CHEUNG NGAR MAN v. KUNG PING SHUN t/a 信記清拆建材工程 AND OTHERS

DCEC 1972/2021

[2024] HKDC 1818

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1972 OF 2021

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IN THE MATTER OF AN APPLICATION BETWEEN

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DECISION

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Introduction

1.  This is the Applicant’s application to join Noble House Interior and Furniture Design Co Limited (“Noble House”) as the 4^th Respondent, and to further amend the Amended Application filed on 16 August 2022 on the basis that, upon the latest discovery, it is revealed that Noble House was the principal contractor in relation to the construction work undertaken by the Applicant when he was injured in the accident, the subject of these proceedings, that occurred on 18 August 2020.

2.  The joinder application was made on 7 March 2024, which was outside the 24-month limitation period under section 14(1) of the Employees’ Compensation Ordinance, Cap 282 (“ECO”). The Applicant contends that there is reasonable excuse for his failure to make claim against Noble House within the time limitation.

3.  On the other hand, Noble House opposes the application on the basis that (i) the Applicant has offered no reasonable excuse to justify his delay, and (ii) there is insufficient basis to join Noble House as principal contractor.

The applicable legal principles

4.  Section 14(1) of the ECO provides that an applicant has to make an application for employees’ compensation within 24 months from the occurrence of the accident that caused his injuries.

5.  However, section 14(4) provides that the Court may receive and determine the application if it is satisfied that there was “reasonable excuse” for the applicant’s failure in making the application within the time required. The court has an unfettered discretion, which should be exercised liberally (see Chan Siu Ling v Tonyear Investment Ltd [1999] 2 HKC 348 at paragraph 23, and Kaur Paramjit v Li On Na t/a 新長發快餐 & Others, DCEC 1479 of 2012, 15 November 2018; [2018] HKDC 1388, HH Judge Levy, at paragraph 14).

6.  When determining what constitutes “reasonable excuse” within the meaning of section 14(4), the Court of Appeal has given certain guidelines in Tsang Loi Fat v Sun Fook Kong [2011] 4 HKLRD 344 at paragraphs 10-12. The factors to be considered include the reason for the delay, the length of the delay, whether there is sufficient ground to support an award of employees’ compensation to the Applicant[1], and whether prejudice would be caused to the interests of the Respondent if an extension of time is granted by the Court.

7.  In considering the reason for the delay, the Court of Appeal has given a non-exhaustive list of factors which the Court has to take into account. These factors include (a) the age, education level, intelligence and background of the applicant; (b) whether the applicant has sufficient knowledge for the making of a claim; (c) whether the failure to make the claim within the prescribed time was due to the claimant’s illness or not being aware of the extent of his injury; and (d) whether the failure was induced by the conduct of others.

8.  Also, in Ku Mui Ying for herself and on behalf of the members of the family of Yuen Chu Wing, deceased v W. Hing Construction Co Ltd & Ors, DCEC 2360 of 2020, 14 July 2021; [2021] HKDC 830 at paragraph 8, HH Judge KC Chan referred to the often cited passage in Wong Man Tak v Shaws & Sons Limited [1957] DCLR 85 at 88-89 where HH Judge Charles said:

“A reasonable excuse, in the ordinary sense of the phrase, means, in relation to a failure by an applicant to make his application for compensation within the prescribed period, that the failure was due to such cause or causes that it ought, as a matter of reason, to be excused. The phrase thus means the same as the phrase “reasonable cause” which occurred in section 14 of the Workmen’s Compensation Act 1925 of the United Kingdom. The numerous authorities upon that phrase show that a cause for failure to make a claim within the prescribed period was reasonable, and therefore excused the failure, if it were:- a reasonable belief on the part of the applicant that his injury was trivial; or a mistaken diagnosis of his injury; or a belief in the applicant that a claim for compensation was unnecessary, when the belief had been induced by the employer in such circumstances as reasonably warranted it; or the inability of the applicant to transact business because of his injury. On the other hand, a cause was not reasonable if it were a belief by the applicant that it would be to his interest to defer or not to make a claim. Moreover, an applicant was not excused if he had a reasonable cause which operated only for part of the period: he had to have reasonable causes for the whole period. Thus, while an applicant might delay making his claim until the last moment of the prescribed period, he was not entitled to be excused if his last moment claim was prevented by a reasonable cause unless he could show that he had good reason for not making his claim before that cause arose. The principle to be deduced from the foregoing is, I think, that an applicant has a reasonable excuse for not making an application to the court for compensation within the prescribed time if his failure were due to a cause or causes other than unreasonable conduct or an unreasonable decision on his part.”

9.  In Hong Chun Tak v Yip Kan Kee Contracting Co Ltd & Ano [2018] HKLRD 360, HH Judge Levy applied the above principles and on the facts of that case found that the applicant has provided a reasonable excuse in accordance with section 14(4). Her Honour stated at paragraph 18 of the decision that since the question of what constitutes “reasonable excuse” is largely fact-sensitive, and may vary from one case to another, it may not be helpful to rely on previous decisions in the exercise of discretion.

10.  I bear in mind the above principles when considering the facts of this case.

The Applicant’s contentions

11.  The Applicant submits that there was a reasonable excuse in not claiming against Noble House within the 24-month period. The Applicant contends that he could not have done so earlier as he had no knowledge of the identity of Noble House as the principal contractor until very recently. It is said that the Applicant, through his solicitors, had been diligent in the investigation of the identity of the principal contractor, including a number of letters sent to various parties to make enquiries.

12.  It was only on 12 January 2024 when the Applicant’s current solicitors received the following documents from one Mr Tong Ka Man after they had sent out a written enquiry with the owner of the subject unit:

(i) A “Sales Contract” dated 10 July 2020 showing the names of one Lofty Design Co Ltd (“Lofty Design”) as well as Noble House, but which was signed on behalf of Noble House in respect of the renovation work at the site where the injury occurred;

(ii) A receipt dated 11 August 2020, with the company chop of Noble House, showing that it has received a deposit in the sum of HK$360,000;

(iii) The contractors’ all risks insurance certificate dated 18 August 2020 and employees’ compensation insurance certificate dated 20 August 2020 issued by Zurich Insurance Co Ltd, both naming Noble House as the contractor.

13.  The Applicant’s solicitors then made enquiries with various parties including the 2^nd and 3^rd Respondents’ solicitors, but no substantive reply had been received. Enquiries were made with Hang Yick Properties Management Limited (“Hang Yick”), the management company of the building of the subject property but to no avail. Advice from counsel was then sought on 7 February 2024, and the joinder application was eventually made on 7 March 2024.

14.  The Applicant says that he has taken all reasonable steps in ascertaining the identity of the principal contractor. There was no deliberate delay, and the Applicant could have done nothing more than what he has done to find out the identity of the principal contractor.

15.  Further, it is submitted that the documents received by the Applicant’s solicitors on 12 January 2024 referred to above clearly reveal that Noble House was the principal contractor. Firstly, the Sales Contract bears the name and company chop of Noble House, and states that the location of the project was “星匯居T1-48A (複式連天台)”, which is the unit in the building known as “The Sparkle”, being the place of the accident. Secondly, the receipt dated 11 August 2020, with the company chop of Noble House, shows that it has received the deposit in the sum of HK$360,000 from the customer on that day, i.e. before the subject accident took place on 18 August 2020. Further, the employees’ compensation insurance certificates dated 18 August 2020 and 20 August 2020 issued by Zurich Insurance Co Ltd also show that the contractor was Noble House.

16.  The Applicant further submits that despite Noble House has through its sole shareholder and director Au Tim Ying (“Au”) filed affirmation evidence in opposition to the present application, Au never denied that Noble House was the principal contractor, nor did he challenge the authenticity of the Sales Contract and the receipt. On the contrary, Mr Wong for the Applicant pointed out that when Au mentioned about prejudice suffered by Noble House, he stated that “the workers responsible at the construction work at the Property who might have witnessed the alleged accident are no longer in contract with Noble House” and that “the construction work in the Property was completed”. This, Mr Wong says, clearly implies that Noble House did carry out construction work at the subject premises.

17.  The Applicant also says that if there is any prejudice caused to Noble House as alleged, in terms that it has lost contact with the workers and can no longer locate relevant documents, such prejudice was caused by the 2^nd and 3^rd Respondents, and by Noble House itself. They could and should have identified Noble House as the principal contractor earlier. The Applicant was merely a construction worker who did not have knowledge of the identity of the principal contractor. In any event, the Applicant submits that Au has not identified which workers he had allegedly lost contact with, and the documents he was looking for. In any event, a limited company ought to have kept relevant documents for taxation purposes.

18.  The Applicant also points out there is a high probability that the 2^nd and 3^rd Respondents in fact have close association with Noble House:

(a) The registered address of Lofty Design, which was owned by the 2^nd Respondent, is the same as that of Noble House, which is also the address of the principal contractor the 1^st Respondent mentioned in the notice of the accident dated 31 August 2020 given to the Labour Department pursuant to section 15 of the ECO (Form 2);

(b) Both the names of Lofty Design and Noble House have appeared on the Sales Contract;

(c) The email address of Au, being the shareholder of Noble House, is “info@loftydesign.co”, which suggests that Au or Noble House is closely connected with Lofty Design;

(d) The 2^nd Respondent, the 3^rd Respondent as well as Au (being the shareholder of Noble House) all have the same surname; and

(e) The 2^nd Respondent, the 3^rd Respondent and Noble House have all engaged the same firm of solicitors in these proceedings.

19.  Au has not made any response in his affirmation in relation to the Applicant’s contention above that the 2^nd Respondent, the 3^rd Respondent and Noble House are closely related. The Applicant further says that his lack of knowledge was induced by the incomplete information provided by the 1^st Respondent, and more importantly, the concealment by or evasiveness of the 2^nd and 3^rd Respondents, which is a factor the Court should take into account.

Noble House’s contentions

20.  First of all, Noble House pointed out that given the age of the Applicant and the nature and severity of his injuries (being laceration injuries to his fingers), it is unlikely that these factors would affect his ability to pursue his claim against the relevant parties.

21.  Further, Nobel House contends that there are some gaps in time where the Applicant did not take any action which have not been explained in his evidence or submissions:

(a) There is a 9-month inaction between the alleged accident in August 2020 and the engagement of his former solicitors on or about 11 May 2021. Whilst it is understandable that a construction worker may not possess legal knowledge, this may not be a sufficient or reasonable justification for the delay on his part in seeking legal assistance. Ignorance of the law or his legal rights is not a reasonable excuse (see Tsang Loi Fat above, at paragraph 11(2));

(b) In the first half of 2023, it was not apparent that the Applicant had done anything to ascertain who was the principal contractor;

(c) There was another 5-month delay between the letter to Hang Yick after the filing of the 2^nd and 3^rd Respondents’ witness statements in June 2023, and the issuance of another letter on 28 December 2023 to Hang Yick and the registered owner or occupant of the subject property; and

(d) As such, there has been an intermittent delay of approximately 14 months, which Noble House contends was unjustified.

22.  Nobel House further contends that despite letters were sent to various parties to make enquiries in 2022, there remains a gap between July 2023 and December 2023 where there seems to be a substantial period of inaction. Further, the “Sales Contract” which links Noble House to the Applicant’s claim was obtained by issuing a letter to the registered owner or occupant of the subject property on 28 December 2023. It had always been possible for the Applicant to confirm the identity and retrieve information of the registered owner by conducting a search at the Land Registry. The Applicant has all along been aware of the possibility of making an enquiry with the occupier or owner of the subject property. However, the letter issued on 28 December 2023, which prompted the receipt of the Sales Contract, was not issued until slightly more than 2 years after the first letter was issued, and more than a year after the 2^nd Respondent’s Answer was filed. The Applicant has not referred to any difficulties preventing him from making more enquiries in the interim. As such, Noble House contends that the documents that were crucial to the case could have been obtained at an earlier stage.

23.  In addition, Noble House says that apparently there are conflicting averments between the Answer filed by the 2^nd Respondent in April 2022 and the Amended Answer filed by the 3^rd Respondent in December 2022. It should have been obvious to the Applicant that there was a need for enquiry as early as that time, but the Applicant waited until the exchange of witness statements in June 2023 before making another round of enquiries, which Noble House says was unreasonable.

24.  As for the allegations by the Applicant of concealment, Noble House contends that the burden is on the Applicant to conduct his own investigation and enquiries. As a starting point, a defendant or prospective defendant cannot be expected to readily assist a prospective plaintiff in pursuing his or her claim[2]. In any event, the fact that the 2^nd Respondent had withdrawn his previous averments in his Amended Answer that the 3^rd Respondent was the principal contractor does not necessarily mean that he deliberately attempted to mislead the Applicant. The connections relied upon by the Applicant as aforesaid do not assist the Applicant in establishing that they were clearly aware of the identity of the principal contractor. In any event, if there has been incomplete information provided, this does not necessarily mean there had been inducement by the 2^nd or 3^rd Respondents.

25.  Noble House further submitted that the evidence at this stage is tenuous or inadequate for the purpose of joining it as the principal contractor. The source of the Sales Contract is unclear, and there is no verification of the identity of the person (i.e. Mr Tong) who provided a copy of the Sales Contract to the Applicant’s solicitors.

26.  It is also said that the documents so received by the Applicant do not identify Noble House as the principal contractor. For example, in the insurance certificates issued by Zurich Insurance Co Ltd, Noble House was merely referred to as an “insured contractor”, whereas the space for filling in the principal contractor was marked with “---”. Further, the value of the contract works of HK$1.9 million set out in the relevant insurance certificates does not correspond with the contract sum of HK$2.4 million as stated in the Sales Contract. The works stated in the Sales Contract included works regarding the balcony and the rooftop, which are not works included under the relevant insurance certificates which refer to interior works only. Furthermore, the Sales Contract was not signed where it was provided for “Client’s Confirmation Signature”. Hence, Noble House submitted that it was not the principal contractor who was responsible for all the construction works at the subject property. It was possible that Noble House was but only a “parallel” contractor which did not engage the sub-contractor who employed the Applicant.

27.  Lastly, Noble House submitted that in the event the Applicant is allowed to claim against it, it may face substantial difficulties in gathering evidence and would thus suffer prejudice, as the workers responsible, many of whom might be casual workers, are no longer in contact with Noble House in light of the lapse of 4 years since the accident. As the works had been completed for a number years, it would not be possible for Noble House to conduct its own investigation by taking photographs of the site shortly after the alleged accident, and compiling a report of the accident, etc. Also, Hang Yick has notified the Applicant that they were unable to provide documents requested by the Applicant in its letter dated 10 July 2023 because the management office has disposed of the related documents. It would also now be difficult to ascertain the monthly earnings of the Applicant at the time of the alleged accident. All these factors, submitted by Noble House, would prejudice its defence of the claim.

Discussion

28.  First of all, in my view, the contention by Noble House that there has been a period of inaction or delay on the part of the Applicant between August 2020 and May 2021 when he engaged his former solicitors does not carry much force. Firstly, the Applicant was seriously injured in the accident and priority should naturally be given to medical treatment first. Secondly, the fact remains that an injured employee has a two-year limitation period to commence proceedings, and there is nothing to suggest that the fact he first engaged solicitors or sought their advice in May 2021, some 15 months before the end of the statutory limitation period, was unreasonable on the part of the Applicant.

29.  Letters were sent by the Applicant’s former solicitors and current solicitors as early as May and July 2021 respectively to the owner and occupier of the subject property to enquire about the identity of the principal contractor, but no response had been received.

30.  Enquiries made with the 1^st Respondent in 2021 and with the Labour Department between May 2021 and March 2022 also elicited no information about the identity of the principal contractor. Similarly, a letter was sent by the Applicant’s solicitors to the 2^nd Respondent on 27 July 2021 enquiring whether the person referred to as Mr Au（歐生）in the Form 2 submitted by the 1^st Respondent was a reference to the 2^nd Respondent, but no response was received from the 2^nd Respondent. It was not until by reason of what the 2^nd Respondent revealed in correspondence and in his Answer filed on 14 April 2022 that the 3^rd Respondent was said to be the principal contractor. As a result, the 2^nd Respondent, and subsequently the 3^rd Respondent were both made parties to these proceedings. At the hearing of the joinder summons held on 8 August 2022 for joining the 3^rd Respondent, neither the 2^nd nor 3^rd Respondent had appeared or made any submissions concerning the true identity of the principal contractor.

31.  In its Amended Answer filed on 23 December 2022, the 2^nd Respondent withdrew his averment that the 3^rd Respondent was the principal contractor. The 3^rd Respondent also denied he was the principal contractor in his Answer filed on the same day. In their witness statements both dated 26 June 2023, the 2^nd and 3^rd Respondents maintained their denial of being the principal contractor, but did not proffer any positive case as to the identity of the principal contractor, nor did they explain why the 2^nd Respondent’s business address was stated in the Form 2 submitted by the 1^st Respondent as the address of the principal contractor.

32.  It is thus not surprising that at the time, the Applicant would have taken that either the 2^nd or the 3^rd Respondent would have been the principal contractor. In the interim, enquiries made with the Hang Yick, i.e. the management company of the building between June 2022 and July 2023 yielded no results as Hang Yick eventually informed the Applicant’s solicitors in July 2023 that they have not kept the relevant documents.

33.  It was not until the Applicant’s solicitors sent a further letter of enquiry to the registered owner of the subject property, Mr Tong, on 28 December 2023, that a telephone call was finally received by the Applicant’s solicitors from Mr Tong informing them that he has the relevant documents showing the identity of the principal contractor. The Applicant’s solicitors subsequently received by post the documents from Mr Tong on 12 January 2024 comprising the aforesaid Sales Contract, receipt and insurance certificates.

34.  Au, the sole director and shareholder of Noble House has not explained why his correspondence address happens to be the same as the address of the principal contractor stated in the Form 2 submitted by the 1^st Respondent. Neither has he explained why Noble House was named in the Sales Contract, and the relationship between the 2^nd and 3^rd Respondents and Noble House. This is especially so, as pointed out by the Applicant, in light of the provision in clause 1 in Section G of the Sales Contract where it is stated that“在本公司購物條款及細則及特別條款（定義見下）（統稱「本條款及細則」中，「Noble House」或「Lofty Design」、「本公司」或「我們」是指御品室內設計工程有限公司…”, which means that Noble House was identified as the company involved in the deal. This is also supported by the fact that the Sales Contract was signed on behalf of Noble House instead of Lofty Design.

35.  As mentioned above, Au never denied that Noble House was the principal contractor, nor did he challenge the authenticity of the Sales Contract and the receipt. The fact that the Sales Contract does not appear to have been signed by the customer is neither here nor there. Given the above, I do not agree with the submission by Noble House that the evidence showing that it was the principal contractor is tenuous.

36.  I also do not agree with the submission by Noble House that there had been unreasonable or unexplained delay on the part of the Applicant. On the contrary, the Applicant through his solicitors have made reasonable enquiries with the relevant parties.

37.  In the circumstances set out above, I agree with the submissions made by the Applicant. In this case, the Applicant suffered serious injury at work. He is entitled to claim compensation against his employer and the principal contractor under the ECO. The identity of Noble House being the principal contractor was not known to him despite diligent investigation. It was not until January 2024 when he eventually found out that Noble House might have been the principal contractor instead of the 2^nd or 3^rd Respondent.

38.  It also suffices for me to mention at this stage that it is clear from the evidence that neither the 2^nd Respondent, 3^rd Respondent nor Noble House has been forthcoming in identifying the principal contractor in this case, despite the evidence referred to by the Applicant above pointing to the fact that the three of them were at the material time closely related.

Conclusion

39.  I find that the Applicant has satisfied the requirement of a reasonable excuse under section 14(4) of the ECO. In the interest of justice, this joinder application ought to be allowed. I therefore make an order in terms of the Applicant’s summons dated 7 March 2024, save that as for costs, since Noble House has unsuccessfully contested the application, I make the following order:

(1) Costs of the amendments to the Application and the consequential amendments to the respective Answers of the 1^st and 2^nd Respondents be in the cause;

(2) Costs of the summons dated 7 March 2024 including the costs of the hearing be paid by Noble House to the Applicant, with Certificate for Counsel; and

(3) The Applicant’s own costs be taxed in accordance with the Legal Aid Regulations.