CHAN SIK PAN v. WYLAM'S SERVICE LTD. AND OTHERS

HCPI 648/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO.648 OF1995

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J U D G M E N T

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1. This is a retrial ordered by the Court of Final Appeal on the issue, as between the 1st, 2nd and 3rd defendants, who was the employer of the plaintiff. It is further ordered by the Court of Final Appeal that the earlier finding that the employer, whoever he may be, is liable to the plaintiff, will stand.

2. In that event, the only one issue before me relating to liability is who is the employer of the plaintiff.

BACKGROUND

3. The plaintiff is a skilled fire installation worker. On or about 11 August 1992, he was contacted by a fellow worker in the trade, one Ng Chi Hung, to go to a construction site at Windsor House in Causeway Bay to do fire installation work. Together with Ng Chi Hung and others he then reported to the 3rd defendant at the site and started work there.

4. On 21 August, in the course of his work, the plaintiff sustained injuries when he fell from a platform on which he was working. There is no need for present purposes to go into the detail of that fall since the Court of Final Appeal has ordered that the earlier finding that the employer, whoever he was, is liable to the plaintiff, will stand.

THE PLAINTIFF'S CASE

5. The plaintiff very frankly told the court in evidence that before he started work, after he had been contacted by Ng Chi Hung, and even during the course of his work at the site in Windsor House right up to the time when he met with the accident, he did not know as a fact who was his employer.

6. The plaintiff has brought this action against the 1st, 2nd and 3rd defendants on the basis that one of them must be the employer of the plaintiff.

7. However, relying greatly on documentary, circumstantial and other evidence containing admissions by the 1st defendant, the primary case of the plaintiff is that the 1st defendant was his employer. It is only if the court is not with the plaintiff on its primary case that the plaintiff says that in that event either the 2nd or the 3rd defendant was the employer.

8. As for its primary case that the 1st defendant was his employer, the evidence relied on by the plaintiff in this respect are as follows :-

(a) The 1st defendant filled out a Form II, being notification to the Labour Department of an accident to an employee, in respect of the accident to the plaintiff in which the 1st defendant admitted itself to be the employer of the plaintiff.

(b) According to the plaintiff, when he attended the office of the 1st defendant in December 1992, he was told by both a Miss Ng of the 1st defendant and by Mr Wong Ng Kun that the 1st defendant was his employer.

(c) Two agreements entered into between the plaintiff and the 1st defendant in January and May of 1993 in which the 1st defendant, as the employer of the plaintiff, agreed to and in fact paid the plaintiff two-thirds of his salary during part of the sick leave period granted to the plaintiff.

(d) The worker's Attendance Book in which reference is made to workers of the 1st defendant.

(e) Letter from the 1st defendant to the principal contractor, Carrier Hong Kong Limited ("Carrier") dated 15 June 1993 in which the 1st defendant admits to being the employer.

(f) The objection by the 1st defendant to the assessment of 15% loss of earnings capacity of the plaintiff in which the objection is made by the 1st defendant as the employer of the plaintiff.

(g) Insurance claim made by the 1st defendant to its insurers on behalf of the plaintiff as its employee.

(h) The payment into court made by the 1st defendant and others in ECC Case No.502 of 1994 ("the ECC Case").

9. Quite apart from the above, the plaintiff further alleges that the 1st defendant is estopped from denying that it was the employer of the plaintiff by reason that its objection to the assessment of the 15% loss of earnings capacity had caused the Medical Board to re-assess the plaintiff's loss of earnings capacity at 14%. Thereafter, the plaintiff, due to such re-assessment by the Medical Board, accepted the amount of payment into court by the 1st and 2nd defendants together with Carrier in the sum of $250,000 in settlement of its claim for employee's compensation.

THE 1ST DEFENDANT'S CASE

10. The 1st defendant denies that it was the employer of the plaintiff. Its case is that a situation commonly known as "chau sam sha" in the trade existed between the 1st, 2nd and 3rd defendants whereby the 1st defendant subcontracted the wet part of the fire installation works to the 2nd defendant who then sub-subcontracted the labour and small metal part of it to the 3rd defendant. In the event, the 1st defendant says that the employer of the plaintiff was the 3rd defendant as the "sam sha" or sub-subcontractor.

11. The 1st defendant does not accept that any estoppel arise as alleged by the plaintiff against it.

THE 2ND DEFENDANT'S CASE

12. By and large the case for the 2nd defendant is run along identical lines as that of the 1st defendant and the 2nd defendant also says that the 3rd defendant was the "sam sha" and therefore the employer of the plaintiff.

THE 3RD DEFENDANT'S CASE

13. The 3rd defendant, while accepting that a "chau sam sha" situation did exist between the defendants, nevertheless says that as a "sam sha" he was not in the same position as a sub-subcontractor but more akin to a head worker and as such was an employee himself and that all the workers including himself as well as the plaintiff were the employees of either the 1st or 2nd defendant depending on the true relationship between the 1st and 2nd defendants as found by the court.

THE EVIDENCE

14. The plaintiff himself was the only witness giving evidence for the plaintiff on the issue of who was the employer of the plaintiff. His evidence can be summarised as follows. As far as he knew the 3rd defendant had called Tung Hung who in turn called Ng Chi Hung who then asked the plaintiff to go to work at the Windsor House site. When he got there, the plaintiff reported to the 3rd defendant and was told that he needed to sign in the Attendance Book when he reported for work. The plaintiff did not know who his employer was even when he was working there.

15. After the accident, the plaintiff's wages were brought to him by Ng Chi Hung at the hospital.

16. He was discharged from the hospital in early December 1992. He then went to the Labour Department concerning this accident and was told by people at the Labour Department that the 1st defendant had, as the employer, reported this accident to the Labour Department already. He was also told by the Labour Department to take his sick leave certificate to the office of the 1st defendant in Chai Wan.

17. At the office of the 1st defendant he saw a Miss Ng there. Miss Ng told him that the 1st defendant was his employer and took him to see a Mr Wong Ng Kun to whom he gave the sick leave certificate.

18. In cross-examination he said that the 3rd defendant held the key to the tool room where the workers also changed, took the workers to the work site, gave instructions to the workers what to do and also inspected the work done. He had heard from others that the 3rd defendant was the foreman at the site but did not hear that from the 3rd defendant himself. He further took the view that since the 3rd defendant had hired him, the 3rd defendant could also fire him if his work was not up to standard. However, he agreed that the 3rd defendant had never represented himself to be the boss and he himself did not think the 3rd defendant was his employer. He had treated the 1st defendant as his employer.

19. The 1st defendant, on the question of liability, relied on the evidence of its director, Wong Ng Kun.

20. His evidence was that in 1992 the 1st defendant held a license and was registered as a contractor with the Fire Services Department to carrying out fire installation works. Carrier subcontracted the fire installation works in respect of the Windsor House project to the 1st defendant who in turn subcontracted, through its agent United Company, the wet part of it to the 2nd defendant (the dry part being subcontracted to another subcontractor).

21. The 2nd defendant then subcontracted the labour and small metal part of it to the 3rd defendant. This procedure of subcontracting between the 1st, 2nd and 3rd defendants is commonly known as "chau sam sha" in the trade.

22. Wong Ng Kun further explained that when subcontracting the wet part of the fire installation works to the 2nd defendant there was an understanding between the 1st and 2nd defendants that the 1st defendant would be responsible to take out the necessary insurance to cover the workers of the subcontractors as well. At all times the 1st defendant had an insurance policy but that he laboured under the mistaken belief that such policy also covered the workers of the subcontractors when it covered only the direct employees of the 1st defendant. He only came to know of it when the insurance company rejected the claim for compensation made on behalf of the plaintiff.

23. According to Wong Ng Kun, the 1st defendant was not aware of the accident to the plaintiff until about the end of September when a nurse from the hospital phoned Miss Ng informing her that one of the 1st defendant's worker had been injured. He then instructed Joe Wong of United Company to follow up the matter. As a result it was learned that it was one of the 3rd defendant's worker who had been injured.

24. The 1st defendant then informed its insurance company that a worker had been injured on the site and in accordance with past practice when a worker had been injured, filed a Form II with the Labour Department.

25. According to Wong Ng Kun, when an accident happened to a worker in the past, the insurance company would pay compensation to the worker upon being notified by the 1st defendant. However on this occasion the insurance company sent along its representative to ask for the salary record of the plaintiff and other proof of employment from Miss Ng of the 1st defendant. When these documents were not forthcoming the insurance company refused to accept the claim on the basis that the plaintiff was not an employee of the 1st defendant.

26. In about January 1993, he received a call from the Labour Department because the plaintiff had made a complaint that he did not receive his sick leave compensation. Wong Ng Kun explained to the person from the Labour Department that the plaintiff was the employee of their subcontractor but was told by the Labour Department that even if the 1st defendant was a principal contractor it was still under a duty to compensate the plaintiff or else it would be prosecuted.

27. As a result Miss Ng of the 1st defendant then calculated the amount of the compensation based on the sick leave certificate which the plaintiff had brought along to the office of the 1st defendant which was later paid to the plaintiff.

28. In May 1993, Wong Ng Kun again received a phone call from the Labour Department because the plaintiff lodged another complaint that he could not get his sick leave compensation from the 1st defendant. Once again Wong Ng Kun explained to the Labour Department officer that the plaintiff was not the employee of the 1st defendant. He was then asked to bring along all the documents to attend the Labour Department.

29. On both those occasions in January and May of 1993, the 1st defendant paid the compensation to the plaintiff because it was told by the Labour Department that they were obliged to pay even if they were the principal contractor and on threat of prosecution by the Labour Department.

30. Wong Ng Kun further explained that Carrier refused to pay to the 1st defendant its monthly interim claim since a worker (the plaintiff) was injured and the 1st defendant had failed to define whether that worker was an employee of the 1st defendant. As a result, and also because of the quandary that the 1st defendant was in due to the relationship between it and the plaintiff coupled with what they had been told by the Labour Department, it was decided to reply to Carrier in the 1st defendant's letter of 15 June 1993 in which it was stated that the plaintiff was "an Employee within the meaning of the legislation". That was how that letter came about.

31. In May of 1994, the Labour Department again contacted Wong Ng Kun and told him that the 1st defendant had to explain to the plaintiff why the 1st defendant did not further compensate him. As a result of that and because the plaintiff could not be reached by phone on several occasions, the 1st defendant wrote to the plaintiff for him to attend the offices of the 1st defendant. That was how the letter of May 1994 came about. Wong Ng Kun further said that that was the first time he saw the plaintiff, but not on the earlier occasions and he thought that on those earlier occasions, it must have been Joe Wong who saw and spoke to the plaintiff.

32. Wong Ng Kun further gave evidence as to how the 1st defendant's objection to the assessment of the plaintiff by the Medical Board came about. He said that on one occasion, the 2nd defendant came across the plaintiff transporting or lifting cloth in Shamshuipo and chanced to mention that to him. The 1st defendant therefore used that as a ground to lodge their objection to that medical assessment, not as the direct employer of the plaintiff but as the principal contractor since they had been told by the Labour Department that they had to compensate the plaintiff even as principal contractor. However, the printed form for the objection referred to the party objecting as the employer and no steps were taken by the 1st defendant to correct or amend that part of the printed form.

33. Finally as for the Attendance Book signed by the workers, he explained that the Attendance Book was not provided by the 1st defendant and that he only came to know of such an Attendance Book at the first trial of this matter.

34. Evidence called by the 2nd defendant came from the 2nd defendant himself.

35. His evidence was that he was a subcontractor of the 1st defendant for the wet part of the fire installation works at the Windsor House project which included all the material for pipes, spare parts tools and labour. He then sub-subcontracted to the 3rd defendant for the 3rd defendant to provide the small metal and labour at an agreed lump sum of $780,000. There was also an arrangement with a specified hardware shop which would allow the 3rd defendant to obtain tools and small metal parts on credit but paid for by the 2nd defendant first. However, those expenses would ultimately be deducted from the subcontract amount due to the 3rd defendant at the end of the day.

36. Before August 1992, the 3rd defendant employed only four to five workers on site for the fire installation works. The number of workers employed was decided solely by the 3rd defendant and he would only monitor the quality and progress of the work done. The 3rd defendant would supervise and instruct the workers himself. He, the 2nd defendant only liaised with the 3rd defendant concerning the works.

37. He paid the 3rd defendant periodical payments according to the value of the works completed by the workers of the 3rd defendant. Each time the 3rd defendant was paid, the 3rd defendant would sign a receipt for the payment made. The 3rd defendant would pay the workers their wages.

38. In about the end of July he was contacted by Joe Wong on behalf of the 1st defendant and told that the owners wanted to catch up the delay to the project due to the heavy rains that summer and to engage 30 workers in the day time to catch up on the progress of the works. If necessary night work would also be carried out to ensure completion by October.

39. He then spoke to the 3rd defendant on this request by the owners. The response from the 3rd defendant was that the original subcontract between them did not contemplate night work and if that was to be done it could only be on the condition that the payment for the night work be supplemental to the subcontract amount and that the 3rd defendant be reimbursed the night work payment to the workers.

40. Ultimately that condition of the 3rd defendant was acceptable to the owners but Carrier requested that a written record be kept daily of the workers on site to be signed by the workers separately for the day work and the night work. That record would form the basis upon which the payment of wages to the workers would be worked out during the special arrangements for the works. That was how the Attendance Book came into being. He agreed that the writing on the front page of the Attendance Book was written by him saying that the workers were the 1st defendant's workers.

41. He was also informed by Joe Wong that if the works could be completed by October the owners have promised bonus to all the contractors down the line and that the 2nd defendant would receive $150,000 as his share of the bonus. From that amount he had promised to pay to the 3rd defendant $100,000 as bonus to the 3rd defendant.

42. This special arrangement to hurry up the works lasted for over one month but less than two months. After the special arrangement, the works returned to normal hours and the normal number of workers. The Attendance Book was no longer used when things returned to normal.

43. He also gave evidence that the tools for the additional workers during the special arrangement were obtained by the 3rd defendant on credit and initially paid for by him but later deducted from the final sum due to the 3rd defendant when the account between them was finalized.

44. As matters turned out the works were completed by October and the 2nd defendant did receive a bonus but only $130,000 which was given to him by the 1st defendant. He therefore reduced the bonus to the 3rd defendant to $90,000. He was told by the 1st defendant that the 1st defendant did not receive their full bonus from Carrier.

45. After the project was completed, they had to wait for a completion plan from the 1st defendant and Carrier. The completion plan was finalised only in September 1993. Then in October 1993, he and the 3rd defendant, worked out the accounts between them using the completion plan. It took the two of them three days to finalise the account between them. Finally they arrived at a final figure of $189,197 owed by the 2nd defendant to the 3rd defendant. After the final account was worked out between them, the 3rd defendant signed his signature on the Summing Up Account to acknowledge those accounts. That final sum was paid by the 2nd defendant to the 3rd defendant by three installments for which the 3rd defendant signed written receipts acknowledging payment. These receipts were produced in evidence.

46. In about August or September 1994, Joe Wong asked him who was the actual employer of the plaintiff. He then asked the same of the 3rd defendant who admitted to be the employer of the plaintiff. As a result of that admission by the 3rd defendant he had asked the 3rd defendant to acknowledge that by signing on a written certificate to the same effect. The 3rd defendant did so and that document dated 6 September 1994 is relied on by the 2nd defendant as an admission by the 3rd defendant to be the employer of the plaintiff.

47. In cross-examination the 2nd defendant agreed that he was given a name card by the 1st defendant to use on the Windsor House site. He further agreed that the name card described him as a foreman of the 1st defendant. He also said that the name card was used to introduce him to the people from Carrier and that at some site meetings with people from Carrier he would represent the 1st defendant. He was normally on site some five hours each day to monitor the progress and quality of the work. He also agreed that it was not made known to the people of Carrier that he was a subcontractor of the 1st defendant.

48. Some time after the accident happened, the 3rd defendant gave to him a signed statement of Ng Chi Hung dated 18 October 1992. This statement contained an account of how the accident happened. At the same time the 3rd defendant told him that since Ng Chi Hung witnessed the accident, his statement was given as evidence.

49. When asked why he had written on the Attendance Book that it was a record of the workers of the 1st defendant, his answer was that since it was a record of the workers requested by Carrier, and that Carrier only recognized the 1st defendant as its subcontractor on site, therefore he had put down that it was the Attendance Book for the 1st defendant's workers.

50. Coming now to the evidence of the 3rd defendant, he agreed that he was the "sam sha" in a "chau sam sha" situation pertaining between the 1st , 2nd defendants and himself. He regarded his role as a "sam sha" as being no different from a head worker and earning the daily wage of a worker. He did however accept that there were differences between a mere worker and a "sam sha" because no matter how hard a worker worked, a worker was only entitled to his daily wage whereas a "sam sha" stood to gain a profit if he worked hard and could muster his workers to work hard and efficiently.

51. He also agreed that as a "sam sha" he recruited the workers, provided them with the tools and instructed them what to do and where to do it.

52. He said that the 2nd defendant first approached him in about April 1992 to provide the labour and small metal in respect of the fire installation works for the Windsor House project. Initially he had quoted a lump sum of over $800,000. However after further discussion between them, $780,000 was the final sum agreed between them. This was on the basis of the total work that was required. This final figure would include the provision by the 3rd defendant of the small metals, tools and labour for the project.

53. When the work in this project started, the 3rd defendant had engaged about four or five workers including the 3rd defendant himself to do the fire installation work. The 2nd defendant would be at the site for about five hours a day and would give him instructions which he in turn would pass onto the workers.

54. In about the end of July the 2nd defendant approached him to say that the owners of the building had requested for an increase of workers to catch up with the delay caused to the project by heavy rains that summer. The request was for the engagement of 30 workers to work in the day and also night work if necessary in order to complete the project by October.

55. His initial reaction was that he could not do it since such arrangement was never contemplated when he took up the job and that he did not have enough tools. The 2nd defendant then promised to provide the tools for the additional workers and also promised that the workers would get paid. The 2nd defendant further promised him that if the works could be completed by October there would be a bonus payment but the amount was not told to him by the 2nd defendant at that time. It was not until September when he chased the 2nd defendant for the amount of the bonus that the 2nd defendant told him the bonus to him would be $100,000.

56. Further it was agreed between him and the 2nd defendant that during the special arrangement there would need to be kept an Attendance Book on which all the workers working at the site would have to sign each day they worked there since payment of the wages during the special arrangement would depend upon the head count of the workers working on site.

57. The plaintiff who started work on the site in mid-August was brought along by Tong Hung and was one of the additional workers on the site as a result of such special arrangement.

58. The 3rd defendant was informed of the accident to the plaintiff at the end of the night work that same day that the accident happened when he was changing. He then called the 2nd defendant to inform him of it because of the need to claim compensation for the injured worker. The response from the 2nd defendant was that the injured worker should make his claim for insurance from the hospital himself. The following day the 3rd defendant told Ng Chi Hung to tell the plaintiff what the 2nd defendant had said about making his claim for compensation from the hospital and gave to Ng Chi Hung the address and phone number of the 1st defendant.

59. The 3rd defendant further said that when he entered into the agreement with the 2nd defendant to supply small metal and labour for the project, he was told by the 2nd defendant that the 1st defendant would be responsible for insurance for the workers. Moreover, he had no Business Registration at the time and could not have obtained employee's compensation insurance.

60. Some time in 1993, at the request of the 2nd defendant, he had arranged to have tea with the plaintiff and the 2nd defendant. From what was told to him by the 2nd defendant and what was said at that meeting, he gathered that the 2nd defendant, as the representative of the 1st defendant, wanted to see the plaintiff to offer the plaintiff $100,000 to settle the question of compensation to the plaintiff once and for all. He was told by the 2nd defendant that the 1st defendant did not wish the plaintiff to go up to its office making claims for compensation. However the plaintiff at that meeting wanted at least $200,000 to settle. The 2nd defendant replied that anything over $100,000 he had to go back to discuss and nothing came of that meeting.

61. According to the 3rd defendant the Windsor House project was completed some time around Lunar New Year of 1993. After its completion, he was chasing the 2nd defendant for some $189,000 which was owed to him by the 2nd defendant. In about October of that year, he sat down with the 2nd defendant who then calculated the final accounts between them and came up with a figure of $189,179 which the 2nd defendant said was due to the 3rd defendant. As it accorded with his own estimate of what was owed to him, he then signed on the Summing Up Account prepared by the 2nd defendant.

62. He also explained that the certificate dated 6 September 1994 certifying that he (3rd defendant) employed the plaintiff came about because the 2nd defendant had asked him to provide proof of the plaintiff's wages in order for the plaintiff to claim compensation. He further said that he did not think there was anything wrong with the wording on that document since it was he who had recruited the plaintiff to work at the site. He denied he had ever admitted to being the direct employer of the plaintiff.

63. He also gave evidence that the tools for the increased workers working at the site was provided by the 2nd defendant at the 2nd defendant's own expense and those tools were ultimately taken away by the 2nd defendant.

64. He agreed that the 2nd defendant had never told him what was the role of the 2nd defendant on the Windsor House site, but that the 2nd defendant had given to him the name card of the 2nd defendant.

65. He also said that all the workers on site had regarded the 1st defendant as their employer.

ASSESSMENT OF THE EVIDENCE

66. In so far as the evidence concerning the question of the employer of the plaintiff and on liability generally is concerned, I have no hesitation in accepting the evidence of the plaintiff.

67. As for the other witnesses, I view the evidence of Wong Ng Kun with some caution due to the fact that of his own admission, he was not the person who dealt with the matters relating to the works on site and the project generally, but it was all left to Joe Wong to deal with. Much of what happened on site was only reported to him by Joe Wong who was not called as a witness in these proceedings.

68. Neither, for that matter was Miss Ng called as a witness although she was still employed by the 1st defendant at the time of this trial. Instead there were instances when Wong Ng Kun tried to give evidence which should properly have come from Miss Ng, as for instance relating to the phone call purportedly received by Miss Ng from a nurse at the hospital informing the 1st defendant that one of their worker had been injured.

69. Some aspect of the evidence given by Wong Ng Kun I find to be quite unsatisfactory because I am left with the distinct impression that when the project and the works were being carried out, there was a scheme, most likely with the 2nd defendant, to keep hidden from Carrier the fact that the 1st defendant had subcontracted the works to the 2nd defendant who had further subcontracted parts of it to the 3rd defendant when Carrier only recognized the 1st defendant as its subcontractor by reason of the fact that it was the 1st defendant who held the necessary license for fire installation works. This probably explains the name card that was given to the 2nd defendant by the 1st defendant on which it states the 2nd defendant to be its foreman which is factually incorrect. It probably also explains why the 2nd defendant wrote on the Attendance Book that the workers were the 1st defendant's workers.

70. Furthermore it also explains the 1st defendant's letter to Carrier dated 15 June 1993 which was worded in the way that it was because by then the 1st defendant must have been in a dilemma for on the one hand it wanted to hide from Carrier the subcontract by it to the 2nd defendant (Carrier was withholding further payment to the 1st defendant until the issue of compensation was resolved since Carrier was named as the principal contractor on the Form II) but at the same time the insurers having rejected the 1st defendant's claim for compensation on behalf of the plaintiff because the plaintiff was not its direct employee, it did not want to make yet a further admission to being the plaintiff's employer.

71. I do not accept the evidence of Wong Ng Kun that he only learnt of the accident to the plaintiff when a nurse from the hospital phoned Miss Ng of the 1st defendant. There is clear evidence from the 2nd defendant, which I accept, that shortly after the 2nd defendant had learnt of the accident, within a day or two, he had already informed Miss Ng of same by phone because he knew that Miss Ng dealt with all matters relating to insurance claim and compensation arising from injury to workers.

72. It seems obvious enough from all the evidence adduced in the case that the 1st defendant had no difficulty treating the plaintiff as its employee when the Form II was filed by them and that in so doing they were following past practice. The 1st defendant also treated the plaintiff as its employee when making a claim on the plaintiff's behalf to its insurance company. In that context I accept the evidence of the plaintiff (as opposed to the evidence of Wong Ng Kun) that he saw Miss Ng as well as Wong Ng Kun when he first went up to the 1st defendant's office in December 1993 and he was told that he was an employee of the 1st defendant. It was not until after the plaintiff took out the ECC Case in mid-1994 that the question of who was the direct employer of the plaintiff came to the forefront and assumed any great significance.

73. I do however accept the evidence of Wong Ng Kun that after the insurance company rejected the claim for compensation made by the 1st defendant on behalf of the plaintiff, the 1st defendant had told someone from the Labour Department that the plaintiff was the employee of its subcontractor. I accept this evidence because that is confirmed in the letter written by the Labour Department to the 1st defendant dated 9 January 1993. I also accept that the Labour Department did tell Wong Ng Kun that even as a principal contractor, the 1st defendant is still obliged to pay compensation to the plaintiff during the period of sick leave. Because of this the 1st defendant found itself in a quandary, caught between the devil and the deep blue sea because of its earlier admissions to being the employer.

74. This also explains the two agreements in January and May 1993 between the 1st defendant and the plaintiff whereby the 1st defendant paid compensation to the plaintiff for the sick leave period.

75. As for the evidence given by the 2nd defendant, basically, I found him to be an honest witness in relating to the court the relationship which existed between the three defendants. However there are some parts of his evidence which is less than satisfactory. The first which I had already referred to above, namely that he together with the 1st defendant was hiding the fact, at least from the Carrier people, that he was a subcontractor of the 1st defendant but holding himself out to be its foreman. It follows therefore that he was also not prepared to divulge to them that the 3rd defendant was his subcontractor at the site. This further explain why he wrote the Attendance Book in the way that he did.

76. Secondly, I do not accept his evidence that at the tea meeting he had with the plaintiff and the 3rd defendant, he initiated this meeting on his own steam with a view to mediate the dispute between the plaintiff and the 1st defendant. I prefer the evidence of the 3rd defendant that the 2nd defendant was making an offer to the plaintiff to settle the whole matter at $100,000 on behalf of the 1st defendant. His reluctance to reveal the true purpose of this meeting indicates to some extent that he was not only taking steps or doing things at the behest or on behalf of the 1st defendant or Joe Wong, but also that he was prepared to shield the 1st defendant if he thought it necessary.

77. Thirdly, I do not accept his evidence relating to the certificate signed by the 3rd defendant and dated 6 September 1994. The timing of it being just shortly after the institution of the ECC Case by the plaintiff (at that stage only naming the 1st defendant and Carrier as respondents) suggests that such a certificate was obtained with a view to aiding the 1st defendant in its defence of the ECC Case. Fortunately, in deciding the issue in this case, it is not necessary for me to place any weight on this certificate to decide the issue before me when I come to make my finding hereafter.

78. Having said the above, I do accept his evidence, in particular the evidence given by him as to his relationship with the 1st defendant on the one hand and also his relationship with the 3rd defendant on the other hand.

79. In submission, the plaintiff challenged that evidence of the 2nd defendant by saying that the quotation which the 2nd defendant says he submitted to the 1st defendant was firstly, not addressed to the 1st defendant or even to United Company and secondly, it was not even signed by the 2nd defendant. Counsel then submitted that the better view to take on that document was that it was a costing exercise made by the 2nd defendant to enable the 1st defendant to give its quotation to Carrier. In this respect, it was pointed out that the written agreement between the 1st defendant and Carrier was dated some time in June 1992.

80. I take the view that at that lowest strata of subcontracting in the construction field, it is not surprising that the parties would enter into an oral subcontract rather than a written one and rely on mutual trust between them. In this case such a view is strengthened by the fact that the 3rd defendant does not dispute that there was an agreement between him and the 2nd defendant to supply labour and small metal at a lump sum of $780,000. For the 2nd defendant to be in a position to enter into such an agreement with the 3rd defendant he (i.e. the 2nd defendant) could not be anything other than a subcontractor of the 1st defendant.

81. Turning now to deal with the evidence of the 3rd defendant there can be no dispute that of all the defendants in the case, he is undoubtedly of the lowest level of education. He has risen from a mere construction site worker to what he calls a head worker after a number of years in the construction trade. While he agrees that he was the "sam sha" and did enter into an agreement with the 2nd defendant to supply labour and small metal at an agreed lump sum of $780,000.00, he says in the same breath that he was not a subcontractor but only a worker himself earning a daily wage. He further says that by such agreement as a "sam sha" he could make a profit but cannot suffer any loss.

82. It appears that he takes the view that he cannot suffer any loss because he is of the view that if the lump sum of $780,000 is exceeded and the 2nd defendant stops paying him any further interim payment, then he can just walk away from the job since he is no longer being paid his wages. There is no evidence before me that there was any term agreed between the 2nd and 3rd defendant to such effect.

83. I can only say that perhaps due to his lack of education and therefore low understanding, that must be a perverse view when looked at from the point of legal rights and obligations. It may also be that from a practical point of view, it never happens that the lump sum agreed to by a "sam sha" is exceeded or that if it is, it is not worthwhile to bring legal proceedings to claim against the "sam sha". However, whatever the reason, the view expressed by the 3rd defendant as to his obligations as a "sam sha" cannot and does not reflect the true position in law as to the duties and obligations of a person in that position.

84. Moreover, the fact that he doubles up as one of the worker in getting the job done does not alter the fact that he has entered into a subcontract with the 2nd defendant to provide tools, labour and small metal for the project. What it simply means is that he, the 3rd defendant assumes the position of one of the worker and therefore saves on having to pay for another worker from the lump sum agreed between him and the 2nd defendant. In short, he is self-employed as a worker.

85. Finally I should say that in assessing the evidence on the issue of who is the actual employer of the plaintiff, first and foremost, that issue should be decided on the direct evidence and facts as they are found by me pertaining to the actual relationship between the 1st 2nd and 3rd defendants with respect to the project at Windsor House. Moreover, in determining that issue, the fact that both the plaintiff and the 3rd defendant has expressed the view that all the other workers on site regarded the 1st defendant to be the employer can carry very little weight. This is all the more so when the 1st and 2nd defendants were hiding the true relationship between them from other people on site and the 3rd defendant does not fully appreciate his role as a "sam sha".

86. It is accepted by the plaintiff that many of the documents relied on by the plaintiff in its primary case came into existence some time after the accident and they either contain admissions or are circumstantial evidence relating to that issue. Such admissions and/or circumstantial evidence must be looked at in the light of the explanations and circumstances in which they came into existence as already dealt with above.

FINDINGS OF FACTS

87. From all the evidence I find the following facts :-

(1) There was a subcontract between the 1st defendant and the 2nd defendant whereby the 2nd defendant was subcontracted the wet part of the fire installation works for the project at Windsor House some time in March or April 1992.

(2) The 2nd defendant further sub-subcontracted the labour, tools and small metal part of his subcontract in the project to the 3rd defendant. As such it was left to the 3rd defendant solely to decide on the number of workers to engage to perform the works.

(3) A special arrangement was agreed to by all concerned to increase the day workers to about 30 and for night work to be carried out in order to hurry up the works to meet the deadline in October. The special arrangement did not alter the underlying relationship between all three defendants in the project.

(4) The 3rd defendant recruited and hired the plaintiff (with the assistance of Tong Hung and Ng Chi Hung) as one of the additional worker in respect of the special arrangement to hurry up the works in mid August 1992.

(5) Whilst the 1st and 2nd defendants were present on site either through representatives (in the case of the 1st defendant) or in person (as in the case of the 2nd defendant) to supervise the quality and progress of the works, the supervision and instruction of each of the worker including the plaintiff remained in the domain of the 3rd defendant solely. The right to hire and fire workers remained solely the responsibility of the 3rd defendant.

(6) All the tools including the tools for the additional workers during the special arrangement were provided ultimately at the expense of the 3rd defendant.

(7) The wages of the workers (with the exception of the overtime night work) was paid to the workers from the subcontract sum agreed between the 2nd and 3rd defendants, and therefore was paid to the workers, including the plaintiff, by the 3rd defendant.

CONCLUSION

88. From the above facts as found, there is overwhelming evidence that the 3rd defendant was the direct employer of the plaintiff when the accident happened to the plaintiff on 21 August 1992.

ESTOPPEL

89. The plaintiff submits that the 1st defendant is estopped from denying that it was the employer of the plaintiff. The plaintiff's factual bases for the estoppel are as follows :-

(a) The plaintiff was initially assessed by the Medical Board as having a 15% loss of earnings capacity under the Employee's Compensation Ordinance as a result of his injuries. The Certificate of Assessment is dated 5 November 1993.

(b) The 1st defendant, as the employer, lodged their written objection to such assessment on 27 November 1993 on the ground that the plaintiff has been working for Wan Fat Plastic Co. Ltd in June 1993, as a result of which the Medical Board re-assessed the plaintiff to have a loss of earnings capacity of 14%. The re-assessment was dated 4 March 1994 contained in a Certificate of Review of Assessment.

(c) By reason of and based on such re-assessment by the Medical Board, the plaintiff, after receiving the advice from his solicitors, accepted the amount of $250,000 paid into court by the 1st, 2nd defendants and Carrier in the ECC Case.

90. It is submitted by the plaintiff that because of the objection by the 1st defendant in its capacity as the employer of the plaintiff which resulted in the re-assessment by the Medical Board, and relying on such re-assessment, the plaintiff had changed its position by accepting the payment into court which the plaintiff would not have accepted had the original assessment stood. Therefore the 1st defendant is now estopped from denying that it is the employer of the plaintiff.

91. There was no dispute between the parties relating to the facts as stated in paragraphs (a) and (b) above except that the 1st defendant says that the objection could have been made in his capacity as a principal contractor. However, in so far as paragraph (c) was concerned, there was a substantial dispute between the parties with the 1st defendant not accepting that it was the 14% re-assessment which led the plaintiff to accept the amount of the payment in.

92. After hearing the evidence from both the plaintiff and his solicitor on this aspect of the case, in particular the calculations that was made and presented to the plaintiff by his solicitor, I have no hesitation in accepting both their evidence. I therefore find as a fact that the re-assessment by the Medical Board downwards to 14% was a very significant factor for the plaintiff making up his mind to accept the amount of payment into court in the ECC Case. I was particularly impressed by the evidence of the plaintiff's solicitor Mr Lo Kwing Yu, both in the way in which he conducted himself as a solicitor and in the painstaking way in which he worked out the calculations and advised the plaintiff in a matter not easy to understand by a layman.

93. Having said that, I am of the view that estoppel has not been made out in this case on those facts. There are basically two reasons for holding that estoppel has not been established.

94. Firstly, the plaintiff relied on the downward re-assessment by the Medical Board. That re-assessment was an act done by the Medical Board. Even though the re-assessment may have come about because of the 1st defendant's objection, that re-assessment cannot be equated on the same footing as a representation by the 1st defendant that it was the employer of the plaintiff. The fact that on the printed form of the objection lodged by the 1st defendant, it was stated that the 1st defendant was the employer of the plaintiff does not change the fact that the plaintiff, for the purpose of the estoppel alleged, was relying on the downward re-assessment and not the fact that the 1st defendant was stated on the objection form to be the employer.

95. Moreover, there is nothing to suggest that there must be a downward re-assessment by the Medical Board even if an objection was lodged by the 1st defendant and even if that objection was made in the capacity of an employer.

96. Secondly, even after the objection by the 1st defendant and after the re-assessment by the Medical Board, at all material times up to the acceptance by the plaintiff of the payment into court in the ECC Case, the issue as to who was the plaintiff's employer was very much a live issue in the said ECC Case. Indeed had that matter gone to trial, that issue as to who was the employer of the plaintiff would have been one of the issues, if not the only issue, in that case. Therefore there was no question that the plaintiff could have been misled by any representation from the 1st defendant that it was the employer of the plaintiff, whether or not the plaintiff accepted the payment in.

97. In those circumstances, I cannot see how it can be said that it is unconscionable for the 1st defendant to deny that he was the employer of the plaintiff in the present proceedings.

98. For these reasons, I hold that the estoppel alleged by the plaintiff has not been established.

QUANTUM

99. I now turn to deal with quantum.

Injuries and Treatment

100. After the accident, the plaintiff was taken to the Accident and Emergency Department of the Tang Shiu Kin Hospital. There he was diagnosed to be suffering from the following injuries :-

(a) Scalp laceration and skull's concussion.

(b) Concussion of right lower ribcage and loin.

(c) Concussion of lower back.

(d) Abrasion over both forearms.

(e) Comminuted displaced fracture of left calcaneum (i.e. heel bone).

101. On the same day (21 August 1992) he was transferred and admitted into the Queen Mary Hospital. There he was further diagnosed to have suffered a fracture of the left radial head (i.e. elbow bone).

102. On 24 August operation by open reduction, internal fixation and bone grafting was performed on the plaintiff in respect of the comminuted fracture of the left calcaneum.

103. As for the fracture of the left radial head, that was treated conservatively.

104. On 1 September 1992, the plaintiff was transferred to the MacLehose Medical Rehabilitation Centre for rehabilitation. There he received a tailored rehabilitation programme. He was discharged from the rehabilitation center on 11 December 1992. At the time of discharge the plaintiff was able to walk independently with one walking stick. However the left ankle was slightly limited in movement. Thereafter he received follow up treatment at the Orthopaedic Department of Queen Mary Hospital and was granted sick leave until 12 September 1993.

105. The plaintiff was examined by Dr Brian Chan Kwok Pui (instructed on behalf of the plaintiff) in May 1999. Dr Chan came to the conclusion that the plaintiff still had a stiff left ankle from the injury and still suffers from ankle pain, particularly when the weather changes. He further came to the conclusion that further deterioration and degeneration to the left ankle are definite since the calcaneum bears the whole body weight. He also took the view that sclerosis on the left subtalar joint margin is suggestive of early osteoarthritis.

106. As for the fracture to the left radial head, Dr Chan found that it had healed well without any deformity.

107. Dr Chan looked upon the fracture of the left calcaneum to be an intra-articular fracture of the subtalar joint and assessed that fracture to be 6% permanent impairment of the whole person. He further assessed the scars from the surgery and bone grafting to be a further 1% permanent impairment of the whole person. The total permanent impairment of the whole person therefore came to 7%.

108. Dr Chan further examined the plaintiff in March 2002 and maintained his earlier views and assessment.

109. Dr Lam Kwong Chin (instructed by the 1st defendant) also examined the plaintiff in November 1996 and again in March 2002. His findings and assessment are not so very different from that of Dr Brian Chan.

110. Dr Lam found the plaintiff to have some stiffness and pain in his left ankle on prolonged walking and standing and some limitation of movement of it particularly in inversion and eversion (i.e. the sideways movement of the ankle). He assessed the plaintiff to have a 5% permanent disability of the whole person as a result of the injury to his left ankle.

Pain Suffering and loss of amenities

111. A number of awards made in local cases of personal injuries have been cited to me in submission by counsel for the various parties. Those cases encompass varying degrees of severity resulting from injuries to ankles, and some in particular to the calcaneum. Undoubtedly therefore the awards made in the cited cases vary quite considerably. I do not propose to repeat here in any detail the cases cited suffice it to say that it appear from the cases and awards cited in submission, the range of the awards for ankle fracture, and depending on the resulting disability, can vary from $150,000 to $400,000.

112. In the present case, I take into account the fact that apart from the disability to the plaintiff arising from the fracture of the left calcaneum which I have already gone into some detail above, the plaintiff also suffered some pain to his left elbow for several years after the accident as well as occasional dizziness caused by the concussion to his head. These disabilities were not permanent and had more or less cleared by the time he was examined by Dr Brian Chan in 1999 leaving only the disability arising from the ankle injury being the only permanent injury.

113. I also take account that the ankle injury to the plaintiff is such that he will have difficulty walking on uneven ground and in climbing up ladder. Moreover the prognosis is that the disability to the ankle could likely worsen with time.

114. I have also viewed a video of the plaintiff when in the earlier part of this year. It shows the plaintiff walking without any appreciable difficulty or limp on level ground. It also shows the plaintiff climbing over some railings going into a construction site without any appreciable difficulty.

115. However, having said that, in all the circumstances of this case, I am of the view that the injury and the disability suffered by the plaintiff fall short of the serious category as it is understood in the case of Lee Ting Lam. Accordingly, a reasonable award for the plaintiff for pain suffering and loss of amenities would be $350,000

Loss of Earnings

116. The main dispute between the parties in so far as quantum is concerned relates to the claim for loss of earnings, both past and future. I shall deal with each head separately.

(a) Pre-trial loss of earnings

117. There is no dispute that the plaintiff was granted sick leave after the accident on 21 August 1992 until 12 September 1993, a period of 12 months and 23 days. It is also not in dispute that the plaintiff's pre-accident earnings as a fire installation worker was by and large fixed by the trade at the time of the accident at $450 per day. It is further accepted that until the decline in the construction industry which happened at around 1997/1998, there would have been enough work to keep workers like the plaintiff employed for 26 days in a month. It is also the plaintiff's evidence that at the time of the accident, he did work 26 days a month.

118. On such evidence, I find that for the entire duration of the sick leave period, there would be total loss of earnings for the plaintiff.

119. In the light of the medical evidence, I find that the plaintiff would not have been able to return to his pre-accident work after the sick leave period had expired due to the fact that he would not be able to carry any heavy load as a result of the fractured left calcaneum (which is the weight bearing part of the heel) and that he would not have been able to climb ladders both of which are necessary requirements of his pre-accident work as a fire hose installation worker.

120. However I also accept the evidence of Dr Chan, if not also of Dr Lam, that the plaintiff would have been able to carry out some light duties, even at construction sites.

121. It is therefore not unreasonable to allow the plaintiff some time after expiry of his sick leave to seek and to obtain alternative form of employment. Mr Barretto SC for the 1st defendant suggested six months in this respect and I agree with that suggestion.

122. Accordingly for the first 18 months and 23 days after the accident, total loss of earnings at $450 per day calculated at working 26 days a month comes to $218,790.

123. For the remaining period, namely from 12 March 1994 to date, I propose to separate it into two periods with the first of the two periods up to the end of 1997 and from 1998 to present. The reason for adopting such an approach is that there is evidence before me from the 2nd defendant which I accept that the wages for a fire hose installation worker gradually increased from 1992 until 1997 when it peaked at $750 per day. This was during the boom time in the construction industry. From 1998 onwards, the evidence from the 2nd defendant was that due to the decline in the trade, a fire installation worker could only get on average $550 per day and because of the scarcity of work, such a worker could only find work about 15 days in a month.

124. I accept this evidence from the 2nd defendant and by adopting the proposed approach it would allow for a more accurate assessment of the loss of earnings to the plaintiff.

125. Accordingly, for the period from 12 March 1994 to the end of 1997, a period of three years nine and a half month (i.e. 45.5 months), I calculate the average daily wage of a fire hose installation worker to be ($450 + $750) / 2 which gives $600. Since those were still boom times in the construction industry, I shall still adopt 26 working days in a month for this calculation.

126. In so far as the alternative employment open to the plaintiff is concerned, in view of his disability, there can be little doubt that he would not be able to command the average wage of a fire installation worker during this period.

127. It was suggested by counsel for the 1st defendant that the plaintiff could take on work as a plumber. In so suggesting, counsel was equating the plaintiff's skill and experience in the fire installation work with that of a plumber who is qualified and skilled in that trade. In this respect, I accept the plaintiff's evidence that his skill and experience in fire installation works neither entitles nor qualifies him to perform the work of a skilled plumber even if there may be some overlap in the types of work performed in the two trades.

128. My attention has also been drawn to the Government statistics which show that in 1993, a general construction site worker was being paid an average daily wage of $386 and which has now increased to $616 per day.

129. In taking note of these statistics, I am also aware that a general construction site worker very often has to carry out heavy manual work, particularly so when he is not a skilled worker in any particular trade but that would not be open to the plaintiff in the condition he was in after the accident.

130. In this respect I have also taken into account the evidence of the plaintiff that in March of 2002, when the boom time for the construction industry was over, he was looking for work at a construction site in Tseung Kwan O and would have been prepared to take on any light work for between $200 to $300 a day.

131. In the light of the foregoing therefore, I have come to the view that for the period between mid-March 1994 and 1997 when the construction industry was in its heydays, it would not have been difficult for the plaintiff to have earned on average $400 per day doing light work at a construction site which would have been within his capability given his disability after the accident. The partial loss of earnings therefore where the plaintiff is concerned would have been $200 per day. Translated into a 26 work days a month for the 45.5 months up to the end of 1997, it would come to $236,600.

132. For the period from the start of 1998 to date, I take the view that the plaintiff, in his condition after the accident, would still have been in a position to find some work but at a reduced daily wage of around $300. However, I also accept that due to the downturn in the construction industry, it is more than likely that the plaintiff would not be able to find work for all 26 days in a month.

133. Since I accept the evidence of the 2nd defendant that a fire hose installation worker would be working about 15 days per month during this period, I would also take 15 days per month as the average days the plaintiff would have work in a month in the condition that he is in, not because of his condition but because of the decline in the construction industry generally.

134. On that basis the plaintiff would have suffered a daily loss of $250 ($550 - $300) which is a loss of $3,750 per month on the basis of working 15 days in a month.

135. Accordingly for the 59 months from the start of 1998 to date, the partial loss suffered by the plaintiff for this period comes to $221,250.

136. Therefore the total loss of pre-trial earnings come to $676,640.

(b) Future loss of earnings

137. The medical evidence suggests that the disability to the plaintiff's left ankle as a result of the fracture of the left calcaneum will be permanent and that such disability is likely to deteriorate with time such that osteoarthritis will develop. However Dr Chan also expresses the opinion that the degeneration or deterioration is not expected to be to such an extent as to require a prosthesis.

138. In the light of that medical evidence which I accept, it is likely that the plaintiff will continue to suffer loss of earnings in the future.

139. For the multiplicand I shall continue to adopt the monthly loss of earnings of $3,750.

140. As for the multiplier, the plaintiff contends for a multiplier of 12. The plaintiff will be 44 years old in November of this year, having been born in November 1958. He was aged 33 at the time of the accident. Had it not been for the accident, I am of the view that the plaintiff would likely have continued in his pre-accident work but not beyond the age of about 60 bearing in mind that the plaintiff's own evidence was that such work involved the carrying of very heavy metal pipes.

141. In all the circumstances, I take the view that a multiplier of 9 would be reasonable for calculating the compensation to the plaintiff under this head of damage.

142. Future loss of earnings therefore comes to $405,000.

Other Special Damages

143. The other special damages which include medical expenses, travelling expenses and tonic food are agreed in the total sum of $12,411 and will be allowed.

Loss of Earnings Capacity

144. In the light of the foregoing, it follows that the plaintiff will necessarily suffer a disadvantage in the labour market such that if he loses his job it will be that much more difficult for him to obtain alternative employment due to the disabilities which he has as a result of the accident. For this he must also be compensated.

145. I take into account the type of jobs which this plaintiff would be fit for, the kind of injury which he has suffered and the effect such injury would have on the type of jobs which would be open to this plaintiff.

146. In all the circumstances of this case I am of the view that $75,000 would be a reasonable sum to compensate the plaintiff under this head of claim.

Loss of Mandatory Provident Fund

147. Mandatory Provident Fund came into existence in Hong Kong in December 2000. Since loss of pre-trial earnings from December 2000 to date was calculated at $3,750 per month, the loss of MPF for that period comes to 5% of ($3,750 x 24 months) which gives $4,500.00.

148. As for the loss of MPF in relation to the loss of future earnings, that will be a straight 5% of the amount of loss of future earnings which comes to $20,250.00.

Interests

149. Interests will be awarded for general damages for pain and suffering at the rate of 2% per annum from the date of Writ.

150. For loss of pre-trial earnings, special damages and loss of MPF pre-trial (less the amount of employee's compensation received) interests will be awarded at 4.06 % (i.e. half judgment rate) from the date of the accident.

Deduction

151. Credit will have to be given by the plaintiff for the amount of employee's compensation of $250,000 already received by him.

Summary of Quantum

(a)	PSLA	$350,000
	Interests on (a)	51,310
(b)	Pre-trial loss of earnings	676,640
(c)	Special damages	12,411
(d)	Pre trial loss of MPF	4,500
	Interests on (b), (c) and (d) (less ECC amount)	148,567
(e)	Loss of future earnings	405,000
(f)	Loss of MPF re future earnings	20,250
(g)	Loss of earnings capacity	75,000
	Sub-total :	$1,743,678
Less ECC amount		250,000
	Total :	$1,493,678
		========

DECISION

152. There will accordingly be judgment for the plaintiff against the 3rd defendant in the amount of $1,493,678.00.

153. The plaintiff's claim against the 1st and 2nd defendants is dismissed.

COSTS

154. Because of the unusual course that events have taken in this case, and the order relating to costs made by the Court of Final Appeal, I would wish to hear the parties on costs before making any order. Dates are to be fixed with the listing clerk for such hearing.