YU WING FUK v. WONG TSAN FAT

DCEC 905/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 905 OF 2013

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JUDGMENT

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INTRODUCTION

1. This is an application by the applicant Yu Wing Fuk (the “Yu”) for employees’ compensation under sections 9, 10 and 10A of the Employees’ Compensation Ordinance (Cap 282) (the “Ordinance”) against the respondent Wong Tsan Fat (“Wong”).  Yu is a carpenter by occupation, whereas Wong carries on the business of conducting interior design and decoration works as a sole proprietor.

BACKGROUND

2. On 28 July 2011, Yu went to residential premises at Flat B, 28^th Floor, Block 2, The Hermitage, Tai Kok Tsui, Kowloon (“Flat 28B”) to install ceiling frames.  Yu was cutting a piece of wood with an electric sawing machine.  As he removed the wood from the machine, its protective shell fell off and Yu’s right thumb was cut by the electric saw.  He sustained a 2 cm laceration over his right thumb and a ruptured thumb extensor tendon.  Yu was treated at the Accident & Emergency Department of Kwong Wah Hospital and was later transferred to its Orthopaedics & Traumatology Department for further management.  Thereafter, he underwent 24 sessions of physiotherapy and attended a work rehabilitation program.  Yu was granted sick leave from 28 July 2011 to 5 February 2012.

3. Wong does not dispute that Yu did suffer personal injury as a result of an accident inside Flat 28B on 28 July 2011.  However, Wong denies that Yu was his employee and contends that Yu was an independent contractor providing service on a job by job basis.  It is also Wong’s case that Yu gained access to Flat 28B by falsely representing to the management of the property development that he needed to enter Flat 10B of Block 1 and the work performed by him at Flat 28B was carried out without Wong’s prior authorization.  On this basis, Wong contends that Yu’s injury did not arise out of and in the course of his employment with Wong.

ISSUES

4. The issues that arise for determination at this trial are therefore:-

(1)  Whether at the time of the accident Yu was an employee of Wong or an independent contractor carrying on business on his own account;

(2)  If Yu was Wong’s employee, whether his injury arose out of or and in the course of his employment;

(3)  If the answer to (2) above is in the affirmative, the amount of compensation payable to Yu under sections 9, 10 and 10A of the Ordinance.

ISSUE 1 – WHETHER YU WAS AN EMPLOYEE OF WONG OR AN INDEPENDENT CONTRACTOR CARRYING ON BUSINESS ON HIS OWN ACCOUNT

Legal principles

5. There is no dispute between the parties that the modern approach to the question whether a person is an employee, as adopted in the Court of Final Appeal decision of Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951, is to examine all the features of their relationship against the background of the indicia of employment with a view to deciding whether, as a matter of overall impression, the relationship was one of employment, bearing in mind the purpose for which the question is asked.  This involves a nuanced and not a mechanical approach: painting a picture from the accumulation of detail.  The indicia include 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.

6. The passage of Mummery J’s judgment in Hall v Lorimer [1992] 1 WLR 939 at 944, cited by Ribeiro PJ in Poon Chau Nam, provides useful guidance in the task which the court has to undertake:-

“In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person's work activity. This is not a mechanical exercise of running through items on a checklist to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”

Factual evidence – Yu’s case

7. Adopting the approach described above, it is essential to find first the features of the working relationship between Yu and Wong.

8. It is not in dispute that Yu first met Wong in 2010 through a mutual friend.  At that time, Wong was in need of workers to assist him with a project in a residential estate in Ma On Shan.  Yu agreed to assist.  Since then, Yu had consistently worked together with Wong on various residential projects, including renovation work in various flats at The Hermitage.

9. It is Yu’s understanding that he was throughout engaged by Wong on two separate basis: first, sometimes Wong would hire Yu as a casual worker on a daily basis (日薪工人); second, if the residential project concerned was greater in scope and involved more tasks, Wong would contract out the project to Yu as an independent contractor.

10. Where Yu was engaged as a casual worker on a daily basis, Yu would receive a daily salary from Wong.  Wong would also supply the relevant renovation materials to Yu.  On the other hand, if the residential project was contracted out to Yu, Yu would charge Wong based on the total area of the works conducted, as opposed to a daily salary.  In the latter scenario, Yu would also usually bring more of his own tools to the site and may also assist Wong in the purchasing of renovation materials.

11. Specifically in relation to the residential projects at the Hermitage, Yu says that:-

(1)  Out of the 7 to 8 residential flats concerned, only 2 of them (namely Flat 10B of Block 1 and Flat 30C, Block 2) involved Wong contracting out the renovation project to Yu.  For the others, Wong paid Yu a daily salary for his work.

(2)  After Yu completed his work at Flat 30C, Block 2, Wong contracted out another project to Yu located at The Arch in Jordan for 3 days.  When that was done, Wong requested Yu to work on a light trough project in Flat 28B.  This was the first time Yu worked in Flat 28B, and the work took 4 days.  Wong paid Yu a daily rate of HK$1,000, totalling HK$4,000.

(3)  As Yu’s works at the Hermitage were then completed, Yu then went on to work for another employer. Around one week later, Wong however requested Yu to assist him with some remaining works at The Hermitage.  Whilst Yu initially turned down such an offer due to clash of his work schedule, Wong persuaded him to assist by saying that the remaining works were all of a minor nature.  The works were to be conducted at Flat 51C, Block 2 and at Flat 28B.  On the same night, Yu went to The Hermitage to meet Wong, where Wong explained to Yu the nature of the works required.  Wong specifically instructed that Yu need not bring his own equipment, as Wong had stored equipment at Flat 51C, Block 2 for Yu’s use.  Wong also promised that Yu would receive the normal rate of salary of HK$1,000 per day, whereas Yu’s son Yu Ka Chun (“Yu Junior”) would receive a daily salary of HK$500.

(4)  It was during this second time working at Flat 28B when Yu was injured by an electric saw provided by Wong whilst removing wood from the machine.

12. It is significant to note that Yu’s testimony is that after the occurrence of the accident, Wong claimed that he did not take out insurance for Flat 28B, and asked Yu to rush to Flat 10B, Block 1 together with the tools so as to pretend that the accident occurred there – a place where insurance was taken out.  However, since Yu was in too much pain and a report had already been made to the police stating the accident occurred at Flat 28B, Yu disregarded Wong’s instructions.

13. After Yu arrived at the Accident and Emergency Department of Kwong Wah Hospital, Wong went to visit Yu whereupon Wong requested Yu not to report the injury to the Labour Department as Wong had failed to take out insurance for Flat 28B.  At Yu’s request, Wong paid HK$3,000 to Yu and Yu Junior representing their accumulated daily salary for their work at Flat 28B for two days.

Factual evidence – Wong’s case

14. Wong, on the other hand, denies that there was any employment relationship between himself and Yu.  Wong’s testimony is that in all of the renovation projects which they had worked together, Yu was always regarded as an independent contractor – he never paid Yu a daily salary, but instead all along he remunerated Yu based on the total area of the works carried out.

15. Whilst Wong admitted that he generally provided the renovation materials to Yu, he asserted that the working tools were prepared and brought to the site by Yu himself.  Wong also claimed that he did not care about how Yu carried out his job – so long as the end result was satisfactory to the end client and compliant with the end client’s instructions, he would not interfere with Yu’s work.

16. In support of such contention, Wong’s evidence was that Yu had absolute discretion in arranging support staff to assist in projects and to supervise their progress.  As an illustration, Wong said that Yu Junior was hired by Yu to assist in Yu’s work, but Wong himself was not responsible for paying Yu Junior’s salary – Yu was.

17. Specifically, Wong asserted that given that he had not taken out insurance for Flat 28B and the relevant approval from the management office of The Hermitage had not been obtained, he repeatedly instructed (“再三叮囑”) Yu not to enter Flat 28B to commence work in that flat.

18. In the premises, according to Wong, he should not be responsible for any injury sustained by Yu as Yu entered Flat 28B against his express instructions to the contrary.

Analysis of the factual evidence

19. In assessing the credibility of the witnesses, I am guided by the principles set out by Deputy Judge Thomas Au (as he then was) in Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513 at §53:-

“In assessing the credibility of a party’s case on a particular issue, …the Court should take into consideration the following:

(1) Whether the party’s case is inherently plausible or implausible;

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests, this is relevant to the assessment of his overall credibility; and

(4)    The demeanour of the witness.”

20. Generally, I find Yu and Yu Junior to be reliable and honest witnesses. Their evidence accorded with common sense, and was consistent and inherently credible. Both gave evidence in a straightforward and cogent manner, and were not shaken in cross-examination. I accept their evidence, including their evidence that they were paid a daily salary by Wong to carry out the works at Flat 28B (which caused the subject matter accident).

21. I do not accept Wong’s evidence.

22. As stated above, Wong’s evidence was that Yu arranged his own support staff to assist in projects. He was not concerned with them at all and did not know their names (apart from Yu Junior). Accordingly to Wong, however, he was responsible for filling out Hermitage’s Fitting-out Application Form (at page 93 of the trial bundle). Part III of this form contained a table with 10 spaces and required him to fill out the name and ID card number of each of the workers who would be working at the flat so that a working permit could be issued to each worker to access the premises. When confronted in cross-examination as to how he filled out this part of the form if he did not know the names of any of the workers, Wong’s answer was that he would put down his own name and ID card number in a number of the spaces. Even if this is what he did, it is difficult to imagine the management would approve the form and issue working permits on that basis, given that clearly the whole purpose of the form was to let the management know the names of the workers who would be accessing the premises so as to avoid strangers entering the development.  Wong’s evidence in this regard is incredible.

23. Wong’s assertion that he repeatedly instructed Yu not to enter Flat 28B is also difficult to believe.  Wong goes so far as to say that the details of the renovation project at Flat 28B, including the size, materials and designs were never communicated to Yu, nor was Yu provided with the relevant design plan drawn by Wong.  If – as Wong says – little of the details regarding the Flat 28B project had been communicated to Yu, then why would Wong see the need to repeatedly remind Yu not to enter Flat 28B to commence works there?  An employer would not reasonably expect a worker to commence works when the worker had not even been told of the details of the works to be carried out.  Similarly, why would Yu bother to enter Flat 28B and commence works in that flat when he did not know precisely what he was required to do?  Wong has provided no satisfactory explanation on this important aspect of his evidence.

24. Further, it is difficult to see how Yu managed to access Flat 28B without Wong giving Yu the key.  When questioned in cross-examination, Wong claimed for the first time that he had visited Flat 28B with Yu on a previous occasion, during which he hid the key behind the fire exit door in Yu’s presence.  Implicit in such an answer is that Yu took it upon himself to find the key hidden behind the fire exit door in order to access Flat 28B.

25. Quite apart from the fact that such an explanation was never foreshadowed in Wong’s witness statement, it is against common sense that Wong would leave (in my view, negligently) a client’s key to a residential flat just behind the fire exit door, on his evidence, for almost one month.  It is also inherently improbable that Yu would take the risk and trouble of (a) deliberately using a permit relating to another flat and (b) searching for the key hidden behind the fire exit door – simply to gain access to Flat 28B so as to commence works there when (as Wong claimed) he had not even been told precisely what was required to be done there and such was against the repeated express instructions of Wong not to do so. Further, Wong must have known Yu Junior would be assisting Yu as otherwise Yu Junior would not be issued with a work permit and permitted to access the premises.

26. In my view, there is an air of unreality to Wong’s testimony. I have no difficulty in preferring the evidence of Yu and Yu Junior to that of Wong where there is any conflict.

Conclusion on issue 1

27. Based on my factual conclusions above, it is clear that the indicia of employment point to an overall impression that the working relationship between the parties is one of an employer-employee relationship.  I do not understand Ms Emily Yu, Counsel for Wong, to be suggesting otherwise were I to find in favour of Yu on the facts.

28. Before I move on to the second issue, I should also mention that Mr Alex Lai, Counsel for Yu, submitted that the fact that (a) Yu charged a piece-rate remuneration for some of the projects he worked for Wong; and (b) Yu subjectively regarded himself as an independent contractor for those projects, cannot be regarded as material as ultimately the question as to whether Yu is an employee or an independent contractor is for this Court to decide.  I am inclined to accept that submission.  However, given my factual conclusions above, there is no need for me to further deal with this point.

ISSUE 2 – WHETHER YU’S INJURY WAS CAUSED BY AN ACCIDENT ARISING OUT OF AND IN THE COURSE OF HIS EMPLOYMENT WITH WONG

29. Given my conclusions on the factual matrix above, it necessarily follows that Yu’s injury was caused by an accident arising out of and in the course of his employment with Wong.  In Lam Sik v Sen International Ventures Corp (HK) Ltd [1994] 3 HKC 405 at 407, HHJ V Bokhary (as she then was) quoted with approval the following passage from the decision in Weston v Great Boulder Gold Mines Ltd (1964) 112 CLR 30:-

“…anything at all that happens to a man while he is at work happens in the course of his employment and if it happens unexpectedly, it is an accident in the course of the employment.”

30. Section 5(4)(a) of the Ordinance provides:-

“For the purposes of this Ordinance, an accident arising in the course of an employee's employment shall be deemed, in the absence of evidence to the contrary, also to have arisen out of that employment.”

31. The words “in the course of” a person’s employment “relate to time conditioned by reference to the man’s service” while the words “out of” relate to “causality”: Lam Sik v Sen International Ventures Corp (HK) Ltd (supra) at 407.

32. For the reasons stated above, I reject Wong’s contention that he had expressly and repeatedly instructed Yu not to engage in the works (which led to the accident) in Flat 28B.  Accordingly, I am satisfied, on a balance of probabilities, that Yu’s injury was caused by an accident arising out of and in the course of his employment with Wong.

ISSUE 3 – THE AMOUNT OF COMPENSATION PAYABLE

Yu’s monthly salary

33. The Applicant says that his monthly salary prior to the accident was about HK$20,000.  The sum is computed on the basis that his daily wage is HK$1,000, and that he works around 20 days per month.

34. As mentioned above, I accept that in relation to the employment relationship which gave rise to the accident causing the injury concerned, Wong paid Yu a daily wage of HK$1,000.  I have also been referred to statistics from the Census and Statistics Department which show that the average daily wages of carpenters was HK$1,066.2 in July 2011.  In the premises, I also accept that Yu’s average monthly earning was HK$20,000 immediately prior to the accident.

Loss of earning capacity

35. According to the Certificate of Assessment (Form 7) issued on 21 November 2012:-

(1)  Yu was assessed to have suffered a 2% permanent loss of earning capacity (for right thumb injury resulting in right thumb pain, stiffness, weakness and scarring); and

(2)  Yu was granted sick leave from 28 July 2011 to 5 February 2012 (193 days).

36. There is no appeal against the assessment in the Form 7.  In the premises, I would adopt 2% as the loss of capacity and 193 days of sick leave as the basis of my calculation of the amount of compensation.

Compensation under section 9 of the Ordinance

37. Yu was aged 47 at the time of the accident.

38. His compensation under section 9 of the Ordinance is accordingly $20,000 x 72 x 2% = HK$28,800.

Compensation under section 10 of the Ordinance

39. The compensation for Yu’s temporary loss of earning capacity under section 10 of the Ordinance is HK$20,000 x 193/30 x 4/5 = HK$102,933.

Compensation under section 10A of the Ordinance

40. I accept that Yu has incurred hospital expenses of HK$100.  I accordingly award Yu HK$100 under section 10A of the Ordinance.

Summary on amount of compensation

41. The total compensation awarded is as follows:-

(1)	Section 9 compensation	HK$28,800
(2)	Section 10 compensation	HK$102,933
(3)	Section 10A compensation	HK$100
	Total:	HK$131,833
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Conclusion

42. I make an order that Wong is to pay employees’ compensation in the sum of HK$131,833 to Yu.

43. I also make a costs order nisi that Wong is to pay Yu the costs of this application, such costs to be taxed if not agreed, with certificate for counsel. Yu’s own costs are to be taxed in accordance with the Legal Aid Regulations.  The costs order nisi shall become absolute unless an application for variation is made within 14 days from the date of delivery of this judgment.