YU TAT KAM v. CHU TUNG SHING AND ANOTHER

CACV 25/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO.25 of 2008

(On Appeal from DCEC 1053 of 2006)

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J U D G M E N T

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Hon. Yuen JA (giving the judgment of the Court):

1.  On 28 December 2007 Deputy Judge K. Lo awarded $48,906 to the Applicant in DCEC 1053 of 2006 as employees’ compensation.  The judge rejected the Applicant’s claim for further compensation for a period of time covered by sick leave certificates because there was evidence that the Applicant was in paid employment during part of that period.

2.  The Applicant appealed from that judgment.  He was represented by Mr Kenny Lin (who did not appear at the trial).  The Applicant did not proceed with his appeal against the 1^st Respondent.  The 2^nd Respondent did not appear at the appeal.

Background

3.  The Applicant was an electrician.  He worked for different contractors when work was available and was paid on a daily basis.  He was injured when he fell off a ladder on 1 April 2005.  He fractured his left wrist and also suffered mild tenderness over the right chest wall.  He was in hospital for 4 days. 

4.  The Applicant was first given sick leave from 1 April 2005 to 12 April 2005.  After that he went back to the hospital from time to time to obtain sick leave certificates.  The sick leave certificates he was given covered a continuous period of 271 days from 1 April 2005 to 27 December 2005 (“the Sick Leave Period”).

Claim for employees compensation

5.  On 3 August 2006 the Applicant lodged a claim for employees compensation against the 1^st and 2^nd Respondents.  In his application, under the item for “Monthly earnings which he was earning or capable of earning during the period of temporary incapacity”, he put down “Nil”. 

6.  On 26 October 2006 the Applicant attended an assessment before the Employees Compensation (Ordinary Assessment) Board.  The Board certified the 271 days Sick Leave Period as the “period of absence from duty necessary as a result of the injury”.  This assessment was not disturbed on review.  The Respondents did not appeal against the assessment. 

Proceedings before the district court

7.  At the hearing in the District Court, there were two issues: (a) who was the Applicant’s employer, and (b) how much compensation he was entitled to.  The judge held that the 2^nd Respondent was the Applicant’s employer.  There is no dispute about this now.   The appeal is only concerned with compensation.

Heads of compensation

8.  The Applicant had claimed compensation under the Employees Compensation Ordinance cap. 282 (“the Ordinance”) under three heads:

-  s.9:    for permanent partial incapacity;

-  s.10:   for temporary incapacity;

-  s.10A:   for medical expenses.

The appeal is only concerned with the claim under s.10 – compensation for temporary incapacity.

Allegations regarding Applicant’s work during Sick Leave Period

9.  In the 2^nd Respondent’s opposition drafted in person and filed in October 2006, he alleged that the Applicant was able to and did in fact work normally about 3 months after the accident.  The 2^nd Respondent alleged that the Applicant worked:

-  for So Wah as a daily worker,

-  as an electrician in the redecoration of the 1^st Respondent’s flat in North Point, and

-  as an electrician at a site in Shanghai Street. 

10.  The Applicant filed a witness statement on 29 June 2007.  He admitted that during the Sick Leave Period he worked:

-  as an electrician in the redecoration of the 1^st Respondent’s flat in North Point for 14-15 days, and

-  for the 1^st Respondent (presumably as an electrician) in Mongkok in August 2005 but only for half a day.

He did not comment on the 2^nd Respondent’s assertion that he had worked for So Wah.

11.  The 2^nd Respondent filed a witness statement in response in July 2007.  He asserted that the Applicant also worked:

-  as an electrician in a Waterloo Road site in August - September 2005, and

-  afterwards for So Wah at a site in Village Road. 

12.  So Wah himself signed a brief witness statement in which he said that about 2 months after the accident the Applicant worked for him on “several occasions”. 

Evidence at the hearing

13.  At the hearing, the Applicant admitted that during the Sick Leave Period he had also worked

-  at Ngau Tau Kok for 6 days;

-  in Shanghai Street for 10 days, and

-  in Kwai Fong for 2-3 days.

He explained that he was not sure of dates or sites and so had left these out of his witness statement.  However he said that apart from these occasions, he had not worked during the Sick Leave Period (Transcript p22).

14.  The 1^st and 2^nd Respondents, as well as So Wah, were cross-examined by the Applicant’s counsel on their allegations in respect of the Applicant’s work during the Sick Leave Period.  Their evidence was vague and did not add to the Applicant’s admissions of the occasions when he had worked. 

Judgment

15.  The judge found that the Applicant was not a credible or reliable witness as he only revealed part of the work he did during the Sick Leave Period, and it was only during cross-examination that he gradually admitted the rest of the work disclosed (para. 25).  The Applicant agreed that he could not completely remember the sites where he had worked during the Sick Leave Period or his earnings (para. 41).  

16.  The judge found that the Applicant had “failed to rebut” the allegation that he had started working 2 months after the accident (para. 41). The judge held that the Applicant had “only succeeded in proving that he had suffered a loss of income during the 2 months after the accident” (para. 44).  Accordingly, he was only entitled to an award of $29,120 under s.10 for temporary incapacity even though it had been certified that it was necessary for him to be absent from work for 271 days.

Appeal

17.  The main ground of appeal was that the judge had failed to take into account s.10(2) of the Ordinance.

Section 10(2) ECO

18.  Section 10(2) provides:

“For the purposes of this section [s.10] a period of absence from duty certified to be necessary by a registered medical practitioner, a registered Chinese medical practitioner, a registered dentist, an Ordinary Assessment Board or a Special Assessment Board shall be deemed to be a period of total temporary incapacity irrespective of the outcome of the injury”.  (Emphasis added).

Irrebuttable presumption?

19.  In Mr Lin’s written submission, he emphasized the importance of the word “deemed”.  The impression received from his written submissions was that he was arguing that an employee was entitled to compensation for the whole period of sick leave certified under s.10(2) even though he was in paid employment during that period.  

20.  That would have been a surprising submission because s.10(1) clearly contemplates that in awarding compensation, the court would take into account the employee’s actual or potential earnings during the period of incapacity.  The material parts of s.10(1) read as follows:

“Where temporary incapacity whether total or partial results from the injury, the compensation shall be the periodical payments ... or a lump sum ... having regard to the probable duration, and probable changes in the degree, of the incapacity.  Such periodical payments shall be ... a monthly payment of four-fifths of the difference between the monthly earnings which the employee was earning at the time of the accident and the monthly earnings which he is earning, or is capable of earning, in some suitable employment ... during the period of the temporary incapacity after the accident”.  (Emphasis added). 

21.  At the appeal, Mr Lin did not suggest that an employee was entitled to compensation for the whole period of sick leave certified under s.10(2) even though he was in paid employment during that period.  Rather he submitted that the judge had failed to take the presumption in s.10(2) into account when she held that the Applicant had failed to prove that he had not worked during the rest of the period.

Discussion

22.  Section 10(2) was not mentioned in the written submissions below or in the judgment, and so it may well be that it had escaped the notice of the judge.  It therefore falls to this court to consider the effect of s.10(2). 

23.  In our view s.10(2) enables the employee to make a claim for compensation without having to prove a negative – that during the certified period the incapacity “incapacitates [the] employee for any employment which he was capable of undertaking at the time of the accident” (see the definition of the term “total incapacity’ in s.3(1) of the Ordinance). 

24.  However s.10(2) does not mean that the court is bound to award compensation at four-fifths of the employee’s pre-accident earnings during the certified period.  As noted previously, s.10(1) contemplates that even for total temporary incapacity, the compensation would be reduced if there were earnings that the employee was earning, or was capable of earning, in some suitable employment during the period of temporary incapacity. 

25.  Does the employee bear the burden of proving that he had no earnings that he was earning, or was capable of earning, in a suitable employment during the period of temporary incapacity so that there should be no reduction under s.10(1)?  Although the employee is the applicant for compensation, we are of the view that he does not bear that burden.  The intention of the Ordinance is to provide quick financial relief to employees incapacitated by work-related injury in a no-fault scheme (LKK Trans Ltd v Wong Hoi Chung [2006] 9 HKCFAR 103, 114).  It is assumed that had the accident not occurred, the employee would have continued in the same type of employment receiving the same earnings.  Given the intention of the Ordinance and the difficulty of proving a negative, the legislature would not have intended that it was for the employee to prove that during the certified period of incapacity, that he was not earning, or was not capable of earning, wages in a suitable employment after the accident. 

26.  Accordingly in our judgment, the burden is on the employer to prove that circumstances existed for a reduction in compensation.  If the employer can prove that the employee was actually earning money during the certified period (as in this appeal), those earnings would be put into the s.10(1) calculation.  Also if the employer can prove that despite the certified incapacity, the employee was still capable of earning money in a “suitable” employment, those potential earnings would also be put into the s.10(1) calculation.

27.  Having said that, we think it would only be in rare circumstances where an employer could prove potential earnings where total incapacity has been certified, because (a) it is not only physical disability that incapacitates an employee from working – an employee may be incapacitated by discomfort or pain preventing him from concentrating, and (b) an employee is expected only to undertake employment which is suitable for him. 

Application to facts of this case

28.  Applying those views to the facts of this case, the evidence before the judge was that the Applicant had worked only 33 days during the certified period of 271 days at $600 a day.  The compensation under s.10 should therefore be as follows:

(A)  Monthly Earnings $18,200 ($700/day working 26 days a month)

x 8.87 months (1 April - 27 December 2005) 

x 4/5

= $129,147.20.

(B)  Earnings during Sick Leave Period $600/day

x 33 days

x 4/5

= $15,840.

Difference between (A) and (B)

  $129,147.20 - $15,840

= $113,307.20

Order

29.  We would make the following order:

(1)  the appeal is allowed,

(2)  the judge’s order under the s.10 head of compensation is set aside and in its place it is ordered that judgment be entered for the Applicant against the 2^nd Respondent in the sum of $113,307.20, with interest at half judgment rate from 3 August 2006 to 28 December 2008, and thereafter at judgment rate,

(3)  the 2^nd Respondent do pay the costs of the appeal to the Applicant to be taxed if not agreed;

(4)  the Applicant’s own costs are to be taxed in accordance with Legal Aid Regulations.