ON HANG CHU v. CHAN NGUN

CACV 3780/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 3780 OF 2001

(ON APPEAL FROM DISTRICT COURT EMPLOYEES'
COMPENSATION CASE NO. 646 OF 2000)

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REASONS FOR JUDGMENT

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Hon. Cheung J.A. :

1. This Court dismissed the respondent's appeal from the judgment of H H Judge Yung with costs to the applicant at the conclusion of the appeal on 28 May 2003. These are my reasons for dismissing the appeal.

The facts

2. The applicant was a construction worker doing work for different employers. In November and December 1999 he was employed by the respondent to do plastering work at Flat A, 19th floor, Block 1, Winner Court, 18 Hospital Road, Hong Kong ("Flat A"). His daily wage was $800.00 together with $50.00 for meal and travelling allowance. He was paid every ten days by the respondent.

3. The respondent was in the construction trade. She held a Category A Construction Licence. Flat A was owned by a company called Annbie Ltd. of which she was a majority shareholder.

4. The applicant started work in Flat A on 7 November 1999 together with 20 other workers. The evidence is not clear as to when he finished the work in Flat A. In giving evidence, he said the work was finished on 19 December 1999 and on 20 December 1999 he was instructed by the respondent to do some plastering work (laying tiles) on the roof of Flat B of the same building which was a flat next to Flat A ("Flat B"). A co-worker, Mr. Yip, however, said that the applicant was still working in Flat A on 21 December 1999. The judge did not make a finding on this.

5. In any event the applicant said that on 21 December 1999 he was told by the respondent to work in Flat B. He was to lay marble slabs in the dining room of Flat B. Flat B was owned by Profit Ocean International Limited of which the respondent was a minority shareholder.

6. On that day, the applicant laid the marble slabs with his co-worker Mr. Yip. Mr. Yip was holding a marble slab with a pair of suction device while the applicant applied the glue. The suction device suddenly became detached from the slab. The slab fell and hit the applicant's right wrist.

7. The applicant sustained injuries and sought employees' compensation from the respondent. Judge Yung found for the applicant on liability and awarded him a sum of $47,962.00 which was agreed by the parties. It is from this award that the respondent appealed.

The Answer

8. In the Answer filed by the respondent in opposition to the applicant's claim, she denied that the applicant was her employee. She pleaded that the work carried by the applicant in Flat B was contracted to the applicant and Mr. Yip by her "on behalf of Mr. Cheng Kwok Ho for the agreed price of HK$1,000.00 per person for the whole job". She pleaded that the applicant was an independent contractor and had not entered into any contract of employment with her at any time.

The finding

9. The judge found that the applicant was an employee of the respondent. He was recruited by a foreman of the respondent to work in Flat A. The judge further found that the respondent was still his employer at the time of the accident on 21 December 1999. He further rejected the evidence of the respondent and her witnesses that the applicant had finished his contract relating to Flat A before commencing work in Flat B. He rejected her defence that she had nothing to do with the decoration work in Flat B.

10. The judge also considered whether the applicant was excepted from the definition of an employee by proviso (b) to Section 2(1) of the Employees' Compensation Ordinance ("the Ordinance"). The proviso states that,

“ Any person whose employment is of a casual nature, and who is employed otherwise than for the purposes of the employer's trade or business, not being a person employed for the purposes of any game or recreation and engaged or paid through a club and not being a part-time domestic helper." (emphasis added)

11. The judge stated that it was not disputed that the applicant was a 'casual worker'. He stated that there was nothing to suggest that the respondent would decorate Flat B for no charge. He found that the respondent decorated Flat B for gain and she did that for the purpose of her trade and business. Accordingly the proviso did not apply.

The grounds of appeal

12. The grounds of appeal are all related to the judge's finding in relation to the proviso in section 2(1)(b) of the Ordinance that the applicant was employed by the respondent for her own trade or business. The respondent complained that there was no or no sufficient evidence that Flat B was used for "the trade or business" of the respondent and that she was decorating Flat B for gain.

The proviso was not pleaded

13. In section 2 of the Ordinance, an employee means any person who has "entered into or works under a contract of service or apprenticeship with an employer in any employment......".

14. While in her pleaded case the respondent had denied that the applicant was her employee and had further asserted that he was an independent contractor, she had never pleaded that the applicant was not her employee by reason of proviso (b).

15. What had happened at the hearing was that Ms Lai, counsel for the respondent, referred to proviso (b) in her closing submission.

16. It appeared from the transcript that this point was not fully argued. Even then the focus was still on the point that the work for Flat B was not done for the purpose of the respondent rather than the employment was not for the purpose of the respondent's trade or business. This is consistent with the line of defence adopted by the respondent at the hearing.

17. No authority was cited to the judge on this aspect. The judge in his judgment stated that this was a point that was not fully argued by both counsel.

The matter has to be pleaded

18. Ms Lai argued that the point does not need to be pleaded because it concerns the legal definition of an employee.

19. I disagree. The test to be applied in deciding whether a person is an employee or an independent contractor is laid down by the Privy Council in Lee Ting Sang v. Chung Chi Keung [1990] 1 HKLR 764. It was expressly observed in that case the definition of employees includes casual workers by reference to proviso (b).

20. On the facts of this case, the judge was clearly entitled to find that the applicant was employed by the respondent as an employee on the day of the accident. There was no appeal on the employment aspect.

21. If the respondent wished to rely on the exclusion from the definition of an employee, then this had to be expressly pleaded so that the matter could be fully dealt with at the hearing. This was not done and was only briefly mentioned at the conclusion of the case.

22. Order 18 rule 7 of the Rules of the District Court requires a party to plead the material facts on which he relies for his defence. Order 18 Rule 8 further requires a party to plead matters :

（1） which he alleges makes the claim of the opposite party not maintainable;

（2） which, if not specifically pleaded, might take the opposite party by surprise; or

（3） which raises issues of fact not arising out of the preceding pleading.

The exclusion set out in proviso (b) clearly is a matter which fits into every requirement of these rules.

23. This Court in Poon Hau Kei v. Hsin Chong Construction Co. Ltd. & Others [2003] HKLRD 56 had emphasized the importance of putting forward the issues in a case so that the other party became fully aware of the case he had to meet.

24. Although the judge had briefly dealt with the matter in his judgment, obviously this was a matter which would require evidence to be given before it could be fully determined.

25. As the House of Lords observed in Manton v. Cantwell [1920] AC 781 whether an employee is employed for the purposes of the employer's trade or business is a matter which depends upon the facts of each case and does not simply turn on the question of whether the premises in respect of which the work is done are used solely for business purposes or are used for domestic purposes.

26. If the defence had been raised in the pleadings, then matters such as the respondent's intention to deal with Flat B after the decoration, and her previous property transactions in the buying and selling of flats, if any, may have to be explored more fully. Discovery for gain of business records of the respondent may also have had to be undertaken.

Relevant facts

27. Ms Lai argued that all the facts relevant to the determination of proviso (b) were before the court. She submitted that counsel for the applicant had cross examined the respondent extensively on the purpose she used for Flat B. It was put to the respondent that she used it as an office for the construction business she was engaged in.

28. In my view, what counsel for the applicant did was merely to meet the defence put forward by the respondent that she had nothing to do with the employment of the applicant in Flat B at the time of the accident. Mr. Cheng, the occupier of Flat B, was one of the two occupiers of that flat. Both of them were the employees of the construction business of the respondent. In addition Mr. Cheng was the cousin of the respondent. There was a fax machine in Flat B which was used by the respondent. These facts together with the beneficial interest of the respondent in Flat B were clearly relevant matters to be explored in order to challenge the respondent's defence that she had nothing to do with the decoration of Flat B.

29. However, the respondent had never put forward the case that even if she had employed the applicant to carry out the decoration in Flat B, it was not done for the purpose of her trade or business. This is a separate issue. As the purpose of the decoration in Flat B had never been put in issue, while it may be that some of the parts of the evidence that were referred to us by Ms Lai was relevant to the proviso, nevertheless it just could not be said that all the facts available were before the judge so that a determination on the applicability of the proviso could properly be made.

30. Lastly in the context of the evidence, it must not be assumed that, limited though it was on the issue of the proviso, it was all in favour of the respondent. At one stage in her cross-examination, the respondent said that if the applicant was injured prior to 21 December 1999 (that is, while working in Flat A), she would be responsible to pay employees' compensation. One would then ask rhetorically, if the respondent was liable to pay employees' compensation if an injury was caused while the applicant was working in Flat A, why is the respondent not equally liable as regards Flat B? No qualification was made by the respondent in relation to the proviso.

Miles v. Dawe

31. Ms Lai relied on the case of Miles v. Dawe [1915] 8 B.W.C.C. 225. In that case the equivalent English statutory provision of proviso (b) was not raised in the answer of the respondent in a claim for workmen's compensation by the widow of a deceased workman. The widow admitted that the deceased was only casually employed. The county court judge held that the widow could not succeed as the employment was of a casual nature only and not for the purpose of the respondent's trade or business.

32. On appeal it was argued that the judge could not take this point as this was not pleaded in the answer and was not in issue until the conclusion of the case. The English Court of Appeal rejected the argument and held that the widow's own evidence that the deceased was employed casually "put her out of court". Cozens-Hardy M.R. held that that the respondent was not carrying on a trade or business was a finding in fact and therefore the widow could not succeed if the employment was casual.

33. In that case the respondent owned a number of properties in London which he instructed a person to collect rent and maintain. That person hired the deceased to carry out repair in one of the properties where he met an accident and died.

34. It may well be that on the facts of that case there really was no issue on the trade or business purpose of the employment and the decision was reached on the facts of the case. But for my part I do not accept the rationale of this old decision is necessarily correct if it goes as far as Ms Lai says it does. Clearly the modern practice of pleading and civil litigation is to require the parties to identify their cases clearly so that the issues can be fully dealt with. Ultimately it is simply a matter of fairness.

35. In any event, the respondent had never accepted the applicant to be her employee. She could not turn around and say that even if the applicant was found to be employed by her, nonetheless the employment was not done for her trade or business without giving an opportunity to the applicant to respond to it.

The appeal was dismissed

36. In my view, the respondent was not entitled to rely on proviso (b) as her defence in the trial. Accordingly she was also not entitled to take this point on appeal. As the appeal was solely on this issue, her appeal was accordingly dismissed.

Substance of the proviso

37. In dismissing the appeal, the Court had not asked Ms Lai to submit on the merits of the case. There is an extensive body of case law on the meaning of 'employment of a casual nature' and 'for the purpose of trade or business' as set out in Willis's Workmen's Compensation 37th Ed. page 182-185. Ms Lai had also very diligently provided many of these cases in her list of authorities.

38. I would only make this observation. Although the applicant was a casual worker in the sense that he was not employed on a long term basis by the respondent, it does not necessarily follow that during his employment with the respondent, the employment was of a casual nature. His task was to carry out construction work in the two flats. While the task of laying down the marble slabs in Flat B may be of a short duration, it does not necessarily make his employment with the respondent to be casual in nature. However, in view of our decision the matter has to await determination in an appropriate case.

Hon. Ma J.A. :

39. I agree.

Hon. Waung J. :

40. I agree.