KWONG CHEUK SING v. SKY FIELD CONSTRUCTION LTD AND OTHERS

DCEC 2198/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 2198 OF 2013

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J U D G M E N T

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Background

1.  The applicant was a concrete repair worker.  He suffered from personal injury out of an accident at work on 20 November 2012 at the 1^st Floor, City Industrial Complex, No. 116-122 Kwok Shui Road, Kwai Chung, Hong Kong (“the Site”) when he fell from a working platform of about 2 metres high (“the Accident”).  As a result of the Accident, he suffered:

   (1)  fracture over bilateral radius of both wrists;

   (2)  stiffness and swelling in both hands and wrists; and

   (3)  abrasion over forehead and upper lip.

2.  At the material times, the owner of the Site was Freudenberg and Vilene International Limited, appointed the 1^st respondent (“R1”) as the principal contractor to undertake the renovation works at the Site.  R1 then subcontracted the entire works to an unincorporated business body known as Cheung On Engineering by a written subcontracting agreement dated 8 November 2012 signed between R1 and the 3^rd respondent (“R3”) who claimed to be the responsible person of Cheung On.  The 2^nd respondent (“R2”), who was working for R3 at the Site, later introduced the applicant to work at the Site without any written employment contract.

3.  After the commencement of the present proceedings, the applicant later applied to join the 4^th respondent (“R4”) by the summons dated 22 April 2016, and it was approved by the order of Her Honour Judge Levy on 5 September 2016.  The applicant made such joinder application because R1 claimed that it intended to contract with R4 and denied any contractual relationship with R3.   

4.  After these proceedings were set down for trial, R1 filed a notice to act in person on 10 August 2017 and eventually failed to attend the trial.  R2 and R3 were all along acting in person.  Both were absent for the trial and all previous hearings.  R2 has filed an answer to the applicant’s original application, and R3 has filed nothing.

5.  On the first day of the trial, counsel for the applicant applied to discontinue the applicant’s claim against R4 as the primary case of the applicant is that only R3 and R1 should be liable to the applicant as employer and principal contractor respectively.  Leave to discontinue the claim against R4 was granted with the issue of R4’s costs reserved, and R4’s attendance of the trial was excused save and except for the adjourned argument of costs scheduled on the last day of the trial.

6.  The applicant himself came to court to give evidence at the trial by adopting his witness statements and supplemented by oral evidence updating his current situations. 

Liability

7.  There is no dispute that the applicant has suffered personal injury by the Accident arising out of and in the course of employment.  The issues for the trial are the following:

   (1)  Who was the employer of the applicant at the time of the Accident?  and

   (2)  The contractual relationship between the respondents and the employer of the applicant, if any.

8.  The applicant was asked to work at the Site by R2 on 17 November 2012.  R2 did not tell the applicant who was the employer.  Therefore, the applicant did not know who was his employer at the beginning of these proceedings.

9.  The Labour Department conducted an investigation over the Accident and compiled a report dated 14 December 2012.  The report identified R1 as the principal contractor of the Site and R3 being its subcontractor which in turn employed the applicant.  The Labour Department also prosecuted against R1 and R3 for breach of regulations 38C, 68(1)(a) and 68(2)(g) of Construction Sites (Safety) Regulations, (Cap 59I).  R3 was convicted on his own plea.  R1’s conviction was overturned on appeal on the basis that the working platform provided by R1 was not unsafe in the circumstances.

10.  The applicant relies on section 62 of the Evidence Ordinance (Cap 8) that facts which form the basis of a criminal conviction shall be regarded as facts proven in a civil trial. 

11.  As R3 has pleaded guilty to the above criminal prosecution and admitted the brief facts drafted by the prosecution, including the admission of being the employer of the applicant, I accept such uncontested evidence and find that R3 was the employer of the applicant at the material time of the Accident.  I also accept that R2 was acting as the agent of R3 to recruit the applicant to work at the Site. 

12.  Therefore, I find that R3 is liable to the applicant as the employer of the applicant and R2 is not liable.  

Relationship Between R1 and R3

13.  First of all, there is no dispute that R1 was the principal contractor of the works at the Site.  The applicant relies on the following evidence to prove that R3 was R1’s subcontractor:

(1)  According to a subcontracting agreement dated 8 November 2012, R1 has engaged R3 as its subcontractor.  Although it is stated that Cheung On Engineering Company was the subcontractor, it was only a tradename.  The applicant submitted that the contracting party should be R3.

(2)  In the statement given by one Ms Lam, a staff of R1, to the Labour Department on 6 April 2013, Ms Lam confirmed that R1 had subcontracted the works at the Site to R3.

(3)  During the criminal prosecution by the Labour Department against R1, R1 had never raised any objection that R3 was not its subcontractor. 

14.  Although R1 has challenged the validity of the subcontracting agreement signed by R1 and R3, arguing that R4 was the registered proprietor of Cheung On but not R3, after considering all the evidence before me, I accept that R3 was the subcontractor of R1.  I agree with the applicant’s counsel that the contracting party of the contract would not be changed by the mere fact that R3 used the tradename of R4 to sign the contract, and the labelling of the contract is not conclusive in deciding who was the real contracting party.   

15.  Pursuant to section 24 of the Employees’ Compensation Ordinance (Cap 282)(“the ECO”), every subcontractor and principal contractor of the applicant’s employer would be liable for the applicant’s employees’ compensation.  As R1 was the principal contractor at the Site and, R1 is also liable for the applicant’s employees’ compensation claim according to section 24 of the ECO.

Quantum

16.  The applicant was born on 16 August 1957.  He was aged 55 at the time of the Accident. He appealed against the Form 9 dated 23 October 2014 which assessed the applicant to suffer 4% loss of earning capacity. 

17.  The applicant claimed that his earning immediately before the Accident was HK$900 per day, working 26 days a month.  He also earned the same amount per day in the preceding job.  The applicant takes HK$23,400 as his earning for the purpose of employees’ compensation.  At the trial, the applicant has updated the court his current earnings as a security guard of HK$13,275 per month.

Compensation for Permanent Partial Incapacity under Section 9

18.  The applicant submits that section 9(1A) of the ECO should be invoked in the present case and the Paper Mills formula as stated in Hong Kong Paper Mills Limited v Chan Hin Wu [1981] HKLR 556 and Lui Kwong Yan v Shui Hing Decoration Works & Another [1993] 1 HKLR 168 should apply for the purpose of calculating compensation under section 9 as the application of the first schedule of the ECO would produce unjust result.

19.  The applicant was examined by Dr Wong Sze-hoi for the applicant and Dr Tio Man-kwun Peter for R1 on 13 December 2016.  Dr Wong assessed the applicant suffering a loss of earning capacity of 8% to 10% whereas Dr Tio assessed the loss at 3.5%.  Dr Wong also opined that the applicant was unable to return to his pre-accident job as a ceiling-furnishing worker.  His residual wrist pain would cause him unable to perform moderate to heavy type of delivery work as required by his pre-accident job.  Dr Wong recommended the applicant to change to sedentary type of work.

20.  After the expiry of the applicant’s sick leave, he only managed to secure job as security guards, working for 26 days a month on a 12-hour shift. 

21.  The applicant submits that there are special circumstances in the applicant’s case that warrant the application of section 9(1A):

(1)  The applicant has been working as a ceiling-furnishing worker since 1996 and he has no other skills.

(2)  The applicant was only educated up to high school in mainland China.  In view of his low level of education, old age and his academic qualification not being recognised in Hong Kong, it would be difficult for the applicant to change to other types of work with earnings similar to a ceiling-furnishing worker.

(3)  The residual pain and weakness in his wrists make the applicant impossible to find a job as a ceiling-furnishing worker.

(4)  The job assessment performed by occupational therapy department of Princess Margaret Hospital found that the applicant’s performance was “non-matched” with the job demands of his pre-accident job as a ceiling-furnishing worker and advised the applicant to change to other less physically demanding jobs.  The applicant submits that the actual loss suffered is much higher than the loss of earning capacity as assessed by the experts.

22.  After considering the uncontested evidence before me, I accept the applicant’s submission and apply the Paper Mills formula to calculate the percentage of loss of earning capacity suffered by the applicant as follows:

   HK$(23,400 - 13,275) ÷ HK$23,400 × 100% =  43.27 %   

Accordingly, the applicant’s compensation under section 9 is:

   HK$23,400 × 72 × 43.27% » HK$729,000 (rounded up).

Compensation for Temporary Incapacity under Section 10

23.  The period of absence of the applicant was supported by sick leave certificates issued by registered medical practitioners.  Such sick leave certificates shall be deemed to be the period of total temporary incapacity.  In the absence of any evidence of fraud, I accept such period of absence as certified by the doctors.  The total days of absence are 572.  Therefore, the compensation under this section is

   HK$23,400 × 12 × 572/365 × 4/5 = HK$352,039.

Medical Expenses under Section 10A

24.  As the third schedule of the ECO stipulated that the daily medical expenses subject to a cap of HK$200, there is one item claimed by the applicant exceeds such limit.  The applicant agreed to deduct the excess amount and claimed the compensation under this section for the sum of HK$4,005.  I award the same to the applicant.

Conclusion & Order

25.  For the above reasons, I find that R1 and R3 are liable to the applicant for the total compensation of HK$1,085,044 as follows:

Section 9 compensation:		HK$ 729,000
Section 10 compensation:		HK$ 352,039
Section 10A compensation:		HK$ 4,005
		HK$1,085,044

26.  I also award interest for the above compensation at half judgment rate from the date of Accident, ie 20 November 2012, to the date of this judgment and thereafter at full judgment rate until full payment.

Costs

27.  R1 and R3 shall pay the applicant’s costs of this application with certificate for counsel, to be taxed if not agreed, such costs to include all costs incurred by reason of joining R4 and further all costs the applicant may have to pay R4, save and except that there be no order as to costs as between the applicant and R2.

28.  Regarding the adjourned argument on R4’s costs, the applicant and R4 were eventually able to reach amicable resolution and I make the following costs order according to their agreement:

(i)  R1 shall pay R4’s costs of this action up to 20 October 2016 with certificate for counsel, to be taxed if not agreed;

(ii)  The applicant shall pay R4’s costs of this action from 21 October 2016 onwards, including the costs of the argument on costs of this action, with certificate for counsel, to be taxed if not agreed; and

(iii)  The applicant do have liberty to recover the costs set out in sub-paragraph (ii) above from R1;

29.  The applicant’s own costs shall be taxed in accordance with the Legal Aid Regulations.

30.  Finally, I thank Mr Yip for the applicant and Mr Lam for R4 for their assistance and cooperation.