FONG MING CHU v. CHU I CHUNG t/a BEAUTIFUL CITY AND ANOTHER

DCEC410/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 410 OF 2006

D E C I S I O N

1.  This is a claim for employees’ compensation.  The Applicant was a cleaner working at the 3rd floor of a KMB bus terminus when he was assaulted by a colleague.  It is his case that the 1st Respondent was his direct employer and the 2nd Respondent was the principal contractor at the time of the accident.  In the alternative, it is pleaded that the 2nd Respondent was the Applicant’s direct employer by that time.  As the assault occurred in the course of his employment, the Applicant claims for employees’ compensation against the two Respondents.

2.  The case has been fixed for trial before me today with 3 days reserved.  Shortly before the commencement of the trial, I am given to understand that there was an out-of-court settlement between the Applicant and the 2nd Respondent, and as a result of such settlement, the Applicant is prepared to discontinue the claim against the 1st Respondent with no order as to costs between them.  Unfortunately, the 1st Respondent, very much against the advice of his own solicitors assigned by the Director of Legal Aid, decided not to accept such offer.  After my exchanges with the 1st Respondent personally in court today, I understand that the 1st Respondent has a firm belief in the merits of his defence.  As he should not be liable to pay employees’ compensation in respect of the present accident, he wants to have a trial to clear his name.

3.  Obviously, the 1st Respondent has a complete free will whether to settle the case.  However, in order to save the costs of the trial, the Applicant eventually agrees to discontinue the claim against the 1st Respondent and leaves the court to determine the issue of costs between them.

4.  Generally, anyone who abandons his claim against another party should bear the costs of the latter.  However, Mr Leung, solicitor of the Applicant, argues that since both the Applicant and the 1st Respondent are legally-aided, any costs order in favour of the 1st Respondent would not benefit him personally.  In particular, it is the position of the Director of Legal Aid that there should be no order as to costs between the Applicant and the 1st Respondent.  On the other hand, if there is a costs order in favour of the 1st Respondent against the Applicant, there would be a first charge by the Director of Legal Aid on the settlement sum recovered from the 2nd Respondent under section 16A of the Legal Aid Ordinance, Cap. 91.  This, Mr Leung argues, would be unfair on the Applicant.  Further, the Applicant has a meritorious claim against the 1st Respondent, and it is only because of the out-of-court settlement with the 2nd Respondent that the Applicant, in order to save the costs of the trial, is prepared to discontinue the claim against the 1st Respondent.  In such case, the fair order should be one with no order as to costs.

5.  Mr Lau, solicitor for the 1st Respondent, is put in a very difficult position.  It is the view of the Director of Legal Aid that there should be no order as to costs between the Applicant and the 1st Respondent, but the 1st Respondent insists to get the costs of the proceedings.  While the 1st Respondent cannot oppose the Applicant’s application to discontinue the claim against him, it seems that a costs order in his favour may help him to clear his liability in respect of the accident.  Mr Lau just submits that costs should follow the event, but he confirms that the 1st Respondent has not paid any contribution for the granting of legal aid and the 1st Respondent has no financial gain by having a costs order in his favour.

6.  At this stage, it is not appropriate for me to deal with the merits of the claim without hearing the evidence.  However, it is clear that the withdrawal of the claim against the 1st Respondent is very much the result of the settlement between the Applicant and the 2nd Respondent.  Further, both the Applicant and the 1st Respondent are legally-aided.  By having a costs order in favour of the 1st Respondent, it would not result in any financial gain by the 1st Respondent while the Applicant would suffer prejudice with a possible legal aid first charge on the sum recovered from the 2nd Respondent.  In such circumstances, I think that the fair order should be one with no order as to costs.

7.  As there is no trial to determine the merits of the claim, a costs order in favour of the 1st Respondent would not serve the purpose of clearing his liability in respect of the accident.  While I appreciate that the 1st Respondent is a person who has very limited knowledge of the operation of the legal system, there is simply no basis for him to insist a trial simply to air his alleged grievances about the proceedings.  As the Applicant has been acting reasonably in withdrawing the claim against the 1st Respondent, I rule that there be no order as to costs between them.