XCHRX LI FAT MUI v. ABLE ENGINEERING CO. LTD. and Others

1997 No. P. I. 766

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES LIST

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REASONS  FOR  DECISION

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1. The second Defendants apply to re-amend their Defence to deny what they had previously admitted in paragraph 2 of their Defence, namely that they employed the Plaintiff at all material times. They now seek to allege that he was employed by Sui Kee Construction Company, their sub-contractor. The chronology is relevant.

2. The accident occurred in 1991. The writ was issued in November 1993 (with the Statement of Claim) and served in March 1994. The Defence was dated 28th April 1994 and was amended on 23rd April 1996. Not until the 8th September 1987 did the 2nd Defendant take out its summons to re-amend its Defence.

3. In the course of his argument, when I raised the matter of the 2nd Defendants' delay in seeking to make such amendment, Mr. Paul Harris referred to the Plaintiff's own delay in the issue of the writ and service of proceedings, and the consequent expiry of the limitation period before the 2nd Defendants were served. It is however to be noted that the Plaintiff was relying on the form 2 notice dated 22nd March 1991 which was completed and signed by the main contractor (the 1st Defendant) and stated the sub-contractor (the 2nd Defendant) to be the employer. The 1st and 2nd Defendants have throughout joined forces and there is one Defence for both of them. The Plaintiff can hardly be criticised for relying upon the main contractor's notice and there was no reason why the identity of the employer should create any uncertainty. 6-1/2 years elapsed before the 2nd Defendant seems to have become aware of any possible mistake by the 1st Defendant.

4. The 2nd Defendants contend that their "mistake" came to light in or about early September 1997 when their solicitors were considering certain documents. The history of their discovery of documents in this case is therefore also of relevance. The Defendants filed their list of documents on the 23rd April 1996 but it was incomplete and the Plaintiffs solicitors told them so. On the 28th August 1996 they filed a supplemental list. On the 18th September 1996 the Plaintiffs solicitors required them to verify the lists by affirmation/ affidavit. The Defendants filed a second supplemental list of documents disclosing inter alia, an undated contract and transaction records between the 2nd Defendant and Sui Kee Construction and Engineering Company. Even then the "penny had not dropped" as far as the 2nd Defendants or their solicitors were concerned and on the 16th May 1997 the Plaintiff's solicitors wrote to the Defendants' solicitors querying the relevance of these documents. They received an uncertain reply dated 2nd June 1997 from the 2nd Defendants solicitors saying that the 3rd Defendants "may" be a subcontractor of Sui Kee and "may have liability in relation to the occurrence of the accident" and "we have not decided yet whether those documents will be produced as evidence in the trial". The affirmation/affidavit verifying the lists had still not been filed, nine months after the request. Finally on the 5th September 1997, the 2nd Defendants solicitors wrote saying that they were instructed by their clients to apply to amend the Defence but for some reason failed to say in what respect.

5. Mr. Harris says that the Plaintiff does not deny that what has happened is a mistake, or deny that he was in fact employed by Sui Kee. I do not think that he can take any comfort from that. Why should he make any particular comment? What he is concerned about is that the 2nd Defendants are seeking to make what could be a fundamental shift to his disadvantage. It is not for him to decide whether there has been a mistake or whether in fact the employment originally admitted over 3-1/2 years ago, is in fact the true factual position.

6. In relying upon Order 20 rule 5-8/6 of the 1997 Supreme Court Practice (page 359) Mr. Harris cites the case of Clarapede v. Commercial Union Association (1883) 32 W.R. 262, 263 referred to, and the passage quoted:

"However negligent or careless may have been the first omission and however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs."

Two other nineteenth century authorities are relied upon - Hollis v. Burton 1892 3. Ch. 226 and Clarke v. Yorke (1882) 31. W.R. 62. The prejudice or injustice to the other side which may be occasioned by such amendment may be unclear, Mr. Harris contends. I do not agree. The limitation period has well and truly operated against the Plaintiff ? nearly 7 years have elapsed since the accident and it is no answer that the court's discretion may be exercised in his favour under section 35(5) of the Limitation Ordinance if he joined Sui Kee as a tortfeasor. Whether Sui Kee still exists, whether it can be traced, is uncertain. The only information produced is a copy I.R.B.R. form stamped 12th August 1985 and expiring on 11th August 1986. There appears no subsequent registration form.

7. I do not think that either of those cases helps the 2nd Defendant, on the facts, and the principle set out in Clarapede is the general proposition for application.

8. Mr. Simon Chiu, for the Plaintiff, contends that the length of time which has now elapsed is crucial. The admission made by the 2nd Defendant has allowed the time to elapse which would make it difficult for the Plaintiff to overcome the time bar in suing Sui Kee, even if he could trace the proprietor of such a business.

9. He relies upon Gale v. Superdrug Stores Plc [1996] 1 W.L.R. p. 1089 and in particular to the considerations to be applied where a defendant seeks to withdraw an admission. The admission was a pre-proceedings admission of liability for negligence by the insurers who had made an interim payment. The Plaintiff had issued proceedings before the limitation period expired. The Defendants denied liability. The District Judge struck out the Defence upon her application but the Court of Appeal allowed the Defendant's appeal by a majority. Waite L.J. said at p.1097A:

"The judge should conduct a weighing exercise, carefully balancing the prejudice suffered by the defendant if he is deprived of his prima facie right to resile from his admission against any prejudice which the Plaintiff stands to suffer if the admission is withdrawn ... it is not enough to presume prejudice; it must be established specifically and affirmatively."

at page 1097H:

"The discretion of the judge was a general one in which all the circumstances had to be taken into account; that there had been no evidence before the judge of any specific matter which rendered it more difficult for the Plaintiff to prosecute her claim in liability than it would have been if the Defendants' admission had never been made."

Thorpe L.J.'s dissenting judgment is in my view redolent of good practical sense in putting the Practice Direction (Civil Litigation Case Management) in the forefront. In that case the judge's exercise of his discretion was "in furtherance of a more disciplinary approach to adversarial manoeuvring which the public interest now requires." There is also support for the Plaintiff's argument in Tse Yuk-Tin v. Chee Cheung Hing 1984. H.K.L.R. p.391. and Bird & Ors v. Birds Eye Wall. The Times 24 July 1987.

10. I am satisfied that on a balancing exercise the prejudice to the Plaintiff far outweighs the prejudice to the Defendant. That prejudice cannot be compensated for by an order for costs. The Defendant can seek indemnity from Sui Kee, if he wishes, under the contract, perusal of which discloses the interesting provision in clause 4 of the 2nd Defendant's contract with Sui Kee that:

"Our company [2nd Defendant] shall provide employees' insurance, third party liability ... etc"

Clause 5 does not derogate from that. It means then that the 2nd Defendant was under the contract acting 'in loco' employer in providing what what necessary ? insurance for employees and third party liability. It assumed the essential obligations of an employer of any employees of Sui Kee. It may be pointless for him to seek such indemnity in these circumstances, but his position in relation to any limitation point is better by far than that of the Plaintiff.

11. This application is accordingly dismissed with costs to the Plaintiff.

(Conrad Seagroatt)

Judge of the High Court