CHAN LAI HEUNG v. PO LEUNG KUK

DCEC 172/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’COMPENSATION CASE NO. 172 OF 2001

--------------------

--------------------

__________________

Ruling

__________________

1. The applicant's Application was filed on 10 March 2001, claiming compensation for an accident which happened on 20 March 1999. Trial on liability and quantum has been set down for 5 and 6 December 2002.

2. On 29 April 2002, the respondent made a payment into court of $50,000. The applicant acknowledged this on 4 May 2002. Then on 28 May, the respondent paid in a further $50,000, which the applicant acknowledged on 31 May. The were in the usual terms, i.e. that the payment or increase was "in satisfaction of the cause of action in respect of which the applicant claims against the respondent herein."

3. The parties continued to prepare for trial. Correspondence passed between them concerning a figure of $441,762.23 paid to the applicant as advance payment, and $2,090.00 as medical expenses. The applicant's solicitors inquired as to whether this first figure represented a payment of full salary, which according to the respondent's policy was payable to an employee whilst on sick leave, or a payment of compensation under section 10 of the Ordinance. The respondent's solicitors stated that the entire sum of $441,762.23 was to be treated as advance payment under the Ordinance, for which credit should be given in quantifying the ultimate compensation, if the applicant succeeded on liability. In fact, I am told that the figure represents full salary for the 2 year period following the accident.

4. The order fixing the trial date was made on 19 August 2002. Then on 21 August 2002, the applicant's solicitors wrote to the respondent's solicitors that the applicant would accept the payment into court of $100,000.00, having given credit for the total of $443,852.23 received, plus costs in full and final settlement of her claims. They enclosed a draft consent summons which provided for the respondent to pay the applicant's party and party costs. Then on 22 August, they wrote a further letter to the effect that the applicant would accept the payment in, plus her costs up to 28 May 2002 and would pay the respondent's costs from 29 May 2002 up to the date of signing of the consent application. On the following day they sent a revised draft consent application which reflected this.

5. The respondent's solicitors, however, did not accept the costs proposal. On 26 August, they replied that the respondent was entitled to all costs after the payment into court and estimated that there should not, in any event, be many further costs except for the costs of taxation, which would be costs in the cause of the taxation itself. This did not commend itself to the applicant's solicitors, who insisted that the respondent should only be entitled to costs up to "the date of the consent order to be made herein" and they sent another draft to reflect this with a demand that it be signed by the close of business on the following day.

6. The respondent's solicitors did not agree. They insisted that there should be no time limit on the respondent's costs to be paid by the applicant. Up to this point the only dispute had been about costs; but now the respondent's solicitors also asked that the first paragraph of the draft be amended to read "Without prejudice to the respondent's position that it should not be liable for the present claim, the respondent do pay the applicant $543,852.53, inclusive of interest." The plaintiff's solicitors did not agree. They threatened to make an application to the court. The respondent's solicitors said that there was no meeting of minds regarding terms of settlement, and that they would invite the court to decide whether there was any agreement for settlement. The applicant's solicitors issued their summons on 5 September 2002. They apply for the following orders:

1. The Respondent do pay the Applicant the compensation agreed at HK$543,852.23 inclusive of interest;

2. Credit having been given to the amount of HK$443,852.23 already paid by the Respondent to the Applicant. The Applicant do have leave to accept the payment into Court in the total sum of HK$100,000.00 made by the Respondent respectively on 29th April 2002 and 28th May 2002 (being the balance of the agreed compensation) and the said sum of HK$100,000.00 be paid out to the Applicant's Solicitors forthwith;

3. Subject to the first charge of the Director of Legal Aid, if any, the said sum of HK$ 100,000.00 be paid to the Applicant;

4. The Respondent do pay the Applicant's party and party costs in these proceedings up to and including 28th May 2002, such costs be taxed if not agreed;

5. The Applicant do pay the Respondent's party and party costs in these proceedings after 28th May 2002 up to 26th August 2002, such costs be taxed if not agreed;

6. The costs of and occasioned by this application be paid by the Respondent, such costs to be taxed if not agreed; and

7. The Applicant's own costs be taxed in accordance with the Legal Aid Regulations.

7. The respondent's position is that the compensation can only mean compensation payable under section 6,7, 8, 9, 10 or 10A, i.e. because the respondent is liable to pay it. Therefore the order as drafted contains an admission of liability unless a qualification is added to say that it is not paid as such. Further, the Respondent should have its costs after the payment in, and without any time limit, to be taxed if not agreed. If the applicant will not accept that, there is no settlement and the trial should proceed.

8. The procedure on payment into court in an employee's compensation case is governed by Rule 20 of the Employees Compensation (Rules of Court) Rules which provides:

(1) A respondent from whom compensation is claimed may pay into court a sum which is considered by him to be sufficient to cover his liability.

(2) If no greater compensation be awarded than the sum of money which the respondent has paid into court, the court may order that any costs incurred by such respondent, after payment by him into court of the said sum of money, shall be paid by the applicant.

9. Unlike Order 22 of the Rules of the District Court, Cap. 336, there is no provision for acceptance of the payment in and stay of proceedings on such acceptance.

10. The applicant says that payment into court does not imply any admission of liability. There is no time limit for acceptance and the applicant should be able to accept it now, without the need for any consent summons. She refers to the case of Ng Ming Chor v. Pui Hing Construction Co. Ltd. & Ors. DCCJ 496 of 1996. In that case there was a payment into court. The applicant's solicitors drafted a consent summons for payment out, in satisfaction of all the causes of action. The respondent's solicitors would not accept that; they proposed an amendment to add the words "on a without admission as to liability basis". The matter came before H. H. Judge To. It was argued that payment into court under Rule 20 must include an admission of liability. The judge, after considering the authorities, held:

Rule 20 is the only rule which covers payments into court in connection with employees' compensation proceedings. Apart from the phrase "to cover his liability", it is silent as to the effect of the payment in, except as regards costs. Payment into court has been a well established practice. By 1948, a statement as to whether liability was admitted or denied was no longer required. Impliedly, the payment was made without admission of liability. In the words of Devlin, L.J. in A. Martin French v. Kingswood Hill Ltd., [1961] Q.B. 96 "a payment into Court is simply an offer to dispose of the claim on terms. The payment in implies no admission about the merits of the cause of action; there has been no adjudication on it, and therefore no estoppel is created. "The same practice has been imported into the Employees' Compensation Ordinance albeit with the addition of the words "to cover his liability." However, I do not consider these words as wide enough to displace the concept of payment without admission of liability which has been associated with the practice for such a long time. In practice the majority of claims for compensation are settled presumably because of compulsory insurance. Very often, these claims are settled without admission of liability. This is to ensure a speedy and costs saving disposal of the compensation claims but without prejudicing the parties' position in relation to the common law claim that sometimes follow. To hold otherwise would require the parties to embark on a course of unnecessary and costly litigation on the issue of liability, even though the parties have no dispute on quantum and are consent to pay and to receive the compensation. Had it been the intention that payment into court includes an admission of liability, it would have been more expressly provided in the rule. In the circumstances, I consider payment into court under Rule 20 has the same effect as a payment under Order 22. The payment does not imply an admission of liability.

11. The judge went on to allow payment out in the terms proposed by the applicant's solicitors, namely in satisfaction of all the causes of action.

12. In Li Kwok Shing v Law Ka Fu & Anor. DCEC 654 of 2000, it was argued before H. H. Judge Li that to bring an ECC claim to an end, a "determination" of the District Court is necessary under section 18A of the Employees' Compensation Ordinance. The only way in which payment into court in ECC proceedings can be accepted are by the parties submitting a consent summons for the court to approve so that "compensation" is "awarded" by the court; i.e. there is a determination under section 18A. In that case, a payment into court had been made on the day before the trial and the matter only came before the judge in respect of a dispute on costs.

13. Judge Li said:

9. I find Ms. Remedios' arguments most persuasive. I believe there are two reasons for Rule 20 of the Employees Compensation Rules, Cap. 282 not to provide for acceptance of payment. First, an Application for compensation under the Employees Compensation Ordinance, Cap. 282 may involve infant interests for which the court has a duty to protect. If an applicant can terminate an ECC case by acceptance of payment in, the court cannot effectively protect the interests of infants who are not the nominal party. Secondly, there may be dependents not necessarily infants who may have a share in the compensation that the court should justly apportion. If the nominal applicant can by simply filing a form obtains the money paid in, the money may be unlawfully distributed or dissipated before the court has the opportunity to decide on apportionment among dependents.

10. In the premises, I hold that an applicant for compensation under the Employees Compensation Ordinance, Cap. 282 is not entitled to invoke Order 22 of the Rules of the District Court, Cap. 336 to accept payment into court. If an applicant wishes to accept monies paid into court in full and final settlement, a consent summons may be taken out for approval by the court. Alternatively, the applicant may on the day of trial apply for compensation to be determined in the same amount as the total of monies in court.

11. Since monies paid into court is not "acceptable", I agree with Ms. Remedios that theoretically a respondent may object to awarding the total of monies already paid into court as compensation lawfully due. In other words, payment into court is not admission of liability. Even if payment into court should be taken as admission of liability, it is not an admission as to quantum. A respondent, in any event, is entitled to insist on trial as to quantum.

14. I respectfully agree that payment into court under Rule 20 does not involve admission of liability. I agree that Order 22 of the Rules of the District Court does not apply, so there cannot be a simple acceptance. I also agree that payment out needs some kind of determination by the court. This may be achieved by the court's endorsement of a consent order. Equally, I think it could be achieved by a simple application for payment out. The court could determine the matter on the basis that the applicant accepted the respondent's offer in settlement of all claims, without making any decision as to liability. What the court could not do, however, is determine the case on the basis that the respondent was liable, unless the respondent admitted liability.

15. It seems to me that the respondent is right. The consent order contained an order for payment of compensation. Compensation is only payable on liability. So the respondent was quite entitled to refuse to accept that. But the applicant, it appears, does not want a finding of liability either. What she fears is that if she positively accepts that the respondent is not liable, she may be at risk in any subsequent common law proceedings. But the words suggested by the respondent's solicitors, i.e. "without prejudice to the respondent's position that it should not be liable" would not have amounted to a positive acceptance.

16. To the extent that any order to be made should be silent as to liability, there is a meeting of minds between the parties. It is now simply a matter of adjusting the terms of the order to be made by me to reflect that. To allow the applicant to insist on proceeding to trial, on the basis that there is no agreement between them on liability, would be wrong. What is really at issue between them is the matter of costs.

17. The applicant is prepared to pay the respondent's costs after the date of payment in but wants a cut-off at 28 August 2002. The respondent wants all costs after the date of payment in. That would be the normal order where money is paid out with leave of the court. I do not see that agreement to this would subject the applicant to an unexpected costs consequence. The only costs to be expected would relate to taxation and would be in the cause of the taxation.

18. It seems to me that the applicant could and should have accepted the respondent's amendments. If she had the matter could have been resolved by a consent summons. So the applicant will have to bear the costs of the present summons.

19. I therefore make the following order:

1. Credit having been given to the amount of HK$443,852.23 already paid by the Respondent to the Applicant, the Applicant do have leave to accept the payment into Court in the total sum of HK$100,000.00 made by the Respondent respectively on 29th April 2002 and 28th May 2002 in satisfaction of the cause of action in respect of which the applicant claims against the respondent, and the said sum of HK$100,000.00 be paid out to the Applicant's Solicitors forthwith;

2. Subject to the first charge of the Director of Legal Aid, if any, the said sum of HK$ 100,000.00 be paid to the Applicant;

3. The Respondent do pay the Applicant's party and party costs in these proceedings up to and including 28th May 2002, such costs be taxed if not agreed;

4. The Applicant do pay the Respondent's party and party costs in these proceedings after 28th May 2002 and including the costs of this application, such costs to be taxed if not agreed;

5. The trial on 5 and 6 December 2002 be vacated; and

6. The Applicant's own costs be taxed in accordance with the Legal Aid Regulations.