DCEC 2437/2015
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
EMPLOYEES’ COMPENSATION CASE NO.2437 OF 2015
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IN THE MATTER OF AN APPLICATION BETWEEN
SHING HO WA (盛浩華),
Applicant
and
REALLY SUPER LIMITED
1st Respondent
CREATIVE ENT LIMITED(實創有限公司)
2nd Respondent
and
CHUBB INSURANCE HONG KONG LIMITED
Intended Intervener
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Before: Deputy District Judge S.H. Lee in Chambers
Date of Hearing: 27 Jan2017
Date of Decision: 27 Jan 2017
Date of Reasons for Decision : 3 Feb 2017
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REASONS FOR DECISION
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1. This is a summons filed 24 Nov 2016 (“the summons ”) by the intended intervener (“the intervener ”) to vary costs order nisi made by me on 10 Nov 2016 (“costs order nisi ”) on the intervener’s summons to be joined to the captioned application (“the application ”) to have the same right to defend the same as if it were employer (“the joinder summons ”).
2. After hearing the joinder summons on 26 Oct 2016 (“hearing before me ”), I dismissed it by my decision dated 10 Nov 2016 (“my decision ”) and I made costsorder nisi as follows:
(1) there be no order of costs as to 2nd respondent’s (“R2 ”) costs of the hearing before me;
(2) subject to para (1), the intervener do pay the applicant (“A ”), 1st respondent (“R1 ”) and R2 all costs of and occasioned by the joinder summons, includingreserved costs of the call-over hearing on 12 July 2016 (“call-over hearing ”), to be taxed if not agreed, with certificate for counsel; and
(3) applicant’s own costs to be taxed in accordance with Legal Aid Regulations.
3. Mr Anthony Ismail of counsel (“Mr Ismail ”) appeared for the intervener before me on the summons, as he did on the joinder summons. By the summons, the intervener sought variation so that there be no order as to costs in respect of the joinder summons (including such reserved costs of the call-over hearing) or in such order as to coststhis court shall deem just.
4. A third affirmation of Lui On Kit (“Lui ”) was filed on 24 Nov 2016 in support of the Summons. Lui has previously filed two affirmations prior to the hearing before me.
5. Both R1 and R2 adopted a neutral stance on the summons and their attendance had been excused.
6. A opposed to the summons and a 2nd affidavit of Pansy Tsang (“Tsang ”) was filed on 26 Jan 2017, in addition to one filed by Tsang prior to the hearing before me. Tsang asked that the summons be dismissed.
7. Ms Christina Lee of counsel (“Ms Lee ”) appeared for A before me on the summons, whereas Mr Patrick Lim of counsel (“Mr Lim ”) appeared for A on the joinder summons.
8. After hearing Mr Ismail and Ms Lee, I dismissed the summons, and made the costs order nisi absolute, with costs to the A on a common fund basis. Now I give my reasons.
Background
9. For background leading to the joinder summons and my reasons for dismissing it, I refer to my decision and do not repeat them herein.
Intervener’s submissions
10. Mr Ismail submitted that it is fair and just to make no order as to costs on the joinder summons in light of the following facts and circumstances. If not, this court can make such alternative costs order as it sees fit to make.
11. Mr Ismail began by pointing out that I have found for the intervener having an interest to be protected by joinder as it was subject to a potential direct liability to Aunder Part IV of the Employees’ Compensation Ordinance, Cap.282 (“ECO ”).
12. The proposed joinder, he submitted, failed not for want of merits but because it was premature such that this court declined to exercise its discretion at this stage.
13. This court, he observed, took the view that the interest of the intervener was “fully and properly protected” by R2 which was legally represented and which had raised “every possible line of defence” in its answer to the application.
14. A relevant and important factor that this court had taken into account is Mr Lim’s offer during oral submissions at the hearing before me of an undertaking from A to notify the intervener ifR2 elects not to defend in future (“the undertaking ”).
15. The undertaking against entry of default judgment, Mr Ismail stressed, was never raised by A prior to the hearing before me. Lui labelled it in his 3rd affirmation a “completely new and totally unexpected factor which A successfully relied upon to persuade this court (italics supplied)”.
16. Mr Ismail went on to submit that A had gone from objecting to giving the undertaking at the call-over hearing to offering it at the hearing before me, until I pointed out the intervener’s solicitors at the call-over hearing sought in fact a “direction from the court” that no default judgment be entered by A against R2 prior to the joinder summons but that was objected to.
17. In any event, Mr Ismail pointed out, A’s solicitors had, after my decision, refused to give an extended undertaking to the intervener to notify it should R2 fails fully or properly to protect its interest (“the new undertaking ”) by e.g. abandoning every or some line of its defence like conceding A as its employee.
18. The practical consequence of such refusal from A is that, he said, the intervener has to incur costs of observer to watch out for such possible scenario in future which may prejudice the intervener as it had not been joined.
19. Finally, my decision, though strictly not a “test case” mentioned by Lui in his 3rd affirmation, had, Mr Ismail submitted, an element of public interest being served.
20. My decision, he submitted, had clarified the law that there is no general rule or practice of generally allowing joinder of an insurer on disclaimer of its liability as previous 2 cases (Farman Khan v Shum Sum Engineering Co [2009] 1 HKLRD 534; Ernest Eduard Sprecher v Zingrich Cabletrans GMBH & Another , unreported, DCEC 1498/2006, 28 Nov 2007) may suggest.
21. And I pointed out in my decision that Shahid v Fame Rich Co Ltd [2009] 1 HKLRD 302 was wrongly decided on s.43(3) of ECO without the Court of Appeal decision in Tugu Insurance Co Ltd v Woo Kin-wah & Others [1993] 1 HKLR 300 brought to its attention. These aspects of my decisions, it was said, provide helpful guidance to the public in any future joinder dispute.
A’s submissions
22. Ms Lee reminded this court that costs often follow the event in contested application like the joinder summons before me.
23. While this court found the joinder summons premature, an unsuccessful party like the intervener could, she stressed, still be ordered to pay for the costs incurred by all parties.
24. Regarding the new undertaking, Ms Lee explained that it was simply not practical or feasible for A to give the same. A’s solicitors did not act for R2 and could not know, or know beforehand, about evidence or instructions of R2. If R2’s legal team was to change its line of defence in the middle of the hearing of the application, there would be, she said, difficulty on the part of A’s solicitors notifying the intervener as required by the new undertaking.
25. Furthermore, the new undertaking would also go against professional duty of A’s solicitor to promote A’s interest in obtaining compensation from R2, whose aim was just opposite of A. This further prevents A’s solicitors from giving the new undertaking.
26. In contrast, if R2 was to become unrepresented and default judgment is to be entered against it by A, A could give and honour the undertaking Mr Lim orally offered on A’s behalf to the intervener at the hearing before me.
27. My decision, Ms Lee further submitted, was arrived at by this court after a large number of factors having been considered, weighed and balanced by the court. The undertaking was merely one of such many factors.
28. As for public interest served by my decision, that certainly, submitted Ms Lee, was not the purpose or aim of the intervener in taking out the joinder summons in the first place.
29. The law has, she stressed, not been changed at all by this court. The Court of Appeal decision in Tugu Insurance , supra, was always there back in 1991. By this long-standing decision binding on lower courts including me, double representation of the same interest is to be avoided.
30. If there be no order as to costs of the joinder summons as suggested by the intervener, the consequences are that A (or the public as A is legally-aided), R1 and R2 would have to bear their own costs of the same. That is, she submitted, not fair nor just, all the more so as A is a mentally-incapacitated person.
31. For the above reasons, Ms Lee submitted that the costs order nisi should be made absolute.
Analysis
32. The starting point is, I think, that costs in respect of the joinder summons is at my discretion: s.53(1) & (2) of the District Court Ordinance, Cap.336, and O.62, r.3(2A) of the Rules of District Court, Cap.336H.
33. That was also the position with regard to the joinder summons itself. I declined to exercise my discretion in the intervener’s favour and declined the proposed joinder.
34. This court having considered, weighed and balanced all factors put before it by the parties, the intervener failed to persuade this court to exercise its discretion in its favour and lost aftera contested hearing with lots of authorities cited.
35. The intervener, I must say, did not fail on technicality or procedural ground but lost on the merits of the joinder it proposed, albeit on the ground that the proposed joinder was premature and unnecessary at this stage.
36. In the ordinary course of events, there is, I think, no reason why the intervener should not be ordered to pay the costs of the joinder summons. As Ms Lee reminded this court, courts often apply the rule of costs following the event. If not, such costs incurred by A, R1 and R2 on the joinder summons would go uncompensated. Such situation would neither be just nor fair when it was the intervener who lost on the joinder summons it took out.
37. While the undertaking was orally offered by Mr Lim for the 1st time at the hearing before me, it is no more than, I must point out, one among many factors this court has taken into consideration in arriving at my decision. Nowhere was it stated in my decision to be a significant, let alone decisive, factor.
38. Among many other factors stated in my decision that this court has considered, weighed and balanced are the fact that R2 was a local company legally represented, that R2 had put forward in its answer “every possible line of defence” to the application, that there was no material to suggest that R2 will disappear or will not properly defend the application in future and that the Court of Appeal had stated in its 1991 decision of Tugu Insurance , supra, that double representation of the same interest is to be avoided.
39. The above matters were, I think, either known and/or ought to be known to the intervener and/or its legal team (all the more so some of them was stressed by Tsang in her 1st affidavit filed prior to the hearing before me) but the intervener nonetheless took out and continued the joinder summons until it lost the same after argument before me.
40. As for the new undertaking, it is, I must point out, entirely a matter for A and its legal team to decide whether to give it or not to the intervener. I can envisage some practical difficulties for A’s solicitors if its wordings are not suitably worded and I find it understandable for A to decline to give it given that A stands in directly opposite position from R2 on the application.
41. As I have commented in my decision about Lui’s suggestion in his affirmation that R2 will disappear or will not properly defend the application in future, the suggestion by Mr Ismail that R2 may in future not fully or properly defend R2’s interest (e.g. not running every line of possible defence, such as conceding A as its employee) was, I think, equally speculative and without any evidential foundation at this stage before me.
42. In the ordinary course of events, it would certainly, one thinks, be in the interest of R2 to run every possible line of defence (including the crucial one of employer-employee relationship) if they are open on the evidence and instructions of R2, and one trusts R2’s legal team would professionally so advise R2 and do so.
43. If, due to e.g. lack or change of R2’s instructions or evidence, R2’s legal team considered it, on a review of all matters, better to concede one point than wasting time putting A to strict proof on that point, and focusing on other stronger points, one can hardly see any problem and that happens from time to time in litigation.
44. With all due respect to the intervener and its legal team, I fail to see why they simply cannot trust R2’s legal team to do its professional jobs properly to safeguard its lay client (i.e. R2)’s interest on the application where there is nothing to suggest otherwise.
45. If the intervener is minded to incur expenses of hiring observer to watch details of R2’s defence at each or important hearings of the application, it is, I would point out, also a matter entirely for the intervener, which should have taken this possibility into account when it declined to take over the defence of R2 in the first place.
46. Assuming that this court had indeed clarified the law as suggested, that was, I think, only an incidental benefit to the public arising from my decision (and it may arise anytime a decision is made by this court in future).
47. As Ms Lee rightly observed and Mr Ismail admitted, the intervener took out the joinder summons not for any public or charitable purpose but to serve its own private interest. The intervener so motivated, such incidental benefit to the law it indirectly brought should not, I think, be made at the expenses of A, R1 and R2.
48. All in all, having carefully considered all submissions and materials before me in light of my decision, I see nothing to depart from the costs order nisi I made.
Disposition
49. I therefore dismissed the summons and made the costs order nisi absolute.
Costs
50. On Ms Lee’s application for costs and with no objection from Mr Ismail, I ordered the intervener to pay applicant costs of and incidental to the summons on a common fund basis, to be taxed if not agreed and with certificate for counsel, and applicant’s own costs to be taxed in accordance with Legal Aid Regulations.
51. It remains for me to thank Ms Lee and Mr Ismailfor their helpful submissions.
(LEE Siu-ho)
Deputy District Judge
Ms Christina Lee instructed by Szwina Pang, Edward Li & Co., for the applicant
1st respondent represented by Lam, Lee & Lai and attendance excused
2nd respondent represented by Robertsons and attendance excused
Mr Anthony Ismail instructed by Clyde & Co., for the intended intervener