CHENG HOI MAN AND OTHERS v. TUNG WO ENGINEERING COMPANY LTD AND ANOTHER

DCEC 823/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 823 OF 2013

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DECISION

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Introduction

1.  On 29 October 2012, Cheng Chi Wai (“the Deceased”) died in an accident at work.  The 1^st and 2^nd respondents were his employer.

2.  On 13 May 2014, a full and final settlement was reached by all parties this Application, save as to costs.

The proceedings

3.  On 22 April 2013, the daughter and the mother (“the 1^st and 2^nd Applicants”) of the Deceased commenced this Application against the 1^st and 2^nd respondents (“the Application”).  On 7 August 2013, by consent, interlocutory judgment on liability was entered in favour of the 1^st and 2^nd applicant against the 1^st and 2^nd respondents with damages to be assessed.

4.  On 31 October 2013, the lawful wife of the Deceased joined as the 3^rd applicant.  In the same order, interlocutory judgment on liability was entered in favour of the 3^rd applicant against the 1^st and 2^nd respondents with damages to be assessed.

5.  As a matter of family history, the 1^st applicant stated in her  witness statement made to the police dated 24 November 2014 (marked as “HX – 7” in the 2^nd affirmation of the 4^th applicant filed on 4^th March 2014), the Deceased and the 3^rd applicant was married in 1994, and the 1^st applicant was born in the same year. Since 1995, the 3^rd applicant deserted the Deceased and the 1^st applicant. However, as there was no divorce proceedings, both the Deceased and the 3^rd applicant remained lawful husband and wife at time of the Deceased’s demise.

6.  The 4^th applicant, the co-habitee of the Deceased, applied to join as a party to the Application. The 3^rd applicant contested, she took the view that information provided in the 4^th applicant’s affirmation filed on 14 January 2014 in support was insufficient to prove her status as a co-habitee, she should not be entitled to compensation.  

7.  On 18 February 2014, the learned Judge ordered the 4^th applicant be joined as a party, and has directed the  3^rd and 4^th applicants to file and serve their respective affirmations  in opposition and in reply; a direction hearing be fixed before the EC Judge on issue on entitlement / apportionment between the 3^rd and 4^th applicants.

8.  Subsequently in a consent order filed on 3 March 2014, interlocutory judgment on liability in favour of the 4^th applicant was also entered against the 1^st and 2^nd respondents with damages to be assessed.

9.  Without fixing the direction hearing,  all parties have reached an agreement for settlement. The 1^st and 2^nd applicants filed a summons on 19^th March 2014 (“the Settlement Summons”) for leave to (i) accept sanctioned payment in sum of $1,559,040.00 (“the Settlement Sum”) made by the 1^st and 2^nd respondents out of time; and (ii) the apportionment of the applications in accordance with paragraph 6 of Schedule 7 of the Employment Compensation Ordinance, Cap 282 in the following manner:-

(i) The 1^st applicant shall receive a sum of $701,568.00 being 45% of the Settlement Sum;

(ii) The 2^nd applicant shall receive a sum of $155,904.00 being 10% of the Settlement Sum;

(iii) The 3^rd applicant shall receive a sum of $350,784.00 being 22.5% of the Settlement Sum; and

(iv) The 4^th applicant shall receive a sum of $350,784.00 being 22.5% of the Settlement Sum.

10.  On 27 March 2014, at the direction hearing of the Settlement Summons, all parties except the 3^rd applicant agreed to the terms of apportionment.  The learned judge further adjourned the Settlement Summons for argument and of which was fixed for substantive hearing today.

11.  Two days prior to the substantive argument hearing, i.e. on 13 May 2014, the 3^rd and 4^th applicants finally reached a settlement on the apportionment of the compensation as those stated in the Settlement Summons.

12.  The 1^st and 2^nd respondents raised issue on costs of the Application.

The 1^st and 2^nd respondents’ application on costs

13.  The 1^st and 2^nd respondents agree to pay the costs of this Application of the 1^st – 4^th applicants except:-

(i) The costs incurred by the 3^rd and 4^th applicants for arguing the proving that the 4^th applicant was the co-habitee of the Deceased (including but not limited to the 4^th applicant’s costs for preparing and filing of her 2^nd Affirmation dated 3 March 2014 (“Issue A”);

(ii) The 1^st and 2^nd respondents’ costs occasioned by the disputes between the 3^rd and 4^th applicants, which shall be borne by the 3^rd applicant (“Issue B”); and

(iii) The 1^st applicant’s costs of preparing and filing of her Affirmation dated 26 March 2014 (“Issue C”).

Issues (A) & (B)

14.  Miss Wong, solicitor of the 1^st and 2^nd respondents submitted, they have acted reasonably and promptly in the Application.  Interlocutory judgment on liability was admitted in favour of all applicants at an early stage.  They are satisfied the 4^th applicant was the co-habitee of the Deceased and had agreed to the apportionment of the compensation.  The dispute on apportionment between the 3^rd and 4^th applicants is no concern to the 1^st and 2^nd respondents. Costs relating to arguing and proving the 4^th applicant was the Deceased’s co-habitee should not be borne by them.

15.  Miss Cheng, solicitor for the 3^rd applicant opposed.  She submitted the 3^rd applicant did not positively challenge the status of the 4^th applicant, whilst the 3^rd Application took the view that it is incumbent on the 4^th applicant to provide all the objective facts before the court to make an appropriate determination of her status, that was why she has requested for further information from the 4^th applicant.

16.  My attention is drawn to paragraph 48 of a recent judgment Bushra Bibi and Nabela Qoser, the Co-administrator of the estate of Khalid Mehmood, the Deceased v Method Building & Engineering Works Ltd (in liquidation) and others [2014] HKCFI 695; HCPI 301 of 2012 (16 April 2014):-

“A dependant must think long and hard before challenging the claims of other dependants and risking an adverse order as to costs which may substantially reduce, or even extinguish, the award of loss of dependency apportioned in his favour. A realistic assessment of the objective facts must be made before a challenge is made to the claims of other dependants. …”

17.  Miss Cheng further submitted, although the 3^rd applicant contested the apportionment of the Settlement Summons, yet finally on 13 May 2014, the 3^rd applicant conceded. Therefore, costs of the Application, including the Settlement Summons, should follow the event and to be borne by the 1^st and 2^nd respondents.

18.  Mr Cheng, the solicitor for the 4^th applicant, submitted costs of the Summons should be to borne by the 1^st and 2^nd respondents as well.

19.  I do not agree.  The 3^rd applicant had all along maintained her position to challenge the status of the 4^th applicant as the co-habitee in both the joinder application and the Settlement Summons.

20.  In the 1^st Affirmation of the 4^th applicant filed on 14 January 2014 in support of the joinder application, the 4^th applicant gave a thorough account of her living habits with the Deceased, including the place of residence, time spent with him and other daily activities.

21.  Nevertheless, the 3^rd applicant failed to comply with the directions of the learned Judge to file and serve an affirmation in opposition challenge the 4^th applicant’s status as a co-habitee.  Consequentially, the 4^th applicant filed no affirmation in reply. Shortly after that, the Settlement Summons came into being.

22.  The Settlement Summons was fixed on 27 March 2014 for directions, I am given to understand that the 3^rd applicant maintained her view that the 4^th applicant was the Deceased’s girlfriend but not his  co-habitee. The learned Judge adjourned the Settlement Summons to be argued, and had granted leave for the 3^rd applicant to file and serve an affirmation in opposition and the 4^th applicant to file and serve an affirmation in reply.

23.  Repeatedly, the 3^rd applicant failed to comply with the direction to file and serve affirmation in opposition for argument.  Finally, the 3^rd applicant agreed to the terms in the Settlement Summons in her without prejudice letter dated 7 May 2014.  Having said that, in the same letter, the 3^rd applicant was still, apparently unsatisfied with the 4^th applicant as a co-habitee:-

“Having considered your client’s affidavits and available evidence, our client [the 3^rd Applicant] believes that your client [the 4^th Applicant] would have some difficulty to prove to the satisfaction of the court that she was indeed a co-habitee of the Deceased as husband and wife as opposed to being the Deceased’s girlfriend only”.

24.  The conduct of the 3^rd applicant is unreasonable.  She attempted to challenge the status of the 4^th applicant without valid reasons. She assumed the role of Court to decide on entitlement / apportionment of compensation by requesting the 4^th applicant to provide information to her satisfaction that she was a co-habitee of the Deceased. On her part, she failed twice to give evidence or reasons for such opposition.  

25.  The exception on costs as proposed by the 1^st and 2^nd respondents as Issue A and Issue B above are justified, which shall not be borne by the 1^st and 2^nd respondents.

26.  The 3^rd applicant failed to embark on a realistic assessment of the objective facts provided by the 4^th applicant before challenging her status as a co-habitee. The 3^rd applicant has caused delay and had elevated costs of the Application. I am driven to the conclusion that the 3^rd applicant should bear the costs of (i) Issue A and Issue B and (ii) the costs of the hearing on both 27March 2014 and 15May 2014.

27.  Ironically, the authority of Bushra BiBi submitted by Miss Cheng is applicable to the 3^rd applicant, because she is now facing an adverse order that would reduce the compensation apportioned in her favour.

Further submissions after hearing

28.  The 1^st and 2^nd respondent submitted an authority by way of facsimile on 16May 2014, Hse Fei Lun v. the administrator of the estate of Lam Chu Yuk, the deceased v. So Suk Yee HCPI No. 606 of 2012 (10April 2014). This case was settled and the outstanding matter was disputes on apportionment under the Fatal Accidents Ordinance, Cap 22. In paragraph 25 thereof, Bharwaney J stated in paragraph 24,

“More often than not, the apportionment exercise, where the dependants are not in conflict, would be fairly straightforward and all that is needed is a memorandum of apportionment to be sent to the relevant tribunal. If the judge or master dealing with the matter agrees with the memorandum, he will dispose of the apportionment application on paper without the need for the parties to appear before him. Where, however, the judge or master does not agree with the proposed apportionment, he can call the dependants to appear before him for a short hearing to deal with the matter. In either case, the matter ought not to be very contentious or costly, so to that extent, I think the concerns of the 1^st defendant to have pay for this exercise can be allayed.”

Further in paragraph 25,

“…where the apportionment exercise is contested by the dependants in conflict, the costs of revolving that conflict ought to be borne, in most such cases, by the group of dependants whose contentions have failed, and not to be borne by the defendant”.

29.  I invited the 1^st – 4^th applicants to make submissions in light of Hse Fei Lun, only the 3^rd applicant made further submissions. In summary, the 3^rd applicant reiterated her position that, for the Application has been settled finally without an apportionment exercise, the 1^st and 2^nd respondents should bear the costs of all applicants. 

30.  Hse Fei Lun is applicable to the extent that costs should be borne by the party who has challenged the apportionment and I agree. I do not intend to repeat my analysis above.

Issue (C)

31.  The 1^st and 2^nd respondents submitted they should not be responsible for costs of the 1^st applicant’s affirmation filed on 26 March 2014.  Miss Wong submitted, an affirmation in support of a settlement is unnecessary.

32.  Mr Leung, solicitor for the 1^st and 2^nd applicants, submitted it is in the normal course of business to explain to the court the relationship and the respective apportionment of all the Applicants when the court is entitled to approve or determine such apportionment.

33.  I agree with Mr Leung.  The 1^st applicants’ affirmation is necessary and is of assistance to the court in approving the Settlement Summons.

Conclusion

34.  I make an order in terms as amended to the Settlement Summons filed on 19 March 2014 as follows, the decision on costs are particularized in sub paragraphs (vii)(a) , (b) and (viii) hereinbelow:-

(i) The 1^st, 2^nd, 3^rd and 4^th applicants do have leave to accept the sanctioned payment by the 1^st and 2^nd respondents in the sum of $1,559,040 (“the Sanctioned Payment”) out of time in full and final settlement of the 1^st, 2^nd, 3^rd and 4^th applicants’ claim against the 1^st and 2^nd respondents in this Application.

(ii) The 1^st applicant do have leave to pay out from court a sum of $701,568 being 45% of the Sanctioned Payment through the Director of the Legal Aid.

(iii) The 2^nd applicant do have leave to pay out from court a sum of $155,904 being 10% of the Sanctioned Payment forthwith.

(iv) The 3^rd applicant do have leave to pay out from court a sum of $350,784 being 22.5% of the Sanctioned Payment through the Director of the Legal Aid.

(v) The 4^th applicant do have leave to pay out from court a sum of $350,784 being 22.5% of the Sanctioned Payment through the Director of the Legal Aid.

(vi) The accrued interest, if any, on the Sanctioned Payment be released to the 1^st and 2^nd respondents through Messrs Deacons forthwith.

(vii) The 1^st and 2^nd respondents do pay the costs of this Application, including the Settlement Summons, of the 1^st, 2^nd, 3^rd and 4^th applicants, to be taxed if not agreed, save and except:- (emphasis added)

(a) The costs incurred by the 3^rd and 4^th applicants for arguing the proving the 4^th applicant was the co-habitee of the Deceased (including but not limited to the 4^th applicant’s costs for preparing and filing of her 2^nd Affirmation dated 3 March 2014) be borne by the 3^rd applicant in any event, to be taxed if not agreed. (emphasis added)

(b) The costs of both hearings of the Settlement Summons of the 1^st – 2^nd and 4^th applicants and the 1^st and 2^nd respondents on 27 March 2014 and 15May 2014 shall be borne by the 3^rd applicant in any event, to be taxed if not agreed. (emphasis added)

(viii) The costs of and occasioned by the 1^st and 2^nd respondents’ relating to the arguing and proving the 4^th applicant was the co-habitee of the Deceased be borne by the 3^rd applicant in any event, to be taxed if not agreed. (emphasis added)

(ix) The 1^st, 3^rd and 4^th applicants’ costs be taxed in accordance with the Legal Aid Regulations respectively.

(x) Upon full payment of the $1,559,040 and costs aforesaid, the 1^st and 2^nd respondents be wholly discharged from all liabilities in relation to the 1^st, 2^nd, 3^rd and 4^th applicants’ claim against the 1^st and 2^nd respondents in this Application.

(xi) The terms of settlement entered into by the parties herein shall not prejudice any issue and/or matters that may arise in the 1^st, 2^nd, 3^rd and 4^th applicants’ claim against the 1^st and 2^nd respondents at common law (if any) or under any enactment for damages arising out from the accident in this Application.