KWOK HING YUEN v. GOODPOINT ENGINEERING LTD AND OTHERS

DCEC96/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES COMPENSATION CASE NO. 96 OF 2002

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D E C I S I O N

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1. There are two applications before me. The first one is the Applicant's application to re-re-amend the Application, and the second one is an application by the 4th Respondent for a determination on points of law under Order 14A of the Rules of the District Court. The 4 questions included in the second summons are as follows:

"1. On a proper interpretation of section 24 of the Employees' Compensation Ordinance, can there be more than one principal contractor liable to the employee of a sub-contractor?"

2. In the light of the answer to the question in paragraph 1 and given that:

(a) the 3rd Respondent was the main contractor for the works at KTIL 16, No. 410, Kwun Tong Road, Kwun Tong, Kowloon;

(b) the 3rd Respondent sub-contracted the lift and escalator installation works, wholly or in part, to the 4th Respondent;

(c) the 4th Respondent sub-contracted the lift and escalator installation works, wholly or in part, to the 1st Respondent;

(d) the 1st Respondent sub-contracted the lift and escalator installation work, wholly or in part, to the 5th and the 6th Respondents; and

(e) the 5th and 6th Respondents employed the Applicant to carry out the work sub-contracted to them,

which of the Respondents is/are the principal contractor(s) liable to the Applicant for the purposes of section 24 of the Employees' Compensation Ordinance?

3. Can a sub-contractor who is neither the principal contractor nor the employer of the Applicant be liable to compensate the Applicant under the Employees' Compensation Ordinance?

4. If the answer to the question in paragraph 2 above is that the 4th Respondent is not the principal contractor liable to the Applicant and the answer to the question in paragraph 3 above is "No", an order that:

(a) the Applicant's action against the 4th Respondent be dismissed; and

(b) the Applicant do pay the 4th Respondent his costs of the action."

2. The present case arose out of an industrial accident on 21 August 2001. It is the Applicant's case, which has been confirmed by Mr Chiu for the Applicant, that the 3rd Respondent was the main contractor of the construction site at the relevant time. The 3rd Respondent sub-contracted the lift and escalator installation work to the 4th Respondent, who in turn sub-sub-contracted part of such work to the 1st Respondent, who in turn sub-sub-sub-contracted part of such work to the 5th and/or 6th Respondents, who was/were the direct employer(s) of the Applicant.

3. By the Order 14A application, the 4th Respondent seeks to argue that under section 24 of the Employees' Compensation Ordinance, Cap.282 ("the Ordinance"), only the main contractor of the construction site and the direct employer are liable to pay employees' compensation to the Applicant, and so the claim against the 4th Respondent should be dismissed.

4. Section 24(1) of the Ordinance provides as follows:

"Where any person (in this section referred to as the principal contractor), in the course of or for the purposes of his trade or business, contracts with a sub-contractor for the execution by or under the sub-contractor of the whole or any part of any work undertaken by the principal contractor, the principal contractor shall be liable to pay to any employee employed by that sub-contractor or by any other sub-contractor in the execution of the work any compensation under this Ordinance which the principal contractor would have been liable to pay if that employee had been immediately employed by him; and where compensation is claimed from or proceedings are taken against the principal contractor, then, in the application of this Ordinance, references to the principal contractor shall be substituted for references to the employer, except that the amount of any compensation calculated by reference to earnings shall be calculated by reference to earnings of the employee under the employer by whom he is immediately employed."

5. Both "principal contractor" and "sub-contractor" are defined in section 3 of the Ordinance. The definitions are as follows:

"'Principal contractor' means a person referred to as a principal contractor in section 24;

'sub-contractor' means -

(a) any person who enters into a contract, express or implied, with a principal contractor to perform all or any part of the work which the principal contractor has undertaken to perform; and

(b) any other person who enters into a contract, express or implied, to perform all or any part of the work which a sub-contractor within the meaning of paragraph (a) has undertaken to perform."

6. According to such express wordings, a sub-contractor like the 4th Respondent may fall within the meaning of "principal contractor" under section 24, as he was also a party who sub-contracted part of his work to a sub-sub-contractor. Hence, the learned authors of Butterworth's Hong Kong Personal Injury Service (2002, issue No. 3) said the following in paragraph 503:

"As it now stands, the effect of section 24 is that, not only is the direct employer of an employee liable to pay that employee employees' compensation in the case of that employee sustaining personal injury by accident arising out of and in the course of employment, but in addition, all contractors, right from the head or principal contractor down through the chain of sub-contractors (if there be more than one in the chain) to the sub-contractor who engaged the direct employer, are equally liable with that direct employer to pay employees' compensation to that employee."

7. In the premises, there can be more than one principal contractor liable to pay employees' compensation to the employee of a sub-contractor under section 24 of the Ordinance, and the answer to the first question in the Order 14A summons is "Yes".

8. In my judgment, this answer is already sufficient to dispose of the Order 14A summons, as the claim against the 4th Respondent cannot be dismissed at this stage. Further, Question (2) involves issues of facts which have to be dealt with by the trial judge, and so it is not appropriate for me to answer this question at this stage. For Question (3), the question is too generalised. Obviously, a sub-contractor responsible for the lift and escalator installation work would not be responsible for an accident to a worker who is an employee of a sub-contractor responsible for, say, the construction of walls in the site. Hence, the answer would depend on the facts of each individual case, and it is not appropriate for me to answer Question (3) at this stage.

9. Based on the aforesaid, I do not find Questions (2) and (3) to be appropriate issues to be decided in an Order 14A application. As the claim against the 4th Respondent should not be dismissed at this stage, application under paragraph 4 of the summons is also dismissed.

10. I then turn to the amendment summons. In the original Application, it was pleaded that the 4th Respondent was a sub-contractor within the meaning of the Ordinance to a principal contractor, namely the 3rd Respondent. With the proposed amendments, the Applicant now seeks to include an averment that the 4th Respondent was a principal contractor within the meaning of the Ordinance.

11. The 1st to the 4th Respondents have no serious objection to the application for amendment, and so I allow such application. However, in order to give sufficient time for the 4th Respondent to prepare the case to deal with the proposed amendments, the 4th Respondent asks for the trial dates on 12 to 14 July 2004 be vacated and the Applicant should pay for the costs occasioned by the adjournment of the trial. This request is strenuously opposed by the Applicant. According to Mr Chiu, the 4th Respondent can make use of the available time before the trial to prepare its case and there is no necessity to adjourn the trial.

12. In respect of such application, there are two points I would like to make. Firstly, the application for amendment was made at a very late stage. The case was set down for trial in the listing hearing on 27 February 2004. The case should have been ready for trial at that time, and so whoever is going to make a late application after the listing hearing runs the risk of paying the costs occasioned by the adjournment of the trial. Secondly, the amendments made by the Applicant are substantial, or at least the Applicant is estopped from arguing otherwise. The facts relied upon by the Applicant have all along been the same, but the Applicant needs the amendments in order to attach liability on the 4th Respondent under section 24 of the Ordinance. Without such amendments, it is arguable whether the 4th Respondent is liable. In view of such substantial amendments, the 4th Respondent should be given adequate time to prepare its case.

13. The 4th Respondent now complains that there is insufficient time for it to do so. However, I take the view that the 4th Respondent was at least partly responsible for its inaction in the past. The 4th Respondent has all along taken the view that, being only a sub-contractor and not the main contractor of the construction site, the 4th Respondent is not liable to pay compensation to the Applicant under section 24 of the Ordinance, and as a result it did not take any active steps to prepare the case. As I have mentioned above, the 4th Respondent's construction of section 24 is wrong, and so the 4th Respondent should be partly responsible for its previous inaction and for the adjournment of the trial. As I see it, if the 4th Respondent were to have a correct understanding of the law, it should have done some preparation work in the past, or at least such work should have been started after they knew of the Applicant's application for amendment on 21 June 2004. In my judgment, the Applicant and the 4th Respondent are equally to blame for the adjournment of the trial, and I therefore order that, as between the Applicant and the 4th Respondent, there be no order as to costs occasioned by the adjournment of the trial. For the 1st and 3rd Respondents' costs occasioned by the adjournment, such costs shall be paid by the Applicant and the 4th Respondent.

14. For the other costs, I follow the usual practice and order that:

(1) the costs of the Applicant's summons for re-re-amending the Application and the costs of and occasioned by such amendments be paid by the Applicant to the 1st to the 4th Respondents; and

(2) the costs of the Order 14A summons be paid by the 4th Respondent to the Applicant and the 1st to the 3rd Respondents.

15. I also make an order to vacate the trial dates on 12-14 July 2004 and the trial be refixed to another date.