YEUNG KAM SHING v. ISS EASTPOINT FACILITY SERVICES LTD

DCEC 999/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 999 OF 2008

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D E C I S I O N

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1.  In the present case, the applicant claimed compensation for his injuries at work in the course of his employment with the respondent. The claim has been tried; and before me is the aftermath. As I have directed, I now give my ruling on paper.

BACKGROUND

2.  The applicant’s legal aid was discharged in early January 2010.  Therefore he was unrepresented at the trial.

3.  After trial, Deputy District Judge Yu in his written judgment dated 10 December 2010 awarded the applicant compensation in the sum of HK$72,592.86 (net of the advanced payments already received) with interest.  A nisi order was made that the applicant was entitled to the costs of the employees’ compensation application.

4.  The respondent applied to vary the nisi costs order on the ground that the award failed to beat the sanctioned payments made by the respondent.  Sanctioned payment was first made in the sum of HK$83,800 (on top of the advanced payments); and the deadline for accepting the same without leave expired on 9 December 2009.  Since then, the payment had been increased to ultimately HK$120,000.

5.  The award together with interest failed to beat even the first payment.  The respondent therefore requested that the applicant should pay the respondent’s costs incurred since 10 December 2009 on an indemnity basis with advanced interest thereon.

6.  After hearing, the Deputy District Judge in his written decision dated 25 February 2011 varied the nisi costs order to, among others, that:

(1)  the respondent should pay the costs of the applicant but the costs in respect of the issue of quantum shall be limited to those up to 9 December 2009;

(2)  interest on the award should run at 4% per annum from the date of accident but up to 9 December 2009 only;

(3)  the applicant should pay the respondent’s costs in respect of the issue of quantum from 10 December 2009 on an indemnity basis with advanced interest thereon at 2% above judgment rate;

(4)  the applicant should pay the respondent’s costs of the application to vary the nisi costs order;

(5)  all costs should be taxed, if not agreed; and

(6)  to the extent appropriate, the applicant’s own costs should be taxed subject to legal aid regulations.

7.  There came the question of whether the respondent is entitled to the return of the money paid into court.  The Deputy District Judge adjourned that question for the reasons as expressed in the judgment (at §24), namely: (i) not until after taxation and set-off would it be known which party ultimately shall pay the other’s costs; and (ii) the Director of Legal Aid (“DLA”) should be entitled to make submission on the question.

8.  The respondent’s costs that the applicant should pay pursuant to the above order have since been taxed at the total sum of HK$242,164.67.

9.  By summons filed on 22 February 2012, the respondent applies for payment out of the court the entire sum of HK$120,000 remaining in court with any accrued interest.  It also asked for costs of the application to be borne by the applicant.

10.  The summons was heard before me on 12 April 2012.  Representative of the DLA was present.  As agreed by the DLA, I ordered that a sum of HK$37,849.08 be paid out of the amount standing in court to the respondent.  What remains is a sum of HK$82,150.92, which is equivalent to the compensation coupled with interest up to 9 December 2009 as awarded to the applicant (i.e., HK$72,592.86 + HK$9,558.06).

11.  As to the disposal of such balance in court, I adjourned it to be decided on paper; and for such purpose the DLA and the respondent were invited to lodge and exchange written submissions.  The parties did so on 10 May 2012*.

12.  The respondent now informs this court that the applicant’s costs incurred when he was represented by the solicitors assigned by the DLA have just been agreed at HK$109,008.20.  No claim for costs incurred by the applicant in person since the discharge of the legal aid certificate has been put forward.

13.  In a nutshell, pursuant to the order of the Deputy District Judge, the respondent shall satisfy the award with interest in the sum of HK$82,150.92 and pay the applicant’s costs in the sum of HK$109,008.20.  Meanwhile, the applicant shall pay the respondent’s costs in the sum of HK$242,164.67.

THE PARTIES’ STANCE

14.  Clearly the respondent’s taxed costs that the applicant shall pay far exceed the award and his costs that the respondent shall pay.  The respondent argues that it should be entitled to set-off so that the amount in court should be paid out to it.

15.  The DLA disagrees.  Relying on the first charge under section 18A and the right to payment under section 19A of the Legal Aid Ordinance, Cap 91, the DLA argues that the amount in court represents money recovered by and due to the applicant pursuant to the award shall be paid to the DLA direct.  This is so, notwithstanding the discharge of the legal aid certificate.

THE SET-OFF

16.  Solicitors for the respondent refer to Lockley v Blood Transfusion Service [1992] 1 WLR 492.  In that case, the issue on appeal was whether in a case where one party is legally aided, an order for costs in favour of the other party can direct that those costs be set-off against either damages or costs to which the legally aided party has become or may in future become entitled in the action.  Save that there was in that case the additional issue of whether it was premature to make such an order, which does not exists in the present case, the question of whether the set-off is permissible is similar to what this court has to rule on now.

17.  In Lockley, the English Court of Appeal decided that such order of set-off is permissible. The set-off is no different from and no more extensive that the set-off available to or against parties who are not legally aided.  The broad criterion for the application of set-off is that the plaintiff’s claim and the defendant’s claim are so closely connected that it would inequitable to allow the plaintiff’s claim without taking into account the defendant’s claim.  The defendant’s claim must in equity impeach the plaintiff’s claim.

18.  That the DLA has pursuant to section 18A(1) a first charge on what is recovered or preserved for the aided person in the proceedings does not trump the application of the set-off permitted in equity.  Section 18A(4) of Cap 91 provides that:

“The charge created by subsection (1) on any damages or costs shall not prevent a court …… allowing them to be set off against other damages or costs in any case where a solicitor’s lien for costs would not prevent it.”

19.  Section 18A(4) of Cap 91 is similar in terms to section 16(8) of the Legal Aid Act 1988 under consideration in Lockley.  The appellate court there construed that subsection of the Act as simply preserving the rights of set-off that the general law allow and protecting them against the charge created by section 16(6) of the Act (which was similar in terms to section 18A(1) of Cap 91).

20.  Lockley was discussed in the post-CJR case of Singh Harpel v Najib Transport, DCPI 494/2009 (23 November 2009).  The plaintiff’s claim for employees’ compensation was tried before this court where I made an adverse costs order against him.  In the personal injuries action (arising out of the same accident) tried before H H Judge Lok, the defendant (respondent in the employees’ compensation case) sought to rely on that judgment debt in the employees’ compensation case by way of equitable set-off to reduce or extinguish the amount of damages which, if liability was established, might be awarded to the plaintiff.

21.  Referring to Lockley, the learned Judge in Singh Harpel found no material difference between the legal aid statutory frameworks in England and Hong Kong; and the employees’ compensation case and the person injuries action, though being different legal proceedings, were closely connected to permit equity to intervene.  The set-off was ordered.

22.  In the present case, there is not even complication by the consideration of costs orders in different sets of legal proceedings as in Singh Harpel.  It was in the present case the same order in the same proceedings.

THE AMOUNT IN COURT

23.  Section 18A confers on the DLA the right of a first charge on any property recovered or preserved for the aided person in the proceedings.  This applies to the award that the respondent has to satisfy.  The amount in court originated as part of the sanctioned payment that the applicant has never accepted.  Whilst in the normal course of event the amount in court could have been paid out in satisfaction of the award, this is not the applicant’s right and leave of the court would have been required.  The amount in court is not itself property recovered or preserved for the applicant as an aided person for the purpose of section 18A.

24.  Section 19A(1) of Cap 91 provides that all moneys which may become payable to an aided person by virtue of an order shall be paid to the DLA direct; and section 19A(4) provides that only the DLA shall be capable of giving a good discharge for moneys which may become payable to the DLA under that section.  However, as a result of the set-off in the present case, simply no money becomes payable to the applicant for the purpose of section 19A.

ORDER

25.  I therefore order that the amount of HK$82,150.92 in court be paid out (with interest, if any) to the respondent through its solicitors.  The respondent shall have against the applicant the costs of this application, including the costs of the last hearing that has been reserved.  Costs shall be taxed, if not agreed.