LUK SHUN KWONG v. HOI TIN ENTERPRISE INTERNATIONAL LTD

DCEC 2179/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO.2179 OF 2013

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DCEC 278/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 278 OF 2014

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JUDGMENT

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1.  The Applicants in the present two applications for compensation under the Employees’ Compensation Ordinance, Cap.282 (“ECO”), namely Luk Shun Kwong and and Luk Ho Kwong (for ease of reference, they will be respectively referred to as “the 1^st Applicant” and “the 2^nd Applicant”), are brothers who both claim to have suffered injuries while working for the Respondent. The Respondent disputes the happening of the alleged accidents and denies that they were its employees. By an agreement which was embedded in an order of H. H. Judge Andrew Li dated 10 August 2015, the parties in DCEC 278/2014 (i.e. the 2^nd Applicant and the Respondent) agreed to abide by the court’s ruling in DCEC 2179/2013 on the relationship between the 1^st Applicant and the Respondent. That is to say if the court decides that the 1^st Applicant was not an employee, the 2^nd Applicant would concede and accept he too was not an employee. On the other hand, if the court decides that the 1^st Applicant was indeed an employee of the Respondent, the Respondent would not dispute that the 2^nd Applicant was also its employee. By another order made by H.H. Judge Levy on 25 February 2016, it was ordered that the two applications be consolidated and heard together.

The Parties

2.  The 1^st Applicant is an experienced building/decoration sub-contractor who has over 30 years of experience. Although he had a business of his own, he claims that worked as the Respondent’s employee from time to time. The 2^nd Applicant was and is a building/decoration worker who used to work with or for his brother, and, according to him, also for the Respondent in respect of the renovation of the Respondent’s office at Unit 10, 10/F, Block C, Wah Tat Industrial Centre, 8 Wah Sing Street, Kwai Chung, New Territories, Hong Kong (“the Premises”).

3.  The Respondent is a company owned by Luk Hoi Tin (“Luk”), a successful businessman who is also a collector of Chinese art works. Luk’s daughter, Ms. Luk Ai Kei, the proprietor an auction house called Kai Fu Auctioneer Co. Ltd., has been assisting him in taking care of his collections.

The Witnesses

4.  Both the 1^st and 2^nd Applicants gave evidence for himself and for each other. They also called their sister Luk Wai Wah as a witness.

5.  The Respondent also called three witnesses, namely, Luk, his daughter and Chan Kee Ming, Luk’s driver.

The 1^st Applicant’s Case – DCEC 2179/2013

6.  The evidence of the 1^st Applicant and that of his witnesses can be summarised as follows: -

7.  The 1^st Applicant came to know Luk in 2006 when Luk looked for someone to redecorate another office of him in Jordan. According to the 1^st Applicant, Luk on behalf of the Respondent agreed to employ him after a short interview at Luk’s office. There was no written employment agreement but Luk agreed to pay him on a “labour and costs” basis, that is to say the Respondent would pay him at a fixed daily rate and reimburse him of all the costs that he might incur for the Respondent.

8.  The 1^st Applicant started the renovation work at the Premises in around early December 2011. The work included plastering, painting and carpentry work. According to him, he was employed on the same “labour and costs” terms as he was five years ago, except that the daily rate was adjusted to $900.  As the 1^st Applicant could not do all the work by himself, he would occasionally ask his elder brother, the 2^nd Applicant to come and help. He would also get other workers to help speed up the work if necessary. Both his brother and other workers were paid at the same daily rate of $900.

9.  On 24 February 2012, the 1^st Applicant had an accident in the course of his work at the Premises and had his right wrist fractured. He attended Princess Margaret Hospital for treatment. However, as he was not satisfied with the treatment there, he switched to Prince of Wales Hospital.

10.  The 1^st Applicant did not make any claim for compensation in respect of the accident on 24 February 2012.

11.  As for the accident in question that allegedly happened at around 6 p.m. on 22 May 2012, 1^st Applicant’s evidence is that he fell off a wooden ladder from a height of about 5 feet and sustained multiple serious injuries to his left wrist, left elbow and left hip. The injuries were so serious that he became totally immobilised. Despite the fact that he was in great pain and could hardly move, he did not call for an ambulance. Instead, he had a long discussion with the 2^nd Applicant, who happened to be there although he was not working on that day, as to how to make sure that he would not be sent to Princess Margaret Hospital.  At the end, they decided that they should make a phone call to their sister and asked her to travel all the way from Tuen Mun to Kwai Chung to pick him up. As he could not walk, he asked his brother to look for a push cart and to have it layered with cardboards or whatever shock-absorbent substances that he could find so that he could have him safely carried in it and wheeled to the street level, via the loading area and a bumpy passageway, which was of a length of a not less a hundred metres, for a taxi to hospital. Some four hours after the alleged accident, at around 10 p.m. the sister arrived. However, instead of taking the 1^st Applicant to hospital, the sister and the 2^nd Applicant took their time to look for waste towels and electrical wires to have him wrapped and fixed in the push cart. After a lot of work, the 2^nd Applicant and the sister managed to have the 1^st Applicant carried to the ground floor. The 2^nd Applicant then fetched a taxi. After pushing his brother and sister into the taxi, the 2^nd Applicant decided not to go with them because he was tired and had other matters to attend to. Instead of going to Prince of Wales Hospital direct, the 1^st Applicant asked the taxi driver to drive him to Wai Wah Centre in Shatin, which was very close to where he lived, from there he called for an ambulance. It was around 0029 when he finally arrived at Prince of Wales Hospital, some six and a half hours after the alleged accident.

12.  The 1^st Applicant was hospitalised for some 6 weeks. It was not until some seven months after the alleged accident that the 1^st Applicant reported it to the Labour Department.

13.  Back to the renovation of the Premises. The renovation work was completed sometime in September 2013. Upon completing the renovation work at the Premises, the 1^st Applicant went back to his own practice (in his words, he went back to contracting and sub-contracting  (判頭/判上判) work). 

14.  The 1^st Applicant claims that he had incurred substantial expenses on behalf of the Respondent but the Respondent has failed to settle those expenses. According to his calculation, a sum of $176,064.50 is still outstanding. Furthermore, the 1^st Applicant had incurred a liability of $152,064.50 for some furniture that he had ordered for the Respondent, which Luk has been refusing to pay for. The total amount that remains outstanding from the Respondent is $320,119.

15.  The 1^st Applicant claims compensation in the total amount of HK$1,267,300 under sections 9, 10 and 10A of the ECO.  There is no claim, whether in these proceedings or in other proceedings, for the allegedly outstanding sum of $320,119.

HK’s Case – DCEC 278/2014

16.  It is the 2^nd Applicant’s evidence that his brother hired him on behalf of the Respondent to carry out renovation work at the Premises.

17.  He claims that at around 6 to 7 p.m. on 24 February 2012, he fell off a ladder while carrying out renovation work. The 1^st Applicant called for an ambulance and had him sent to the Accident and Emergency Department of Princess Margaret Hospital.

18.  The 2^nd Applicant claims compensation in the total amount of HK$617,946 under sections 9, 10 and 10A of the ECO.

The Respondent’s Case

19.  The Respondent is and was at all relevant times a company registered in Hong Kong carrying on the business of computers and electronic products recycling. Its case is that the 1^st Applicant was an independent contractor whom it engaged to carry out renovation work at the Premises. The Respondent was a client of the 1^st Applicant and not its employer. The relationship between them was one of employer/building work contractor and not one of employer/employee.

20.  The Respondent denies that there was any accident to the 1^st Applicant on 22 May 2012 at the premises. It also denies that the accident to the 2^nd Applicant on 24 February 2012 arose out of and in the course of his employment with it.  

The Issues

21.  The issues that this court will have to decide are: -

(1)   Was there any accident to the 1^st Applicant while he was working on the Premises on 22 May 2012?

(2)   Was there any accident to the 2^nd Applicant while he was working on the Premises on 24 February 2012?

(3)   If the answer(s) to either or both of the above question(s) is/are in the affirmation, was or were accident(s) arising out of and in the course of the 1^st and/or 2^nd Applicants’ employment with the Respondent?  Given the order that the court’s decision in DCEC 2170 is binding on the parties in DCEC 278/2014, the question can be simply stated as: Was the 1^st Applicant an employee or independent contractor of the Respondent?

Credibility of Witnesses

22.  The Applicants and the Respondent are telling very different stories. In assessing the credibility of the witnesses, this court takes into account, among other things, the inherent probabilities or improbabilities of their testimonies, the contemporaneous documents or any evidence, which is undisputed or indisputable, tending to support or contradict one account or the other and the overall impression of the witnesses: Ip Fung Kuen HCA 1897/2009 (unreported, date of judgment: 6^th April 2016) at §65-67; Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd (unreported) HCA 1957/2005, 28 July 2011.

Issue (1) – Any Accident to the 1^st Applicant?

23.  The 1^st Applicant’s case in relation to the alleged accident is summarised in paragraph 11 above.

24.  To say that the 1^st Applicant is economical with the truth is an understatement. He is, in my assessment, not an honest and unreliable witness. His narrative of what happened that evening, from why he did not call for an ambulance after the accident to how his brother and sister struggled to carry him downstairs for a taxi ride not to a hospital but to where he lived, is totally against common sense and inherently incredible. His story being so inherently incredible, one may ask why he bothered to tell such an incredible story. The answer lies in two pieces of indisputable evidence: First, it was around midnight that he called for an ambulance; secondly, he told the ambulance-men and the nurses at the triage of Prince of Wales Hospital that he had fallen off a ladder at home. In my judgment, it was out of a desperate attempt to reconcile these two pieces of evidence that the 1^st Applicant and his brother and sister came up with the above story. What happened was, or more likely to be: He fell at home at around midnight. He then called for an ambulance.  He did not feel too bad or did not realise that he was so badly injured that he went downstairs to wait for the ambulance. The ambulance arrived. On the way to the hospital and upon arrival, he told the ambulance-men and the nurses that he had fallen from a height at home. Subsequently, and it does not matter when, he came up with the “brilliant” idea of attempting to benefit from his misfortune by claiming, falsely, he was an employee of the Respondent and had an accident at work.

25.  Not only is the story of the 1^st Applicant inherently incredible, it is in many ways inconsistent with the evidence of his brother and sister. Some of the inconsistencies are as follows: -

(1)   The fall – the 1^st Applicant’s evidence is that he fell from a height of 5 ft; his brother gave various estimates, ranging from 2 m to 5 m;

(2)   Injuries to the 1^st Applicant – the 1^st Applicant’s evidence is that he had a broken left elbow; his brother’s evidence is that both elbows were “completely shattered”;

(3)   When the sister was summonsed for help – It was the evidence of the sister in her witness statement that she received a call from the 2^nd Applicant at around 6 p.m. However, the two brothers’ evidence is that the 2^nd Applicant called her after 8 p.m.;

(4)   Wrapping of fractures – whilst the 2^nd Applicant managed to give a vivid and colourful account of how he and her sister “wrapped up the fractures” with electric wires, towels and a scarf of the sister; the sister said that she was not involved in the “wrapping up”;

(5)   Getting a taxi – the 2^nd Applicant’s evidence is that there was already a taxi at the entrance to Wah Tat Industrial Centre. Yet, the sister said that they had to look for a taxi and waited 5 minutes for its arrival.

26.  It would be a waste of ink and papers to further summarise the inconsistencies between the evidence of the 1^st Applicant and that of his brother and sister. Suffices it to say that they are wholly unreliable witnesses and the story told by them is nothing but an orchestrated lie.

27.  Other aspects of the 1^st Applicant’s story are equally perplexing. For examples: –

(1)   There is no explanation from the 1^st Plaintiff as to why he chose not to make a claim for compensation in respect of the accident on 24 February 2012;

(2)   Why should he, as an employee, incur over $320,000 for his employer? Why should he choose not to ask for repayment?

(3)   Why it took him 7 months to report the alleged accident to the Labour Department?

(4)   Why the 2^nd Applicant chose not to escort his brother to hospital?

28.  In my judgment, the 1^st Applicant and his witnesses are wholly unreliable. On the first issue, I find against the 1^st Applicant.

Issue (2) – Was there any accident to the 2^nd Applicant on 24 February 2013?

29.  There are some disputes as to whether the 2^nd Applicant fell off a ladder or from a working platform. However, there is no serious dispute that the 2^nd Applicant was injured on 24 February 2012 while working on the Premises. Although I do not consider the 2^nd Applicant a credible witness, on the objective evidence that he was injured on 24 February 2012, I find in favour of him on the second issue.

Issue (3) – Was the 1^st Applicant an employee or independent contractor of the Respondent?

30.  The modern approach to the question whether a person is an employee or sub-contractor is set out in the Court of Final Appeal’s decision in Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951. At §18 of the Judgment, Ribeiro PJ said: -

“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 abovementioned 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, as Mummery J emphasised in Hall v Lorimer (in a passage approved by the English Court of Appeal):

‘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 check list 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.’”

31.  In the present application, the following facts and matters are undisputed/indisputable: -

(1)   The 1^st Applicant was a building work sub-contractor and had a business of his own;

(2)   The 1^st Applicant got to know Luk in around 2006 through a distant relative when Luk was looking for someone to redecorate his office;

(3)   The 1^st Applicant carried out renovation work at the Respondent’s office in 2006;

(4)   The Respondent was the owner of two other units of Wah Tat Industrial Centre, namely Unit 7, 17/F, Block B and Unit 10, 9/F, Block C. After acquiring the former in March 2010, the Respondent contacted the 1^st Applicant and asked him to renovate it for the Respondent;

(5)   The 1^st Applicant also carried out minor repair work at the Block C unit in September 2013;

(6)   Except that the 1^st Applicant carried out renovation works at different offices of the Respondent, the 1^st Applicant did no other work for the Respondent;

(7)   The Respondent’s business was one of recycling of computers and other electronic products, which had nothing to do with building work. Whenever the Respondent needed someone to renovate its offices, Luk would look for and hire a contractor.

(8)   Luk always had the final say in the design and choice of materials;

(9)   The  1^st Applicant was remunerated on a “labour and costs” basis;

(10)   Before the 1^st Applicant carried out work at the other office of the Respondent in 2010, he had submitted a written quotation to Luk. The quotation looked exactly like a quotation submitted by a contractor;

(11)   After the accident on 24 February 2012, the 1^st Applicant was granted sick leave up to 25 May 2012. However, he did not claim for compensation.

(12)   Luk made the following cash payments to the 1^st Applicant: -

(a)   HK$50,000 at around the time when the 1^st Applicant commenced work at the Premises;

(b)   HK$50,000 on 28 February 2012;

(c)   HK$100,000 on 22 April 2012;

(d)   HK$10,000 on 21 September 2012.

(13)   The 1^st Applicant did not demand payment of the allegedly outstanding amount.

32.  The overall impression is that the Respondent was a client of the 1^st Respondent and not his employer. Ms. Lau, counsel for the 1^st and 2^nd Applicants, relies on the following three matters and argues that the applicants should be considered employees of the Respondent: -

(1) Lau had the final say in the design and choice of materials;

(2) The work was closely supervised by Lau;

(3) The 1^st Applicant was remunerated on a “labour and costs” basis.

33.  As for (1), I cannot see why Lau as a client should not have the final say in the design and choice of materials. After all, it was his property and the work belonged to him.

34.  As for (2), Lau only told the 1^st Applicant what he wanted. Never did he dictate how the work was supposed to be done, what tools the 1^st Applicant should use and so forth. There was never any supervision in the capacity of an employer. Although Luk did attend the Premises every now and then, I accept his evidence that he attended the Premises only to check the progress.

35.  In passing, I shall add that I find that Lau and other witnesses of the Respondent are honest and reliable witnesses. They are composed and calm, and their answers are reasonable and logical. I prefer their evidence in all respects to that of the two applicants and their sister.

36.  As for (3), whilst I accept that a fixed daily rate is a feature common in a typical employer/employee relationship, I do not accept Ms. Lau’s submission that it is a deciding factor. First, there is no reason why a contractor cannot be remunerated at a fixed rate; secondly, Lau did not pay the 1^st Applicant per any actual contemporaneous work records. The payments that the 1^st Applicant received from Lau are in my opinion more consistent with periodic instalments payable by a client.

37.  I do not accept the arguments of Ms. Lau and find that the 1^st Applicant was not an employee of the Respondent.

Decision on Liability

38.  Having decided against the 1^st and 2^nd Applicants on the 1^st and 3^rd issues, I dismiss both applications.

Quantum

39.  For completeness sake and in case I am wrong on liability, I shall proceed to assess the applicants’ claims.

The 1^st Applicant     

40.  The 1^st Applicant attended the Accident and Emergency Department of Prince of Wales Hospital at 0029 on 23 May 2012. Physical examination revealed a deformed left elbow with decreased range of movement. The left hip also showed decreased range of movement. Emergency operations, which included open reduction and internal fixation of elbow fracture, left distal radius fracture and fracture neck of left femur, were carried out.

41.  The 1^st Applicant attended the Employees’ Compensation (Ordinary Assessment) Board on 30 July 2014 and was assessed to have suffered a 22% loss of earning capacity. On review, the assessment remained the same. There is an appeal against such assessment.

42.  The 1^st Applicant was jointly examined by Dr. Wong See Hoi and Dr. Fu Wai Kee. Both doctors agree that the 1^st Applicant should avoid heavy duty and vigorous sports. Returning to his pre-accident job as a decoration worker is not advisable. Dr. Wong assesses the 1^st Applicant’s loss of earning at 25-30% while Dr. Fu agrees with the Board’s assessment of 22%.

43.  While I accept that the court should come to its own assessment and is not bound to follow the assessment of the Board (Kan Wai Yip v Everbest Port Services Limited, unreported, DCEC 383/2008), I can see no good reason not to accept the Board’s assessment. I shall uphold the 22% assessment.

44.  The 1^st Applicant was aged 51 at the time of the accident. Assuming that he worked 26 days a month, the amount payable under s.9 of ECO is: ($900 x 26) x 22% x 72 = $370,200.

45.  The 1^st Applicant was granted sick leave from 26 May 2012 to 31 December 2014, totalling 950 days. The Respondent does not seriously dispute that the length of sick leave was appropriate and I accept that it was. The amount of compensation payable under s.10 is: ($900 x 26) x 950/30 x 4/5 = $592,800.

46.  The sum of $100 claimed under s.10A is allowed.

47.  I shall leave it to the parties to work out the amount of interest payable, should such an exercise become necessary.  

The 2^nd Applicant

48.  Upon admission to hospital, the 2^nd Applicant was found to have a 7cm hematoma at is occiput with superficial abrasion. Glasgow coma scale was full and he had full limb power. Radiological examination of his chest, cervical spine and pelvis revealed no fracture. His condition deteriorated on 26 February 2012 with Glasgow coma scale dropped to 12/15. Craniotomy with removal of blood clot was performed. He was eventually discharged on 6 March 2012. Subsequent complaints included headache and dizziness. He attended the Employees’ Compensation (Ordinary Assessment) Board on 10 July 2014 and was assessed to have suffered 5% loss of earning capacity.

49.  Both Dr. Yu Yuk Ling and Dr. Kan Yiu Ting, who carried out joint examination of the 2^nd Applicant on 9 October 2015, agree that the 5% assessment is on the low side given that there is a significant risk of him developing post-traumatic epileptic seizures. The doctors’ joint assessment of 13% loss of earning capacity sounds reasonable and I shall adopt it in assessing compensation under s.9.

50.  The 2^nd Applicant’s claim that he used to work 24 days a month is not challenged. Hence, the amount payable under s.9 is: ($900 x 24) x 13% x 72 = $202,176.

51.  Both experts agree that a sick leave of 24 months is appropriate. Hence the amount payable under s.10 is ($900 x 24) x 24 x 4/5 = $414,720.

52.  The 2^nd Applicant’s claim under s.10A for $1,050 is allowed.

53.  Again, I shall leave it to the parties to work out the amount of interest payable.

Disposal of the two applications

54.  I order that both applications be dismissed with costs to the Respondent. There be certificate for counsel to the Respondent. As the 1^st and 2^nd Applicants are legally aided, I further order that the their own costs be taxed in accordance with Legal Aid Regulations.

55.  I thank counsel for their able submission.