WONG KIT YEE for herself and on behalf of other dependants of YEUNG CHUN HO, deceased v. CAPITAL GLOBE LTD (In Liquidation) AND OTHERS

DCEC 704/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 704 OF 2012

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DECISION

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1.  This is an application for variation of costs order nisi.

2.  By my judgement dated 19 February 2016 (“the Judgment”), order nisi was made that the 1^st and 2^nd respondents should bear their own costs.  By the summons dated 3 March 2016, the 2^nd respondent applied to vary the costs order nisi and sought that the applicant, the 3^rd respondent and/or the 4^th respondent do jointly and severally pay the 2^nd respondent the costs.  In this decision, I adopt the abbreviations used in the Judgment.

3.  This action concerned a fatal incident in which the applicant’s husband was killed in a hotel room in Pakistan on or around 30 April 2010.

4.  The 1^st respondent is a limited company and has been in liquidation since 8 July 2011.  At the material time, it had two directors, Haque and Lee.

5.  The 2^nd respondent is the insurer of the 1^st respondent under the Employees’ Compensation Ordinance.

6.  The 3^rd respondent is a limited company wholly-owned by the 1^st respondent.  It shared the same registered office and had the same directors as the 1^st respondent.  The 3^rd respondent was not insured in respect of the liability herein and had no assets.

7.  The 4^th respondent is the Employees Compensation Assistance Fund Board.  The 4^th respondent has to pay the judgment sum as the 3^rd respondent is held liable in this case.

8.  The issues in dispute in the trial were:-

(a) Whether the accident happened in the course of employment;

(b) Whether the accident was arising out of employment; and

(c) Whether Yeung was an employee of the 1^st respondent and/or the 3^rd respondent at the time of his death;

9.  It is ruled that the 3^rd respondent was the employer of the deceased.  The applicant’s case against the 1^st and 2^nd respondents was dismissed.

10.  The 2^nd respondent’s submissions for variation of costs order could be summarized as follows:-

(a) Costs should follow event.  As the case against the 2^nd respondent was dismissed, the 2^nd respondent should be entitled to costs.

(b) The applicant had gained an advantage by suing more respondents than needed to establish liability, she should pay the price for doing so if the claim against one of the respondents failed.  The case Hung Chiu Kwan Danka v Lui Chi Mun Teddy and anor, unreported, DCEC 703/2012, was relied on.

(c) The 2^nd respondent helped the applicant by pointing out the evidence against the 3^rd respondent and as a result the 3^rd respondent was joined as a party.  Without its assistance, the applicant could have simply lost without compensation.  It would therefore be unjust to order the 2^nd respondent to bear its own costs.

(d) It may be reasonable to join the 2^nd respondent at the beginning of the proceedings, but it was unreasonable to continue the proceedings against the 2^nd respondent.

(e) The 2^nd respondent, being the insurer, did nothing wrong in the case, only the 1^st respondent put its name in the Form 2 and made payments to the applicant.

11.  Mr Chan, counsel for the 4^th respondent, cited paragraph 10 of the case YBL v LWC, unreported, CACV 244/2015, which stated the relevant principles in the exercise of discretion as to costs as follows:-

“a. Whilst the courts often start with the proposition of costs following event, it is no longer a general rule but a starting point, see Hung Fung Enterprises V Agricultural Bank of China [2012] 3 HKLRD 683;

b. there have to be some justifications for depriving a successful party of his costs;

c. in measuring who is the successful party and the extent of his success, the court must examine the reality and justice of the case.  Thus, in Hysan Development Co Ltd v Town Planning Board (No 2) (2016) 19 HKCFAR 635, the Court of Final Appeal made no order as to costs notwithstanding the success of the appellants in reversing the Court of Appeal’s decision because they did not achieve the full objects of their appeals;

d. in addition, under Order 62 Rule 5, the court in exercising its discretion shall take into account the matters set out in Rule 5(1) as may be appropriate in the circumstances;

e. Rule 5(2) highlights some conduct which the court may take into account including whether it is reasonableness for a party to take an issue, the manner in which the matter was pursued or defended, the extent of success, and conduct before, as well as during the proceedings;

f. if a successful party has brought the litigation upon himself or has done some wrongful act in the course of the transaction, he could be deprived of his costs.”

12.  In this case, the 1^st respondent filled out the Form 2 Notice of Accident stating that the 1^st respondent was the employer of the deceased.  The 1^st respondent made 3 monthly payments to the applicant after the accident.  The 1^st respondent’s director Haque issued a letter on 6 October 2009 confirming the deceased was the 1^st respondent’s employee, notwithstanding that MPF record showed that the deceased began employment with the 3^rd respondent on 1 October 2009.

13.  I find that it is reasonable to sue the 1^st respondent and the 1^st respondent had brought the litigation upon himself.

14.  Costs follow event is only a starting point.  The court must examine the reality and justice of the case.  Taking into account the confusion of the employer’s identity, it is unfair to order the applicant to pay the costs of the successful respondent.

15.  In the present case, the 2^nd respondent was the insurer of the 1^st respondent.  Its interest aligned with the 1^st respondent.  The 2^nd respondent adopted the same defence of the 1^st respondent.

16.  I find that it is reasonable to sue the 1^st respondent in the first place and continue the claim against the 1^st and 2^nd respondents.  The identity of the employer cannot be resolved by simply considering the documentary evidence.  Lee has to give evidence to clarify his position and mentality when signing the documents and making payments.  The outcome of this case could only be ascertained after trial.

17.  I do not accept that the 2^nd respondent had tried to help the applicant.  As stated in paragraph 2 of the 2^nd affirmation of Hong Kam Cheung dated 3 March 2016, the solicitors acting for the 2^nd respondent, the reason why the 2^nd respondent needed to join in as a party to this action was to protect its interest.

18.  Mr Chan correctly pointed out that in the trial, the 2^nd respondent defended this case vigorously and took issue with all three issues in dispute, including whether the accident happened in the course of employment; whether the accident was arising out of employment.  The 2^nd respondent lost in two issues.  I find that it is unreasonable to dispute those issues.  That is another reason why the 2^nd respondent should not be entitled to costs.

19.  I find that it is reasonable for the 4^th respondent to join in the proceedings in order to safeguard the public fund.

20.  The factual matrix of Hung Chiu Kwan Danka (supra) is different from this case.  In particular, in that case, there is no evidence “to indicate that the 2^nd respondent therein was the employer.  Quite the contrary, the evidence was all one way to suggest that the 1^st respondent was the employer”.  In this case, there was documentary evidence made by the 1^st respondent, even to the effect to hold out as employer of the deceased.

21.  In the circumstances, the 2^nd respondent’s application for variation of costs order be dismissed.  I order that the costs order nisi be made absolute.

22.  Parties have agreed that costs of this application should follow event.  I order that the 2^nd respondent do pay costs of this application to the applicant and the 4^th respondent, with certificate for counsel, to be taxed if not agreed.

23.  It remains of me to thank counsel’s assistance.