HUI KIN HUNG v. CHEER PROSPECT SERVICES LTD AND OTHERS

DCEC 781/2020 [2023] HKDC 1133 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION EMPLOYEES’ COMPENSATION CASE NO. 781 OF 2020 ------------------------------------------ IN THE MATTER OF AN APPLICATION BETWEEN HUI KIN HUNG（許建雄） Applicant and CHEER PROSPECT SERVICES 1st Respondent LIMITED（至興服務有限公司） CHEER PROSPECT PROPERTY 2nd Respondent MANAGEMENT LIMITED （至興物業管理有限公司） ONEHO DECORATION LIMITED 3rd Respondent （一和裝飾工程有限公司） ------------------------------------------ Before: Deputy District Judge David Chan in Chambers (Open to Public) Date of Hearing: 15 August 2023 Date of Decision: 22 August 2023 ------------------------ DECISION ------------------------ BACKGROUND This is the applicant’s claim for compensation under sections 9, 10 and 10A of the Employees’ Compensation Ordinance, Cap 282 (“ECO”), against the 1st to 3rd respondents. Both liability and quantum are disputed by the respondents. For the former, the contentions primarily rest on whether the applicant was an employee, and if so, by whom he was employed at the time of the accident. Between June and December 2018, the 2nd respondent was the property manager of King Tsui Court, No. 8, Fung Ha Road, Chai Wan, Hong Kong (“King Tsui Court”). An agreement between it and the Incorporated Owners of King Tsui Court was signed on 3 May 2018 (“Property Management Contract”), under which, the 2nd respondent had to, amongst others, station a technician at the King Tsui Court on Mondays to Saturdays, and from 9 am to 6 pm on each working day. Between late August to early September 2018, the applicant learnt from his younger brother許建志 (the “Brother”) that there was vacancy for a technician to work at King Tsui Court. The Brother received such information from Mr Ho Wai Keung (“Mr Ho”), and relayed the same to the applicant. On 13 October 2018, when the applicant was repairing a loosened stainless-steel label plate located at the upper part of the letter boxes, the label plate became detached and dropped onto his left thumb and lacerated it (the “Accident”). He was sent to the Accident and Emergency Department of the Pamela Youde Nethersole Eastern Hospital by ambulance. He was then admitted to the orthopaedic ward for further management, and was discharged on 14 October 2018. For his left thumb injury, and the consequential loss of earning capacity due to it, the applicant commenced this application, initially against the 1st and 2nd respondents as his employers. The 3rd respondent was added after the 1st and 2nd respondents in their Answer alleged that the applicant was employed by the 3rd respondent. This matter came before me on 14 August 2023 for Trial with 3 days reserved. At the Trial, the applicant was represented by counsel Mr Gary K. H. Chung (“Mr Chung”), and the 1st to 3rd respondents were represented by counsel Mr Pakco Chan (“Mr Chan”). The solicitors were Messrs. LWC & Co., Solicitors for the applicant (“LWC”) and Messrs. Ellen Au & Co. for the 1st to 3rd respondents (“EAC”). EAC has started representing the 1st to 3rd respondents since 1 November 2021. ADJOURNMENT OF THE TRIAL On the first day of Trial, Mr Chung brought to my attention that §3 of the order of HH Judge H. Au-Yeung dated 9 February 2022 (the “Order”) has not been complied with by the 2nd respondent. Under that paragraph, the 1st and 2nd respondents were required to produce for inspection of the employees’ compensation insurance covering the 1st and 2nd respondents, or make an affidavit or affirmation stating that they have never had any employees’ compensation insurance at the time of Accident. The 1st and 2nd respondents were required to comply with this order on or before 23 February 2022. Although it was not expressly stated in §3 of the Order, as the 1st and 2nd respondents were both sued as the employers of the applicant, this direction was made pursuant to section 44A of the ECO. I shall add that, under §§1 and 2 of the Order, same directions were given to the 3rd respondent. The 1st respondent delayed but ultimately complied with such order, when the Endorsement Note and Notice of Insurance issued by QBE Hongkong & Shanghai Insurance Limited dated 3 April 2018 (“1st Respondent’s Insurance Policy”) was disclosed by way of a Supplemental List of Document filed on 30 May 2022. According to the 1st Respondent’s Insurance Policy, the place of employment to which the policy would apply was specified as 1424, 14/F, Hoi Yuen Industrial Building, 55 Hoi Yuen Road, Kwun Tong, Kowloon (the “Kwun Tong Address”). Apparently, this was the registered office address of the 2nd respondent before 2020. Hence, it seems that the 1st Respondent’s Insurance Policy might not cover the applicant, whom was assigned to work at King Tsui Court. Also on 30 May 2022, Mr Ho, on behalf of the 3rd respondent, filed an affirmation stating that the 3rd respondent did not have any employees’ compensation insurance at the time of the Accident. Turning to the 2nd respondent, after the reminder from Mr Chung, Mr Chan was given time to obtain the insurance policy from the 2nd respondent. He was able to provide to the Court and Mr Chung a copy of the schedule of the insurance policy within an hour after such request was made. Consistent with the Information Amendment Sheet filed by the 2nd respondent to the Labour Department, the schedule was issued by Zurich Insurance Company Ltd with Policy No. OFP0027230ZC (AGT) (the “Schedule”). However, it is observed that the policy class was stated therein as “office insurance”, and the policy covered the period from 20 July 2018 to 19 July 2019. The Kwun Tong Address was stated to be the place of employment, and the staff insured under this policy were: (1) one indoor manager (including outdoor duties); (2) one indoor supervisor (including outdoor duties); and (3) three indoor clerical staff (including outdoor duties). It appears that the Schedule did not apply to the 2nd respondent’s staff stationed at King Tsui Court:- The Property Management Contract required the 2nd respondent to station at King Tsui Court one property officer, one property assistant, a technician, two security guards for the day shift, and two security guards for the night shift. None of these posts was mentioned in the Schedule, especially the posts of technician and security guards. King Tsui Court is a residential building. It may not fall within the description and scope of the policy class “office insurance”. Instead, by such policy class, it tallies with the Kwun Tong Address, which was the registered office of the 2nd respondent at the material time. In any event, King Tsui Court was not expressed as a place of employment under the Schedule. Mr Chan submitted that, by including the outdoor duties of the staff so insured under the Schedule, the staff stationed at King Tsui Court could be covered. I am not convinced. I repeat my observations in §12 above. I shall also add that the Property Management Contract was signed on 3 May 2018, and it covered the period from 1 June 2018 to 31 May 2020. Clause 3.8.3 of the same provides that the 2nd respondent was responsible to take out employees’ compensation insurance for its staff stationed at King Tsui Court during subsistence of the Property Management Contract. Contrast these with the information contained in the Schedule, one can see that it was proposed on 20 July 2017, and took effect on 20 July 2018. I simply do not see how the Schedule was meant for its staff working at King Tsui Court. There is no explanation as to why the 2nd respondent would start to apply for employees’ compensation insurance on 20 July 2017, when the Property Management Contract was yet to be signed. Equally, I am baffled by the effective date of the Schedule, which came more than 1 month after the Property Management Contract started. The cumulative effect of the matters stated in §§9-14 above is that there could be no policy of insurance known to be in force at the time of the Accident to which the present application relates. This would allow the applicant to apply for payment from the Employees Compensation Assistance Fund under section 16 of the Employees Compensation Assistance Fund Ordinance, Cap. 365 (“ECAFO”); moreover, the Employees Compensation Assistance Fund Board (the “Board”) is also entitled to apply to the court to join in the present application pursuant to section 25A of ECAFO. Surprised by the contents of the Schedule, LWC had immediately tried contacting the Board; unsurprisingly, the attempt to do so was futile. LWC was only connected to the Board’s hotline. Despite Mr Chan’s suggestion that a decision could be made by the Board in 1 or 2 hours’ time, I agree with Mr Chung that this is unrealistic. It would be wishful thinking that any concrete reply from them could be expected within a short period of time (i.e., before 16 August 2023, which is the last scheduled date of Trial), considering that the Board would need to obtain and peruse the papers, and perhaps to seek legal advice from solicitors, before they could decide on whether to intervene in this application. For these reasons, I agreed with Mr Chung that the Trial should be adjourned, so that the Board could be notified of the above. Mr Chung indicated that costs thrown away on the adjournment of the Trial should be borne by the respondents. Mr Chan disagreed, and he initially proposed that the costs occasioned by such adjournment should be reserved. I disagreed. Upon Mr Chan’s request, I adjourned the matter to 15 August 2023 at 9:30 am for the parties to make their submissions on costs. DECISION ON COSTS In the case Elijah Saatori v Raffles Medical Group (Hong Kong) Ltd, Chu JA (as Chu VP then was) had these to say about costs thrown away on the adjournment of trial:- “Under Order 35 rule 3, a judge has wide discretion to decide whether to adjourn on terms and on what terms. The court invariably orders costs thrown away by the adjournment of the trial to be paid by the party who brings about the adjournment. In appropriate cases, the court may also order the party responsible for the adjournment to pay to the other party or to bring into court the amount of costs owing from him to the other party.” (emphasis added) I find the 2nd respondent and/or EAC to be the main culprits for the adjournment of the Trial; it stemmed from the very late disclosure of the Schedule, and their non-compliance with the Order. No explanation has been given as to why the Order was not complied with until Mr Chung’s reminder on the first day of Trial. The inaction on the part of 2nd respondent is especially questionable when Mr Chan was able to obtain from it a copy of the Schedule in about an hour on the first day of Trial. Although he conceded that the 2nd respondent and/or EAC were at fault, Mr Chan argued that the applicant and LWC should share the blame. At the hearing, Mr Chan first referred to the cases of Ip Sau Lin v Hospital Authority and Wing Fai Construction Co Ltd (in liq) v Yip Kwong Robert, to highlight on the duties on both parties under the underlying objectives pursuant to O. 1A of the Rules of the District Court, Cap. 336H (“RDC”). In particular, where a party defaulted in the compliance with the rules or orders from the Court, the other party owed a duty to report the same to the Court. Mr Chan then pointed to there being no interlocutory application from the applicant’s side seeking for an unless order to be imposed on the 2nd respondent to disclose the Schedule. In addition, Mr Chan highlighted on the inaction of LWC since late August 2022, when their demands for the Schedule were suspended. In the Joint Written Applications and Joint Appendix D filed in 2023, LWC had failed to report to the Court on the 2nd respondent’s failure to comply with the Order. For these reasons, Mr Chan suggested that the applicant should be 50% to blame for the adjournment of the Trial. Hence, he submitted that there should be no order as to costs of the adjournment. I do not entirely agree with Mr Chan. To accept such submissions in their entirety is to put the cart before the horse. One should appreciate that the primary duty was on the 2nd respondent to comply with the Order. Should it be unable to do so within time, an application for extension of time should be taken out by the 2nd respondent. Such primary duty should neither be shifted to nor shared by the applicant. I should also mention that, pursuant to section 44A of the ECO, it is a mandatory statutory duty of the 2nd respondent to produce for inspection of the applicant a policy of insurance within 10 days after receiving a written request for the same. LWC had, as early as 26 May 2021, written to the 2nd respondent’s former solicitors demanding production of the insurance policy, but to no avail. The demand was repeated in another letter to the same firm on 27 October 2021, but it was also ignored. In the Joint Appendix D and Joint Written Application, both dated 31 January 2022, LWC had requested for disclosure of the insurance policies of the 1st and 2nd respondents pursuant to section 44A of the ECO. This led to the directions given under §3 of the Order. LWC had reported to the court on the 2nd respondent’s non-compliance with the Order in the Appendix D filed on 11 April 2022. And under §1(a) of the proposed directions, the applicant also sought an unless order to be imposed on the 1st and 2nd respondents to ensure compliance of the Order. The same complaint was made, and the same request for an unless order to be imposed on the 1st and 2nd respondents was sought, in LWC’s letter to the court dated 16 May 2022. Pausing here, Mr Chan’s accusation that the applicant had failed to take out any application to ensure the 2nd respondent’s compliance with the Order is clearly contradicted by the above documents. It was after the 16 May 2022 letter that EAC filed the Supplemental List of Documents on 30 May 2022, disclosing the 1st Respondent’s Insurance Policy. Nevertheless, it was not made clear on the Supplemental List of Documents that such insurance policy was taken out solely by the 1st respondent to the exclusion of the 2nd respondent. In their letter dated 10 June 2022, EAC impliedly represented to the Court that the Order was complied with. Seeing that the Supplemental List of Documents was filed, and EAC’s letter dated 10 June 2022, LWC in their letter dated 17 June 2022 had not pursued on the request for an unless order to be made. Thus, no further action was taken by the Court in this regard. However, after a copy of the 1st Respondent’s Insurance Policy was provided to LWC on 23 June 2023, LWC realised that it had nothing to do with the 2nd respondent. Since then, LWC had repeatedly asked for a copy of the insurance policy from the 2nd respondent. For example, LWC had, in their letter dated 28 June 2022, highlighted to EAC that only the 1st Respondent’s Insurance Policy was disclosed under the Supplemental List of Documents filed on 30 May 2022. In the same letter, LWC had attached the Information Amendment Sheet filed by the 2nd respondent to show to EAC that the 2nd respondent’s insurance policy should come from a different insurance company and with different policy number. Request for such document was thus made. Repeated request for the insurance policy from the 2nd respondent was made in the subsequent letters from LWC to EAC dated 11 July 2022, 15 July 2022, 3 August 2022 and 26 August 2022. There were no reply to these letters. The above clearly showed that the applicant, via LWC, had repeatedly requested for the insurance policy from the 2nd respondent, and had twice reported the matter to the court. All these had fallen on the 2nd respondent and/or EAC’s deaf ears. Akin to their non-compliance of the Order, neither the 2nd respondent nor EAC has rendered any explanation as to why they gave LWC the cold shoulder. Mr Chan placed much emphasis on the lack of action from LWC after their last letter on 26 August 2022. To illustrate on his point, Mr Chan referred to the Joint Written Applications and Appendix D filed in 2023 to the Court, under which there was no report on the non-compliance of the Order by the 2nd respondent. I accept Mr Chan’s submissions that the applicant should shoulder some blame for the adjournment of the Trial for the reason given in the preceding paragraph. But I should also point out that the 2nd respondent and/or EAC were equally liable for not informing the court via those documents that they have yet complied with the Order. The culpability in this regard, in my view, should be shared between both sides. That being so, as I have stressed at the beginning of this discussion, the 2nd respondent and/or EAC bore the primary duty to comply with the Order and the statutory duty under section 44A of the ECO. Equally, they have the principal obligation to report to the Court on such default with valid reasons provided, and suggestions on how to rectify the problem, e.g. by applying for extension of time to comply with the Order. Mr Chung suggested that, should the court consider appropriate to allocate some blame on the applicant, the extent should be no more than 10 to 20%. Based on the above, I shall adopt the figure of 15%. Lastly, I have to mention O.62, r.8(2) of the RDC, which provides:- “A wasted costs order may— disallow the costs as between the legal representative and his client; and direct the legal representative to— repay to his client costs which the client has been ordered to pay to other parties to the proceedings; or indemnify other parties against costs incurred by them.” As I have said in the above, no explanation has been given by the 2nd respondent and/or EAC as to why the Order was not complied with, and repeated requests from LWC between June and August 2022 had been ignored. If there is any application against EAC for a wasted costs order, the court will hear and determine the application in due course. CONCLUSION For the above reasons, I make the following orders:- Trial fixed for 14 August 2023, with 15 August 2023 and 16 August 2023 reserved, be adjourned to a date to be fixed with 5 days reserved, and in consultation with counsel’s diaries. 85% of the costs thrown away by the adjournment of the Trial, including the substantive hearing on 15 August 2023, shall be paid by the 2nd respondent to the applicant in any event to be taxed if not agreed, with certificate for counsel. The applicant’s own costs for the adjourned Trial and the substantive hearing on 15 August 2023 be taxed in accordance with the Legal Aid Regulations. I thank Mr Chung and Mr Chan for their assistance. ( David Chan ) Deputy District Judge Mr Gary K. H. Chung, instructed by LWC & Co., Solicitors, assigned by the Director of Legal Aid, for the applicant Mr Pakco Chan, instructed by Ellen Au & Co., for the 1st to 3rd respondents