TSE CHI WAI v. CHAN KWAN HO AND OTHERS

DCPI 3774/2023

[2026] HKDC 144

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 3774 OF 2023

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BETWEEN

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DECISION

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A.  INTRODUCTION

1.  This is the 4^th Defendant’s application for leave to appeal against the Court’s order dated 30 October 2025 (“Costs Order Absolute”), varying the costs order nisi made by the Court on 10 July 2025 (“Costs Order Nisi”).

2.  The Plaintiff’s claim arises out of an accident which happened on 23 February 2017. On that morning, the Plaintiff and the 1^st Defendant had a quarrel about work at the loading platform of the warehouse at which they worked. The quarrel soon turned into a fight. During the fight, the 1^st Defendant assaulted the Plaintiff, who fell off the loading platform and was injured (the “Accident”).

3.  At the material time, the Plaintiff was employed as a warehouse supervisor and the 1^st Defendant was employed as a senior supervisor. A major issue at the trial was whether the 2^nd or 3^rd Defendant was the employer of the Plaintiff and/or the 1^st Defendant. It was the Plaintiff’s case at the trial that the 1^st Defendant was employed by the same employer as him at the time of the Accident because the 1^st Defendant was his supervisor.

4.  The 4^th Defendant is the insurer of the 3^rd Defendant.

5.  On 28 July 2017, the Plaintiff commenced DCEC 1828/2017 and claimed employee’s compensation against the 2^nd Defendant under the Employees’ Compensation Ordinance (Cap 282) (“DCEC Proceedings”) on the basis that his personal injuries caused by the Accident arose out of and in the course of his employment with the 2^nd Defendant.

6.  On 17 May 2018, in respect of the Accident, the 1^st Defendant pleaded guilty to the charge of common assault and inflicting grievous bodily harm in TMCC 672/2018 (the “Criminal Proceedings”).

7.  On 13 January 2020, the Plaintiff commenced this action in the High Court, which was transferred to the District Court pursuant to the order of Master Kot dated 2 November 2023.

8.  By this action, the Plaintiff claims against the 1^st, 2^nd and 3^rd Defendants for damages for the personal injuries he has suffered as a result of the Accident. The claims against the 2^nd and 3^rd Defendants are based on (a) negligence, (b) breach of implied terms of contract of employment, and (c) their vicarious liability for the damages caused by the 1^st Defendant’s assault.

9.  On 24 March 2021, interlocutory judgment was entered against the 1^st Defendant, who had given no notice of intention to defend.

10.  On 18 February 2022, the Plaintiff applied to join the 3^rd Defendant. In the Plaintiff’s affirmation in support of the joinder application, he explained that the 2^nd Defendant suddenly changed its stance and alleged that the Plaintiff was employed by the 3^rd Defendant but worked under the direction of the 2^nd Defendant. On 1 March 2022, Master So granted leave to join the 3^rd Defendant in these proceedings.

11.  On 23 June 2022, the 4^th Defendant applied to intervene into these proceedings, which application was consented to by the Plaintiff.

12.  By the order of Master Kot dated 7 July 2022, leave was granted to the 4^th Defendant to join in these proceedings. However, in the prayer for relief of the Plaintiff’s Amended Statement of Claim, no relief is sought against the 4^th Defendant.

13.  On 2 August 2022, the 4^th Defendant filed its defence, disputing any employment relationship between the Plaintiff/1^st Defendant and the 3^rd Defendant, the 3^rd Defendant’s alleged liability to the Plaintiff, as well as the quantum claimed by the Plaintiff. The 4^th Defendant also claims that the Plaintiff is contributorily negligent for the damages resulted from the Accident.

14.  On 8 August 2022, interlocutory judgment was entered against the 2^nd and 3^rd Defendants, which interlocutory judgment against the respective defendants was set aside by respectively Master Kot on 27 October 2022 and by this Court on the first day of the trial.

15.  The 1^st, 2^nd and 3^rd Defendant did not participate in these proceedings.

16.  In his opening submissions, the Plaintiff’s counsel, Mr Yip, informed the court that the Plaintiff no longer relied on negligence or breach of implied terms of contract of employment. He also confirmed that it was not his case that both the 2^nd and 3^rd Defendants were employers of the Plaintiff. His primary case is that both the Plaintiff and the 1^st Defendant were employed by the 3^rd Defendant at the time of the Accident, who was vicariously liable for the 1^st Defendant’s acts. His secondary case is that they were both employed by the 2^nd Defendant at the time of the Accident, who was vicariously liable for the 1^st Defendant’s acts.

17.  In the judgment dated 10 July 2025 (“Judgment”), the Court found that the Plaintiff and the 1^st Defendant were both employees of the 2^nd Defendant at the time of the Accident, and that the 1^st Defendant’s tortious act in assaulting the Plaintiff was so closely connected with his employment that it is fair to make the 2^nd Defendant as his employer vicariously liable. In the end, the Court ordered, inter alia, that:

(1)  The 1^st and 2^nd Defendants do pay the Plaintiff’s damages in the sum of $1,865,740; and

(2)  The Plaintiff’s claim against the 3^rd Defendant is dismissed.

18.  In the Costs Order Nisi, the Court ordered, inter alia, that:

(1)  The 1^st and 2^nd Defendants do pay the Plaintiff’s costs of the action (including all costs reserved), to be taxed if not agreed, with certificate for counsel; and

(2)  There be no order as to costs as between the Plaintiff and the 3^rd and 4^th Defendants.

19.  On 22 July 2025, the 4^th Defendant applied to vary the Costs Order Nisi (“4^th Defendant’s Variation Application”) to an order that the Plaintiff do pay the 4^th Defendant’s costs of the action on:

(1)  party and party basis on the High Court Scale up to 29 September 2022;

(2)  indemnity basis on the High Court Scale from 30 September 2022 to 2 November 2023; and

(3)  indemnity basis on the District Court Scale from 3 November 2023.

20.  In making the 4^th Defendant’s Variation Application, the 4^th Defendant relied on the fact that, on 1 September 2022 it made a sanctioned payment in the amount of $5,000 into Court for settlement of the whole of the Plaintiff’s claim (“Sanctioned Payment”), which was not accepted by the Plaintiff.

21.  On 24 July 2025, the Plaintiff applied to vary the Costs Order Nisi (“Plaintiff’s Variation Application”) to an order that the 4^th Defendant’s costs be paid by the 2^nd Defendant, ie a Sanderson order against the 2^nd Defendant in favour of the 4^th Defendant.

22.  In the hearing on 30 October 2025 (“Costs Hearing”), the Court dismissed the 4^th Defendant’s Variation Application and allowed the Plaintiff’s Variation Application. In the Costs Order Absolute, the Court varied the Costs Order Nisi and ordered, inter alia, that:

(1)  The 1^st and 2^nd Defendants do pay the Plaintiff’s costs of the action on the District Court scale, to be taxed if not agreed, with certificate for counsel;

(2)  The 4^th Defendant’s costs of the action be paid by the 2^nd Defendant, to be taxed if not agreed, with certificate for counsel; and

(3)  There be no order as to costs between the Plaintiff and the 3^rd and 4^th Defendants.

23.  On 13 November 2025, the 4^th Defendant took out the present application for leave to appeal against the Costs Order Absolute.

B.  APPLICABLE LEGAL PRINCIPLES

B1.  Costs only appeal

24.  The parties agree that it is trite that costs are generally in the discretion of the first instance judge. The Court of Appeal will not disturb an exercise of discretion by the judge as to costs unless the decision of the judge is either wrong in principle or is plainly wrong. Unless it can be shown that the judge has committed a palpable error in the exercise of the discretion on costs, the mere fact that the Court of Appeal would not have exercised the discretion in the same manner as the judge is not a sufficient ground to warrant interference with the decision of the judge: see Chan Shun Kei v Hong Kong Construction (Hong Kong) Limited (unrep, CACV  192/2014, 7 March 2016), §22, and Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815, §34.

B2.  Sanderson or Bullock order

25.  In deciding whether to make a Sanderson or Bullock order and, if so, which of the two orders to make, the Court is exercising its discretion. The question to be determined by the Court is: whether it was reasonable in all the circumstances of the case for the Plaintiff to join the 3^rd Defendant in this action, which gave rise to the intervention of the 4^th Defendant: see Chong Ngan Seng v China Harbour Engineering Co Ltd & ors (unrep, CACV 54/2012, 25 September 2013), §§5-7; and Fung Chun Man v Hospital Authority [2012] 1 HKC 531, §5.

26.  The Court of Appeal has warned against losing sight of the uncertainties which surrounded the case before its conclusion in Leung Lai Ha & anor v Hau Sau Ling & anor [1992] 2 HKC 109, at 114A-C & G-H. The Court of Appeal envisaged that the plaintiff “could reasonably have felt doubts and uncertainties as to what would transpire at the hearing and have commenced and maintained the proceedings against both defendants accordingly”.

27.  In deciding which of a Sanderson or Bullock order to make, following Chong Ngan Seng (supra), §§31-34, whilst the Court accepts and acknowledges the need to adhere to a principled approach and not infringe the requirement that costs should generally follow the event, the Court will also take into account the practical consequence of its costs order.

C.  PURPORTED GROUNDS OF APPEAL

28.  The draft Notice of Appeal relies on three purported grounds of appeal:

(1)  The Trial Judge erred in taking as a starting point that there be no order as to costs as between the Plaintiff and the 3^rd and 4^th Defendants, instead of awarding costs in favour of the 4^th Defendant, given its successful defence after trial (“Ground 1”);

(2)  The Trial Judge erred in law in rejecting, without giving any proper or sufficient reasoning, that the 4^th Defendant’s sanctioned payment is not effective nor relevant in determining the costs order as between the Plaintiff and the 4^th Defendant (“Ground 2”); and

(3)  The Trial Judge erred in making a Sanderson order in failing to consider the factual circumstances of the case properly and logically, given the evidence that transpired at trial and her actual factual findings thereat (“Ground 3”).

29.  For the reasons below, the Court finds that it was neither wrong in principle nor plainly wrong in making the Costs Order Absolute.

C1.  Ground 1

30.  It is unclear whether the 4^th Defendant is referring to the Costs Order Nisi or the Costs Order Absolute in this purported ground of appeal.

31.  If the 4^th Defendant is referring to the Costs Order Nisi, such costs order has been varied by the Costs Order Absolute. As such, the Costs Order Nisi is water under the bridge and should not be subject to an appeal.

32.  Insofar as the 4^th Defendant is referring to the Costs Order Absolute, the Court did not deprive the 4^th Defendant of its costs and ordered the 2^nd Defendant to pay the 4^th Defendant’s costs of the action for reasons explained in the ex tempore decision given in the Costs Hearing on 30 October 2025 (“Decision on Costs”). In gist, the Court found that:

(1)  Having been awarded damages in the sum of roughly $1.8 million in the Judgment, the Plaintiff actually did better than the Sanctioned Payment of merely $5,000 made by the 4^th Defendant to settle the whole of the Plaintiff’s claim. In the premises, the Plaintiff could not be said to have unreasonably failed to accept the Sanctioned Payment.

(2)  Further, as a result of the 2^nd Defendant’s position that the Plaintiff and other employees were the 3^rd Defendant’s employees, it was reasonable for the Plaintiff in all the circumstances of the case to join the 3^rd Defendant. These circumstances had led to the 3^rd Defendant’s and subsequently the 4^th Defendant (the insurer)’s joinder. The Court was therefore prepared to make a Sanderson or Bullock order in the circumstances of this case.

(3)  On one hand, there is no evidence or certainty that the 2^nd Defendant was impecunious such that the 4^th Defendant would not be able to recover its costs from it. On the other hand, if the Plaintiff is liable for the 4^th Defendant’s costs and end up being unable to recover the same from the 2^nd Defendant, his amount of damages awarded would be reduced by a considerable amount. A Sanderson order is therefore more appropriate in the circumstances of this case.

33.  In the premises, the Court ordered the 2^nd Defendant to pay the 4^th Defendant’s costs of the action in the Costs Order Absolute.

34.  Thus, whilst the Court did not make any order as to costs as between the Plaintiff and the 3^rd and 4^th Defendants, it is incorrect for the 4^th Defendant to contend that it “was not awarded costs, despite its complete success at trial”.

C2.  Ground 2

35.  As explained above and in the Decision on Costs, the Plaintiff obtained a judgment better than the Sanctioned Payment. Thus, the costs consequences set out in O 22 r 23 of the Rules of the District Court (Cap  336H) (“RDC”) do not apply.

36.  It is clear from:

(1)  the 4^th Defendant’s Notice of Sanctioned Payment dated 1 September 2022, offering to pay an amount of $5,000 in settlement of “the whole of the Plaintiff’s claim”; and

(2)  Messrs WH Chik (the 4^th Defendant’s solicitors)’s without prejudice letter dated 1 September 2022, stating that the Plaintiff’s “damages will not exceed HK$5,000.00 and he should have brought his claim for damages at the Small Claims Tribunal instead of at the High Court” and that the Sanctioned Payment was “in settlement of the whole of [the Plaintiff’s] claims”,

that the Sanctioned Payment was for settlement of the whole of the Plaintiff’s claim in this action, and not just for its claim against the 4^th Defendant as alleged. As such, it is incorrect for the 4^th Defendant to contend that the Plaintiff had failed to do better than the Sanctioned Payment.

37.  Further, as stated in paragraph 11 of the Judgment, in the prayer for relief of the Plaintiff’s Amended Statement of Claim, no relief was sought against the 4^th Defendant. It therefore makes no sense to say that the Sanctioned Payment was only to settle the Plaintiff’s claim against the 4^th Defendant. The fact that the 4^th Defendant took an active role at the trial to defend the Plaintiff’s claims against the 3^rd Defendant is beside the point. The fact remains that the Sanctioned Payment was made in settlement of the whole of the Plaintiff’s claims in this action against all the defendants, and not just the 4^th Defendant.

38.  Even if the Court was wrong in the reading of the terms of the Sanctioned Payment, in light of the making of the Sanderson order, it is the 2^nd Defendant, and not the Plaintiff, who is liable to pay the 4^th Defendant’s costs of the action. In the circumstances, there is no issue of costs between the Plaintiff and the 4^th Defendant, and the costs consequences in O 22 r 23 of RDC has no applicability between the Plaintiff and the 4^th Defendant.

C3.  Ground 3

39.  As mentioned above, the Plaintiff commenced the DCEC Proceedings against the 2^nd Defendant.

40.  On 5 February 2018, the 2^nd Defendant, through Messrs Au-Yeung, Chan & Ho (the “2^nd Defendant’s former solicitors”), filed its Answer in the DCEC Proceedings, admitting that the Plaintiff was an employee employed by it on the date of the Accident. In the Answer, the 2^nd Defendant also pleaded that the 1^st Defendant was its senior warehouse supervisor.

41.  In the Plaintiff’s affirmation filed in these proceedings on 18 February 2022 in support of its application to join the 3^rd Defendant, the Plaintiff explained that by a letter from the 2^nd Defendant’s former solicitors dated 11 August 2020, the 2^nd Defendant suddenly changed its stance and alleged that the Plaintiff was employed by the 3^rd Defendant but worked under the direction of the 2^nd Defendant, relying on an MPF statement of the 3^rd Defendant dated 2 March 2017.

42.  According to the Plaintiff, prior to receiving the aforesaid letter, he was not aware of the existence of the 3^rd Defendant or the fact that it was contributing to his MPF immediately before the Accident.

43.  In the Plaintiff’s solicitor’s letter to the 2^nd Defendant’s former solicitors dated 17 September 2020, the Plaintiff’s solicitors stated inter alia that on 12 August 2011, the Plaintiff and the 2^nd Defendant entered into a written employment contract, expressly stating that the 2^nd  Defendant was the employer. The notice for adjusting his salary, warning letters and letter of termination of his employment were all issued in the 2^nd Defendant’s name. The 3^rd Defendant was only incorporated six months after the said employment contract.

44.  By a letter dated 28 May 2021, the solicitors of the Employees Compensation Assistance Fund Board (the “Board”) informed the Plaintiff’s solicitors that the 3^rd Defendant was contributing to the Plaintiff’s MPF at the time of the Accident and “was, at least, one of” his employers. The Board also noted that according to an MPF statement of the 3^rd Defendant dated 4 February 2017, the 3^rd Defendant was also the employer of three other employees who had given police statements in relation to the Accident.

45.  In the premises, the Board “trust[ed] [the Plaintiff] will take necessary steps to protect his rights against [the 3^rd Defendant] and under [the Employees Compensation Assistance Ordinance (“ECAO”)], Cap 365”, specifically drawing the Plaintiff’s attention to s.16(3)(i) of the ECAO[1].

46.  The DCEC Proceedings have been stayed pursuant to HHJ  Levy (as she then was)’s order dated 20 May 2022 pending the resolution of the present action.

47.  For the reasons below, it was reasonable for the Plaintiff to join the 3^rd Defendant in this action.

48.  Although the 2^nd Defendant first admitted to be the Plaintiff’s employer in the DCEC Proceedings in its Answer filed on 5 February 2018, on 11 August 2020 the 2^nd Defendant changed its stance and alleged that the Plaintiff was employed by the 3^rd Defendant instead. The 2^nd Defendant relied on an MPF statement dated 2 March 2017 in which the 3^rd Defendant was stated to be paying the Plaintiff’s MPF.

49.  In the 2^nd Defendant’s former solicitors’ letter dated 11 August 2020, the 2^nd Defendant also stated that “employees [in plural] working under the direction of [the 2^nd Defendant] are in fact employed by [the 3^rd Defendant] at the material time of the Accident”. Those employees would most likely include the 1^st Defendant, if not certainly, as they were working together. It is therefore not entirely correct for the 4^th Defendant to contend that the 2^nd Defendant’s former solicitors never alleged that the 3^rd Defendant was also the employer of the 1^st Defendant.

50.  In the premises, it was the 2^nd Defendant who put the blame on the 3^rd Defendant and alleged that the 3^rd Defendant was the Plaintiff’s employer in this action, and this is a weighty factor in determining whether to make a Sanderson or Bullock order: see Chong Ngan Seng (supra), §22.

51.  The above matters culminated in the Plaintiff’s application to join the 3^rd Defendant in this action.

52.  The 4^th Defendant submits that the cause of action relied on by the Plaintiff at trial was the vicarious liability of the 1^st Defendant’s employer, and the 2^nd Defendant never pointed finger to say that the 3^rd Defendant was the 1^st Defendant’s employer. However:

(1)  It was the Plaintiff’s case, and there was no suggestion or evidence otherwise, that the Plaintiff and the 1^st Defendant were employed by the same employer. This makes logical sense given that they were colleagues and the 1^st Defendant was the Plaintiff’s supervisor and the Accident happened at their workplace.

(2)  As explained above, the 2^nd Defendant’s stance in its former solicitors’ letter dated 11 August 2020 was that the employees working under the 2^nd Defendant’s direction, which would most likely include the 1^st Defendant, were in fact employed by the 3^rd Defendant at the material time of the Accident.

53.  Indeed, as stated in paragraph 28(1) of the Judgment, it was an issue in dispute at the trial as to whether the Plaintiff was the employee of the 2^nd or 3^rd Defendant, and it was explained in paragraph 29 of the Judgment that this is relevant to the extent that it was the Plaintiff’s case that the 1^st Defendant was employed by the same employer as him. Whilst this was disputed by the 4^th Defendant, it remained a live issue which was tried.

54.  In the premises, as a result of the 2^nd Defendant’s position that the Plaintiff and other employees were the 3^rd Defendant’s employees, the Plaintiff could not reasonably take the risk that, if the 2^nd Defendant was found not to be the employer of the Plaintiff and the 1^st Defendant, and the Plaintiff did not join the 3^rd Defendant, then he would be left with no judgment. At the very least, given the 2^nd Defendant’s position in this regard, whether the 3^rd Defendant was the 1^st Defendant’s employer was a live issue at trial: see paragraph 28(2) of the Judgment. It remained a live issue at trial even after the Plaintiff’s abandonment of the standalone negligence claims.

55.  For the reasons above, it was reasonable for the Plaintiff in all the circumstances of the case to join the 3^rd Defendant. These circumstances had led to the 3^rd Defendant’s and subsequently the 4^th Defendant (the insurer)’s joinder. Even though in the end of the trial the Court found that the 2^nd Defendant was in fact the Plaintiff’s and the 1^st Defendant’s employer, such finding by the Court does not make it unreasonable for the Plaintiff to join the 3^rd Defendant in the first place.

56.  I am satisfied that in the circumstances of the case, it would not be competent for any lawyer, aware of the vicissitudes of litigation, to advise the Plaintiff to sue only the 1^st and 2^nd Defendants: see Leung Lai Ha (supra), at 114A-C & G-H. Whether or not it was reasonable to join the 3^rd Defendant should not be decided with the benefit of the hindsight of the final outcome of the trial. The Court would otherwise lose sight of the uncertainties which surrounded the case at an earlier stage.

57.  In the premises, it was appropriate to make a Sanderson or Bullock order in the circumstances of this case.

58.  This was so even though the Plaintiff’s evidence at trial was that he did not know who the employer of the 1^st Defendant was and that his Answers to the 4^th Defendant’s Requests for Further and Better Particulars of the Amended Statement of Claim in relation to the plea that the 1^st Defendant was bankrupt and had requested not to put his name on the employer’s payroll were “incorrect”, and that his evidence in relation to the latter was found to be unbelievable by the Court. Notwithstanding the above, the Court remains of the view that it was reasonable for the Plaintiff to join the 3^rd Defendant for the reasons explained above.

59.  Further, even though the 2^nd Defendant’s former solicitors had acted for the 1^st Defendant and submitted that the employer of the 1^st Defendant was the 2^nd Defendant during mitigation in the Criminal Proceedings, in light of the matters stated above, in particular the 2^nd Defendant’s change of stance and its latest position that the Plaintiff and other employees were employed by the 3^rd Defendant, it was reasonable for the Plaintiff to join the 3^rd Defendant.

60.  As to whether this Court should make a Sanderson or Bullock order, the Court is guided by the Court of Appeal in Chong Ngan Seng (supra), §§5, 31-34, referred to above. In the present case, despite the 2^nd Defendant was deregistered at one point, there is no evidence or certainty that the 2^nd Defendant is impecunious such that the 4^th Defendant would not be able to recover its costs from it. At the Costs Hearing, the 4^th Defendant’s counsel was unable to point to any evidence to suggest that the 2^nd Defendant was impecunious.[2]

61.  On the other hand, if the Plaintiff is liable for the 4^th Defendant’s costs and end up being unable to recover them from the 2^nd Defendant, his amount of damages awarded in this action would be reduced by a considerable amount.

62.  For the reasons above, the decision to make a Sanderson order against the 2^nd Defendant in favour of the 4^th Defendant is neither wrong in principle nor plainly wrong.

D.  CONCLUSION

63.  For all the above reasons, the 4^th Defendant’s application for leave to appeal is dismissed.

64.  I make a costs order nisi that the costs of and occasioned by the 4^th Defendant’s application for leave to appeal be paid by the 4^th Defendant to the Plaintiff on party and party basis, with certificate for counsel, to be taxed if not agreed. The Plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations. Such costs order nisi shall become absolute in the absence of any application within 14 days to vary the same.