MAN YUK TAI (萬玉銻) for herself and on behalf of the members of the family of CHUNG HOK LUN (鍾學麟), deceased v. CLIVE DOUGLAS WOLSTENCROFT

DCEC 2796/2018

[2021] HKDC 1588

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 2796 OF 2018

---------------------

--------------------

--------------------

JUDGMENT

--------------------

1.  This is an employees’ compensation claim.

2.  There is no dispute that the deceased, Chung Hok Lun (“Alan”), died after an accidental fall whilst carrying out renovation work on the roof of the respondent’s house in Shatin (the “House”) on 20 March 2017.  There is also no dispute as to the quantum should liability be found by the court.

3.  The only issue is whether Alan was an employee of the respondent or an independent contractor.

The respondent’s application to amend his Answer to the Claim

4.  The respondent made an application to amend the Answer.  During the trial, I have dismissed the application with costs of and occasioned by the application be to the applicant to be taxed if not agreed with certificate to counsel, and further ordered that the applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

5.  I shall now give the reasons for the decision.

6.  The respondent took out the application just in the week before trial in order to raise the exemption under section 2(1)(b) of the Employees Compensation Ordinance (“ECO”): that is, an alternative defence that even if Alan was found to be employed as a casual worker on a daily wage, he was “employed otherwise than for the purposes of the respondent’s trade or business” thus not entitled to employees’ compensation.

7.  The respondent argued that the facts pertaining to this defence was not new: there were Annual Returns and other documents of various businesses of the respondent disclosed in the trial bundle.

8.  I disagree.

9.  This is clearly a new ground of defence.  The respondent’s new case is that even if the nature of the respondent’s business is property renovation and sale, the House was not part of the business, and thus if Alan was employed to work there, this was not “for the purposes of the Respondent’s trade or business”.

10.  Therefore, the important issue now would not only be concerned with the purpose of the respondent’s trade or business, but also whether the House was part of this trade or business.  The fact that the respondent has disclosed various of his companies’ documents would be inadequate to address this new issue.

11.  If this alternative defence was raised at the early stage of the proceedings, the applicant would have been able to conduct further investigation not only into the respondent’s business, but to the nature and purpose of the House.  Therefore, I am not sure that all the evidence pertaining to this defence has been disclosed.  At this stage, all the evidence came only from the respondent.

12.  I also think that even if the respondent claims that he has been using the House as his residence, it may not, by itself, mean that this cannot be part of his business.

13.  Therefore, raising such a defence one week before the trial is clearly prejudicial to the applicant.

14.  The respondent is aware of all the facts at all times and if he fails to raise this alternative defence in good time, the fault clearly lies with him, or those advising him.

15.  The respondent’s explanation for this some 4 years of delay was that this new ground has not been discovered until upon recent legal advice (with the instruction of a new counsel) and thus it was not the respondent’s own fault.

16.  This is not a satisfactory explanation.

17.  The respondent suggested that, as an alternative to an outright adjournment of the trial, the trial could proceed but with matters regarding this alternative defence be adjourned to a later hearing.  This would be highly undesirable given that the applicant has not even begun to investigate the matters and no one would know what new evidence would be produced.

18.  Of course, there is no need to reiterate the CJR and this is not the “exceptional circumstances” that the court would consider aborting a trial or modifying the procedures and trial dates as the respondent suggested.

19.  As such, I have dismissed the application and ordered the trial to proceed.

20.  Given this decision, the only issue in question is whether Alan worked as an employee of the respondent or as an independent contractor at the relevant time.

Legal principles

21.  The test of whether a person is engaged as an employee or independent contractor was summarised in Lee Ting Sang v Chung Chi Keung [1990] 2 AC 374:-

“The fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’ If the answer to that question is ‘yes’. Then the contract is a contract for services. If the answer is ‘no’, then the contract of service…”

22.  The factors to be considered was stated in Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156 at paragraph 18:-

“The modern approach to the question whether one person is another’s employee is therefore to examine all the features of their relationship against the background of the indicia developed in the above mentioned case-law with a view to deciding whether, as a matter of overall impression, the relationship is one of employment, bearing in mind the purpose for which the question is asked. It involves a nuanced and not a mechanical approach…The indicia included the degree of control exercised by the ‘employer’; whether the person performing the services provided his own equipment, whether he hired his own helpers; what degree of financial risk he took; what degree of responsibility for investment and management he had; and whether and how far he had an opportunity of profiting from sound management in the performance of his task…”

Analysis of the evidence

23.  The court is assisted not only by evidence from various witnesses, but also by a large amount of contemporaneous records of WhatsApp messages and various invoices.

24.  As a matter of background, it is not disputed that the house in question was bought by the Respondent in 2013 and it was in a very dilapidated state, with on and off renovation work done depending on the respondent’s available financial resources.  It was also not in dispute that Alan was a master of many crafts: building walls, roofs, floorings, furniture, plumbing, installation of appliances etc.

25.  The applicant’s case is that Alan was an employee of the respondent and was paid a daily wage for doing various renovation projects.  At times, he even slept over in the respondent’s office.

26.  However, the applicant also agreed that at times when not working for the respondent, Alan accepted works from others.

27.  As a passing comment, the respondent’s counsel, Mr Fong, has spent much time in cross-examining the applicant and various witnesses on matters concerning Alan’s office, name card and LinkedIn page.  The applicant’s case was that the office and name card were from the period of time before Alan was employed by the respondent when he was working as a contractor.

28.  However, since the applicant also accepted that, since so employed, Alan had still taken outside jobs as a contractor when not working for the respondent, whether he still had an office or whether he was using means to promote his business would not be matter relevant to the issue of this case: that is, what role he took when working at the House.

Whether Alan bear any financial risk and operated his own business

29.  It was clear that Alan received a daily wage of HK$2,500 for the months of February to March 2017 when doing renovation work in the House.

30.  This is supported by Alan’s handwritten note showing his claim for 21 days of work from February to March 2017 (Trial Bundle 1 page 425) and another handwritten note showing his claim for 3 further days of work in March 2017 sent by Alan to Tess, the respondent’s secretary, via WhatsApp (Trial Bundle 1 page 426).  This was just before the time of the accident.

31.  There were further WhatsApp messages which supported this daily wage, eg the respondent wrote to Alan on 14 March 2017 (Trial Bundle 1, page 428):-

“Alan - we owe 7 days and can just pay another 7 more days at the moment - I am very sorry…”

And on 16 March 2017 (Trial Bundle 1, page 428):-

“Hate you to go.. but you need your pay and that is fair.”

Also, on 19 February 2017 when Tess (the respondent’s secretary) wrote to Alan (Trial Bundle 1, Page 352):-

“Sir would like to talk to you about payment term and how long we can afford you.”

32.  The respondent’s own police statement (after the death of Alan) dated June 2017 stated that Alan was paid a daily wage of HK$2,300 (the respondent admitted at trial that this should have been HK$2,500) (Trial Bundle 1 page 284).

33.  In fact, many other documents provided an insight into how Alan worked for the respondent and his family: he was also paid a daily wage when doing work for Joanna, the respondent’s daughter (eg see his handwritten notes and bill, Trial Bundle 1 page 409 and Trial Bundle 3 page 989).

34.  It is apparent that Alan did not earn any money other than his daily wages.  For materials he bought, Alan simply sought reimbursements from the respondent (eg Trial Bundle 1 pages 409 and 425).  There were even occasions when the respondent or his family asked Alan if they needed to buy materials for him (eg Trial Bundle 1 page 420 and Trial Bundle 2 pages 596-598).  This system of reimbursement of materials bought was admitted by the respondent under cross-examination.

35.  Further, Alan would only submit his handwritten notes and bills after he did the relevant work, claiming the daily wages on the days he had worked.

36.  This mode of payment stands in stark contrast with his work for Jane Howells (the respondent’s witness) where Alan provided a formal quotation prior to the commencement of work with a breakdown of the items of work and details of designs without any specification as to number of days of work and daily wage (Trial Bundle 3 page 1060).  This clearly supports the applicant’s case that Alan did take up outside job as an independent contractor when not employed by the respondent.

37.  The respondent testified in court that Alan in fact gave three oral quotations for the project on the house: one in 2013, one in March or April 2014 and one in December 2016.

38.  The respondent claimed that the December 2016 quotation was for work on the roof of the house in the amount of HK$100,000, with HK$70,000 as labour costs and HK$30,000 for materials.

39.  Such details were only first disclosed by the respondent in court and did not appear in any of his two witness statements.

40.  Further, there is no documentary evidence to support this: no mention of such oral contracts in any of the numerous WhatsApp or text messages, or any of Alan’s handwritten notes and bills.

41.  As stated above, the respondent did not mention the contracts to the police but instead told them that Alan was paid a daily wage.  Under cross-examination, the respondent claimed that he did not tell the police because “it is easier to communicate with people of this level without details”.

42.  It is hard to understand why the respondent thought that the Hong Kong Police Force operated in such a level that could not understand such details.  More importantly, telling the police that a person was paid a daily wage instead of a contract price (if that was the truth) would not be “omitting details”.  It would be a lie.

43.  If it was true that Alan had been an independent contractor, telling the truth would have been advantageous for the respondent.  It hard to understand why the respondent would choose to lie instead.

44.  The only reasonable inference would be that the respondent was telling the truth (at least with regard to the daily wage payment but not the actual amount) at the time.  The defence of “independent contractor” has only occurred to him later so he changed his story to advance this defence.  In fact, I might further speculate that the respondent might already be misleading the police at the time by deliberately understating the daily wage, perhaps with an aim to pay less compensation.

45.  The respondent is clearly a dishonest person.

46.  Further, on cross-examination, the respondent agreed that Alan was not given any time frame to complete any project.  There was no document specifying any project to be done and the project price.  These are simply not the features of an independent contract.

47.  As such, the evidence clearly shows the classic feature of employment relationship in which Alan was simply earning a daily wage instead of operating his own business bearing any financial risks.

Hiring workers

48.  The evidence also shows that Alan did not “hire” any workers on his own for the renovation work in the house.  All the workers that the respondent claimed that Alan hired were actually the respondent’s own domestic helper (Irene), brother of Tess, the respondent’s secretary (Armando), or the respondent’s or his family’s friends (Peter Chan, Ross Smith, Shafi Ahmadey).

49.  Irene never stated in her evidence that she was employed or paid by Alan: in fact, she worked as a domestic helper in the house and cooked for Alan when he was working there.  Numerous WhatsApp messages also pointed to Irene and Armando being under instructions from the respondent eg from the respondent to Alan (Trial Bundle 2, page 521): “Irene will bring heater to Mongkok”, and from Sharon to Alan (Trial Bundle 1, page 131): “Irene and Armand apparent have to do a job for my father tomorrow and may not be able to help you / won’t be around.”.

50.  As for Armando, Irene claimed under cross-examination that Alan paid Armando just to watch him work, which was totally not credible.

51.  Irene also claimed that the respondent did not know that Armando was working at the House.

52.  This was clearly contradictory to the WhatsApp messages when the respondent was instructing Alan to “ask Armand to build scaffold” (Trial Bundle 1, page 125), and to let Armando try welding: “Can Armand now weld?…Good - do give him a try sometime.” (Trial Bundle 1 pages 128-129).

53.  Irene is also a dishonest witness.

54.  The respondent’s own explanation to such messages that he himself wrote was that these were “sick jokes” poking fun at Armando’s physical disability.  He claimed that he was frustrated by Alan’s disregard of his own safety that he made a joke in asking a disabled man (Armando) to build the scaffold.

55.  This is not credible: if the respondent was really concerned with Alan’s disregard of safety, he should have raised that directly with Alan (eg “Alan, you must put on a safety harness or you cannot work on the scaffold!”).

56.  Further, if that was a private joke as alleged, Alan clearly did not see that as a joke because he answered “I do easy” (Trial Bundle 1, page 125).

57.  I fail to get the connection between “Ask Armand to build scaffold” and any safety concern with Alan, and it was clear from his reply that Alan did not get it either.  As such, one would reasonably expect the respondent to immediately clarify the “misunderstanding” in his reply.  But he did not: his next reply was made a day later: “Very much glad (f)or your help Alan…though your pay a little delayed, I am sorry.”  The respondent did not say anything to clear the “misunderstanding” of his “sick joke” nor raise any safety concern.

58.  The respondent also suggested that he knew Armando was not up to doing any welding so asking “Can Armand now weld?” was another “sick joke”.

59.  Again, Alan clearly did not get the joke (he answered: “no, but he is very helpful.”).  Instead of clarifying this “misunderstanding”, the respondent went to instruct Alan: “Good - do give him a try sometime.” And Alan answered: “yes he do many things now I working”.

60.  These were clearly not “jokes” but instructions from the respondent to Alan for works to be done by Armando at the House.

61.  As for Peter Chan, he admitted under cross-examination that he was Joanna’s friend and that it was Joanna who introduced him to Alan and that he did not know Alan before he was working at the house.

62.  Tess wrote to Alan on 2 October 2016: “Hi Alan, peter offer to help with welding and other construction work. Do you trust he work very good?” (Trial Bundle 2, page 552) It was Joanna who provided Peter’s telephone number to Alan on 3 October 2016 (Trial Bundle 2, page 556).

63.  There is no need to go into details but I am satisfied that there is ample evidence (eg WhatsApp messages and videos sent by Peter) to show that Peter was a co-worker with Alan.  Both were being employed by the respondent and / or his family to do renovation work on the House, but with Alan being the more experienced and trusted worker and therefore taking a more “senior” role.

64.  As for Ross Smith and Shafi, the WhatsApp message from Sharon to Alan dated 6 March 2017 (Trial Bundle 1, page 146) stated:-

“Hi Alan Dad asks which night this week, you are willing to meet him and Shaffi...back in Shatin to see and discuss your work here at the house.”

65.  WhatsApp from the respondent to Alan on 10 March 2017 (Trial Bundle 1, page 151) stated:

“Thank you Alan - can you work Sunday 19? I will come out that day - probably with Ross and Shafi”

66.  An email dated 24 January 2017 from Ross to the respondent advising him how to tie down the roof, and the respondent replied that he would “take it up with Alan” (Trial Bundle 1, page 142).

67.  It is clear that both Ross and Shafi are friends of the respondent and were arranged by the respondent to help out on the renovation of the house.  They were not employed by Alan.

Tools kept by the respondent

68.  The respondent admitted that Alan’s tools were left in a storeroom in the House after his death and never returned.

69.  He claimed in his witness statement that he had attempted to return the tools to Alan’s family but had received no reply (paragraph 11(b) of the respondent’s Witness Statement, Trial Bundle 3, page 782).

70.  There was no documentary evidence to support such attempts and it could not be said that Alan’s family had “disappeared” and became “uncontactable” because all along since the commencement of this case, both sides have legal representation and been in contact.  It would have been easy for the respondent to offer to return the tools had he considered these to be Alan’s tools and not his own.

Degree of control of the work

71.  Although there is evidence that there was a degree of flexibility on which days Alan would work on the House, overall, the evidence suggested that the respondent (and his family) directed Alan what work he would do (eg construct a bathroom, adding a gutter, building a bridge to a new door, replacing lights…), who would be helping him, and, indeed, as examples given above, directed Alan to allow which other helpers to do certain tasks.

Conclusion

72.  As such, this court finds that, on balance of probability, that Alan was an employee of the respondent at the time of his death.

73.  As stated above, there was no dispute that the accident did not happen or that the accident did not cause the death of Alan.  Further, the respondent did not raise any evidence disputing that the accident arose out of and in the course of Alan’s work.  As the court finds that Alan was an employee of the respondent, there would be no dispute in this issue.

74.  As such, liability is established.

Quantum and apportionment

75.  The parties have already agreed the quantum of a total sum of HK$1,014,740 (HK$938,520 as compensation under Section 6(1)(c) of the ECO and HK$76,220 as funeral expenses under Section 6(5) of the ECO) so this would be the award ordered by the court.

76.  As the applicant brought the application on behalf of herself as the widow and her 4 children, the apportionment of the compensation (HK$938,520) should be as follows:-

(i)  The applicant: HK$469,260 (50%)

(ii)  Ashley Chung: HK$117,315 (12.5%)

(iii)  Chung PY: HK$117,315 (12.5%)

(iv)  Nicholas Chung: HK$117,315 (12.5%)

(v)  Jeff Chung: HK$117,315 (12.5%)

77.  The applicant should also receive HK$76,220 as reimbursement of her expenses spent for the funeral.

Interests

78.  I would further order that interests on the above award be charged at half judgment rate (4% per annum) from the date of the accident to the date of judgment and thereafter at judgment rate (8% per annum) until the date of payment.

Costs

79.  There be an order nisi for the costs of the action be to the applicant to be taxed if not agreed with certificate for counsel.