because the letter is marked "Without Prejudice" at the outset it is wrong to seek to extract any of its content and regard it as in effect an open statement upon which the other party can rely.

33. He is correct in asserting that the general principle governing "Without Prejudice" negotiations and correspondence is that they are excluded from being given in evidence. Any discussions between the parties for the purpose of resolving the dispute between them are not admissible even if the words "Without Prejudice" are not used.

34. It is clearly established that the heading "Without Prejudice" does not conclusively or automatically render privileged a document so marked. For example where a letter is so marked, but the contents of which amount not to an offer to negotiate but merely to an assertion of the party's rights or an attempt to argue that his case is well founded, it is not privileged [see Buckinghamshire County Council v Moran 1989, 2AER 225]. Sometimes a letter contains material relating to the assertion of rights and the strength of its case, as well as an offer in settlement. The latter aspect can properly be considered as having been made "Without Prejudice" whereas the former material is not so covered. In fact it would be quite pointless to seek to put it under that umbrella of privilege.

35. In my view it follows that a letter may be mixed in its content. Part of it contains what is clearly a "Without Prejudice" offer and part of it is simply concerned with a statement of the issues and an assertion of the rights of the writing party. If a court were to conclude that the mere use of the term "Without Prejudice" afforded a blanket cover for all material which was unrelated to negotiations with a view to settlement, it would dilute the principle involved I am conscious that many practitioners unwittingly use the term on letters which either wholly or in part are entirely unrelated to such negotiations. That practice should be strongly discouraged.

36. The thread running through the whole of the correspondence makes it clear that the issue is whether the Plaintiff can establish negligence on the part of the derrick crane operator. The 6th Defendant maintains that he cannot but accepts that if he can they are vicariously responsible.

37. In my judgment therefore Mr Kerr's prime contention that the Plaintiff's claim is inevitably doomed is flawed. Even in the absence of the correspondence exhibited and to which I have referred in detail. I could not come to that conclusion. On the basis of the correspondence there is an admission of vicarious responsibility for the derrick crane operator. The issue therefore is one of negligence.

38. The 6th Defendant claims that it is now prejudiced by the delay because it cannot now trace the operator. They have provided nothing more than a bare assertion to that effect unsupported by any evidence as to the efforts they have made or the agencies they have used or of whom they have inquired. In any event they have statements from him which can be put before the court providing that certain requirements have been satisfied. There is certainly no other aspect of the accident on which they can properly claim to be disadvantaged.

39. The Master was wholly correct in my view. Accordingly the appeal is dismissed with costs to the Plaintiff.

40. I am asked by Mr Kwok to revisit the Master's decision in relation to the costs of the hearing before him. He made an order for costs to be in the cause. Mr Kerr does not dispute that I have jurisdiction to exercise the discretion as to costs.

41. A review of the merits of the Defendant's case, in which the correspondence played a significant part leads me to conclude that the Defendant having lost the issue should also pay the Plaintiff's costs of that hearing. I am mindful of the fact that Mr Kerr put the "doomed to failure" point at the forefront of his case. I also take into account the contents of the letter of 19 March 1999 which Mr Kwok stigmatised as "threats". I did not accept his contention that they constituted undue influence, duress or improper pressure. The Defendant's solicitors were entitled to use such tactical ploys. Having said that, they cannot complain if the effect was to cause a relatively impoverished layman Mainlander worry, and confusion which may have played some part in the effluxion of time, and his inability to meet a limitation deadline.