KONG HOI LAM v. CHEUNG YUK KWAN t/a CONCEPT PAINTING COMPANY AND ANOTHER

DCEC 1585/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO.1585 OF 2012

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Judgment

Assessment of Compensation

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Introduction

1.  The claim related to an accident on 23^rd July 2011 on a construction site in the course of employment.   The Applicant took out his application for compensation pursuant to the Employees’ Compensation Ordinance Cap.282 (the Ordinance) on 11 September 2011.  It was averred that the 1^st Respondent and the 2^nd Respondent was the direct employer and the principal contractor respectively.

2.  Both of the Respondents failed to file their respective Answer despite the Unless Order dated16 May 2013.  As a result, Interlocutory Judgment was entered against the two Respondents in favour of the Applicant and leave was granted to set this matter down for assessment of compensation on 12 July 2013. 

3.  Upon being served of the order dated 12 July 2013, the 2^nd Respondent filed and served a witness statement dated 29 August 2013 stating that he is the principle contractor who sub-contracted the painting works of the site to the 1^st Respondent who started the painting work from early July 2011, and he has no knowledge of the Applicant’s remuneration package.  The witness statement was filed out of time and without leave, it is not part of the evidence and no weight will be given to it. 

4.  The Respondents were absent in all the previous court hearings, and remained absent in the Assessment hearing.  There is no pleaded case and no evidence to deny and rebut the averments in the Application.  Yet the Applicant is still required to prove his case. 

Finding

5.  The applicant adopted his affirmation and gave evidence to clarify his earnings prior to the accident.  He has entered into a continuous employment contract with the 1^st Respondent since 1997 up till the accident on 23^rd July 2011.  Depending of the schedule of the work, sometimes he was required to work on public holiday, there were times he was required to work more than 26 days a month and there were times he worked less than 26 days a month, on average he worked for 26 days a month prior the accident, and his daily rate was HK$700, his monthly income on average being HK$18,200.  I consider and accept his evidence on his average monthly earnings.

6.  The applicant made application for compensation pursuant to Section 7 of the Ordinance.  During the accident, the applicant fell from a height landing on his back and suffered immediate paralysis of his lower limbs after the injury.  Wheelchair training, muscle strengthening exercise, activity of daily living training and bowel training program were provided to him.  There was no recovery of his neurological function.  He needed assistance in the activities of daily living due to the paralysis and stiffness of his spine. 

7.  Dr Chan, the neurologist, is in the opinion that most recovery of neurological functions after severe spinal injuries occurs within the first 12 months of the accident.  By now more than 20 months have elapsed since the applicant’s injury, further improvement in his neurological functions is not expected.  The applicant’s neurological conditions have stabilized and are considered permanent, and he is not expected to return to gainful employment.  Dr. Chin, specialist in orthopaedics and traumatology, is in the opinion that the applicant’s current status is compatible with a well-maintained paraplegic patient.  With total loss of motion of both lower limbs, the applicant will be paralyzed for the rest of his life. The impairment of the whole person is 63%.  The loss of earning capacity based on the schedule in the Ordinance is 100%.  It is clear from the medical evidence that the applicant has suffered 100% loss of earning capacity.

8.  The applicant made application for compensation pursuant to Section 8 of the Ordinance.  During the initial period of hospitalization the applicant’s wife applied for leave and provided daily care in his hygiene, exercise, feeding etc.  Since 23^rd June 2012 the applicant has been cared for by his wife and also a domestic helper employed for his care and attention. 

9.  Dr Chin is in the opinion that the applicant probably will be able to manage chair bed transfer if his home is equipped with overhead pulling system.  He is likely to be able to mobilize and move around in wheelchair at home. But he probably needs assistance outside home except in places where the surface is totally flat.  He probably needs some assistance in bathing and toileting as he might have difficulty doing all the cleaning himself.  Currently this is performed by domestic helper.    Dr. Chan is of the opinion that the applicant is wheelchair-bound and is dependent in many of his activities of daily living including lower garment dressing, bathing and transfer, thus long term hiring of domestic helper is necessary. 

10.  After consider the evidence as a whole, I agreed with Mr Sakhrani that the statutory limit of compensation under section 8 is still below the actual costs of hiring a domestic helper to provide the necessary assistance to the applicant in the future.  In accordance to take the statutory maximum is the only appropriate course.

11.  The applicant made application for compensation pursuant to Section 10 of the Ordinance.  The section provides for compensation in case of temporary incapacity but the medical evidence shown that the applicant suffered immediate paralysis of his lower limbs after the injury and will remained paralyzed for the rest of his life.  As to whether section 10 is applicable to the present case, Mr Sakhrani drew my attention to relevant paragraphs of the section:

“(1) Where temporary incapacity whether total or partial results from the injury, the compensation shall be the periodical payments hereinafter mentioned, or a lump sum calculated accordingly, having regard to the probable duration, and probable changes in the degree, of the incapacity. Such periodical payments shall be, or shall be at the rate proportionate to, 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 or business during the period of the temporary incapacity after the accident.

:

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(3) Period payments under this section shall be payable on the same days as wages would have been payable to the employee if he had continued to be employed under the contract of service … under which he was employed at the time of the accident.

(4) In the event of death or permanent incapacity following a period of temporary in incapacity whether total or partial, no periodical or lump sum payments paid or pabable under this section shall be deducted from any amount of compensation payable under section 6,7,8 or 9.

(5) An employee who has received periodical payments under this section for a period of 24 months from the date of the commencement of the temporary incapacity or for such further period being not more than 12 months as the Court may allow in any particular case shall no longer be entitled to periodical payments under this section but shall be deemed to have suffered permanent incapacity and the provisions of section 7 or 9, as the case may be, shall apply to the employee.

12.  Mr Sakhrani submitted that the scheme of the Ordinance provides section 10 as a temporary relief to the employee until all assessments completed  to ensure the injured employee be able to maintain his living before the assessment.  The temporary incapacity contemplated by section 10 can be total or partial, and the periodical payment was supposed to be made at the same day as the wages.  In the event of permanent incapacity following a period of temporary incapacity whether total or partial, no periodical or lump sum payments paid or payable under this section shall be deducted from any amount of compensation payable under section 6,7,8 or 9. 

13.  In Kan Wai Ming v Hong Kong Airport Services Ltd CACV 240/2010, the Court of Appeal was required to consider the construction of section 10(4) of the Ordinance and question of over payment of compensation for temporary incapacity, Hon Fok JA in his judgment referred to the scheme of section 10 of the Ordinance as follow:

“The scheme of section 10 of the Ordinance

13. To construe section 10(4) properly, it is necessary to have regard to its context within section 10 and the Ordinance generally.

14. The purpose of the Ordinance is to provide for the payment of compensation to employees who are injured in the course of their employment. Different types of compensation are available depending on the severity of the injury. Such injury may be fatal or non-fatal. Compensation may be for permanent incapacity or for temporary incapacity. Such incapacity may be partial or total. Thus, section 6 of the Ordinance deals with compensation in fatal cases. Section 7 deals with compensation in cases of permanent partial incapacity. Section 8 deals with compensation for an employee whose permanent incapacity requires him to have attention to assist him to perform the essential actions of life. Section 9 deals with compensation payable for permanent partial incapacity. Finally, section 10 deals with compensation payable for temporary incapacity, whether total or partial.

15. Section 10(1) provides for payments to be made by way of periodical payments or lump sum where temporary incapacity whether total or partial results from the injury. Therefore, once temporary incapacity is established, the employer’s obligation to pay periodical payments or a lump sum arises. The periodical payments are by way of monthly payment.

16. By section 10(2) a period of absence from duty certified to be necessary by one of the stipulated persons or bodies is deemed to be “a period of total temporary incapacity irrespective of the outcome of the injury”. A sick leave certificate issued by a registered medical practitioner is the usual manner in which an injured employee obtains such certification to establish temporary incapacity for the purposes of section 10(1).

17. The presumption that a period of absence from duty so certified is a period of total temporary incapacity is rebuttable: see Yu Tat Kam v Chu Tung Shing & anor, unrep., CACV 25/2008, 8.10.09 at §§23-27. Thus, under section 16, an employer is entitled to require an employee who is in receipt of a periodical payment under section 10 to undergo a medical examination and if the employee does not do so, his right to compensation is suspended until the examination takes place. The employer is therefore able to obtain independent medical evidence which he may rely upon to rebut the presumption created by section 10(2).

18. Section 10(3) provides that periodical payments shall be payable on the same day as wages would have been payable to the employee. There is a proviso whereby the parties can agree or the court can order that the periodical payments may be made at shorter intervals. However, the intervals between periodical payments shall not exceed one month.

19. The duration of the periodical payments is not indefinite. If an employee receives periodical payments for 24 months (or for a further 12 months, if the court allows in any particular case), section 10(5) of the Ordinance provides that he will no longer be entitled to periodical payments and deems him to have suffered permanent incapacity so that the provisions of sections 7 or 9 will apply to him.

20. Under section 10(10) of the Ordinance, an employer who without reasonable excuse fails to pay any compensation under the section within a period of 7 days after the date on which such compensation falls due “(whether under subsection (3) or by agreement or by order of the Court)” commits an offence and is liable to a fine. The 7 days are therefore calculated from either the same day as wages would have been payable (section 10(3)) or the day the parties have agreed periodical payments at shorter intervals (section 10(3)(a)) or the date when the court makes an order for compensation under section 10 (for example, after trial in compensation proceedings).

21.  Prior to an adjudication of the compensation proceedings, the employer is obliged to make periodical payments monthly on the same day wages would have been payable to the employee, unless agreement is reached to pay such periodical payments at shorter intervals.  The obligation is therefore automatic upon a period of absence from duty being determined to be a period of temporary incapacity.  As noted above, this may be deemed by virtue of section 10(2).”

And the judge went on to stated in paragraph 32 and 33 that :

“the intention of the legislature in enacting section 10(4) of the Ordinance is so that an employee’s compensation for temporary incapacity under section 10 and his compensation for permanent incapacity under section 9 should be kept separate and distinct, and that in case an employee is entitled to both, they cannot be set off against each other. The Ordinance’s intention to provide quick financial relief is also reflected in the limit on the duration of periodical payments under section 10 to 24 months (unless extended, but then for not more than a further 12 months). The fact that the burden rests on the employer to rebut the presumption of temporary incapacity arising from a sick leave certificate is consistent with this intention. It also follows, in my opinion,that the risk of overpayments being made and the burden of taking any steps to recover such overpayments should lie with the employer.

14.  As the Court of Appeal observed in Choy Wai Chung v Chun Wo Construction & Company Limited CACV 14/2000 that “one of the mischiefs, which was sought to be cured (by section 10) lay in the fact that the method of calculating compensation under the ordinance did not cater for the fact that the employee might have a significant period of greater temporary incapacity followed by permanent incapacity of a lesser level.  The equivalent of what is now section 10(4) was therefore introduced to provide that no compensation for temporary incapacity should be deducted from compensation payable for permanent incapacity. … The mischief sought to be cured by the introduction of the provisions of section 10 was to alleviate the problem which would be caused when an employee suffered a period of temporary incapacity followed by a period of permanent partial incapacity which would result in his not receiving adequate compensation for the period when he was temporarily incapacitated. 

15.  In Choy Wai Chung the accident concerned happened on 28 June 1996 and the employee was on sick leave since then up to 30 November 1999, and further sick leave was given up to 27 November 2000.  The judgment on assessment by the trial judge was given on 14 December 1999.  The trial judge refused to extend the period beyond for section 10 beyond the time when the provision of section 9 come into play i.e. 21 July 1998, the date of the first assessment by the Employees Compensation (Ordinary Assessment) Board.  The Court of Appeal was with the view that in so construing section 10(5), the judge below limited the discretion of the court in a manner not intended by the legislature.  And after taking into account the medical certificates which have been produced, allowed the employee to receive compensation for temporary incapacity for the full three-year period, and that would be up to 27 June 1999. 

16.  Mr Sakhrani in his submission provides calculation for compensation under section 10 on the basis of the actual sick leave certificates granted to the applicant and on the basis that he able to obtain sick leave certificates for the maximum term.  Mr Sakhrani submitted that in view of the medical evidence, it is highly probable that further sick leave certificates will be issued to the applicant and urges me to exercise my discretion to extend the period to the maximum term.  The period covered by sick leave certificates shall be deemed to be a period of total temporary incapacity irrespective of the outcome of the injury (section 10(2)). 

17.  We do not have question of overpayment here, no periodical payment under section 10 was ever paid to the applicant.  And unlike the employees in Kan Wai Ming andChoy Wai Chung, theapplicant unfortunately sustained permanent total incapacity.   Here the applicant was grant sick leave certificate since the date of accident and beyond the date of my assessment to 24 October 2013.  In the present case the 24 months envisaged by section 10 (5) was up to 22 July 2011.  Pursuant to section 10(2) the period of total temporary incapacity shall be deemed up to 24 October 2013. 

18.  Although the medical evidence shown that the applicant suffered immediate paralysis of his lower limbs after the injury and will remained paralyzed for the rest of his life, it is still for me to consider the evidence and assess the percentage of the applicant’s permanent incapacity.  As there is no evidence to the contrary, I accepted the applicant’s medical evidence and find the applicant sustained permanent total incapacity as mentioned above, and I shall exercise my discretion to extend the period for the applicant’s entitlement under section 10 up to the date of this order, after the date of this order the compensation which will be payable will be the compensation for permanent total incapacity as find by me. 

19.  Finally the applicant made application for compensation pursuant to Section 10A of the Ordinance for the payment of medical expenses and provided the supporting receipts in the trial bundle.  The total of the amount spent as shown by the receipts amounts to HK$26,742.

Conclusion

20.  The compensation that the applicant is entitled being:

21.  There is no evidence that the two Respondents had made any payment to the applicant after the accident.  I shall give judgment to the applicant in the sum of HK$2,188,784 together with interest at half of the judgment rate from the date of the accident (23 July 2011) until payment.  The Respondents shall pay the applicant the costs of the application, to be taxed if not agreed, with counsel certificate.  The applicant’s own costs be taxed in accordance to the Legal Aid Regulations. 

Order

1. The 1^st and 2^nd Respondents are to pay the applicant employees’ compensation in the sum of HK$2,188,784 together with interest at half of the judgment rate from 23 July 2011 until payment.

2. The 1^st and 2^nd Respondents are to pay the applicant the costs of the application, to be taxed if not agreed, with counsel certificate.  The applicant’s own costs be taxed in accordance to the Legal Aid Regulations.