HO SHUN HOI v. WAH YICK METAL LTD

DCEC 1155/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1155 OF 2012

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JUDGMENT

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Introduction

1. This is an application by the applicant under sections 9, 10 and 10A of the Employees’ Compensation Ordinance, Cap 282 (“the Ordinance”) for compensation in respect of the injuries he sustained in an accident on 13 June 2011 at Lot 2240, DD129, Deep Bay Road, Lau Fau Shan, Yuen Long (“the Site”). 

2. It is the applicant’s case that at the material times he was employed by the respondent as a lorry driver and the accident occurred arose out of and happened in the course of the employment.

3. The respondent does not dispute that the applicant did suffer personal injuries as a result of an accident took place in the Site on 13 June 2012.  However, it is the respondent’s case that the applicant was an independent contractor providing service to the respondent in a contract for services.

4. At the beginning of the trial, the parties managed to reach an agreement on the amount of quantum at $45,682.  What remains to be dealt with at this trial is the issue of liability.

Issues

5. The issues of this trial are as follows:-

(1)   Whether at the time of the accident the applicant was an employee or an independent contractor of the respondent; and

(2)   If the applicant was an employee of the respondent, whether the injuries of the applicant arose out of and in the course of employment.

Legal principles

6. The relevant legal principles were set out in the case of Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951 in which Reberio PJ said:-

“The modern approach to the question whether one person is another’s employee is therefore to examine all the features of their relationship against the background of the indicia …… with a view to deciding whether, as a matter of overall impression, the relationship was one of employment…”

7. It was said that the indicia include the degree of control exercised by the “employer”; whether the person performing the services provided his own equipment; whether he hired his own helpers; what degree of financial risk he took; what degree of responsibility for investment and management he had; and whether and how far he had an opportunity of profiting from sound management in the performance of his task.

The applicant’s case

8. At all material times, the applicant is and was the sole proprietor of Trust Engineering Transportation Co (“Trust Engineering”) which provides transportation and lifting services with crane lorry.  At the same times, the applicant would take up employment as lorry driver cum crane operator on a casual basis from time to time.

9. Cheung Kam Wah (“Cheung”) is and was the sole director and shareholder of the respondent at all material times which carries on business of scrap metal trading.  The respondent operates a warehouse at the Site where scrap metal was being processed and stored.

10. It is the applicant’s case that on 10 June 2011, the respondent through Cheung employed the applicant as a casual driver cum crane operator on a daily basis to transport scrap metal from a dockyard to the Site.  Cheung also rented the applicant’s crane lorry so that the applicant would drive his own crane lorry to perform the work. 

11. After finishing the first day of work, the applicant employed the applicant again on 13 June 2011.  Cheung instructed the applicant to drive his crane lorry to Chai Wan MTR Factory.  After loading the crane lorry with some metal ware, the applicant, together with the Cheung and a worker of Cheung named Yeung Kam For (who was called as a witness of the applicant), returned to the Site for unloading.

12. At the Site, Cheung instructed the applicant to unload 3 metal storage racks from the lorry using the crane. Cheung provided a wire rope sling to the applicant to tie the 3 metal racks together.  As instructed by Cheung, the applicant and Yeung tied the metal racks and the applicant used the crane to unload the metal racks from the lorry.  While unloading, the wire rope sling broke and the racks fell towards the applicant.  The applicant was struck by one of the racks and fell down from the lorry.  As a result, he sustained personal injuries.

13. It is the applicant’s case that he was injured in the course of his employment with the respondent and the accident also arose out of the employment with the respondent.

14. The applicant gave evidence himself and called Yeung to testify for him.  It is the evidence of Yeung that on the day of the accident it was Cheung who gave instructions to the applicant to use the wire rope to tie the racks. 

The respondent’s case

15. The respondent’s case is straight-forward: the applicant was not its employee and instead was an independent contractor providing services to the respondent at the time of the accident.

16. Cheung, who gave evidence on behalf of the respondent, said he had known the applicant for many years as he was also in business of transportation back then.  About ten years ago, he started the respondent to carry on business of scrap metal trading.  All along the respondent employed a driver to drive and operate a crane lorry that was owned by the respondent.  In or about March 2011, the driver quitted the job and the respondent had not been able to find a replacement driver.  From then on, whenever transportation and lifting services were required, Cheung would engage an independent contractor called “Ying Kee” to provide the services.  Ying Kee would provide the driver and the crane lorry.  Ying Kee would charge the respondent $2,000 per day which was the normal charge in the trade.  The charge covered both driver and lorry.

17. On 9 June 2011, the respondent contacted Ying Kee to provide transportation and lifting services on the next day but Ying Kee was not available.  Cheung remembered the applicant was providing similar services so he contacted the applicant.  He asked the applicant if he and his crane lorry were available on the next day and the applicant said yes. He then told the applicant the details of the job.  They did not talk about the charge as Cheung assumed the applicant would be charging the normal charge in the trade which was $2,000 per day.

18. On 10 June 2011, the applicant drove his crane lorry to provide the services to the respondent as agreed. After work, Cheung asked the applicant if he would be available again on 13 June 2011.  The applicant replied positively and it was agreed that the applicant would work for the respondent again on that day.  There is no dispute that the applicant injured himself while working at the Site on 13 June 2011.

Discussion

19. The issue I have to decide is rather straightforward: was the applicant an employee of the respondent or was he an independent contractor?  My simple answer is on balance I find that the applicant was providing services to the respondent as an independent contractor.  These are my reasons.

20. There is no dispute that the respondent knew the applicant for some time and knew what kind of business the applicant had been carrying on.  It is also not in dispute that the respondent all along owned a crane lorry.  According to the applicant, the daily wage of a casual crane lorry driver was $800 while the service charge for crane lorry with driver was $2,000 per day.  

21. When Cheung was negotiating with the applicant, what he had in mind was the services of transportation and lifting, with driver and crane lorry provided.  The respondent was not merely looking for someone to drive and operate the crane lorry.  If that was the case, Cheung could have simply engaged the applicant only without the need of the crane lorry and he could have saved more than half of the costs. 

22. The applicant gave evidence that during his telephone conversation with Cheung, Cheung specifically asked him to work as a driver first and then went on to request to rent his crane lorry. Cheung, on the other hand, said that he simply asked the applicant if he and his lorry were available to help him.  As I said earlier, Cheung all along knew the services provided by the applicant.  While he could simply engage the applicant to provide services to him under a single agreement, I do not believe Cheung would take the trouble to separately engage the applicant as a driver and then entered into another rental agreement with the applicant to rent the crane lorry.  It simply does not make commercial sense.

23. Base on the above reasons, I find on balance that the evidence of Cheung is more believable.  I find as a matter of fact that the respondent was engaging the applicant (or more accurately the applicant trading as Trust Engineering) to provide the services of transportation and lifting with driver and crane lorry provided.  I find as a matter of fact that the respondent was entering into contract with the applicant who was trading as Trust Engineering.  On the other hand, I find that the applicant also knew that it was Trust Engineering which was engaged to provide services of transportation and lifting and he knew that the parties only entered into one contract. 

24. Of course, in some cases, the name of sole proprietor was only a disguise and the person trading as a sole proprietor could be in fact an employee.  However, this is not the case here.  I have considered the following indicia.

25. First of all, it is undisputed fact that the applicant did carry on sole proprietorship business as Trust Engineering.  The applicant had been carrying on business in the name of Trust Engineering on his own account for years and the respondent had no involvement in the applicant’s running of his business.  The respondent had no control as to how the applicant manages the business.  The respondent may give instructions to the applicant during the work but it is different from having control over the applicant.  I find the respondent had little control, if any, over the applicant.

26. Secondly, as the applicant was running the sole proprietorship of Trust Engineering, I do not see anyone other than the applicant would enjoy the profits and bear the losses arising from the business.  It was the applicant who bore the financial risk and reaped the financial rewards of his business.

27. Thirdly, it is obvious that the respondent would not consider the applicant or Trust Engineering to be part of the respondent.  On the other hand, I could not find any reason to suggest that the applicant should consider himself or Trust Engineering to be part of the organization of the respondent.  

28. Fourthly, the fact that the applicant provided his own equipment i.e. the crane lorry to provide the service also indicates the applicant was more likely to be an independent contractor. From the respondent’s point of view, it does not matter who drives and operates the crane lorry as long as the same services are provided.  The applicant was also at total liberty to use the crane lorry to provide services to other customers.  The respondent had no right to interfere.   

29. Lastly, there is no evidence to suggest that the applicant was in any way bound to accept the jobs from the respondent.  Quite in the contrary, evidence suggests that the applicant was totally free to decide whether to accept the work from the respondent.  The applicant could choose to provide services to others and there was no evidence to suggest that priority would be given to the respondent.

30. To sum up, all of the above indicia point to the direction that the applicant was indeed an independent contractor, rather than an employee, of the respondent.  As the applicant was not an employee of the respondent, it follows that the injury of the applicant did not arise out of and in the course of employment. 

Conclusion

31. In conclusion, I find as a matter of fact that the applicant was not the employee of the respondent at the material time.  The applicant, or more accurately the applicant trading as Trust Engineering, was engaged as an independent contractor by the respondent to provide services.  Accordingly, this application must fail.

Quantum

32. If I were wrong on the issue of liability and the relationship between the applicant and the respondent was indeed employment, as I mentioned earlier, the parties have reached an agreement as to the amount of quantum.  The respondent would be liable to pay the applicant compensation of $45,682.

Order

33. This application is hereby dismissed.  Costs should follow the event.  I make a costs order nisi that the applicant do pay to the respondent the costs of this application, with certificate for counsel, to be taxed if not agreed.  The costs order nisi shall become absolute in the absence of application to vary within 14 days.  The applicant’s own costs be taxed in accordance with the Legal Aid Regulations.