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Employees Compensation Assistance Fund Boar v Fong Chak Kwan

Judgment Cited authorities 52 Cited in Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date21 June 2022
Neutral Citation[2022] HKCFA 12
Year2022
Citation(2022) 25 HKCFAR 135
Subject MatterFinal Appeal (Civil)
CourtCourt of Final Appeal (Hong Kong)
Judgement NumberFACV5/2022
FACV5/2022 EMPLOYEES COMPENSATION ASSISTANCE FUND BOAR v. FONG CHAK KWAN

FACV No. 5 of 2022

[2022] HKCFA 12

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 5 OF 2022 (CIVIL)

(On appeal from CACV No. 358 of 2020)

____________________

BETWEEN
FONG CHAK KWAN Plaintiff (Respondent)
and
ASCENTIC LIMITED 1st Defendant
BRENTWOOD INDUSTRIES, INC. 2nd Defendant
EMPLOYEES COMPENSATION
ASSISTANCE FUND BOARD		 3rd Defendant (Appellant)

____________________

Before: Mr Justice Ribeiro PJ, Mr Justice Fok PJ, Mr Justice Lam PJ, Mr Justice Bokhary NPJ and Lord Collins of Mapesbury NPJ

Date of Hearing: 19 May 2022

Date of Judgment: 21 June 2022

________________________

JUDGMENT

_________________________

Mr Justice Ribeiro PJ:

A. The main issues in this appeal

1. This case initially involved four parties: the plaintiff/respondent, Mr Fong Chak Kwan, a Hong Kong permanent resident (“Mr Fong”); the 1st defendant, Ascentic Limited, a Hong Kong company (“D1”); the 2nd defendant, Brentwood Industries, Inc, a company incorporated in Pennsylvania in the United States (“D2”); and the 3rd defendant/appellant, the Employees Compensation Assistance Fund Board (“the Board”), which administers the fund (“the Fund”) constituted under the Employees Compensation Assistance Ordinance (“Cap 365”). The present parties are the Board and Mr Fong.

2. In the circumstances described below, two issues have arisen between them. The first concerns the standing of the Board to take over D2’s defence and to challenge the Hong Kong Court’s assumption of jurisdiction against D2; and the second relates to the validity of such assumption of jurisdiction in respect of a tort allegedly committed outside of Hong Kong pursuant to Order 11 rule 1(1)(f) of the Rules of the High Court[1] which establishes a jurisdictional gateway (referred to here and below as “Gateway F”).

3. It will be apparent that the aforesaid jurisdictional issue arises in the first place between Mr Fong as the plaintiff and D2 as the foreign defendant. However, since judgment in default was entered against D2, the Board obtained leave to intervene in the proceedings to take over D2’s defence and to challenge the Court’s assumption of jurisdiction as aforesaid. It did so because it anticipated that the Fund might be liable to provide a statutory relief payment to Mr Fong if his claim against D2, when quantified, should be unsatisfied. The Board’s jurisdictional challenge below was unsuccessful, Marlene Ng J[2] and the Court of Appeal[3] holding that jurisdiction was properly founded via Gateway F.

4. The Board’s intervention gives rise to the first issue in this appeal, namely, as to the effect of section 33(d) of Cap 365 on the Fund’s potential liability. Its provisions are set out in Section E of this judgment. Because they exclude claims against the Fund in certain cases involving non-Hong Kong employment, the Appeal Committee[4] considered it apposite to examine the standing of the Board to intervene in this litigation (which had not previously been considered). On 22 February 2022, having sought submissions from the parties, it granted leave to appeal on the first issue, formulated as involving the following question:

“Is section 33(d) of the Employees Compensation Assistance Ordinance (Cap 365) applicable and if so, what are its consequences for the appeal?”

5. The Appeal Committee also granted the Board leave to appeal on the following question concerning the second issue:

“On a proper interpretation of the phrase ‘the damage was sustained ... within the jurisdiction’ in Gateway F, whether ‘the damage’ is limited to damage directly caused by the alleged tortious act, or whether it extends to indirect or consequential damage (e.g. the pecuniary expenditure or other loss resulting from the direct damage) sustained within the jurisdiction?”

6. I have had the benefit of reading in draft the judgment of Lord Collins of Mapesbury NPJ which deals with the second issue. I am respectfully wholly in agreement with his Lordship’s reasoning and conclusions. In this judgment, I deal with the first issue.

B. The accident and Mr Fong’s bringing of proceedings in Hong Kong

7. On 10 October 2014, while Mr Fong was assigned to work as a site service specialist at a sewage treatment works in Ningbo on the Mainland, he accidentally fell more than 4 metres into the trench of a sedimentation tank when a metal plank on which he was walking gave way.[5] He consequently suffered serious personal injuries.[6] He returned to Hong Kong four days after the accident and received medical treatment in hospitals here and was granted sick leave for a total of 1,015 days.

8. On 7 March 2016, Mr Fong commenced the present action. D1 was served in Hong Kong and a defence was filed.[7] Then on 17 October 2016, Mr Fong obtained leave to issue and serve a concurrent writ[8] on D2 in Pennsylvania.[9] Such leave was obtained in reliance on five of the jurisdictional “gateways” in Order 11, namely, (1) that D2 was a necessary or proper party to the action brought against D1 (“Gateway C”);[10] (2) that the claim was brought for breach of a contract made within the jurisdiction (“Gateway D(i)”);[11] or (3) made by an agent within the jurisdiction on behalf of a principal outside (“Gateway D(ii)”) [12] or (4) governed by Hong Kong law (“Gateway D(iii)”);[13] and (5) that the claim was founded on a tort with the damage sustained within the jurisdiction, Gateway F referred to above.[14]

9. Mr Fong served the concurrent writ on D2 in the United States and, when D2 did not acknowledge service, on 4 July 2017 interlocutory judgment was entered against it for damages to be assessed.[15] D1 had disputed liability, contending inter alia that D2 and not D1, was Mr Fong’s employer.[16] D1 later settled Mr Fong’s claim without admission of liability, agreeing to pay him certain (relatively modest) sums under a consent order dated 18 May 2018.[17]

C. The Board’s intervention and the decisions below

10. Initially, the Board did not consider the Fund at risk because it knew that D1 had an Employees Compensation insurance policy and that D1 was disputing liability. It did not have information as to whether D2 was insured but noted that D2 was denying that it was Mr Fong’s employer.[18] However, on 25 May 2018, the Board learned of Mr Fong’s settlement with D1. As the Board’s solicitor affirmed, this was seen to have major implications for the Board’s position:

“... (a) the EC Policy had become irrelevant, (b) there was no other insurance policy known to be in force in relation to P/Accident insofar as section 25A of the ECO was concerned, and (c) there was no longer any ‘employer’ to properly contest P’s claim on both issues of liability and quantum, so the Board’s contingent interest in the outcome of the present action became more acute. Indeed, the following issues would affect the Board’s interests: (i) whether there was proper basis for P’s application to serve the [concurrent writ] on D2 out of jurisdiction, and (b) whether Hong Kong was the proper forum for bringing P’s claim against D2.”[19]

11. Taking the view that there were substantial issues to be contested, the Board submitted that in view of the Fund’s potential liability under Cap 365, it would be appropriate for the Board to intervene in the present action.[20]

12. Upon being joined as the 3rd defendant, the Board applied to set aside the Order granting Mr Fong leave to serve D2 outside the jurisdiction and also to set aside the default judgment on the grounds of material non-disclosure and to stay the proceedings on the basis of forum non conveniens.

13. Marlene Ng J found that Gateways C, D(iii) and F – but not Gateways D(i) and D(ii) – were available to Mr Fong. She rejected the non-disclosure and forum non conveniens applications.[21]

14. On appeal, the Court of Appeal disagreed with Marlene Ng J regarding the availability of Gateway C[22] and Gateway D(iii)[23] but upheld her judgment regarding Gateway F.[24] It is of present relevance that her Ladyship’s finding that Gateways D(i) and D(ii) were inapplicable was maintained. This is a point to which I shall return.[25] The Court of Appeal upheld Marlene Ng J’s rejection of the non-disclosure[26] and forum non conveniens[27] applications and they form no part of the present appeal.

D. The issue of the Board’s standing

15. Cap 365 has as one of its main objects the making of relief payments to eligible persons in relation to damages awarded by a Hong Kong court of competent jurisdiction for employment-related injuries which they have been unable to recover despite reasonable enforcement efforts. Thus, section 20A of Cap 365 relevantly states:

“(1) An eligible person who is unable to recover from an employer payment of an amount of damages for which the employer is liable may apply for a relief payment of that amount from the Fund.”

(2) For the purposes of this section, an employer is not to be regarded as liable for the payment of an amount of damages unless the amount is payable pursuant to a judgment or order of a court of competent jurisdiction in Hong Kong.”

16. Similar provision is made regarding unsatisfied awards of employees’ compensation under the Employees’ Compensation Ordinance (“Cap 282”).[28]

17. An “eligible person” is, for present purposes, an “injured employee”; and a “relief payment” is a payment made from the Fund pursuant to an application under section 20A.[29] The amount of such a relief payment is the amount of common law damages which the employer is liable to pay in respect of personal injury suffered by the employee in an accident arising out of and in the course of his employment, subject to certain reductions.[30]

18. Cap 365 enables...

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