FALCON INSURANCE COMPANY (HONG KONG) LTD v. LEE ZHONG JIN AND ANOTHER

DCEC 206/2021

[2023] HKDC 1651

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 206 OF 2021

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DECISION

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1.  Introduction

1.1  On 18 September 2018, the applicant issued an employees’ compensation insurance policy with the 2^nd respondent as the insured (“Policy”). The period of insurance under the Policy was from 1 July 2018 to 30 June 2019 (both dates inclusive).

1.2  On 27 November 2018, the 1^st respondent was injured in the course of his employment by the 2^nd respondent (“Accident”). In the Form 2 signed by the 2^nd respondent on 6 December 2018, it was stated therein that the 1^st respondent was employed on a daywork basis at daily rate of HK$1,400 and his average income in the 12 months prior to the Accident was HK$5,000 per month.

1.3  The 1^st respondent disagreed with the earnings stated in the Form 2. Eventually, on 8 February 2019, the 2^nd respondent, at the request of the Commissioner for Labour (“Commissioner”), confirmed that the 1^st respondent’s monthly income was HK$36,400[1].

1.4  On 17 October 2019, a Form 7 in respect of the 1^st respondent’s permanent (partial) incapacity was issued pursuant to section 16D of the Employees’ Compensation Ordinance Cap 282 (“ECO”), following which, on 24 October 2019, a Form 5 was issued pursuant to section 16A(2) (“Form 5”)[2]. In the Form 5, the 1^st respondent’s monthly earnings at the time of the Accident calculated in accordance with section 11 of the ECO was stated to be HK$36,400. The Form 5 further certified that compensation in the sum of HK$290,346.67 was payable to the 1^st respondent under sections 9 and 10 of the ECO.

1.5  Whilst the applicant accepts liability to pay compensation to the 1^st respondent under the ECO, it contends that the monthly earnings of the 1^st respondent stated in the Form 5 is incorrect. From October 2019 to January 2021, various attempts to resolve the dispute were made by the applicant with the insurance broker, the respondents and the Labour Department but to no avail. During this period, the 2^nd respondent had on 30 March 2020 lodged a complaint against the applicant to the Insurance Authority.

1.6  On 28 January 2021, the applicant commenced these proceedings to appeal against the Form 5 out of time. Although not expressly stated in the Amended Application, the applicant has confirmed that its appeal is made pursuant to section 18 of the ECO.

1.7  These proceedings were initially pursued only against the 1^st respondent.

1.8  As there is no decided case on whether an insurer can in its own name appeal against a Form 5, on 30 July 2021, HHJ Levy directed that the foregoing issue be determined as a preliminary issue (“Preliminary Issue”) and the learned Judge also gave directions for an evidential timetable (“30/7/21 Order”).

1.9  The substantive hearing of the Preliminary Issue came before me on 4 August 2022 (“August 2022 Hearing”). The applicant was represented by Ms Audrey Eu SC (leading Mr Leon Ho). The 1^st respondent did not attend the hearing, despite having filed evidence pursuant to 30/7/21 Order and subsequently without leave. The evidence filed by the 1^st respondent was concerned with the underlying dispute, namely the correctness of his monthly earnings at the time of the Accident stated in the Form 5.

1.10  At the August 2022 Hearing, Ms Eu accepted that the 2^nd respondent was a necessary and proper party in these proceedings. As I understood Ms Eu, the 2^nd respondent was not joined as there was then in place an operative arbitration agreement in the Policy but there was a time limit within which arbitration had to be commenced. Ms Eu informed me that that time limit was about to expire, upon which the applicant would take steps to join the 2^nd respondent. I therefore adjourned the matter.

1.11  On 15 September 2022, the applicant issued a summons to join the 2^nd respondent as a respondent in these proceedings. The application was not opposed and I acceded to the application and directed the 2^nd respondent to file evidence for the determination of the Preliminary Issue, which he did. Like the 1^st respondent, the evidence filed by the 2^nd respondent deals with the underlying dispute between the parties.

1.12  The adjourned hearing came before me on 27 September 2023. The applicant appeared by the same representation. The 2^nd respondent attended by its director and I was told that the 1^st respondent would not appear. The 2^nd respondent confirmed that he did not have any submissions on the Preliminary Issue and both respondents were only keen to have the underlying disputes determined.

1.13  At the conclusion of the adjourned hearing, I reserved my decision. This is my decision on the Preliminary Issue.

1.14  As the underlying dispute is not germane to the determination of the Preliminary Issue, I do not propose to further deal with the factual matters. I am also not required to, and therefore will not, deal with the question of whether time should be extended to the applicant to appeal against the Form 5.

1.15  As is plain from the submissions advanced by Ms Eu, the determination of the Preliminary Issue hinges on the proper construction of the ECO as a whole, and in particular section 18. As helpfully identified by Ms Eu at the outset of her written materials, the applicant says that the Preliminary Issue should be answered in the affirmative for the following broad reasons.

(1)  The purpose for having section 18 in the ECO is to reduce the unfairness caused by the Commissioner, in the event that he makes a mistake, when issuing a Form 5, and it is consistent with the legislative intent of section 18 to allow an insurer to lodge an appeal in its own name.

(2)  If an insurer cannot appeal against a Form 5 pursuant to section 18, it would lead to absurd and unfair results thereby violating the principle of natural justice.

(3)  Notwithstanding that there is no authority directly on point in Hong Kong, there are analogous authorities and obiter dicta supporting the proposition that an insurer can appeal against a Form 5 pursuant to section 18.

2.  The relevant provisions in the ECO

2.1  In this section, I will set out what appears to me to be the relevant provisions in the ECO. Along the way, I will endeavour to set how they have been construed in previous cases or the relevant textbook.

2.2  A Form 5 is issued pursuant to section 16A of the ECO. Section 16A provides, inter alia, as follows:

“1. Where—

(a) a claim for compensation arises in respect of an accident causing injury to an employee that results in temporary incapacity, whether total or partial; or

(b) a claim for compensation arises in respect of an accident causing injury to an employee that results in loss of earning capacity as assessed under section 16D(5), 16E(8) or (9), 16G(2) or 16GA(1),

the Commissioner may assess the compensation payable under sections 7, 9 and 10.

(1A) Compensation shall not be assessed by the Commissioner under subsection (1) unless claim for compensation arises within 24 months after the happening of the accident.

(2) Where the Commissioner assesses compensation under subsection (1) he shall issue to the employer and the employee a certificate in such form as he may specify stating the amount of the compensation and details of the assessment, and shall retain one copy of the certificate for his records.

(3) An objection to the amount of compensation assessed under subsection (1) may be made in writing—

(a) by the employer, the employee or the ECAFB;

(b) within 14 days after—

(i) in the case of the employer or employee, the date of issue of the certificate issued under subsection (2);

(ii) in the case of the ECAFB, the date on which an application is made under section 16 of the Employees Compensation Assistance Ordinance (Cap. 365) by the employee,

or within such further time as the Commissioner, in the circumstances of any particular case, thinks fit;

(c) stating the grounds of the objection; and

(d) by the objector sending a copy of the objection—

(i) where the objector is the employer, to the employee;

(ii) where the objector is the employee, to the employer;

(iii) where the objector is the ECAFB, to the employer and the employee.

(4) On receipt of an objection under subsection (3) the Commissioner shall—

(a) if the objection relates to the assessment of the percentage of loss of earning capacity made by an Ordinary Assessment Board under section 16D(5) or by a Special Assessment Board under section 16E(8) or (9), forward a copy of the objection to the Ordinary Assessment Board or the Special Assessment Board, as the case may be, for a review under section 16G(2); and

(b) after taking into account the objection and any review referred to in paragraph (a) of this subsection, confirm, vary or cancel the assessment of compensation under subsection (1).

(5) Upon completing a review under subsection (4), the Commissioner shall issue to the employer and the employee and, where applicable, the ECAFB a certificate in such form as he may specify stating—

(a) that the original assessment is confirmed and giving details thereof; or

(b) details of the assessment as varied,

and shall retain one copy of the certificate for his records.

(6) Upon the issue of a certificate under subsection (5), the certificate issued under subsection (2) shall be cancelled.

(7) A certificate purporting to be issued—

(a) under subsection (2), other than a certificate cancelled under subsection (6); or

(b) under subsection (5),

and to be signed by or for the Commissioner shall be admitted in evidence without further proof on its production in any court, and—

(i) until the contrary is proved it shall be presumed that the certificate is so issued and signed; and

(ii) shall be evidence of the matters stated therein.

(8) A certificate issued—

(a) under subsection (2), other than a certificate cancelled under subsection (6); or

(b) under subsection (5),

may, on application to the Court by the employer, the employee, the ECAFB or the Commissioner, be made an order of the Court and, for the purposes of this subsection, the amount payable under any such certificate shall include any surcharge payable in respect thereof under subsection (10).

(9) Subject to section 18, the employer shall pay to the employee within a period of 21 days after—

(a) the date of issue of the certificate issued under subsection (2); or

(b) where an objection is made under subsection (3), the date of issue of the certificate issued under subsection (5),

the balance (if any) of the amount of compensation stated in the certificate after deducting from such amount—

(i) the total sum of any periodical payments made by the employer to the employee under section 10 in respect of the injury to which the certificate relates; and

(ii) any sum which the Commissioner has ordered to be deducted under section 13(3).”

2.3  As stated at Employees’ Compensation Handbook (Butterworths Hong Kong), [6^th Ed] at §16A.03, section 16A makes provisions for assessment of an employees’ compensation claim by the Commissioner and the issuance of a certificate of assessment. Provisions are made for a review (sections 16A(3)-(5)) (“Review Procedure”) and for appeals to the District Court under section 18 (section 16A(9)). Unless an appeal is lodged, the balance of the amount of compensation assessed in the certificate remaining unpaid must be paid within 21 days of the issue of the relevant certificate, and a surcharge is payable on any overdue amount. A certificate may also be made and enforced as an order of the District Court (section 16A(8)).

2.4  The Court of Appeal at Lam Chi Biu v Mak Kee Ltd & Anor [2005] 3 HKC 15 §§9-11 held that the matters stated in a Form 5, similar to a Form 7 issued under section 16F, would constitute conclusive evidence in the absence of an appeal.

2.5  For completeness, Lam Chi Biu §12 clarified that a Form 5 is not binding as to liability. In other words, were an application made to enforce a Form 5 (or a Form 6 issued following the Review Procedure), the court cannot simply make an order for enforcement without the matter proceeding to trial when liability is contested: Wan Miu Sum v Hing Lung Holdings Ltd, DCEC 1512 of 2007, 27 June 2008 at §17.

2.6  Section 16B, which is a provision for the cancellation by the court of a Form 5 issued pursuant section 16A(2) or a Form 6 issued pursuant to section 16A(5), provides (“Cancellation Procedure”):

“(1) Notwithstanding anything in section 16A, the Court may, on application by the employer, the employee, the Commissioner or the ECAFB, cancel a certificate issued under section 16A(2) or (5) and make such order (including an order as to any sum already paid under the certificate) as in the circumstances the Court may think just, if it is proved that—

(a) the sum paid or to be paid was or is not in accordance with the provisions of this Ordinance; or

(b) the certificate was issued in ignorance of, or under a mistake as to, the true nature or the extent of the injury; or

(c) the certificate was based upon any false or misleading information or statement given or made.

(2) An application under subsection (1) shall be made within 6 months of the date of issue of the certificate in respect of which the application is made, or within such further time as the Court, in the circumstances of any particular case, thinks fit.”

2.7  As may be noted, both the Review Procedure and the Cancellation Procedure have specifically identified the persons entitled to invoke the procedures, namely the employer, the employee, the Commissioner (only in the case of the Cancellation Procedure) or the Employees Compensation Assistance Fund Board (“ECAFB”). In other words, neither procedure is available to an insurer in its own name.

2.8  Section 18, which is a provision for appeals to the court, provides as follows:

“(1) Subject to this section, an appeal shall lie to the District Court from any decision or assessment of the Commissioner, an Ordinary Assessment Board or a Special Assessment Board under section 16A, 16D, 16E, 16G or 16GA.

(2) No appeal shall lie after the expiry of 6 months from the date of the decision or, in the case of an assessment, of the date of issue of the relevant certificate under section 16A, 16F, 16G or 16GA, as the case may be:

Provided that the Court may, if it thinks fit, extend the time within which to appeal under this section notwithstanding that the time has elapsed.

(3) On an appeal under this section, the Court may confirm or reverse any decision, or confirm or vary any assessment, of the Commissioner, an Ordinary Assessment Board or a Special Assessment Board, or may substitute its own assessment, and may determine the amount of compensation payable and may make such order in respect thereof, including any order as to costs, as it thinks fit.”

2.9  In contradistinction to the Review Procedure and the Cancellation Procedure, section 18 does not specify the persons having the locus standi to pursue an appeal.

2.10  Section 18A(1), inter alia, provides:

“Except where otherwise provided under this Ordinance, all claims for compensation, except to the extent that such claims are determined—

…

(b) by certificate under section 16A ;

…

and any matter arising out of proceedings in respect of such claims shall be determined by the District Court, whatever may be the amount involved, and the Court may, for that purpose, call upon any person to give evidence, if the Court is of the opinion that such person is, by virtue of his expert knowledge, able to assist the Court.”

2.11  It is pertinent to note the interplay between the Cancellation Procedure, an appeal pursuant to section 18 and the jurisdiction of the court circumscribed by section 18A(1)(b).

2.12  In Liu Ah Sai v Yiu Lian Dockyards Ltd [1996] 4 HKC 244, the Court of Appeal held that where the Commissioner has assessed compensation and issued a certificate under section 16A, in determining whether to allow an appeal the test should be whether or not the certificate is liable for cancellation. If it is not, then it would be a complete bar to an award of compensation by the court by reason of section 18A(1)(b). At Liu Ah Sai §§43-45, Bokhary JA (as he then was) stated as follows:

“[43] The test which the judge articulated at the end of her judgment came to this: having regard to small difference between the Board's assessment of the appellant's loss of earning capacity and the assessment which she favoured upon her acceptance of Dr Tsoi's evidence, was it just in all the circumstances to invoke the powers conferred upon her by the Ordinance to allow the appeal against the Board's assessment of the appellant's loss of earning capacity and to cancel the Commissioner's certificate as to the compensation due to the appellant?

[44] That is not the right test.

[45] Maintaining a steady focus on the statutory scheme, the question is whether or not the certificate is liable to cancellation. If it is not, then it would be a complete bar to an award of compensation at the judge's hand. Section 18A(1)(b) of the Ordinance provides that "except where otherwise provided under this Ordinance, all claims for compensation, except to the extent that such claims are determined ... by a certificate under section 16A ... shall be determined by the District Court."”

See also Butterworths §18.08.

2.13  In a similar vein, at Tso Chun Cheong v Mak Chi Ming [2007] 2 HKLRD 240 §§17 and 20-21 DDJ R Cheung stated:

“[17] Section 18A of the Ordinance provides inter alia as follows: “Except where otherwise provided under this Ordinance, all claims for compensation, except to the extent that such claims are determined …….. by certificate under section 16A …….. and any matter arising out of proceedings in respect of such claims shall be determined by the District Court” (emphasis my own). In this manner, the jurisdiction of the District Court to entertain such claims is restricted. When there is a binding certificate of assessment, the District Court is precluded from entertaining any claim for compensation.

…

[20] In the present case, the Certificate of Assessment is binding on me. There has been a determination under Section 16A(5) of the Ordinance. By reason of Section 18A of the Ordinance, I do not have jurisdiction to assess the Applicant's compensation, not even if I were to follow strictly the assessment made in the Certificate of Assessment. I am entitled to come to this conclusion as I am not bound by the Interlocutory Judgment herein.

[21] The Applicant may, of course, file a fresh application under Section 16A(8) of the Ordinance so that the amount payable under the Certificate of Assessment may be made an Order of the District Court. This is viable in my view because Section 16A(8) claims are not “claims for compensation” caught by Section 18A(1), or alternatively, Section 18A(1) must be read as subject to Section 16A(8) to avoid an absurdity, for how else is an employee to enforce payment of the amount determined under a certificate of assessment that has not been appealed against?”

2.14  Part IV of the ECO contains provisions setting out the circumstances where an insurer is required to pay an employee directly.

2.15  Section 43 provides:

“(1) Subject to this section, where in relation to an employee there is in force a policy of insurance issued for the purposes of this Part and the employer of the employee becomes liable to pay any sum under this Ordinance or independently of this Ordinance in respect of an injury to the employee arising out of and in the course of his employment, such sum shall forthwith become due and payable by the insurer, including any sum payable in respect of interest and costs, notwithstanding anything to the contrary in the policy of insurance.

(2) No sum shall be payable by an insurer under this section—

(a) unless, in the case of compensation agreed upon between the employer and an employee under section 16CA, such insurer has consented to pay the sum agreed upon as compensation to the employee;

(b) unless, in the case of compensation or damages determined or adjudged by a court or tribunal to be payable to the employee or any other person, the insurer had sufficient notice of the institution in the court or tribunal of proceedings for compensation or damages, as the case may be, to enable such insurer to be added as a party to the proceedings;

(c) in respect of any judgment to pay compensation or damages, while execution thereon is stayed by the court or pending appeal; (Amended 47 of 1995 s. 8)

(d) if before the happening of the accident which was the cause of the injury giving rise to the liability, the policy of insurance was cancelled by mutual consent or by virtue of any provision contained therein; or (Amended 47 of 1995 s. 8)

(e) in respect of the sum liable to be paid under subsection (1) in excess of the available amount covered by the policy of insurance. (Added 47 of 1995 s. 8)

…

(3) If sufficient notice of the institution of proceedings for the recovery of compensation or damages is given to an insurer to enable such insurer to apply to be added as a party to the proceedings, the court or tribunal, as the case may be, shall, on such application being made, add the insurer as a party and the insurer shall have the same right to defend the proceedings as if such insurer were the employer.

(4) Where under this Part an amount is paid by the insurer which would, but for this section, not be payable under the policy of insurance, the employer is liable to pay that amount to the insurer.”

2.16  Section 44 provides:

“(1) Every policy of insurance issued for the purposes of this Part shall be deemed to provide that any employee or other person having a claim against the person insured in respect of the liability in regard to which such policy was issued shall, subject to section 42, be entitled to recover in his own name, as though he were a party to the policy, directly from the insurer any amount which he would have been entitled to recover from the person insured.

(2) An employee or other person having a claim against the person insured under a policy of insurance issued for the purposes of this Part shall not commence proceedings against the insurer unless he also commences or has commenced proceedings against the person insured.

(3) Notwithstanding subsection (2), where an employee or other person having a claim against the person insured has reasonable grounds to be satisfied that—

(a) the person insured cannot be readily located in Hong Kong;

(b) the person insured is insolvent; or

(c) the insurer has disclaimed liability under the policy of insurance,

he may take proceedings against the insurer without taking or having taken proceedings against the person insured.”

2.17  As explained by HHJ Peter Cheung (as he then was) in Wong Kam Fai v Yu Sai Wan & Ors, DCEC 91 of 1992, 13 January 1993, section 43(1) creates an absolute liability on the insurer to make direct payment to an employee. The learned Judge said at §§15-16:

“[15] Under section 43(1) any sum recoverable by the employee from the employer under the Ordinance or otherwise shall forthwith become due and payable by the insurer of the employer. The wording is clear. It imposes an absolute liability on the insurer to pay the amount to the employee. The payment is imperative and immediate. I disagree with Mr. Bharwaney's submission that the insurer could raise the issue of employment when the employee seeks to recover the amount from it under sections 43(1) or section 44. By virtue of section 43(1) the insurer would be precluded from re-opening the issue of employment in a recovery proceeding. To allow it to do so will defeat the intention and the clear wording of section 43(1)…

[16] The safeguard to the insurer's absolute liability, apart from section 43(2) which listed the four situations where such sum would not be payable by the insurer (none of which has any application to the present proceedings), is provided by Section 43(3) which enables the insurer to become a party to the proceedings. While the insurer may take over the proceedings on behalf of the employer under the insurance policy, Section 43(3) provides it with a separate and distinct right. If the insurer is precluded from raising the issue of employment after it has been joined as a party, then Section 43(3) will in effect be meaningless because it clearly provides that "the insurer shall have the same right to defend the proceedings as if such insurer were the employer." It is the right of the employer to challenge the employment relationship if it so wishes. The most appropriate and the only time to challenge the employment relationship is at the employee's compensation proceedings. There is no qualifying words that the insurer is precluded from raising this issue.”

2.18  It seems to me that where, as here, there is in place a Form 5 which has not been cancelled, the safeguards mentioned at Wong Kam Fai §16 cannot offer any protection to the applicant since (1) the 2^nd respondent has become liable to pay the sum stated in the Form 5 to the 1^st respondent (§2.3 above), (2) none of the provisos set out at section 43(2) can be relied on by the applicant and (3) where, as here, liability is not contested, there is unlikely to be proceedings between the 1^st and 2^nd respondents (and there is none) to which the applicant can become a party pursuant to section 43(3).

3.  Whether an insurer can appeal against a Form 5 under section 18

3.1  Ms Eu invited me to adopt, and I do take, a purposive approach to the present interpretation exercise. Ms Eu referred to Paccar Inc v Road Haulage Association [2021] 1 WLR 3648 §§65-66 and 68 at which it is stated:

“[65] The task upon which the court is engaged when construing a statute was expressed with typical clarity by Lord Nicholls of Birkenhead in R v Secretary of State for the Environment, Transport and the Regions, Ex parte Spath Holme Limited [2001] 2 AC 349 at 396:

“Statutory interpretation is an exercise which requires the court to identify the meaning borne by the words in question in the particular context. The task of the court is often said to be to ascertain the intention of Parliament expressed in the language under consideration. This is correct and may be helpful, so long as it is remembered that the “intention of Parliament” is an objective concept, not subjective. The phrase is a shorthand reference to the intention which the court reasonably imputes to Parliament in respect of the language used. It is not the subjective intention of the minister or other persons who promoted the legislation. Nor is it the subjective intention of the draftsman, or of individual members or even of a majority of individual members of either House. These individuals will often have widely varying intentions. Their understanding of the legislation and the words used may be impressively complete or woefully inadequate. Thus, when courts say that such-and-such a meaning “cannot be what Parliament intended”, they are saying only that the words under consideration cannot reasonably be taken as used by Parliament with that meaning. As Lord Reid said in Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg A G [1975] AC 591, 613: “We often say that we are looking for the intention of Parliament, but that is not quite accurate. We are seeking the meaning of the words which Parliament used.””

[66] In Pollen Estate Trustee Co Limited v Revenue and Customs Commissioners [2013] EWCA Civ 753, [2013] 1 WLR 3785, Lewison LJ described the modern approach to statutory construction in words which have often been cited with approval:

“The modern approach to statutory construction is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in a way which best gives effect to that purpose. … In seeking the purpose of a statutory provision, the interpreter is not confined to a literal interpretation of the words, but must have regard to the context and scheme of the relevant Act as a whole… The essence of this approach is to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description. Of course this does not mean that the courts have to put their reasoning into the straitjacket of first construing the statute in the abstract and then looking at the facts. It might be more convenient to analyse the facts and then ask whether they satisfy the requirements of the statute. But however one approaches the matter, the question is always whether the relevant provision of statute, on its true construction, applies to the facts as found.

…

[68] An important tool in the search for the appropriate purposive interpretation of a statutory provision is the presumption against absurdity, described as follows by the authors of Bennion, Bailey and Norbury on Statutory Interpretation (8^th Ed) at paragraph 13.1:

“(1) The court seeks to avoid a construction that produces an absurd result, since this is unlikely to have been intended by the legislature. Here, the courts give a very wide meaning to the concept of “absurdity”, using it to include virtually any result which is impossible, unworkable or impracticable, inconvenient, anomalous or illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief.

(2) The strength of the presumption against absurdity depends on the degree to which a particular construction produces an unreasonable result.

(3) The presumption may of course be displaced, as the ultimate objective is to ascertain the legislative intention.””

3.2  I agree with Ms Eu that allowing an insurer to appeal against a Form 5 is consistent with the purpose of section 18, and were it otherwise, it would lead to absurd results, for the following reasons.

3.3  First, there is nothing in the language of the primary legislation (section 18 itself) which precludes an insurer from being the appellant in an appeal against a Form 5. Moreover, the secondary legislation (ie Rule 16 of the Employees’ Compensation (Rules of Court) Rules Cap 282B) expressly contemplates an application may be made by “any other person”, in addition to an employee and an employer.

3.4  Secondly, I hope it is clear from the analysis conducted in the preceding section that a Form 5 can give rise to an absolute liability on an insurer and neither the Review Procedure nor the Cancellation Procedure is available to the insurer in its own name, leaving an appeal under section 18 as the only avenue to challenge a Form 5. As submitted by Ms Eu, the rule of natural justice should be observed. At Pang Wai Chung v Hoi Tat Rubber Factory [1992] 2 HKC 447 §7, Bokhary J (as he then was) stated:

“[7] If in any given case the circumstances are such that their policy right to conduct the defence in the name of their insured would not be sufficient to give them their due under the rules of natural justice, then it would in general be right to allow insurers who would be liable to satisfy any judgment given against the insured to be added as a defendant in their own name. ”

3.5  In the above regard, as identified at Wong Kam Fai §16 (cited at §2.17 above), the insurer may choose not to take over the proceedings when, for example, the taking over of the proceedings may affect its right to repudiate liability under the policy.

3.6  Thirdly and relatedly, as noted at §§2.12 to 2.13 above, having regard to the ECO as a whole, the correct test in an appeal against a Form 5 is whether it is liable to be cancelled. It is notable that the periods within which an application to the court for cancellation under section 16B and an appeal under section 18 are the same, namely 6 months from the date of issue of the Form 5. Where the Cancellation Procedure and an appeal are “parallel” but subject to the same test, it seems to me that section 18 should be construed to allow a party in addition to the employer, employee, the Commissioner or the ECAFB (ie the persons entitled to make an application to the Court for cancellation) to pursue an appeal. In this regard, I accept Ms Eu’s submissions that the language of section 18 is intended to maintain the flexibility to cope with various or unforeseen circumstances of achieving justice.

3.7  Fourthly, as Ms Eu pointed out, various cases have assumed that an insurer may appeal against a Form 6 (which is issued after review of a Form 5), Form 7 and Form 9. See for example, 李家威 對 丁玉燕, DCEC 669 of 2016, 18 January 2008 §22, Tsang Kwong Tong v Tennille Decoration & Design Ltd, CACV 42 of 2006, 10 October 2006 §§39-48 and Law Chung Tai v Sun Profit Logistics (HK) Ltd & Anor [2020] HKDC 544 §§20-21. In particular, I find that there is force in Ms Eu’s submission that a Form 7 and a Form 9 are but constituent elements on which a Form 5 is based (in the present case, as stated at §1.4 above, the Form 5 was issued after the issue of, and is based on, the Form 7). It would therefore be an odd outcome where previous decisions had recognized an insurer’s entitlement to appeal a constituent part (ie a Form 7 and 9) but section 18 should be construed as preventing an appeal against the whole (in the present case a Form 5).

3.8  Whilst I have come to the view that, on a proper construction of section 18, an insurer may be a proper applicant in an appeal against a Form 5, it is an entirely separate question whether the court is bound to entertain any such appeal. One can envisage a number of circumstances which may give rise to a situation where the court might decline to entertain an appeal lodged by the insurer in its own name. For example, as envisaged at Pang Wai Chung §7 (§3.4 above), it may be that, in a particular case, an insurer’s right under its policy to conduct the defence in the name of their insured is sufficient. Another situation is were an application to the Court for cancellation unsuccessful, it seems to me that the court would be slow to entertain an appeal pursued in the name of the insured on identical grounds.

4.  Conclusion

4.1  For the above reasons, I answer the Preliminary Issue in the affirmative, namely that, on a proper construction of section 18, an appeal against a Form 5 may be pursued by an insurer in its own name.

4.2  Ms Eu invited me to reserve costs. I will make a costs order nisi that the costs of and occasioned by the determination of the Preliminary Issue (with a certificate for counsel) be reserved.

4.3  I also dispense with the requirement set out at §3 of my order dated 4 August 2022, namely that all applications in these proceedings should be listed before me. I trust that the applicant will make the necessary application pursuant to 30/7/21 Order §8 to fix a directions hearing before another judge.

4.4  As noted at §1.12 above, both respondents are only keen to have the underlying disputes determined and did not make any submissions on the Preliminary Issue. However, should the respondents require translation of this decision into Punti, they may contact my clerk to arrange for an appointment for a court interpreter to verbally translate this decision to them at the District Court Building at a mutually convenient time.

4.5  I thank counsel for their assistance.