KONG HOI LAM v. CHEUNG YUK KWAN t/a CONCEPT PAINTING COMPANY AND OTHERS

HCPI 801/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 801 OF 2012

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D E C I S I O N

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1.  I am very pleased that the parties have reached a settlement in this case, and I am pleased to make an order in terms of the summons before me, issued on 14 October 2015, and that will bring closure to these proceedings. However, this is a case which provokes me to add a few observations of my own about the provisions in the Employees Compensation Assistance Ordinance, Cap. 365 (“the ECAO”).

2.  The terms of the settlement are dictated by those provisions. The parties have agreed that the Employees Compensation Assistance Fund Board (“The ECAS Fund Board”) will pay the sum of some $15.4 million to the plaintiff, in addition to the employees compensation in the sum of just under $2.2 million that he has already received from the ECAS Fund Board.  So, looking at the matter broadly, and looking at his injuries and his life expectancy, which is some 29 years, I am very pleased that settlement has been reached in this sum.  It is a settlement in a sum which I would be quite willing to approve, if the plaintiff were a person under disability and asking for my approval of this settlement.  But, of course, he is not a person under disability, thankfully, I say, and he does not need my approval for this settlement to be reached.

3.  The settlement does not provide for the payment of costs.  If this were a matter which required the court’s approval, the court would look at that quite closely to see whether a settlement without some provision by way of costs, after the intervention of the ECAS Fund Board, could be said to be reasonable and in the best interests of the injured person.

4.  But, as against that, I must say that, in this case, the ECAS Fund Board has played a very minimal role in that it joined in the proceedings at a very late stage, and its subsequent participation in the proceedings was directed towards reaching an overall settlement.  It did not appoint experts to medically examine the plaintiff, nor did its actions lead the plaintiff to incur costs in the prosecution of the claim over and above those costs which he must necessarily incur in order to bring this case to court for an assessment of damages.

5.  My observations herein are not dictated by the amount of the settlement, nor by the issue of costs, but by the provisions of Section 20A(1), 20B(1) and 20D(1) and (2) of the ECAO.  These provisions have caused the parties to reach an agreement, which is embodied in the summons, that the ECAS Fund Board will make a first payment of $1.5 million, and that the remaining sum of $13.9 million will be paid by monthly payments.

6.  Now the monthly payment that is to be made is in the sum of $28,200, and a quick calculation shows us that it will take some 40 years for full payment to be made.  How can that sit with the provision in Section 20B, which says:

“(1) Subject to section 20A(2) and subsection (3), the amount of a relief payment to an eligible person shall be the amount of damages for which the employer is liable to pay the eligible person after that amount is reduced by:

(a) the amount, if any, of compensation which has been paid or is payable under the Employees’ Compensation Ordinance (Cap 282) in respect of the injured employee in relation to the accident concerned; and

(b) the amount, if any, of those damages already paid by the employer.” (Emphasis added)

In this case, the calculation of damages in the sum of $15.4 million is net of the employees compensation paid, and accords with the requirement of Section 20B(1).  The employer, as far as I understand, has made no payment towards the employees compensation, or any other payment on account of damages. The references to Section 20A(2) and (3) are not relevant for the present purposes.  Section 20A(2) has been satisfied because what I have done this morning is to make an order of court that is required under Section 20A(2), that:

“An employer is not to be regarded as liable for the payment of an amount of damages, unless the amount is payable pursuant to a judgment or order of a court of competent jurisdiction.”

Section 20A(3) talks about reasonable conduct on the part of the injured employee in pursuing his employer and any insurer for the payment, and which does not apply in this case.  As far as I understand, the employer was not covered by any insurance, and steps taken to pursue him have not borne fruit.

7.  How do we read Section 20B with the other provisions contained in Section 20C and 20D?

8.  I refer first to Section 20C(1) and (2).  The effect of these provisions is that where the amount of relief payment exceeds the prescribed relief payment, which is prescribed under the 4th Schedule, then one must follow the regime of making a first payment of $1.5 million followed by a monthly payment equivalent to the prescribed monthly amount or the monthly earnings of the injured employee, whichever is higher.  The monthly payments have to be made until the full amount of the relief payment has been made.  In the case of a severely injured employee, who is defined to be a person suffering from paraplegia or quadriplegia, there is an additional amount that can be paid.  The plaintiff is a severely injured employee, within the meaning of this definition, and is entitled to the additional amount.

9.  The terms of the summons, which I have make an order of this court, state that:

“The remaining 13.9 million shall be paid … by way of monthly payments pursuant to Section 20C(2)(b) of the ECAO, in the sum of $28,200 …”

That sum of $28,200 is made up of the last monthly earnings of the plaintiff at the time of the accident, which was $18,200, and the additional sum of $10,000, being the prescribed monthly extra payment for severely injured persons.

10.  A quick calculation on a calculator will show you that it will take some 40 years to make payments which will amount to the sum of $13.9 million, and that, of course, raises the question of the impact of future inflation on the sums to be paid so many years in the future; and, of course, there is no provision in the ECAO for the payment of interest.  Specifically, there is no provision that the ECAS Fund Board should pay interest on the amounts which it is not paying immediately, and which it will pay many, many years in the future.  That is something that I highlight.

11.  But more than that, I see that there is an internal inconsistency between these provisions and what I regard to be the primary provision in Section 20B(1), which is to make a relief payment to the eligible person in the amount of damages for which the employer is liable. That inconsistency is created by Section 20D(1) and (2), which are to the effect that the monthly payments will cease if the eligible person dies in the interim.

12.  In this case, the neurologist, Dr S T Chan, who examined the plaintiff, has stated in his report dated 19 February 2013 that, as from February 2013, the life expectancy of the plaintiff was some 31.68 years.  Given the passage of time since then, his life expectancy as from October 2015 is 29 years.  So it is very clear that the literal effect of Section 20D on this case is to deny this plaintiff his entitlement to a relief payment in the amount of his damages.  I have not done the maths, but I do not think that he would have received as much as 70 per cent of the amount of damages that he is entitled to, when his life comes to an end.

13.  Mr Chan, who appears for the ECAS Fund Board, has been caught slightly off guard because I did not ask him in advance to prepare any submissions on this point; but he submits that the provisions in Section 20B(1) in relation to the payment of a relief payment in the amount of damages is subject to the subsequent provisions.

14.  I am afraid I do not quite see it that way.  I would have thought that Section 20D cannot override the obligation, to make payment in the amount of the assessed damages or agreed damages, which is contained in Section 20B. It appears to me that the objective of the provisions in Section 20C and 20D, and the intention of the Legislature enacting them, is to safeguard the funds of the ECAO Fund Board.  But how could it possibly have been the intention of the Legislature to safeguard the funds of the ECAO Fund Board by keeping the payments at a level that will ensure that the injured employee will die before the full amount of damages are paid?

15.  I have referred to the injustices that have been built into this Ordinance by the amendments that were made in 2002,  and I refer to my previous judgments on this matter, including Lau Yuk Hung v Tsang Kwong Ming [2013] 2 HKLRD 614,  Kwan Kam Pui v Fung Man and others, HCPI 18/2012, 30 May 2014, [2014] 6 HKC 361, Chi Yuk Pui v Grace Mind Corporation LtdHCPI 917/2014, 22 May 2015, [2015] 3 HKLRD 271 and a recent assessment of damages I heard in Lee Luk Po v Sin Sze trading as Ngai Lung Iron Ware Eng., HCPI 1085/2014, 7 August 2015.

16.  I make another plea to the Secretary for Welfare and Labour and to the Commissioner of Labour,  and to all those charged with safeguarding the interests of our labour force to please quickly take a close look at the ECAO and do something about it.  We cannot claim to have a first class legal system when our laws contain the sort of provisions we find in our ECAO.

17.  May I conclude by expressing, again, my gratitude to the parties for reaching a resolution which, I suppose, is the best that could be hoped for, given the current state of affairs.