SHEK WING CHO v. WONG YIN FUN t/a FLOURISHING CO

DCEC 605/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 605 OF 2014

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JUDGMENT

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1.  The applicant claims for compensation under the Employees’ Compensation Ordinance, Cap. 282 (“ECO”) in respect of an injury by accident (“the Accident”) happened at the warehouse in Tuen Mun on 12 April 2012 while he was transporting bags of leather with another co-worker by stacking the bags on a wooden plank.

2.  The applicant contended that he was employed by the respondent at the time of the Accident. 

3.  The respondent denied the existence of any employment relationship and contended that the applicant was a member of the delivery team (“Delivery Team”) to whom the respondent has sub-contracted the services.  

4.  There was no written contract between the respondent and the applicant or the Delivery Team.  There was no dispute that the parties have not made any MPF payment in regard to the applicant.

5.  The respondent further contended that the Accident as described by the applicant had not happened. Even if the applicant has suffered from injury, the same was not resulted from an accident arising out of or in the course of employment.

6.  The respondent did not challenge the applicant’s injury as recorded in the medical reports.

7.  The Employees’ Compensation (Ordinary Assessment) Board (“the Board”) assessed the applicant to have suffered 15% loss of earning capacity with the sick leave period from 12 April 2012 to 24 November 2014.  There was no appeal against the assessment. The respondent has not adduced any evidence to rebut the assessment.

Issues on Liability

8.  The central issues on liability are:-

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

(2)  if the applicant was an employee of the respondent, whether the Accident did happen, and if so, whether it was in the course of and arose out of the applicant’s employment with the respondent.

Employee or independent contractor

9.  The court of final appeal decision in Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156 provides the authoritative guidance in the proper approach that the court shall adopt in determining whether there was an employment relationship.  The court shall examine all features of the relationship between the parties against the background of the indicia of employment with a view to deciding whether, as a matter of overall impression, the relationship was one of employment, bearing in mind the purpose for which the question is asked.  It involved a nuanced approach but not a mechanical approach. The object of the exercise is to paint a picture from the accumulation of details.  It is a matter of evaluation of the overall effect of the details, which is not necessarily the same as the sum total of the individual details. The importance and weight to be attached to the details may vary from one situation to another.

10.  The indicia of employment 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

11.  The applicant’s case was that at about the Chinese New Year holidays in 2011, he read on a newspaper an advertisement of the respondent recruiting drivers cum delivery worker.  He went to have an interview at the address of the respondent.  The name of the respondent, Flourishing Company, was shown at the entrance of the office where he was interviewed.  The applicant was interviewed by Mr Kong Tak Ping (“Kong”). 

12.  Kong told him that his salary would be calculated on a daily basis with reference to the sales of the respondent, and by adopting the formula of 40% of the respondent’s daily sales divided by the number of workers on that day.  He would be entitled to an additional $100 per day as driving allowance, and leave on Sundays and public holidays.  If he wanted to take leave on other days, he has to make application in advance.  He has to give one month’s notice to the respondent if he intends to resign.

13.  About one week after the interview, Ms Wong Yin Fun (“Wong”), the respondent, informed him that he would commence work on 16 February 2011.  The applicant took up the job accordingly.

14.  On the days of work, the applicant started at about 8:00 am at the office of the respondent until he finished the delivery works assigned to him.

15.  The respondent assigned the daily schedule and route journeys for him and his colleagues, including the arrangements for destination of delivery and the goods that each of the workers shall deliver. 

16.  The respondent calculated the monthly salary of the applicant and paid him the salary in cash.

17.  He was subsequently given a further monthly allowance at a total sum of $5,000 and the respondent guaranteed that his monthly income would not be less than $19,000.

18.  The applicant has no financial loss. The respondent gave all piers entrance fees to the applicant for their payment.  The applicant have to account and return the balance to the respondent after each day’s work. The respondent was also responsible for the payment of penalty tickets received in the course of their works.

19.  All the orders were received by the respondent.The respondent was responsible for recruitment and management. The applicant did not have any business registration.

20.  The respondent provided the truck and some loading and unloading equipment.

21.  Mr Tam Wai Yin (“Tam”), a former colleague of the applicant, gave evidence in court for the applicant.  Tam said that he was employed by the respondent as cross-border truck driver.  He was interviewed by Kong who claimed to be the boss of the respondent.

22.  According to Tam, all those working for the respondent had to follow the orders of the respondent and Kong.  They would give instruction to the workers, decide the division of labour, decide the time schedule and arrangements on holidays, the scheduling of work assignment, recruitment, termination and calculation of income of the workers.  Tam took the view that the workers working for the respondent were not independent delivery contractor.  They worked for the respondent and were under the supervision of the respondent.

The respondent’s case

23.  The respondent denied that the applicant was its employee. The evidence of Wong and Kong are that the respondent has subcontracted the works to the Delivery Team. The applicant was a member of the Delivery Team and Kong was the person in charge.  The Delivery Team and the respondent had agreed that each of the members of the Delivery Team subcontracted the delivery works from the respondent on an independent basis. 

24.  Wong said the respondent company only employed one female staff.  Apart from this female staff, it has no other employee.  This female staff left the company about 2 years ago, since then Wong worked in the respondent company full time.

25.  Wong denied having any control over the work of the applicant and the Delivery Team.  She admitted that she prepared and organized the orders for the workers of the Delivery Team and calculated their salary each month.  These were only done to assist the Delivery Team in the management work since the workers are not good in clerical work.

26.  She accepted that one of trucks used by the Delivery Team belonged to the respondent.  The Delivery Team has to pay rental for the use.

27.  Wong denied that the recruitment advertisement was posted by the respondent.  She said that she posted the advertisement on behalf of the Delivery Team at their request.  Kong explained that he required the assistance of Wong or the respondent since Kong did not have a credit card account for the placing of the recruitment advertisement.

28.  According to Kong, he told the applicant at the interview that they are part of a team subcontracted the delivery services work from the respondent.  The team will receive 50% of the sales, out of which 80% would be distributed to the worker, and the rest of 20% will be set aside for the driver and the delivery worker for the payment of additional $100 daily allowance, traffic fine and penalty tickets incurred by all members in the course of the works.

29.  Kong denied any agreement to provide further additional allowance to any member of the Delivery Team, including the applicant. 

30.  Wong and Kong said in court for the first time that the applicant was free to take up works other than those sourced by the respondent. 

Decision on the issue of relationship

31.  Having reviewed the evidence objectively as a whole, I came to the view that the applicant was the employee of the respondent. 

32.  I do not accept that the respondent has no control over the works of the applicant or other members of the Delivery Team.  It was clear that Wong, the respondent, arranged the works of each driver every day, assigned the daily schedule, put them in different folders for the drivers and workers.  The drivers, including the applicant, received the assignment of the orders made by the respondent.

33.  It is not disputed that the applicant had no financial risk.  I find that the respondent was responsible for the payment of traffic fine and expenses incurred in the course of delivering goods.  I do not accept Kong’s evidence that these expenses were paid out from the 20% sales set aside. If there was indeed the agreement of the Delivery Team to set aside the 20% sales, there should be account and records of the breakdown made available to the applicant and other members of Delivery Team. There was no such record. Kong or Wong has never accounted to the applicant the balance of his shares in such fund.  I reject Kong’s evidence on the purported agreement of the sharing of the sales.

34.  The respondent gave the applicant all fees for entrance to the piers which were necessary for the undertaking of the delivery works.  The applicant have to account and return the balance to the respondent after each day’s work.  This was not challenged by the respondent.

35.  The applicant was not required to provide equipment for carrying out the works.

36.  The respondent, Wong, calculated the monthly income of the applicant and paid cash to the applicant.  It was the evidence of Wong that she calculated the income of all drivers and workers, complied them in a worksheet for each individual.  Wong would give and has given advance payment to the applicant.  These advance payments were deducted from the income.

37.  The applicant has a fixed time to report duty each day and he has to apply for leave in advance. 

38.  I do not accept the respondent’s bare assertion that the applicant was free to take up orders other than from the respondent. I note that this contention was first raised in the testimony at court but was not stated in the witness statement. 

39.  I do not find the non-payment of MPF a decisive factor. (Chan Kwok Kin v Mok Kwan Hing [1991] 1 HKLR 631; Poon Chau Nam, supar; Wong Kin v Him Kee Food Distribution Co Ltd [2016] 2 HKLRD 665)

The Accident

40.  The applicant’s evidence was that between 10:00 am to 12:00 noon on 12 April 2012, the applicant was transporting bags of leather with another co-worker by stacking the bags on a wooden plank together with bare hands. The weight of each bag of leather was 70 to 80 kilograms.  During the stacking of the 4^th bag to the plank, the co-worker ran out of strength and slipped his hands.  The bag of leather was therefore forced downward and the applicant sprained his back while he was still holding onto the bags with all strength.The applicant was injured.

41.  The applicant did not realise the seriousness of the injury at that time and he continued to drive the truck to deliver the goods to the Yuan Long warehouse.  When he unloaded the goods at the Yuan Long warehouse, the applicant felt pain at his back.  He took some rest, and then called the respondent.  Kong answered the phone call and asked the applicant to drive the truck back to the car park before he consults the doctor.  The applicant has done so accordingly.  He attended the A&E Department of the North District Hospital in the afternoon.  As a result of the Accident, the applicant suffered back pain with prolapsed lumbar intervertebral discs and suffered on and off left chest wall pain.

42.  Lam Shiu Wan (“Lam”) gave evidence for the respondent. He was the causal worker working with the applicant at the time of the Accident.  Lam said that there was no Accident occurred at the time as alleged by the applicant.

43.  Kong’s evidence was that at about noon on 12 April 2012, the applicant said that he has some matter at home and needed to leave early.  Kong agreed.  The applicant has not finished the delivery work that afternoon.  Kong has to complete the delivery works for the applicant that date.  He said that the Accident did not happen. The respondent has not provided any document showing the person who completed the delivery works on that date.

44.  On balance, I accept the applicant’s evidence and find that the Accident had happened.  The applicant’s evidence on the Accident was supported by the medical report issued by the A&E Department.  The medical report recorded that the applicant was attended by the doctor at 4:22 pm on 12 April 2012 as a result of industrial accident.  The symptoms were “back pain after lifting heavy object on the day of attendance”.  The applicant produced other subsequent medical reports showing the extent of his injury.  The respondent did not challenge these reports.

Quantum

45.  One major issue of dispute in relation to quantum is the applicant’s earnings.

46.  The applicant said that the respondent has agreed to give him an additional monthly allowance of $2,000 with effect from 16 May 2011 and further the respondent guaranteed that he would have a monthly income of not less than $19,000. 

47.  In about early February 2012, the applicant told Kong that he wanted to quit one month later.  A few days later, Kong told him that the respondent agreed to pay him a further monthly allowance of $3,000, making a total of monthly allowance of $5,000.  The applicant therefore agreed to continue his works there.

48.  It is the applicant’s case that his earnings should be not less than $19,000.  In any event, the additional $5,000 allowance should be counted as part of his earnings.  The respondent disagreed.

49.  Having evaluated the evidence, I do not accept the applicant’s contention of additional allowances and guaranteed minimum income.  The applicant said that the agreement for the payment of $2,000 additional allowance was effective from 16 May 2011. However, this was not shown on the payment calculation for the month of 17 October 2011 to 15 November 2011, and the applicant did not give any acceptable explanation on this.  The applicant did not provide the payment calculations between 16 May 2011 and 16 October 2011. 

50.  Similarly, the additional allowance of $3,000 and the guaranteed income of $19,000 were not supported by the payment calculations adduced by the applicant.  I reject these contentions of the applicant.

Section 9 Compensation

51.  The applicant was aged 42 at the time of the Accident. The applicable multiplier pursuant to section 7(1)(b) of ECO is 72.  As I do not accept the additional allowances contended by the applicant, the monthly earnings for the purpose of calculating the compensation is $19,100.18, which figure was agreed by both parties.

52.  The Board’s assessment of 15% loss of earning capacity was not rebutted and will therefore be applied.

53.  The compensation awarded under section 9 is $19,100.18 x 72 x 15% = $206,281.94.

Section 10 compensation

54.  I allow the full sick leave period of 31 and 13/30 months (i.e. 31.43 months) as assessed by the Board.  The compensation awarded under section 10 is $19,100.18 x 80% x 31.43 = $480,254.93

Section 10A compensation

55.  There is no disagreement that the applicant spent a total of $3,042 for medical expenses.  I so allow.

Order

56.  The total amount of compensation that the respondent shall pay to the applicant is $689,578.87, with interest at half of the judgment rate from the date of the accident to the date of judgment.

57.  I make a costs order nisi that the respondent shall pay the applicant’s costs in this action on a party and party basis to be taxed if not agreed together with a certificate for counsel. The applicant’s own costs shall be taxed in accordance with the Legal Aid Regulations. Any party wishes to vary the above order nisi shall make an application within the next 14 days, in the absence of which, the above order shall become absolute.