The Way It Works
As we explained in our earlier article, “Role of Employees Compensation Assistance Fund Board in Employment-related Injury Claims”, the Employees Compensation Assistance Fund (“the Fund”) is established under the Employees Compensation Assistance Ordinance, Cap. 365 (“the Ordinance”) to provide for the protection of entitlement of employees and others to compensate for employment-related injury in employees’ compensation cases; and the making of relief payment to eligible persons in relation to damages for employment-related injury in common law proceedings. The Employees Compensation Assistance Fund Board (“the Board”) was set up to manage the Fund.

Under s.25A of the Ordinance, the Board may apply to become a party to common law proceedings where there are difficulties for employees to recover from employers or their insurers. In such circumstances, the Board becomes interested in the proceedings because there is a chance that the Fund would have to make relief payment to the employee since neither the employers nor the insurers are willing or able to pay the damages. If, after joining as a party, the Board then fights the case against an employee, the question then arises: should the Board pay the employee’s legal costs of the common law proceedings?

Active Intervention Entails Financial Contribution

Are Costs Excluded?
At first blush, it seems as though the Board will not need to pay the employee’s costs since s.20B(3)(b) of the Ordinance excludes costs from the definition of relief payment which the Fund is liable to pay to the employee.

“(3) Notwithstanding the definitions of “compensation” and “damages”, for the purposes of determining the amount of a relief payment –
…
(b) any costs 
arising from proceedings in respect of any damages or compensation claim shall not be included.”

In the case of Lau Tuen Ping v Law Wai Kwong trading as Sun Chiu Kwong (Sheung Shui) Construction Material & ors HCPI 1221/2000, the Board joined as a party to proceedings after the Defendant employer disappeared. At that stage, the employer was already held liable to pay the employee and the Board’s involvement was limited to contesting quantum, that is, the amount of damages the employee should be paid. Nonetheless, the Board participated actively in arguing against the employee’s submissions of the amount of damages he was entitled to. When it came to costs, the Board submitted that it should not pay the employee’s legal costs since s.20B(3)(b) of the Ordinance stated that costs were excluded. Master Lung considered that since the Board was proactive in the proceedings when it came to assessing damages, notwithstanding s.20B(3)(b) of the Ordinance, the Court has power to decide who should pay costs in the assessment of damages proceedings. This was due to s.52A of the High Court Ordinance which states that the Court has full power and discretion to determine who should pay costs and how much.

Lau Tuen Ping was followed by Chan Chi Shing v Chan Shu Kuen (in bankruptcy) & ors DCPI 229/2007, a case which was much like Lau Tuen Ping as the Board had intervened after the 1st and 2nd Defendants were found liable to pay the employee. The judge ordered that the Board pay the employee’s costs of the assessment of damages hearing on the strengths of Lau Tuen Ping.

Minimising the Employee’s Claim
In Yi Shengmao & ors v Wong Kam Piu & ors HCPI 742/2005, the Board joined as the 4th Defendant before judgment for liability was entered by consent. Master de Souza stated in the judgment that the Board had made submissions of its own to minimise the 1st Plaintiff’s claims. The Board had averred that the employee had “failed dismally” in proving the means by which he earned his living prior to the accident and hence tried to diminish the employee’s pre-trial loss of earnings.  Master de Souza awarded costs against the Board. His reason was that the Board had allied itself with one of the Defendants who also contested that the employee had failed to prove the means of his pre-trial earnings and had attempted to minimise the employee’s claims. Due to these acts, it should bear the employee’s costs.

On the Other Hand…
Several other cases, however, ruled in the opposite direction. In Leung Kwok Biu v Tam San Yu trading as Mei Kui Inside Decorate Works & others HCPI 810/2008, the judge held that there should be no order as to costs between the employee and the Board such that each party paid its own legal costs. The Court bore in mind that the Board was a statutory body and stated that the Board had joined to assist the Court to come to a fair and just decision on quantum. The Board’s participation was in good faith as it did not intervene to further its own interest or to suppress the employee’s claim.

In Chan Yu Chau v Fong On Construction & Engineering Co Ltd & others HCPI 753/2000, the Board had intervened before judgment was found against the Defendants. The Board did so because it was potentially liable to pay the employee if the 2nd Defendant was found to be liable towards the employee, as the 2nd Defendant was impecunious and legally aided. The Court refused to order the Board to pay the employee’s legal costs, holding that the Board was a statutory body. It had not represented the 2nd Defendant, advancing a positive case for it nor had it settled the matter for the 2nd Defendant. The Board had only cross-examined and made submissions on the issue of the employee’s contributory negligence, and its participation had not prolonged the trial.

In Murky Waters?
There appears to be two schools of thought regarding whether the Board ought to be responsible for the employee’s costs in the common law proceedings after the Board joined as a party to the proceedings. Whilst the answer is not at this moment clear-cut, if one may hazard a guess, the Court is likely to consider various factors such as whether the Board joined proceedings in good faith and any blameworthiness on the part of the Board’s conduct of the case, such as allying itself with or advancing a positive case for a Defendant.

For enquiries, please contact our Insurance & Personal Injury Department:

E: insurance_pi@onc.hk

T: (852) 2810 1212

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.