HSU SHU CHIAO v. LUNG CHEONG TOYS LTD.

CACV 754/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 754 OF 2001

(ON APPEAL FROM DCEC 599 OF 1997)

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J U D G M E N T

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Hon Mayo VP:

1. This is an appeal from a judgment of Judge Carlson in the District Court. The Judge dismissed the claim of the applicant who was making a claim himself and on behalf of the dependants of Hui Pak Sang who was killed in a traffic accident late at night on Saturday 26 August 1995. The claim was being made against the respondent pursuant to the Employees' Compensation Ordinance Cap. 282 (the Ordinance). The Judge dismissed the claim as he was not satisfied that the accident arose out of and in the course of the deceased's employment.

2. This appeal is confined to the issue of liability.

3. The facts which were agreed and accepted by the Judge were as follows.

4. The deceased who was a bachelor was aged 28 at the date of his death.

5. He was employed by the respondent a Hong Kong company as the production manager of one of their factories in Dongguan in China which is approximately 130 kilometres from Shenzhen.

6. The terms of the deceased's employment were laid down in a letter dated 1 July 1995.

7. For the purposes of this appeal the relevant provisions of the employment were that the respondent arranged for Hong Kong employees to be transported to and from work each week. During the week they were accommodated at the respondent's expense at Dongguan.

8. On Monday morning employees were required to transport themselves to Shenzhen where a bus, which was arranged for by the respondent, would take them to Dongguan. By the same token at the end of the week the employees would be brought back from Dongguan by bus to Shenzhen.

9. On the weekend in question the deceased was required to work overtime on Saturday. This was on account of there being Japanese customers who needed to be accompanied on an inspection tour of the respondent's two factories at Dongguan where parts of toys were being manufactured.

10. The deceased left the Japanese customers at about 10.00 p.m. By this time the respondent's bus was no longer available.

11. There was however an agreement between the parties that if the deceased as a consequence of working overtime was unable to take the bus to Shenzhen he could himself hire a taxi for the journey and he would be entitled to be reimbursed the cost of the fare.

12. The taxi which he was in came into collision with a road marker in the suburbs of Shenzhen and the deceased sustained fatal injuries.

13. In dismissing the claim the Judge to a large extent placed reliance upon the provisions contained in section 5(4)(d) of the Ordinance:

"5. (1) Subject to subsections (2) and (3), if in any employment, personal injury by accident arising out of and in the course of the employment is caused to an employee, his employer shall be liable to pay compensation in accordance with this Ordinance.

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(4) (d) an accident to an employee shall be deemed to arise out of and in the course of his employment if it happens to the employee while he is, with the express or implied permission of his employer, travelling as a passenger by any means of transport to or from his place of work and at the time of the accident, the means of transport is being operated-

(i) by or on behalf of his employer or by some other person pursuant to arrangements made with his employer; and

(ii) other than as part of a public transport service;"

14. The Judge reviewed the relevant case law and held that as the deceased had taken a taxi which he held to be "part of a public transport service" the accident had not arisen during the course of his employment.

15. One matter which would appear to be quite clear from the deceased's terms of employment and accepted by Mr Sakhrani for the respondent is that he was employed outside Hong Kong. This being the case the provisions contained in section 5(4)(g) are applicable. These provide:

"an accident to an employee shall be deemed to arise out of and in the course of his employment if it happens to the employee while he is, with the express or implied permission of his employer, travelling by any means of transport for the purposes of and in connection with his employment between Hong Kong and any place outside Hong Kong or between any place outside Hong Kong and any other such place."

16. In his judgment the Judge did consider a number of cases including English cases. In particular he referred to Paterson v Costain [1979] 2 Lloyd's Law Rep 204 which was in a number of respects similar to the instant case. The rationale for the Court of Appeal accepting that an accident occurring on a journey from Abadan to the Iranian oilfields was within his employment was that the employee's employment commenced when he landed in Abadan. The Judge then sought to differentiate the situation obtaining in that case with the present case.

17. With the greatest respect this would not appear to have been a meaningful exercise.

18. It is apparent that section 5(4)(g) was introduced into the legislation subsequent to the enactment of section 30B of the Ordinance which relates to accidents arising outside Hong Kong to Hong Kong employees. There is nothing to suggest that there is similar legislation in the United Kingdom. This being the case very limited assistance can be derived from English cases.

19. The terms of section 5(4)(g) are quite clear. The accident did occur while the deceased was travelling from his employment and this being the case his death arose during the course of his employment.

20. A further matter needs to be referred to. The Judge accepted evidence that the deceased had arranged to meet his girl friend in Shenzhen. I do not think that this makes any difference. There is no evidence that the route taken by the taxi in any way deviated from the route normally taken by the bus and whether or not the deceased continued with his journey to Hong Kong is not a matter of any consequence. As was pointed out by Mr Bharwaney for the applicant the respondent did not see fit to file a respondent's notice on this issue.

21. For the reasons which have been given I would be disposed to allow this appeal.

Hon Cheung JA:

Travelling after work

22. This case is concerned with a frequently occurring situation of an employee meeting an accident while travelling after work. Whether he is entitled to compensation depends on whether the accident arose out of and occurred in the course of his employment : Section 5(1) of the Employees' Compensation Ordinance ("the Ordinance").

The principles

23. The relevant principles are :

1) An employee travelling from his ordinary residence to his regular place of work, whatever the means of transport and even if it is provided by the employer, is not on duty and is not acting in the course of his employment;

2) If an employee is obliged by his contract of service to use the employer's transport, he will normally, in the absence of an express condition to the contrary, be regarded as acting in the course of his employment whilst doing so.

See Vandyke v. Fender [1970] 2 QB 292

3) Return journey is treated on the same footing as the outward journey.

See : Smith v. Stages [1989] 1 A.C. 928 affirming Vandyke v. Fender

Job to be done outside Hong Kong

24. What takes this case out of the usual situation is that the employee, Mr. Hui Pak Sang ("Mr. Hui") was required by his Hong Kong employer, to be stationed in Dongguan, in the Mainland from Monday to Saturday. He was a production manager. His working hours were 8 a.m. to 5 p.m. He had to work overtime as well, without additional pay. He had to live in accommodation provided by his employer in Dongguan. The employer would provide transportation for Mr. Hui and other employees required to work in Dongguan, on Monday morning to take them to Dongguan from the Shenzhen railway station. At 5 pm on Saturday, the employer would provide transport to take them from Dongguan to Shenzhen railway station so that they might return to Hong Kong. If Mr. Hui had to work late on Saturday and missed the employer-provided transport, he would arrange his own transport to Shenzhen and be reimbursed the cost by the employer.

Section 30B

25. Section 30B of the Ordinance extends the ambit of section 5(1) to situations where personal injury by accident arising out of and in the course of employment is caused to an employee outside of Hong Kong where the employee's contract of employment is entered into in Hong Kong with an employer who is a person carrying on business in Hong Kong. It is conceded that section 30B is applicable to this case.

The new social dimension

26. It has to be borne in mind that many of the travelling cases decided in the past were in the context of a local environment of an employee travelling to and from his work. The courts were not concerned with cross-border travelling required by an employee in order to reach his place of work, such as many Hong Kong residents are doing these days. In deciding this case, there is no escape from this new social dimension, which takes account of the nature of a modern employment relationship and the practical consideration that, while a person injured on a public road in Hong Kong may be covered by compulsory third party insurance, there is no certainty that the same protection is afforded to him in another jurisdiction. The question of insurance coverage is, of course, not the basis in which a case is to be decided. But this backdrop of a new social environment is how one should consider the case when applying the words of a statute first introduced in Hong Kong in 1953 which in turn was based on the English Workmen's Compensation Acts introduced in some bygone era. As Sir John Donaldson M.R. said in Nancollas v. Insurance Officer [1985] 1 All ER 833 "The concept is unchanged, but, in a changed social matrix, the foundation of the employment relationship is no longer so much based on orders and instructions as on requests and information and contractual rights and duties are supplemented by mutual expectations of co-operation." The cases decided in the past are to be used as guidance to the approach to be adopted, rather than as providing an answer in a particular case.

Course of Employment began in Shenzhen

27. In my view, there is considerable force in Mr. Bharwaney's, counsel for the applicant, argument that Mr. Hui's employment started upon his arrival in Shenzhen, after exiting the Hong Kong border and at the time of the accident, he was in the course of his employment. In my view, upon arriving in Shenzhen, his presence in the Mainland was for all practical purpose on account of the employment and on the employer's time. It was argued that Mr. Hui was employed to work in Dongguan and he was not employed to travel between Hong Kong and Dongguan as part of his duties. The reality of the situation is that this is a Hong Kong contract in which Mr. Hui, a Hong Kong resident had to travel from Hong Kong to Shenzhen and continued with the onward journey on transport arranged by his employer in order to arrive at his place of work in Dongguan.

28. In Smith v. Stages, Lord Goff, on the facts of that case, found that an employee was required to make the journey in order to make himself available for work i.e. he was employed to make the journey, likewise for his return journey. I would also respectfully adopt such an approach here and hold that Mr. Hui was employed to make the journey in order to reach and leave his work station in Dongguan. Mr. Hui was, of course, not paid for the time spent on the journey, but this cannot be a decisive factor for a salaried worker in considering whether he is in the course of employment : see Smith v. Stage.

29. In my view, considerable guidance also comes from Paterson v. Costain [1979]2 Lloyd's L.R. 204, where an English employee was required by his contract to be stationed in Iran. He was injured when travelling to the work station upon arriving in Iran. Both Ormrod L.J. and Brown L.J. were prepared to base their decision expressly on the broad ground that upon the employee's return to Iran, he resumed his relationship with his employers and was to be considered in the particular circumstances of the case to be in the course of employment with them. Although Lord Denning M.R. seemed to base his decision on the fact that the employee received instruction to go back to the work station immediately upon his arrival in Iran, he also recognized that the situation is different from those discussed in Vandyke v. Fender and other cases. He said "But it is very different with a far off country where special conditions prevail. Men go out of this country under contracts which cover their whole time". When the employee got off the aircraft in Iran, he was "virtually thenceforward in the continuous employment of his employer". We are, of course, not dealing with different countries here, but different systems.

30. The particular circumstances in Paterson v. Costain were, just like the present case, that the employee had to work full time, subject to leave, during his posting away from his home and live in accommodation provided by his employer. One can, of course, try to seek the differences of the two cases, such as the fact that Mr. Paterson had to spend a long stretch of period of 18 months in Iran, whereas Mr. Hui could return to Hong Kong every weekend. But in my view, there really is no material difference. The true rationale is that Mr. Hui was on his employer's time upon his arrival in the Mainland just like Mr. Paterson upon his arrival in Iran.

Limits

31. Likewise, there must be a limit to Mr. Hui's course of employment, e.g. a visit to the cinema at night while he was in Dongguan. As Ormrod L.J. observed, a little commonsense is required in such a case. In Smith v. Stage, Lord Goff stated that how one distinguishes the travelling cases in which a man is acting in the course of his employment from those in which he does not, depend on the circumstances of each case. In this case, Mr. Hui was entitled by his contract to go from Dongguan to Shenzhen on Saturday after work. His journey from Dongguan to Shenzhen must be within the course of his employment. A return journey from work is recognized to be on the same footing as an journey to work.

Deviation from journey?

32. The evidence showed that Mr. Hui on that fateful night when he was killed was to meet his girlfriend in a hotel in Shenzhen. The argument was that this could not be on account of the employment and on the employer's time. It was said that there was deviation by Mr. Hui of the usual arrangement agreed with the employer.

33. There are two answers to this argument. First, the judge's decision was that :

"This was simply a case of travel to and from work for purposes quite unconnected to that work. The motive was to get to his home in Hong Kong, or on this particular occasion to spend time with his girlfriend in Shenzhen."

The case was not decided on the basis that while Mr. Hui's journey to Shenzhen was in the course of his employment, there was a deviation which took Mr. Hui out of the course of his employment. The accident occurred in the suburbs of Shenzhen. This clearly showed that Mr. Hui was travelling to Shenzhen. If the employer wished to rely on deviation then it must adduce evidence on it. Such evidence is lacking in the present case.

34. Second, I think the focus should not be on what Mr. Hui intended to do that night but rather on the fact that Shenzhen was the place in the Mainland where Mr. Hui's course of employment began and ended. Until he left Shenzhen for Hong Kong, he would remain in the course of his employment. It is at that location that the employer was required to provide transportation for the employee to and from Dongguan. Once this broader view is recognized, all the difficulties would fall away. I would hold that the accident falls within the ambit of Section 5(1) of the Ordinance and Mr. Hui's father is entitled to compensation for the death of his son.

Section 5(4)(g)

35. Section 5(4)(g) of the Ordinance provides that :

"an accident to an employee shall be deemed to arise out of and in the course of his employment if it happens to the employee while he is, with the express or implied permission of his employer, travelling by any means of transport for the purposes of and in connection with his employment between Hong Kong and any place outside Hong Kong or between any place outside Hong Kong and any other such place."

36. There was some dispute on whether this section was relied upon by the applicant in the hearing below. It is clear, from the written submissions of the applicant lodged in the court below and the notes of the judge, that this section was relied upon although not referred to in the judgment. In any event, I do not think any additional evidence could possibly be required for this point to be raised. The applicant is clearly entitled to seek reliance on this section in this appeal.

37. This section extends the course of employment to an employee who travels outside Hong Kong so long as the travel is with the permission of the employer and for the purposes of and in connection with his employment. The phrase "for the purposes of and in connection with his employment" clearly covers situations not considered to be "in the course of employment", otherwise there is no need to use these words. These words must be wider than "in the course of employment". They must be intended to cover situations like, for example, the present case where an employee may have difficulties in establishing his journey to the overseas destiny to be "in the course of employment" in view of the stricture imposed by the decided cases.

38. I would respectfully adopt the purposive approach of interpretation said by this Court in Check Chor Ching v. Wik Far East Ltd. [1991] 2 HKLR 224 and Tan Hua Ning v. Tam Wah Sung [1999] 3 HKC 490. In Tau Hua Ning this court further held that it was for the employee to prove that at the time of the accident he was travelling "for the purposes of and in connection with his employment". Further, so long as he was travelling for that purpose, it does not matter if the travel entails another or other purposes as well. But whether one adopts this approach or not, it is clear that Mr. Hui was required by his employment to work in the Mainland. Mr. Hui's presence in the Mainland during the week was for one purpose only, namely, to perform his contract of employment. This clearly fits into the words "for the purpose of and in connection with his employment". His journey between Dongguan and Shenzhen comes within the words of "travelling between any place outside Hong Kong and any other such place". Any other such place means another place outside Hong Kong as well. Mr. Hui clearly was travelling with the express or implied permission of the employer in the light of the agreed transport arrangement which included Mr. Hui being allowed to take a taxi and reimbursed by the employer of the fare if he was unable to avail himself of the bus service. In my view section 5(4)(g) is applicable and will bring the claim within section 5(1) as well.

39. Mr. Bharwaney referred to Izzard v. Universal Insurance Company Ltd. [1937] A.C. 773 and Tan Keng Hong and Another v. New India Assurance Co. Ltd. [1978] 1 WLR 297 which were concerned with the construction of the words "by reason of or in pursuance of a contract of employment". I do not think it is necessary to rely on these cases in the construction of section 5(4)(g).

Section 5(4)(a)

40. Section 5(4)(d) of the Ordinance was enacted in order to mitigate the hardship created by the requirement that unless an employee is obliged to travel in his employer's transport, an accident occurred by the employee while in such a transport would not be treated as occurring in the course of employment, see Lo Kwai Chun v. Hong Kong Oxygen & Acetylene Co. Ltd. [1980] HKLR 420 per Cons J.A. This section provides that :

"(d) An accident to an employee shall be deemed to arise out of and in the course of his employment if it happens to the employee while he is, with the express or implied permission of his employer, travelling as a passenger by any means of transport to or from his place of work and at the time of the accident, the means of transport is being operated -

(i) by or on behalf of his employer or by some other person pursuant to arrangements made with his employer; and

(ii) other than as part of a public transport service. "

41. Mr. Hui was travelling in a hired taxi when he was killed. the taxi was not operated by the employer and generally speaking a taxi must be considered as part of a public transport service. In this case, Mr. Hui, was allowed by his employer to arrange for his own transport to take him to Shenzhen if he missed the company transport due to work, and the employer would reimburse him for the cost. Mr. Bharwaney argued that the word "arrangements" indicates that it could be an informal arrangement made by the employee on behalf of the employer; once the taxi was hired by Mr. Hui, it would no longer be available for the carriage of members of the public, which is the mischief that the section seeks to avoid; this will bring the section into operation for the benefit of Mr. Hui. This is an attractive argument. What I said in Check Chor-chung v. Wik Far East Ltd. [1991] HKDCLR 71 about construing section 5(5A) (the predecessor of section 5(4)(a)), narrowly was in the context of that case when the accident occurred after the employee had alighted from a bus provided by the employer. However, in view of my decision, it is not necessary to finally decide whether section 5(4)(a) applies or not.

Other matters

42. Mr. Bharwaney also referred to the "incident to work test" referred to in Po Kwong Mui v. Cheoy Lee Shipyards Ltd. [1993] HKDCLR 1 and the "practical necessity" tested adopted by the Australian courts and discussed by Robyn Martin in "Employees' Compensation : Arising out of control in the Course of Employment" (1986) 11 HKLJ 77. Likewise for the purpose of this appeal, it is not necessary to deal with these arguments further.

Conclusion

43. I will allow appeal.

Hon Lugar Mawson J:

44. I agree with both Mayo VP and Cheung JA and have nothing to add.

Hon Mayo VP:

45. This being the case the appeal is allowed. We make an order nisi that the applicant is to have the costs of the appeal and the costs below. Costs to be taxed in accordance with the Legal Aid Regulations.