LAM LEUNG HANG v. CHAN MING FAI AND ANOTHER

DCEC 1697/2022

[2024] HKDC 1345

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1697 OF 2022

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JUDGMENT

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Introduction

1.  Pursuant to sections 9, 10 and 10A of the Employees’ Compensation Ordinance (Cap 282) (“ECO”), the Applicant claims for compensation against the 1^st Respondent in respect of the injury that he suffered in an accident that took place on 22 December 2020 (the “Accident”).

2.  The Applicant was 45 years’ old when the Accident occurred.

3.  Whilst the 1^st Respondent filed an answer alleging that he was not the Applicant’s employer at all, he has been debarred from adducing evidence in these proceedings by virtue of the unless orders made by Her Honour Judge Levy on 12 January 2024.

4.  By the order made by Deputy District Judge Martin Wong on 24 July 2024, leave was granted to the Employee’s Compensation Assistance Fund (the “Fund”) to participate in the present proceedings in relation to the issues on quantum.

5.  In the present trial, the Applicant is represented by Mr Thomas Nip, and the Fund is represented by Mr Jeffrey Lee. The 1^st Respondent does not appear.

Material Background

6.  Prior to April 2020, the Applicant worked as a bar manager. Due to Covid-19, the Applicant’s employer suspended the operation of the bar where the Applicant worked. As a result, the Applicant ceased to receive salary.

7.  In the circumstances, on 21 December 2020, the Applicant was introduced to the 1^st Respondent, who engaged him to work as a casual worker at a worksite in Shum Shui Po (the “Worksite”). It was orally agreed that the Applicant was entitled to a daily salary of HK$700, and the Applicant would work at the Worksite for at least 2 days.

8.  The Applicant says that the Respondent:-

(1)  gave him instructions as to how he should affix sponge with soundproofing effect onto a wall;

(2)  provided him with all the necessary tools and equipment, including the sponge, gloves, knives and all-purpose glue; and

(3)  informed him that the work hours were 10am to 6pm.

9.  The Applicant started working at the Worksite on 22 December 2022. At around 5pm on the same day, a fire broke out. As a result of inhaling excessive smoke and being poisoned by carbon monoxide, the Applicant lost conscious during the Accident. The Applicant also suffered severe flame burn injury. The burn covered 23.5% of the surface area of the Applicant’s body, including his face, bilateral upper limbs circumferentially and bilateral lower limbs.

10.  The Applicant was only discharged from the intensive care unit of Princess Margaret Hospital on 31 December 2020. He was transferred to a general ward. When the Applicant was hospitalized, he underwent staged debridement and skin grafting on 30 December 2020, 31 December 2020, 4 January 2021, 8 January 2021 and 14 January 2021. The Applicant was discharged from Princess Margaret Hospital on 28 January 2021. By this time, his wounds had been stabilized.

11.  However, in around April 2021, it was diagnosed that there were chronic unstable wounds over the Applicant’s bilateral upper limbs that were complicated with multiple contractures at bilateral elbows, wrists and fingers joints. As such, from 6 May to 10 June 2021, the Applicant underwent staged operations with scar release, followed by derma and further skin grafting.

12.  Due to the injury, the Applicant suffered stiffness on his wrist and fingers, and the movement of his wrists and fingers had reduced. During the period from 3 February 2021 to 12 November 2021, the Applicant attended 42 sessions of occupational therapy at David Trench Rehabilitation Centre.

13.  On 28 July 2021, the Applicant further underwent scar release and skin grafting in Queen Mary Hospital. In September and November 2021, the Applicant further received laser treatment in respect of the hypertrophic scar on his upper limb.

14.  The Applicant was granted sick leave of 675 days, which covered the following periods:-

(1)  22 December 2020 to 19 October 2021;

(2)  26 October 2021 to 1 November 2022; and

(3)  20 December 2022.

15.  According to the Form 7 dated 17 March 2023, the Employee’s Compensation (Ordinary Assessment) Board (the “Compensation Board”) assessed that the loss of earning capacity permanently caused by the injury was 14.5%.

The 1^st Respondent was the Applicant’s Employer

16.  In my view, the 1^st Respondent was undoubtedly the Applicant’s employer at the time when the Accident occurred.

17.  Due to the Accident, the 1^st Respondent was prosecuted pursuant to sections 6A(1), 6A(2) and 6A(3) of the Factories and Industrial Undertakings Ordinance (Cap 59). Under the three industrial summonses dated 17 June 2021, the 1^st Respondent was accused of, inter alios, failing to provide a reasonable system of work as well as reasonable instruction, training and/or supervision to ensure the safety of his employees, including the Applicant.

18.  The 1^st Respondent pleaded guilty to the charges, and he was duly convicted by a deputy magistrate on 13 September 2021.

19.  There is no question that the 1^st Respondent’s convictions were based on the premise that he was, inter alios, the employer of the Applicant.

20.  I fail to see how the 1^st Respondent may seek to wriggle out of the conviction:

(1)  First of all, the 1^st Respondent (who has been debarred from adducing evidence in these proceedings) is not even in a position to rely on sections 61(1)-(2) of the Evidence Ordinance (Cap 8) to contend that he should not have been convicted.

(2)  Furthermore, as I pointed out in Li Yufen v Cahn Wing Man [2024] HKDC 1113 at paras 13-30, in light of the operation of the doctrine against collateral attack of final and conclusive judgments, a litigant cannot mindlessly and mechanically seek to reopen the merits in relation to his previous conviction (which would constitute an abuse of the court’s process), and the court must be satisfied there are some valid reasons why the matter should be reargued.

(3)  On the evidence before me, I simply fail to see why justice and fairness require that the Court shall reconsider whether the 1^st Respondent’s conviction was correct or not. The 1^st Respondent (who has been debarred from adducing evidence) has not put forward any reason or justification at all.

21.  In any event, putting aside the 1^st Respondent’s conviction (which is premised on the fact that he employed the Applicant), on the evidence before me, I am satisfied that the 1^st Respondent must be the Applicant’s employer, and an employment relationship did exist.

22.  The proper approach for determining the existence of an employer-employee relationship is well settled and has been authoritatively laid down by the Court of Final Appeal in Poon Chau Nam v Yim Siu Cheung [2007] 10 HKCFAR 156, at paras 11-18 (per Riberio PJ). In short, the court should adopt an overall evaluative-impressionistic approach in deciding whether an employment relationship exists by taking into account various relevant factors: see Hossain MD Faruk v Khan Faquergul [2024] HKCA 351 at para 23 (per Au JA).

23.  Some of the indicia of employment are summarized in Tang Chau Yuet v Fu Kin Po [2011] 1 HKLRD 509 at para 12 (per Deputy District Judge Lee (as he then was)):-

“(1) Whether the alleged employer had the degree of control over the task of the alleged employee which was commensurate to his capacity as the employer?

(2) Whether the alleged employee provided his own equipment for the task?

(3) Whether the alleged employee hired his own helpers for the task?

(4) Whether the alleged employee took any financial risk and the nature/degree of it?

(5) Whether the alleged employee had an opportunity of profiting from sound management in the performance of his task?

(6) Whether the alleged employee bore any responsibility for investment and management, and the nature/degree of it?

(7) Whether the alleged employee was properly regarded as part of the alleged employer’s organisation?

(8) Whether the alleged employer bore any responsibility in relation to insurance and tax for the alleged employee?

(9) Whether the alleged employee was carrying on business in the trade in question?

(10) What was the parties’ own view of their relationship?

(11) Whether the traditional structure of the trade or profession concerned and the practices within it would assist with the understanding of their relationship?”

24.  I am of the view that the Applicant is an honest and reliable witness. He answered questions directly, and was willing to make concession in a fair manner. In light of the Applicant’s evidence (which I accept), I find that there was plainly an employer-employee relationship between the Applicant and the 1^st Respondent.

25.  I take into account the following factors:-

(1)  The 1^st Respondent exercised a high degree of control over the works carried out by the Applicant, and the Applicant did not enjoy any autonomy. The 1^st Respondent gave instruction as to how the Applicant should carry out the task required of him (ie affixing sponge with soundproofing effect onto a wall). The 1^st Respondent also dictated the work hours (ie 10am to 6pm). There is no suggestion, let alone evidence, showing that the Applicant could disagree with and/or defy the instructions given by the 1^st Respondent.

(2)  The 1^st Respondent provided all the tools and equipment for carrying out the task carried out by the Applicant. There is no suggestion, let alone evidence, showing that the Applicant was expected or required to bring any tools or equipment.

(3)  The Applicant did not hire his own helper(s) for the task.

(4)  The Applicant was only entitled to remuneration of HK$700 per day. He did not assumed any financial risk and had no opportunity to profit from the task required of him.

(5)  There is no suggestion, let alone evidence, showing that the Applicant participated in the managerial affairs relating to the Worksite.

(6)  There is no suggestion, let alone evidence, showing that the Applicant carried on any business in the renovation or construction industry at the time when the Accident took place.

26.  For the above reasons, I find that an employer-employee relationship existed, and the Applicant was the 1^st Respondent’s employee within the meanings of the ECO.

Compensation under Section 9 of the ECO

27.  The methods of calculating the employee’s monthly earnings at the time of the accident are set out in section 11 of the ECO. The provisions that are relevant for present purposes read as follows:-

“(1) Subject to this section, for the purposes of this Ordinance the monthly earnings of an employee at the time of the accident shall be the earnings —

(a) for the month immediately preceding the date of the accident; or

(b) computed in such manner as is best calculated to give the rates per month at which the employee was being remunerated during the previous 12 months if he has been so long employed by the same employer, but, if not, then for any lesser period during which he has been employed by the same employer,

whichever calculation is more favourable to the employee.

(2) Where by reason of the shortness of the time during which an employee has been in the employment of his employer or of the casual nature of the employment, or of the terms of employment, it is impracticable to compute the rate of remuneration of such employee at the date of the accident, regard may be had to the average monthly amount which, during the 12 months previous to the accident, was being earned by a person of similar earning capacity in the same grade employed at the same work by the same employer, or, if there is no person so employed, by a person of similar earning capacity in the same grade employed in the same class of employment and in the same district.”

28.  As pointed out, the Accident occurred on the Applicant’s first day of employment (ie 22 December 2020). The period of employment lasted for 1 day only.

29.  In light of the casual nature of the Applicant’s employment, the short duration thereof and the lack of practical method to determine the Applicant’s actual monthly remuneration at the time, Mr Nip accepts that it would not be appropriate to invoke section 11(1), and as such the Applicant only relies on the second limb of section 11(2).

30.  Mr Nip points out that whilst the Government’s data shows that the daily salary of a causal worker was between HK$900 and HK$1,000 in 2020, the Applicant’s daily salary was only HK$700.

31.  As regards the number of workdays, Mr Nip draws my attention to Tse Wut Cheuk (by his next friend King Chung Lan) v Patent Design & Engineering Ltd (DCEC 1007/2015, 17 May 2017) at para 26. There, HH Judge Levy stated that:

“[g]enerally, when computing an employee’s monthly earnings, the court will, in the absence of any contrary evidence, use 26 days as the number of days of work per month” [1]

32.  In the premises, Mr Nip invites me to find that the Applicant’s monthly earning was HK$18,200 (ie HK$700 per day × 26 days) for the purposes of section 11(2).

33.  Mr Lee (for the Fund) disagrees with Mr Nip’s submissions. He draws my attention to Yeung Chung Chun v 潘德鋒 [2021] HKDC 1023 at para 18 (per DHCJ Tracy Chan)[2]; Chan Leung Sing v Ng Keung & Anor (HCPI 3/2012, 27 August 2015) at paras 64-65 (per Recorder Paul Shieh SC)[3]; and Leung Wai Pong v Tang Hon Kong trading as Kin Wah Decoration Company (DCEC 237/2007) at paras 25-29 (per HH Judge Lok (as he then was)[4]. These cases involved disputes on the workdays of injured employees who were casual workers. For various reasons[5], the courts rejected the injured employees’ assertions that they worked 26 days a month.

34.  The question of workdays is plainly facts sensitive, and the court’s findings depend on the factual circumstances of the case as well as the available evidence.

35.  In light of the Mr Nip’s indication that the Applicant would only seek to rely on the second limb of section 11(2), the task of this Court is to ascertain the average monthly income of a “notional” worker who was in the same situation of the Applicant. This “notional” worker (i) had similar earning capacity; (ii) was in the same grade employed; (iii) was in the same class of employment; and (iv) worked in the same district: see section 11(2) of the ECO.

36.  Although I have sympathy for the Applicant, based on the available evidence I am unable to find that the “notional” worker who was in the Applicant’s situation within the meanings of section 11(2) of the ECO was able to work 26 days a month during the 12-month period before the Accident took place. For the following reasons, I am of the view that he could, at most, only work 22 days a month:

(1)  It is the Applicant’s evidence that after he ceased working as an estate agent, he started working as a bar manager in around 2015. This was the case until the bar operated by the Applicant’s employer suspended operation due to Covid-19. Although the Applicant claims that he had some knowledge on renovation matters, he admits he had not undergone institutionalized trainings, and he did not possess any of the relevant certificates expected of casual workers. In the premises, I accept Mr Lee’s submissions that the Applicant was less competitive than those casual workers who were experienced and in the construction or renovation industry. It was likely that employers would generally prefer those experienced workers who had undergone proper trainings and possessed the relevant certificates.

(2)  In his oral evidence, the Applicant also said that there were a few previous occasions where he participated in some construction or renovation projects on a short-term basis upon the invitation of some friends. However, it is not in dispute that the Applicant was not a casual worker by profession. In the circumstances, the Applicant was not as well connected as those casual workers who worked in the renovation or construction industry on a permanent basis. In the circumstances, I am of the view that it would take more time for the Applicant (or the “notional” worker in his situation) to look for a new job after a project was completed, and he suffered a disadvantage in this regard.

(3)  However, the advantage enjoyed by Applicant (or the “notional” worker in his situation) was that he was willing to accept a daily wage that was considerably lower than the market rate. As pointed out, whilst an average casual worker earned a daily wage between HK$900 and HK$1,000 in 2020, the Applicant was willing to accept a daily wage of HK$700. In my view, some employers who had budget concern would prefer to engage the Applicant (or the “notional” worker in his situation) rather than those experienced causal workers who were more expensive.

(4)  Lastly, I take into account the fact that Hong Kong was disrupted by Covid-19 throughout 2020 and 2021. Bearing in mind the economic downturn and the public health measures imposed by the Government to tackle the pandemic at the time, job opportunities were more limited.

37.  For all the above reasons, doing the best I could, I find that the “notional” worker who was in the Applicant’s situation worked 22 days a month during the 12-month period before the Accident took place, and his daily wage was HK$700.

38.  Accordingly, based on the second limb of section 11(2) of the ECO, the Applicant’s monthly earnings was HK$15,400 (ie HK$700 per day × 22 days).

39.  It is not in dispute that pursuant to section 9 of the ECO, the Applicant is entitled to compensation based on 72 months’ earnings. There has been no appeal against the Compensation Board’s assessment that the Plaintiff’s loss of earning capacity was 14.5%.

40.  In the premises, the Applicant is entitled to compensation of HK$160,776 (ie HK$15,400 (monthly earnings) × 72 months × 14.5% (loss of earning capacity)) pursuant to section 9 of the ECO.

Compensation under Section 10 of the ECO

41.  Pursuant to section 10(1) of the ECO, an injured employee is entitled to a monthly payment of fourth-fifths of the difference between the monthly earnings which he was earning at the time of the accident and the monthly earnings which he is earning or capable of earning during the period of his temporary incapacity after the Accident.

42.  Section 11(1A)(b) provides that:-

“Where an employee suffers temporary incapacity after an accident and such incapacity extends beyond 12 months after the date of the accident the monthly earnings of an employee at the time of the accident shall, in respect of temporary incapacity beyond the 12-month period after the date of the accident, be computed for the purposes of section 6, 7, 9 or 10 as being the earnings calculate —

(a) ……

(b) where the employer does not employ, in similar employment, other persons of similar earning capacity to the employee, as the monthly earnings of the employee computed under subsection (1) or (2) and adjusted in accordance with the rate of increase in the Consumer Price Index at the end of a 12-month period after the date of the accident.”

43.  Section 11(1C) further provide that the “Consumer Price index” in section (1A) means the “consumer price index as compiled and published as CPI(A) in a Consumer Price Index Report by the Commissioner for Census and Statistics”.

44.  In the Form 7, the Compensation Board certified a sick leave period of 675 days.

45.  I accept Mr Nip’s submissions that the Applicant’s compensation under section 10 shall be adjusted upwards by virtue of the operation of section 11(1A) of the ECO.

46.  According to Consumer Price Index Report issued by the Commissioner for Census and Statistics in December 2021, the CPI(A) (ie consumer price index (category A)) increased by 3% during the period from December 2020 to December 2021.

47.  In the premises, the compensation to which the Applicant is entitled under section 10 of the ECO is as follows:-

Periods	Calculation	Amounts
22 December 2020 to 19 October 2021	HK$15,400 × 302/365 × 12 × 4/5	HK$122,322.41
26 October 2021 to 21 December 2021	HK$15,400 × 57/365 × 12 × 4/5	HK$23,087.34
22 December 2021 to 1 November 2022	HK$15,400 × (1 + 3%) × 315/365 × 12 × 4/5	HK$131,415.58
20 December 2022	HK$15,400 × (1 + 3%) × 1/365 × 12 × 4/5	HK$417.19
		Total: HK$277,242.52           ===========

48.  However, as pointed out by Mr Lee, the Applicant had resumed employment as a bar manager as of 20 December 2022. Although he was granted sick leave on 20 December 2022, he still received salary from his employer, and his daily salary was HK$548.39 (ie HK$17,000 (monthly salary) × 1/31).

49.  I accept Mr Lee’s submissions that this income should be deducted from his compensation.

50.  Accordingly, the Applicant is entitled to compensation of HK$276,694.13 (ie HK$277,242.52 - HK$548.39) under section 10 of the ECO.

Compensation under Section 10A of the ECO

51.  The medical expenses incurred by the Applicant are well documented. They are evidenced by the receipts and statements issued by the public hospitals, rehabilitation center and clinics.

52.  The Fund does not dispute the fact that the Applicant did incur medical expenses in the total amount of HK$21,562.00.

53.  I hold that the Applicant is entitled to compensation of HK$21,562.00 pursuant to section 10A(1) of the ECO.

Conclusion and Order

Compensation

54.  For the reasons set out above, I hold that the Applicant is entitled to compensation in the total sum of HK$459,032.13, the breakdown of which is as follows:-

Section 9	HK$160,776
Section 10	HK$276,694.13
Section 10A	HK$21,562.00
	Total: HK$459,032.13 ===========

Interest

55.  The Applicant is entitled to interest at half judgment rate from the date of the Accident (ie 22 December 2020) to the date of this judgment and thereafter at judgment rate until the date of payment.

Costs

56.  The Fund did not take a hostile or adversarial stance in the present proceedings. Like the scenarios in other cases, the Fund participated in the present proceedings for the purpose of safeguarding public interest and ensuring that the assistance mechanism that involves public funding would not be abused: see Employees Compensation Assistance Fund Baord v Woo Chun Wah [2019] 22 HKCFAR 495 at para 45; Lee Wai Kin v San Xing (China) Trading Limited [2019] HKCFI 361 at paras 107-109; Ou Xiyuan v Lili Lili Company Ltd & Anor [2024] HKDC 1156 at para 55.

57.  Had the 1^st Respondent procured insurance coverage and/or compensated the Applicant in accordance with the provisions of the ECO, it would not have been necessary for the Fund to participate in the present proceedings.

58.  I am inclined to accept Mr Lee and Mr Nip’s submissions that the appropriate costs order to made is as follows:-

(1)  There be no order as to costs between the Applicant and the Fund.

(2)  The 1^st Respondent do pay the costs (including all costs previously reserved) of Applicant and the Fund in these proceedings (with certificate for Counsel), to be taxed if not agreed.

(3)  The Applicant’s costs be taxed in accordance with the Legal Aid Regulations.

59.  I make a costs order nisi in terms of paragraph 58 above. Any application to vary the same shall be made within 14 days.

Other Matters

60.  I am express my gratitude to Mr Nip and Mr Lee for their helpful assistance.