LEUNG SHUI CHEONG v. AU CHUNG YIN JIMMY

CACV 391/2022, [2023] HKCA 963

On appeal from [2022] HKDC 40

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 391 OF 2022

(ON APPEAL FROM DCPI NO 1063 OF 2020)

________________________

________________________

________________________________________________

REASONS FOR JUDGMENT AND DECISION ON COSTS

________________________________________________

Hon Kwan VP (giving the Reasons for Judgment and Decision on Costs):

1.  This is the defendant’s appeal against the judgment of Master Matthew Leung in an assessment of damages of a personal injuries action handed down on 14 January 2022 (“Judgment”)[1]. The appeal was brought with leave granted by the master on 19 September 2022 (“Leave Decision”)[2].

2.  On 20 May 2017, the plaintiff was injured at work in a traffic accident by a car driven by the defendant (“1^st Accident”). He then sustained injuries also at work in a second accident on 9 September 2017 (“2^nd Accident”), in which the defendant was not involved. The plaintiff brought this action against the defendant to recover his loss and damage sustained in the 1^st Accident. He was legally represented in the District Court until the hearing of the assessment of damages. On appeal, Mr Kay Chan[3] appeared for him on a pro bono basis.

3.  By the Judgment, the master assessed damages payable by the defendant to the plaintiff in the amount of $261,591, made up of $100,000 (pain and suffering and loss of amenities), $106,591 (pre-trial loss of earnings), $20,000 (loss of earning capacity) and $35,000 (special damages). He ordered $77,799 to be deducted from $261,591, being the value decided by the master as compensation which has been paid to the plaintiff by his employer under the Employees’ Compensation Ordinance, Cap 282 (“ECO”)[4] in respect of the injury sustained in the 1^st Accident. Hence, the net amount awarded to the plaintiff was $183,792, with interests on various items of damages on the usual basis. A costs order nisi in favour of the plaintiff was made.

4.  Two broad grounds of appeal are advanced by Mr Clark Wang for the defendant. Mr Wang did not appear at the assessment hearing.

5.  The second ground is conceded by Mr Chan. This relates to the plaintiff’s pre-trial loss of earnings (including loss of mandatory provident fund contribution) from 20 May 2017 to 10 October 2018[5] assessed at $106,591. The master wrongly adopted the average monthly earnings between 2017 and 2021 (using an annual increase of 5%) to assess the income loss from 20 May 2017 to 10 October 2018[6]. Had he assessed the monthly earnings correctly, the pre-trial loss earnings for the relevant period should have been $92,790.96. I agree with this.

6.  The remaining ground of appeal relates to the deduction of $77,799 from the damages assessed. The master did so pursuant to section 26, being the provision relied on by the defendant’s trial counsel. The master agreed that section 25 is the applicable provision upon hearing Mr Wang in the leave application[7]. It is not in dispute that section 25 is the correct provision.

7.  It is the defendant’s contention before the master and on appeal that full credit should be given to the compensation paid by the plaintiff’s employer in respect of the 1^st Accident in the sum of $283,297.72. In light of the amount of damages assessed at $261,591 (which should be reduced by $13,800 for the error regarding pre-trial loss of earnings), no damages would be payable to the plaintiff. And the defendant should be entitled to costs against the plaintiff for the hearing below.

8.  The plaintiff’s contention is that the deduction of $77,799 should be affirmed on additional grounds. A respondent’s notice was filed for this purpose.

9.  The amount of compensation that should be deducted from the common law damages in this situation turns on the correct interpretation of section 25.

Background

10.  I will first set out the relevant background matters.

11.  At the time of the 1^st Accident on 20 May 2017, the plaintiff was employed as a food delivery worker. He was riding a motor cycle when he was hit by the defendant’s car from behind, causing a jerk at his neck, bilateral forearm numbness, neck and low back pain. He was not hospitalised but was given sick leave and medicine. He returned to work on 1 June 2017 although he was still receiving physiotherapy treatment. The defendant was convicted of careless driving.

12.  On 9 September 2017, the plaintiff had the 2^nd Accident when his motor cycle skidded causing him to lose balance and fall on one side. He sustained contusion of the left leg and left elbow abrasion. He was admitted to hospital for one night for observation. He attempted to resume work two weeks later. In mid-October 2017, he attended hospital complaining of left lateral lower chest pain and left forearm pain. He was found to have fractured ribs. He went to Taiwan to visit his family and to receive medical treatment. On his return to Hong Kong, he attended various out-patient clinics of the Hospital Authority and in the private sector for treatment and assessment. He was also treated for anxiety, insomnia and acute stress reaction. He was given sick leave intermittently from 20 May 2017 to 13 February 2019, a total of 446 days. He did not return to work until April 2019, as an assistant to a cook in a fast food restaurant.

13.  On 27 February 2019, the Employees’ Compensation (Ordinary Assessment) Board issued two Certificates of Assessment (“Form 7”) under section 16F, one in respect of each accident. For the 1^st Accident, the injury was certified as “neck and bilateral elbow injury resulting in neck pain and elbow pain”; the periods of absence from duty necessary as a result of the injury was from 20 May 2017 to 5 June 2017 and from 27 December 2017 to 13 February 2019; the loss of earning capacity permanently caused by the injury was 2%. For the 2^nd Accident, the injury was certified as “left chest wall and left calf injury resulting in left chest wall and left calf pain”; the periods of absence from duty necessary as a result of the injury was from 10 September 2017 to 20 September 2017 and from 12 October 2017 to 13 February 2019; the loss of earning capacity permanently caused by the injury was 1.5%. It was noted in each Form 7 that part of the sick leave overlapped with the sick leave under the other Form 7.

14.  On 6 March 2019, the Commissioner for Labour issued two Certificates of Compensation Assessment pursuant to section 16A(2)[8] (“Form 5”), one in respect of each accident.

15.  The Form 5 for the 1^st Accident (“1^st Form 5”) certified the periods of absence from duty necessary as a result of the injury at a total of 414 days and the loss of earning capacity permanently caused by the injury at 2%. The amount of compensation certified was in the sum of $283,297.72 and was made up as follows:

(a)  Periodical payments[9]:

(i) Within 12 months from date of accident: $22,355.16/30 x 154.0 x 4/5 = $91,805.19

(ii) After 12 months from date of accident: $22,869.33/30 x 260.0 x 4/5 = $158,560.69

(b)  Compensation for permanent incapacity[10]:

72 x $22,869.33 x 2% = $32,931.84

16.  The Form 5 for the 2^nd Accident (“2^nd Form 5”) certified the periods of absence from duty necessary as a result of the injury at 85 days and the loss of earning capacity permanently caused by the injury at 1.5%. The total amount of compensation was $62,725.68 and was calculated as follows:

(a)  Periodical payments:

(i) Within 12 months from date of accident: $21,001.90/30 x 85.0 x 4/5 = $47,604.31

(b)  Compensation for permanent incapacity:

48 x $21,001.90 x 1.5% = $15,121.37

17.  No objection or appeal was raised by the employer or the plaintiff in respect of the two Form 7 certificates or the two Form 5 certificates.

18.  By a letter dated 18 April 2019, the plaintiff’s former solicitors sent copies of the 1^st Form 5 and the corresponding Form 7 to the defendant’s solicitors. It was stated that “the total amount of employees’ compensation in the sum of $283,297.72 was duly received by [the plaintiff].”

19.  The plaintiff’s employer prepared a record setting out the total compensation certified in the 1^st Form 5 and 2^nd Form 5 ($346,023.40) and the payments in full to the plaintiff. The plaintiff signed on the record to acknowledge receipt on 9 May 2019.

20.  The plaintiff issued the writ in this action against the defendant on 11 May 2020. The employer did not join in this action to recover from the defendant the amount of compensation that had been paid to the plaintiff.

21.  In the statement of damages filed on 7 January 2021 by his new solicitors (the same solicitors acting for him on appeal), it was stated that the plaintiff “will give credit for the employees’ compensation received in the amount of HK$283,297.72” and under the “Summary of Quantum”, $283,297.72 was proposed to be deducted from the claim for damages being employees’ compensation received.

22.  On 11 January 2021, a joint expert report was prepared by the plaintiff’s expert Dr Lam Chi Keung Johnson and the defendant’s expert Dr Chun Siu Yeung. Both doctors agreed that the sprain injury on the neck and both elbows sustained in the 1^st Accident were minor trauma, and the subsequent sick leave and treatments should be very largely related to the 2^nd Accident and not due to the 1^st Accident. For the injury sustained in both accidents, Dr Chun assessed the plaintiff to have 1% whole person impairment and would apportion 20% of the 1% whole person impairment to the 1^st Accident. Dr Lam estimated the injury in the 1^st Accident should carry 0.5% residual pain for the neck and elbows and had no objection to Dr Chun’s apportionment for the two accidents. The doctors agreed that sick leave up to 10 October 2018 was within reasonable limit and that 20% of the sick leave should be apportioned to the 1^st Accident.

23.  A revised statement of damages was filed on behalf of the plaintiff on 27 April 2021 by the same solicitors. Under the heading of “Related Employees’ Compensation”, it was stated as follows:

“In the related Employees’ Compensation, the Labour Department assessed the amount of HK$39,932.84[11] for Compensation for permanent incapacity and the total sum of HK$250,365.88 for periodical payment during the sick leave of 414 days. According to the [joint medical report], Dr Lam and Dr Chun opined that 20% of the sick leave is apportioned to the accident on 20 May 2017. Therefore, the total amount of employees’ compensation related to the accident on 20 May 2017 is in the sum of HK$83,005.02 (HK$32,932.84[12] + HK$250,365.88 x 20%). The Plaintiff will give credit to the employees’ compensation related to the accident on 20 May 2017 in the amount of HK$83,005.02.”

24.  Under the “Summary of Quantum” in the revised statement of damages, $83,005.02 was proposed to be deducted for employees’ compensation received from the plaintiff’s claim for damages.

The Judgment

25.  The master accepted the evidence of the medical experts. He awarded damages for pre-trial loss of earnings on the basis that the plaintiff had suffered loss between the dates of the two accidents (total of 113 days, quantified at $39,605), and 20% of the loss from 10 to 20 September 2017 and from 12 October 2017 to 10 October 2018 (total of 375 days, quantified at $61,910), arriving at $106,591 for damages under this head (($39,605 + $61,910) x 1.05[13]).

26.  The master rejected the defendant’s contention that the entire compensation of $283,297.72 in the 1^st Form 5 should be deducted from the claim for damages. His reasons were as follows.

27.  He referred to section 26(1) which reads:

“26. Remedies independently of Ordinance against employer

Where any injury is caused to an employee by the negligence, breach of statutory duty or other wrongful act or omission of the employer, or of any person for whose act or default the employer is responsible, nothing in this Ordinance shall limit or in any way affect any civil liability of the employer independently of this Ordinance:

Provided that any damages awarded against an employer in an action at common law or under any enactment in respect of any such negligence, breach of statutory duty, wrongful act or omission, shall be reduced by the value, as decided by the Court of First Instance or the District Court, as the case may be, of any compensation which has been paid or is payable under the provisions of this Ordinance in respect of the injury sustained by the employee.”

28.  The master took the view that where any common law damages to be awarded by him in this action are to be reduced by employees’ compensation, as it is stated in the proviso to section 26(1) that “any damages awarded … shall be reduced by the value, as decided by … the District Court, … of any compensation which has been paid or is payable under the provisions of this Ordinance in respect of the injury sustained by the employee”, the court is not bound by the amount of compensation assessed by the Commissioner in the 1^st Form 5 of $283,297.72. The court should assess a fair and equitable amount of the employees’ compensation that should be deducted from the damages awarded.

29.  As for the defendant’s contention that the plaintiff did not raise any objection to the amount of compensation assessed in the 1^st Form 5 (under section 16A(3)), or apply to the court to cancel the 1^st Form 5 (under section 16B(1)), or appeal to the court against the assessment in the 1^st Form 5 (under section 18(1)) and hence the compensation assessed in the 1^st Form 5 is binding on the plaintiff, the master took the view that the binding effect of the 1^st Form 5 is as regards the assessment of the compensation, which was not a matter of the court’s concern or within the court’s jurisdiction. In this instance, the court was concerned with the amount of compensation that should be deducted from the damages awarded, and, as stated in the proviso to section 26(1), “the value … of any compensation which has been paid or is payable” which falls to be reduced is to be “decided by … the District Court”, not by the Commissioner in a Form 5[14].

30.  The master rejected the defendant’s contention that as the plaintiff had in fact received compensation of $283,297.72 under the 1^st Form 5, it would be unfair to the defendant if the entire amount of compensation was not deducted from the award of damages. No reasons are required to be given in a Form 7 issued by the Employees’ Compensation (Ordinary Assessment) Board or a Form 5 issued by the Commissioner. It was noted in each Form 7 there was overlap in the sick leave period. The Commissioner would appear to have apportioned all the overlapping sick leave period of 397 days (from 27 December 2017 to 13 February 2019) to the 1^st Form 5, leaving the non-overlapping period of 85 days (from 10 to 20 September 2017 and from 12 October 2017 to 26 December 2017) to the 2^nd Form 5. The master did not think this approach was correct, as, on the medical evidence before him, the overlapping sick leave period was attributable to both accidents. It would not be fair to the plaintiff to deduct the entire compensation in the 1^st Form 5 from the damages award. The court should determine the proper value of the compensation to be deducted, this would avoid double recovery by the plaintiff and would be fairer to all parties[15].

31.  As for the proper value of the compensation to be deducted, the court would need to ascertain which period of the sick leave should be attributable to which accident. On the available evidence, of the compensation assessed in the 1^st Form 5, permanent incapacity of $32,931.84 was attributable to the 1^st Accident. As for the periodical payments, 17 days of sick leave (from 20 May 2017 to 5 June 2017) were attributable to the 1^st Accident and only 20% of the sick leave period from 10 September 2017 to 10 October 2018 was attributable to the 1^st Accident. So the calculation for the periodical payments attributable to the 1^st Accident would be:

(a)  $22,355.16/30 x 4/5 x (17 + 144 x 20%) = $27,303

(b)  $22,869.33/30 x 4/5 x 144 x 20% = $17,564

32.  On the above basis, the master arrived at the value of the compensation to be deducted from the damages claim as follows:

$32,932 + $27,303 + $17,564 = $77,799[16]

33.  Accordingly, the master deducted $77,799 from the amount of damages assessed and awarded the net sum of $183,792 to the plaintiff.

The construction of section 25(1)

34.  The master is in error in applying section 26(1) in this instance. Section 26(1) applies to the case “Where any injury is caused to an employee by the negligence, breach of statutory duty or other wrongful act or omission of the employer, or of any person for whose act or default the employer is responsible” (emphasis added), which is not the case in respect of the 1^st Accident. The proviso to section 26(1) governs the situation where “any damages [are] awarded against an employer[17] in an action at common law or under any enactment in respect of any such negligence, breach of statutory duty, wrongful act or omission”, which is not the case here. His reasoning in invoking the wording of section 26(1) to support his view that it is for the court to determine the proper value of the compensation to be deducted from the damages claim cannot be supported.

35.  The applicable provision is section 25 and subsection (1) reads as follows:

“25. Remedies against both employer and third party

(1) Where the injury in respect of which compensation is payable was caused in circumstances creating a legal liability in some person other than the employer (in this section referred to as the third party) to pay damages to the employee in respect thereof—

(a) the employee may both claim compensation under this Ordinance and take proceedings against the third party in the Court of First Instance or, subject to the provisions of the District Court Ordinance (Cap. 336) relating to the limits of jurisdiction, in the District Court to recover damages:

Provided that where any such proceedings are instituted the court in which the action is tried shall, in awarding damages, have regard to the amount which, by virtue of paragraph (b), has become or is likely to become payable to the employer by the third party; and

(b) the employer by whom compensation is payable, and any person who may be called upon to pay an indemnity under section 24 in the case of an employee employed by a sub-contractor, shall have a right of action against the third party for the recovery of any sum which he is obliged to pay as a result of the accident, whether by way of compensation or indemnity or by virtue of any agreement made with the employee prior to the accident, and may exercise such right either by joining in an action begun by the employee against the third party or by instituting separate proceedings:

Provided that the amount recoverable under this paragraph shall not exceed the amount of damages, if any, which in the opinion of the court would have been awarded to the employee but for the provisions of this Ordinance.”

36.  The meaning and effect of this provision is reasonably clear.

37.  In this instance, as envisaged in section 25(1)(a), the injury in respect of which compensation is payable was caused in circumstances creating a legal liability in a third party, namely, the defendant, and the plaintiff may both claim compensation against his employer under the ECO and take proceedings against the defendant at common law.

38.  Under section 25(1)(b), the employer, by whom compensation was payable, shall have a right of action against the defendant for the recovery of “any sum which he is obliged to pay as a result of the accident, whether by way of compensation or indemnity or by virtue of any agreement made with the employee prior to the accident”. By the proviso to section 25(1)(b), the amount recoverable thereunder shall not exceed the amount of damages which in the opinion of the court would have been awarded to the plaintiff but for the provisions of the ECO.

39.  As provided in the proviso to section 25(1)(a), in awarding damages in this instance, the court shall “have regard to the amount which, by virtue of paragraph (b), has become or is likely to become payable” to the employer by the defendant.

40.  The dispute turns on “any sum which [the employer] is obliged to pay as a result of the accident” in section 25(1)(b), for which the employer has a right of action to recover from the third party.

41.  Mr Wang submitted that by virtue of section 25(1)(b), the employer is entitled to be indemnified by the defendant of the compensation that the employer is liable to and had actually paid according to the 1^st Form 5, subject to the cap of the amount of damages.

42.  Mr Chan contended that “any sum” in “any sum which [the employer] is obliged to pay as a result of the accident” means that the sum that the employer shall have a right of action to recover against the third party needs not be the whole sum but it needs to be “as a result of the accident”.

(1)  The defendant’s arguments

43.  Mr Wang submitted that the master’s approach of re-assessing the compensation to be deducted from the damages award has caused “double prejudice” to the defendant and a “corresponding double recovery” to the plaintiff, because:

(a)  The defendant would have to pay $183,792 to the plaintiff pursuant to the Judgment, and $261,591[18] to the employer pursuant to section 25(1)(b), a total sum of $445,383.

(b)  The plaintiff would receive $183,792 pursuant to the Judgment from the defendant, in addition to $283,297.72 pursuant to the 1^st Form 5 received as compensation from the employer, a total sum of $467,089.72.

44.  He pointed out that both figures of $445,383 and $467,089.72 are significantly higher than the actual damages suffered by the plaintiff as a result of the 1^st Accident, which have been assessed by the master in the sum of $261,591. This discrepancy is wrong, unfair and unjust.

45.  Section 25(1) provides for a deduction and reimbursement mechanism to prevent double prejudice and double compensation. It allows the employee to claim damages from the third party tortfeasor and also claim compensation from the employer who was not at fault. The proviso to section 25(1)(a) prescribes that such damages awarded shall “have regard to the amount which, by virtue of paragraph (b), has become or is likely to become payable to the employer by the third party”. The employer has a right of action under section 25(1)(b) for recovery of “any sum which he is obliged to pay as a result of the accident, whether by way of compensation or indemnity or by virtue of any agreement made with the employee prior to the accident”, and the proviso to section 25(1)(b) caps the recovery of the employer at the “amount of damages” payable to the employee. Thus analysed, for an accident involving a blameless employer and a third party tortfeasor, where the common law damages are larger than the employee’s compensation the tortfeasor would pay damages to the employee in two parts: (a) indirect payment of the amount of compensation through the employer; and (b) direct payment of the difference between the damages and the compensation.

46.  The employer has a right of action against the defendant to recover the amount of $261,591 under section 25(1)(b). Hence, in assessing the amount of damages payable by the defendant to the plaintiff directly under section 25(1)(a), the court shall “have regard to the amount” of $261,591 which, “by virtue of paragraph (b), has become … payable to the employer” by the defendant. The full amount of $261,591 should be deducted.

47.  Mr Wang addressed the two queries raised by the master in §13 of the Leave Decision, namely, (a) whether section 25(1) allows deduction of an amount different from a Form 5; and (b) whether the amount assessed under the 1^st Form 5 was in reality the amount of compensation the plaintiff received regarding the 1^st Accident.

48.  On the first issue, he submitted that the assessment in the 1^st Form 5 is final and conclusive in this situation. The ECO provides for a two-tier review mechanism to determine the amount of compensation. A Form 5 may be issued by the Commissioner under section 16A(2). This may be reviewed upon objection by the employer, the employee or the Employees Compensation Assistance Fund Board (“ECAFB”) under sections 16A(3) to (6), leading to a Form 6 which replaces Form 5. Form 5 or Form 6 may be further appealed to the court under section 16B or section 18. Without any objection or appeal, a Form 5 is final so that the employer “shall pay to the employee” accordingly (sections 16A(9) and (10)), and such Form 5 may, on application to the court by the employer, the employee, the ECAFB or the Commissioner, be made an order of the court (section 16A(8)). The objection and appeal mechanism in sections 16A to 18A of the ECO is designed to achieve finality. The ECO as a whole is designed to enable employees to obtain compensation reasonably speedily.

49.  As stated by Hunter JA in Chan Kit v Sum Wo Industrial Manufactory [1989] 2 HKLR 230 at 232B to D:

“… the scheme of the Ordinance up to this point is to seek to arrive at an administrative solution to claims of this nature. Quite an elaborate structure is established starting with the Commissioner, then either an Ordinary or a Special Assessment Board under ss. 16D and E; and then with review procedures either at the instance of the party under s. 16G or on the Board’s own motion under s. 16GA. The plain intention is that these procedures will be final and accepted by the parties. The section then provides for an appeal:

‘(2) No appeal shall lie after the expiry of 6 months from the date of the decision ...’[19]

with certain provisos. Plainly therefore the intent is that the assessments are to be final unless appealed within a limited period of time.”[20]

50.  As there was no objection or appeal by any one against the 1^st Form 5, it has become final and conclusive. The position is further solidified when the payment thereunder was accepted by the plaintiff. The time limit of appeal of six months from the date of issue of the 1^st Form 5 has long expired. The plaintiff has never invoked the appeal jurisdiction as regards the assessment in the 1^st Form 5. The court’s jurisdiction to deal with such an appeal must be duly and plainly invoked by the intended appellant[21]. The master has no jurisdiction to revisit the assessment without a proper cancellation under section 16B or an appeal under section 18. The compensation as assessed is binding on the plaintiff and the employer, and cannot be affected by a unilateral revocation on the part of the plaintiff in the revised statement of damages and the plaintiff’s stance in this action, or a subsequent legal decision to which the employer is not a party.

51.  If the plaintiff were permitted to resile from his acceptance of the assessment in the 1^st Form 5, the defendant would suffer double prejudice as submitted earlier. When the employer seeks recovery from the defendant, the defendant has no alternative but to pay the whole sum that the employer “is obliged to pay” as assessed in the 1^st Form 5. His only defence is the cap in the proviso to section 25(1)(b). He cannot query the figure assessed in the 1^st Form 5, not having any locus to raise objection when only the employer, the employee or the ECAFB may do so under section 16A(3)(a).

52.  As for the second issue, Mr Wang submitted that the amount assessed under the 1^st Form 5 was indeed the amount of compensation the plaintiff received regarding the 1^st Accident, being $283,297.72. What the plaintiff seeks to do is to change the apportionment unilaterally and belatedly when he filed the revised statement of damages on 27 April 2021. This is an irregular appeal against the 1^st Form 5 which is impermissible.

53.  Furthermore, the apportionment of the total compensation of $346,023.40 has been fixed at the time of full payment on 9 May 2019 as evidenced by the record signed by the plaintiff. As a matter of law, this apportionment cannot be changed unilaterally by the plaintiff. Where several debts are due, the debtor may, when making payment, appropriate the money paid to a particular debt or debts, and if the creditor accepts the payment so appropriated, he must apply it in the manner directed by the debtor. The creditor’s right to appropriate only arises where the debtor has not exercised his right to appropriate[22]. In this instance, the appropriation was validly made, in accordance with the apportionment in the 1^st Form 5 and 2^nd Form 5, and communicated to the plaintiff. The apportionment is irrevocable and not open to challenge.

(2)  The plaintiff’s arguments

54.  Mr Chan placed emphasis on the finding made by the master that only 20% of the sick leave stated in the 1^st Form 5 was attributable to the 1^st Accident, whereas no reason was provided by the Commissioner for allocating 414 days of sick leave in the 1^st Form 5 and only 85 days of sick leave in the 2^nd Form 5. The master has taken into account the joint expert report and the consensus of the medical experts in making the finding that 20% of the sick leave period between 10 September 2017 and 10 October 2018 was relevant to the 1^st Accident. He found that the defendant was not responsible for all the injuries suffered by the plaintiff resulting in the sick leave under the 1^st Form 5. Based on this finding, only 20% of the relevant sick leave was taken as the basis of assessment for pre-trial loss of earnings. Also based on his finding, he assessed the amount of $77,799 as representing the compensation that should be deducted from the damages claim. The defendant is seeking to utilise the Commissioner’s mistake in apportioning the sick leave to save him from paying any damages and potentially costs to the plaintiff.

55.  Mr Chan relied on the general principle of compensation that the award of damages should be fair, reasonable and just. The master is duty bound to consider all relevant circumstances in deciding the appropriate amount of damages to be awarded. He would need to apply the principles of causation, since the plaintiff was injured in the 2^nd Accident which was a supervening event breaking the chain of causation for losses stemming from the 1^st Accident. Asking the court to adopt 20% of the relevant sick leave as the basis to assess damages but reduce damages by the entire amount of compensation in the 1^st Form 5 of $283,297.72 would wipe out the damages claim completely and is contrary to the principles of causation.

56.  As for the construction of section 25(1), Mr Chan submitted there is no express provision for reduction. Section 25(1)(a) merely provides that the court “shall, in awarding damages, have regard to the amount” in section 25(1)(b). There is no mechanism for mandatory reduction from common law damages, in contrast to the express provision in section 26(1) (“any damages awarded against an employer in an action at common law … shall be reduced by the value … of any compensation which has been paid or is payable”).

57.  He focussed on the words “any sum” in section 25(1)(b) (“the employer … shall have a right of action against the third party for the recovery of any sum which he is obliged to pay as a result of the accident”) and submitted that they provide support for the construction that the sum of compensation to be reduced does not need to be the whole sum, but it needs to be “as a result of the accident”. The amount that the employer is “obliged to pay” may be construed as covering the amount of compensation assessed in a Form 5, but this must be qualified by the words “as a result of the accident”. Whether the obligation to pay was “as a result of the accident” must require a finding by the court, and this is usually done in the personal injuries proceedings.

58.  The master has correctly considered the matter with the assistance of the joint expert report, and made a finding that only 20% of the relevant sick leave should be regarded as a result of the 1^st Accident, which in turn would reduce the compensation in the 1^st Form 5 that should be deducted from the damages claim. Hence, the master’s ruling of the appropriate deduction is the sum that the employer “is obliged to pay as a result of the accident”.

59.  As for the proviso to section 25(1)(b), it only limits the amount recoverable by the employer to the amount of damages “which in the opinion of the court would have been awarded to the employee but for the provisions of [the ECO]”. It does not provide for any minimum amount to be recovered by the employer. Mr Chan also submitted that the phrase “in the opinion of the court” supports his contention there is clear legislative intention that the amount of damages limiting the recoverable sum by the employer is to be determined by the court.

60.  Mr Chan contended that section 25(1) does not manifest a legislative intent that restricts the court’s power and mandate the reduction of the whole amount of compensation in the 1^st Form 5 from the damages claim. He submitted that this interpretation is supported by these words of Rogers VP as italicised in construing section 25(1)(b) in Yardway Motors Ltd v Tam Siu Lun [2005] 2 HKLRD 118 at §2:

“I have no difficulty in interpreting s.25(1)(b) of the Employees’ Compensation Ordinance (Cap.282) (the Ordinance) as enabling the plaintiff, who is “the employer by whom compensation is payable” as having a right of action against the defendant, who is in this context the ‘third party’, for the recovery of any sum which the plaintiff is obliged to pay by way of compensation under s.6 of that Ordinance. The question then arises as to whether that is the whole sum or whether it can be part of the sum. Apart from the fact that the greater would include the lesser, I consider that the construction of the Ordinance itself envisages that the ‘sum’ which may be recoverable under s.25 may not be the whole amount which the plaintiff has to pay in compensation. Section 25(1)(b) limits the amount recoverable by the employer to the amount of damages that may be awarded in for example a negligence action. Section 27, for example, provides that a lesser sum than the amount paid by the plaintiff in compensation may be recoverable if the employee was contributorily negligent, even though the employer himself may be blameless. This is no doubt in keeping with the general purpose of the Ordinance: the employer is liable to make compensation in respect of any accident which happens at work irrespective of fault and a third party only becomes liable in respect of the compensation payable by the employer if there is fault on the part of the third party. In respect of the third party, his liability to make contribution is fault based. Under s.25 he only incurs liability if he is at fault. Unlike the employer, if the employee was at fault, his liability is reduced.” (Emphasis supplied.)

61.  In making the deduction in the manner he did, the master has stayed within his common law jurisdiction. He did not amend the 1^st Form 5. He was only exercising his jurisdiction in assessing damages for personal injuries. It is trite that a Form 5 does not bind the court in assessing common law damages. The master’s jurisdiction is catered for by section 25(1), which provides how the court should treat the employees’ compensation in claims for damages. The master did so correctly, even though he wrongly referred to section 26(1), as he did “have regard to the amount which, by virtue of paragraph (b), has become or is likely to become payable to the employer by the third party” and reduced the amount in the 1^st Form 5 to reflect the sick leave that resulted from the 1^st Accident.

62.  There is a conflict in the Commissioner’s apportionment and assessment in the two Form 5 certificates and the master’s finding. The master resolved the conflict in following the requirements of section 25 “inadvertently” and made a common law damages assessment. In so doing, he did not disturb the 1^st Form 5 in any way. The 1^st Form 5 can be used in recovery proceedings to be brought by the employer, but the defendant would have a defence based on the finding of the master in the Judgment if upheld in this appeal, so that the employer can only recover $77,799 from the defendant. The defendant is protected in the recovery proceedings because of the phrase “as a result of the accident” in section 25(1)(b).

63.  As the defendant is not obliged to indemnify the employer in the full amount of the 1^st Form 5 but only to the extent of $77,799, he will not be prejudiced by the Judgment. There is no double compensation to the employer who can only recover $77,799 from the defendant.

64.  If the employer should be aggrieved in recovering only $77,799 from the defendant and not the full amount of compensation paid under the 1^st Form 5, the employer can appeal against the assessment in the 1^st Form 5 under section 18 out of time. The plaintiff can also appeal against the assessment in the 2^nd Form 5 out of time and the two appeals could be heard together. In light of the Judgment, the court hearing the appeals should reduce the compensation in the 1^st Form 5 according to the master’s finding. The outcome of the two appeals would be the redistribution of the sick leave periods between the 1^st Form 5 and the 2^nd Form 5. This would make no practical difference to the compensation paid by the employer.

(3)  Discussion

65.  On the proper construction of section 25(1), I do not agree with Mr Chan it is permissible to bring about a redistribution of the sick leave periods between the 1^st Form 5 and the 2^nd Form 5 firstly in the present proceedings between the plaintiff and the defendant, then in the recovery proceedings between the employer and the defendant, and lastly in the appeals against the assessment in the 1^st Form 5 and the 2^nd Form 5 to be brought by the employer and the plaintiff respectively out of time. Specific and elaborate provisions are laid down in the assessment of compensation by the Commissioner issuing a Form 5, the raising of objections only by the parties as stipulated (the employer, the employee and the ECAFB), and the bringing of applications for cancellation and appeals under section 16B and section 18. Specific time limits are provided with regard to each of the above measures. Quite clearly, the intention is that unless the assessment by the Commissioner is objected to or appealed within time, the certificate he issued in a Form 5 is final and may not be challenged or re-opened in subsequent proceedings. As the plaintiff has not invoked properly or at all the cancellation or appeal jurisdiction regarding the assessment in the 1^st Form 5, he is bound by it and is not allowed to revoke the apportionment in it unilaterally, quite apart from the legal principle mentioned by Mr Wang on the appropriation of debts by a debtor.

66.  Under the ECO, a third party tortfeasor has no locus to raise objection or appeal against the assessment made by the Commissioner in a Form 5. He is simply to pay any damages awarded by the court to the employee and, in awarding damages, the court is to have regard to the amount of compensation which the blameless employer may recover from the third party tortfeasor under section 25(1)(b) (“the recovery of any sum which [the employer] is obliged to pay as a result of the accident”).

67.  Much was made by Mr Chan of the words “as a result of the accident”. He submitted that this must be decided by the court with regard to the principles of causation. I do not agree with this. This must be read in the context of the provision, the relevant part of which reads: “the employer … shall have a right of action against the third party for the recovery of any sum which he is obliged to pay as a result of the accident, whether by way of compensation or indemnity or by virtue of any agreement made with the employee prior to the accident”. The fact that the assessment or apportionment was made in a Form 5 does not mean that the Commissioner has not determined that the compensation the employer is obliged to pay had arisen as a result of the accident. To the contrary, the Commissioner makes an assessment in section 16A(2) in the circumstances as provided in section 16A(1), which reads 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.”

68.  Nor do I agree with Mr Chan that “any sum” would tend to support a construction that the sum of compensation to be deducted does not need to be the whole sum but could be a lesser amount. As submitted by Mr Wang, “any sum” merely connotes any sum that the employer is obliged to pay as a result of the accident, “whether by way of compensation or indemnity or by virtue of any agreement made with the employee prior to the accident”.

69.  As for the statement of Rogers VP in Yardway Motors Ltd v Tam Siu Lun at §2 which gives some support to Mr Chan’s contention that the sum recoverable by the employer under section 25(1)(b) “may not be the whole amount” which the employer has to pay in compensation, this statement must be read in context with the rest of the judgment of Rogers VP, who went on to say at §4 that “the question remains however, as to whether the claim which the employer can make is liable to be reduced because of his own fault”, which is not the situation in the present case. Rogers VP noted that the ECO did not prevent that but similarly did not provide for it, and it was in this respect that the Civil Liability (Contribution) Ordinance, Cap 377 (“CLCO”) was in point. He mentioned section 9(3) of the CLCO which provided that the right to recover contribution under the CLCO superseded any other right to recover contribution, and this included section 25 under the ECO. The appeal was dismissed on the ground that the employer was entitled to claim contribution from the third party tortfeasor under the CLCO.

70.  What was said by Rogers VP in that case about section 25 was obiter. Besides, the other two members of the court (Le Pichon JA and Yuen JA) expressed a contrary view to Rogers VP on the applicability of section 25(1) to the factual situation. Le Pichon JA was of the view that “s. 25 does not allow a claim for contribution by the employer who is himself partially responsible for the accident” (at §41). Yuen JA was of the same view that section 25 is intended to provide only for recovery of compensation paid by a blameless employer. Specifically, Yuen JA said this about section 25(1)(b) in §50:

“The italicized words [“recovery of any sum which he is obliged to pay … by way of compensation”] show that the employer has a right to recover from the third party the whole of the compensation he (the employer) is obliged to pay the employee. It is not intended that there would be recovery of a lesser sum, reduced on account of the employer’s own liability for the injury. It has been held by this Court (Penlington, Nazareth and Mortimer JJA) that the words “any sum which he is obliged to pay” provides a full indemnity, not only in respect of compensation, but also interest and costs, both payable by the employer to the employee as well as the employer’s own costs (Wong Man Yip v Wah Kwong Construction Material [1994] 2 HKC 214). At p.220, Mortimer JA noted that ‘if the intention is to limit the meaning of ‘any sum’, much clearer words could have been chosen’.”

71.  The question argued in Wong Man Yip v Wah Kwong Construction Material was, on a proper construction of section 25(1)(b), whether the employer was entitled to be indemnified by the tortfeasor not only for the compensation and interest paid to the employee but also for sums in respect of the employee’s costs. It was held by the Court of Appeal that the words “any sum which he is obliged to pay as a result of the accident” in section 25(1)(b) were not limited by the words “whether by” in the phrase “whether by compensation, or indemnity …”. Mortimer JA arrived at the construction for the reason mentioned above.

72.  I do not think the statement of Rogers VP relied on by Mr Chan would advance the plaintiff’s case.

73.  On a proper reading of section 25(1)(b), the amount of compensation which the employer was obliged to pay as a result of the 1^st Accident is the sum as stated in the 1^st Form 5 $283,297.72, and the employer has a right of action to recover from the defendant the amount of compensation paid thereunder capped at the amount of damages assessed by the master but for the provisions of the ECO, namely, $261,591[23]. There would be double prejudice to the defendant and double compensation to the plaintiff if the apportionment in the 1^st Form 5 is departed from, as shown by Mr Wang.

74.  For the above reasons, the contentions advanced on behalf of the plaintiff are rejected. The defendant’s appeal is allowed. We set aside the award of damages made by the master in the amount of $183,792 and the costs order he made. We substitute the award with an order that the amount of $247,791 ($261,591 - $13,800) be deducted from the damages assessed by the master rendering the net sum of damages awarded at nil.

Costs

75.  We have heard submissions on costs below.

76.  Mr Wang informed the court that the defendant would not seek costs of the entire proceedings below. The plaintiff acted in person at the hearing of the assessment of damages and the master was not addressed on the correct provision in the ECO that should be applied. He would seek costs of the proceedings below save for the costs of the hearing for assessment of damages, for which no order for costs is to be made.

77.  This seems a reasonable proposal. We substitute the master’s costs order with the order suggested by Mr Wang for the costs below.

78.  For the costs of the appeal, there is no reason why costs should not follow the event. We order the plaintiff to pay the defendant’s costs of the appeal, which would include the costs of the leave application.