YIP LAI HEUNG v. 伍炳榮 AND OTHERS

DCEC 1252/2016

[2019] HKDC 789

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1252 OF 2016

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REASONS FOR DECISION

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A. INTRODUCTION

1.  The 3^rd and the 4^th respondents in these employees’ compensation proceedings (respectively described as “R3” and “R4”) issued a summons (“Summons”) on 4 March 2019 to strike out the applicant’s employees’ compensation application filed on 17 June 2016. 

2.  At the hearing on 5 June 2019, the applicant was represented by his legally-aided assigned counsel, Mr Gary Chung.  The 1^st and the 2^nd respondents (respectively “R1” and “R2”) were represented by his legally-assigned solicitor, Mr Wong of Huen & Partners, and R3 and R4 by counsel, Miss Percy Yue.

3.  The applicant and R1 and R2 opposed the Summons.

4.  At the end of the hearing, I dismissed the Summons, and indicated that I would give my reasons, which I now do.

5.  In this Reasons for Decision, all references to statutory provisions are, unless otherwise stated, references to those of the Employees’ Compensation Ordinance and all references to rules, unless expressly stated, are to the Rules of the District Court.

B.   BACKGROUND FACTS

6.  In this employees’ compensation claim, the applicant claimed that on 4 December 2014, he was instructed by R2 to dismantle a concrete wall in a premises for payment of $700. Whilst in the course of employment,  he sustained injuries. The applicant asserted that it was only on the alleged date of the accident that he met R1 whom R2 referred to as “boss”, but that he did not know R3 and R4 at all.

7.  Thus, when these proceedings were commenced, they were only against R1 and R2.  Before they were legally represented[1], R1 and R2 denied in their home-made answers (respectively dated 11 July 2016 and 13 January 2017) the existence of any employer-employee relationship, and averred that the applicant was self-employed working in partnership with R1 and R2. After R2 became legally represented, R2 in his Amended Answer (at §3) dated 30 July 2018 further averred that R1 and R2 were not the applicant’s employers and that the employers were R3 and R4. The documents later discovered also disclosed that the said premises was rented by R4, a limited company owned and controlled by R3. 

8.  It was not until 27 July 2018 (more than three and half years after the alleged accident on 4 December 2014) that the applicant was granted leave by this court to join, out of time, R3 and R4 as parties to these proceedings.  In the Amended Application, R3 and R4 are alleged to have been the applicant’s employer(s); or alternatively, the principal contractor(s).  These allegations are denied in the answer R3 and R4 filed on 27 December 2018.

C.   THE GROUNDS FOR STRIKING OUT

9.  After having served their answer, R3 and R4 filed the Summons seeking to strike out the applicant’s claim pursuant to s 14 and O 18, r 19(1) on the grounds that the claim: -

(a)   “disclosed no reasonable cause of action”;

(b)   is “time barred”; and

(c)   is “frivolous or vexatious or an abuse of the process of the Court”.

10.  In support of the Summons, R3, for himself and on behalf of R4, filed an affirmation stating that the applicant had no evidence to show that either he or R4 was the employer or principal contractor as alleged. In his reply affirmation, R3 further stated that he incorporated R4 for the carrying out of the business of buying and selling of waterproof products.  R3 was R4’s sole director.  He gave $2,100 cash to R1 for the demolishing of a wall in the said premises but he did not know the applicant or R2. R3 and R4 were not involved with the arrangement R1 made with the applicant and R2. He also denied providing any tools for the demolition job.

11.  At the hearing, upon this court drawing to Miss Yue’s attention the leave I gave as stated in §8 above that R3 and R4 be joined notwithstanding the expiry of the time limitation, Miss Yue abandoned ground (b) of the Summons, relying therefore only on grounds (a) and (c).

12.  The legal principles for striking out a claim pursuant to O 18 r 19 are well established (see Hong Kong Civil Procedure 2019 (“HKCP”) 18/19/4 – 18/19/11 at pp 491- 498).  I bore these principles in mind when determining the Summons.

D.   WHETHER PLAIN AND OBVIOUS THAT THE CLAIM HAS   NO REASONABLE CAUSE OF ACTION (GROUND (a))

13.  When considering whether the applicant’s claim discloses no reasonable cause of action, this court should only decide on the pleaded facts without any extrinsic evidence: HKCP 18/19/3. 

14.  Pleadings within the employees’ compensation regime, as I stated before[2], are different to other civil proceedings.  They consist of concise statements in the form of an application and an answer in the prescribed forms (see rrs. 16 and 17 of the Employees’ Compensation Rules, and Practice Direction 18.2 §40).  In the circumstances, for the purpose of this striking out application, the pleadings in this case should be examined in this particular statutory context.

15.  According to the Amended Application (at §1(a)), the claim against R3 and R4 is based on the applicant’s alternative averment that they are either the applicant’s direct employer(s), or alternatively the principal contractor(s).  According to s 5 and s 24, an employer and a principal contractor (including a sub-contractor) are respectively liable to pay compensation to an injured employee.  Hence, I agree with Mr Chung’s submission that the cause of action against them is clearly within the statutory ambit of the employees’ compensation regime.

16.  I do not consider that the absence of any employment contract or contract of services between the applicant and R3 and R4 supports Miss Yue’s submission that the applicant’s claim has no reasonable cause of action.  In my view, the Amended Application has clearly disclosed a cause of action and raised some questions fit to be tried.

E.   WHETHER frivolous or vexatious or an abuse of the process of the Court (ground (c))

17.  For this ground, R3 and R4, apart from relying on the lack of employment contract, put forth three points in support of their allegation that the applicant is abusing the process of the court and that the claim is therefore frivolous.

18.  First, the evidence and the pleaded case of R1 and R2 indicate that the applicant was either self-employed or a partner of R1 and R2 (Miss Yue’s written skeleton §18).

19.  Secondly, the applicant was not the employee of R3 and R4 within proviso (b) of s 2(1), which provides that a person “whose employment is of a causal nature, and who is employed otherwise than for the purpose of the employer’s trade or business …” is excepted from the definition of ‘employee’.  This can distinctively be referred as to the “proviso argument”.

20.  Miss Yue, in her written skeleton, sought to rely on, for the first time on behalf of R3 and R4, the exception in s 2(1).  Miss Yue submitted that the applicant would not have been an employee within s 2(1) as he would have only been employed on a casual one-off basis and that he was employed otherwise than for the purpose of R4’s trade or business. 

21.  Thirdly, the applicant has no evidence to support his claim against R3 and R4.  In this regard, Miss Yue referred to R2’s change of his pleaded case in his Amended Answer by implicating R3 and R4.  She further put forth various assertions R3 made on his own behalf and on behalf of R4 in his supporting and reply affirmations (see §10 above).

22.  In addition to the above three grounds, Miss Yue further submitted at the hearing that the applicant, by pursuing both R3 and R4 instead of suing only one of them, has caused prejudice to them.  The prejudice, according to Miss Yue when asked by this court for clarification, was the incurring of extra costs to R3 and R4.  It was further submitted that the applicant should have chosen only one of them to sue instead of suing both.  R4, it was suggested, should have been the more appropriate party to have been sued.

23.  In my view, none of these grounds have merits.

24.  First and the foremost, I reject the proviso argument.

25.  As mentioned in §8 above, R3 and R4 opposed the claim by only putting forward a bare denial in their answer.  They only raised this plea for the first time through Miss Yue.  In On Hing Chu v Chan Ngun[3], the Court of Appeal has held that if a respondent wished to rely on the exclusion from the definition of an employee by reference to proviso (b), it needs to be expressly pleaded so that the matter could be fully dealt with at the trial (per Hon Cheung JA at [18]- [23]).

26.  In this case, R3 and R4, similar to the respondent in On Hing Chu, only oppose the applicant’s claim in their answer by, apart from specifically denying that they were the applicant’s employer(s) or sub-contractor(s) or principal contractor, a bare denial.  They never pleaded that the applicant was not their employee by reason of proviso (b). 

27.  Not only Miss Yue did not seek to argue that On Hing Chu is not applicable to this case, but faintly accepted that this court was bound by it. In the circumstances, I reject this point Miss Yue raised in her skeleton.  In any event, as Mr Chung has correctly pointed out in his skeleton, on the account of R3’s evidence stated in his reply affirmation, I consider that there is some evidence that tends to suggest that the demolition that the applicant carried out on the date of the alleged accident seemed to have been for the purpose of R3/R4’s business, namely, for the purpose of R4’s business development.

28.  Hence, I consider that the second argument, i.e. the proviso argument, is wholly unsustainable.

29.  As for the first argument concerning the contention that the pleaded case of R1 and R2 showed that the applicant was either a self-employed person or a partner of R1 and R2, I do not think it has much substance.  Plainly, all the evidence that has been adduced and the averments contained in pleadings in this case consisted of a mixture of disputed facts and law, which, according to the legal principles for striking out, should not be disposed of at an interlocutory stage by conducting a mini-trial.

30.  As for the third contention that the applicant has no evidence against R3 and R4, it is, in my respectful view, wholly unarguable. I am unable to accept Miss Yue’s submission that R2’s allegation against R3 and R4 that they were the applicant’s employers (see §7 above) is sufficient at this stage to be accepted as the applicant’s lack of evidence against R3 and R4. Similarly, I also reject her submission that the various matters R3 deposed to in his affirmations supported their assertions that the applicant’s claim was frivolous for the alleged lack of evidence.  In my view, the matters that Miss Yue referred to substantially hinged on the issue of credibility, which matter can only be determined at trial.  In any event, the evidence R3 and R4 have adduced could be said as self-serving assertions, which could only be tested through the viva voce examination of witnesses at trial. 

31.  I also do not consider that the last point Miss Yue raised at the hearing has much merit.  As discussed in §15 above, the applicant has clearly pleaded an alternative case against R3 and R4, namely, either as employer(s)or as principal contractor(s).  It is the applicant’s case that he has no knowledge of the relationship of R3 and/or R4 with R1 and R2.  Thus, it is not unreasonable, in my view, for the applicant to base his claim against R3 and R4 in the alternative.  Such plea is not inconsistent but well within the ambit of the employees’ compensation regime.  It is unclear why Miss Yue had boldly suggested that between R3 and R4, R4 rather than R3 was a more appropriate party to have been sued.  Given the fact that R4 is owned and controlled by R3, I believe that Miss Yue’s stated preference for R4 to have been a more suitable respondent was probably due to the need to protect R3 from incurring any personal liability in these proceedings.

32.  For these reasons, I was firmly of the view that this was not a suitable case for striking out the applicant’s claim, and I therefore dismissed the Summons.