KWONG KIN YIN v. SHUN LEE COPPER & DECORATION LTD AND ANOTHER

CACV 187/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 187 OF 2011

(ON APPEAL FROM HCPI NO 285 of 2008)

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REASONS FOR JUDGMENT
AND DECISION ON COSTS

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Hon Barma JA (giving the Reasons for Judgment and Decision on Costs of the Court):

1.  The proceedings below concerned a claim for damages for personal injuries brought by the plaintiff against the 1^st and 2^nd defendants in respect of injuries suffered by the plaintiff in a workplace accident, and a third party claim by the 2^nd defendant for indemnity or a contribution from the third party.

2.  The plaintiff’s case was that the 1^st defendant (Shun Lee Copper & Decoration Limited) was his employer, and that the 2^nd defendant (Asiaray Advertising Media Limited) was the main contractor responsible for the site at which the accident took place.  The 2^nd defendant, however, alleged that the plaintiff was employed, not by the 1^st defendant, but by the third party (Wong Cheung Keung, trading as Shun Fat Metal Works Co), who was the 2^nd defendant’s main (and only) subcontractor to whom the 2^nd defendant had subcontracted the entirety of the works in question, which involved the manufacture and erection of metal advertising signage to be installed at the Kerry Cargo Centre in Kwai Chung.

3.  The trial of the proceedings took place before McWalters J (as he then was) in June 2011, and lasted 5 days.  The 1^st defendant did not appear at the trial, which was thus contested as between the plaintiff, the 2^nd defendant and the third party.  Judgment was delivered on 28 July 2011.

4.  So far as the main action was concerned, the judge found that the plaintiff had been employed by the 1^st defendant (which he found to be a sub-subcontractor of the 2^nd defendant), and that the 2^nd defendant, as the main contractor for the project, was responsible for the site at which the work was being carried out and was in breach of duties owed to the plaintiff under various statutes.  He awarded the plaintiff damages of HK$1,429,707 against the 1^st and 2^nd defendants. There is no appeal against this part of the judgment. 

5.  So far as the third party claim was concerned, the judge dismissed the 2^nd defendant’s claim for an indemnity from the third party, holding that while the third party had been responsible for certain electrical and scaffolding works in relation to the project, it was not responsible for, or involved in, the work on which the plaintiff had been engaged, and thus could have had no liability towards the plaintiff or the 2^nd defendant.  The judge found that the third party was not the main or principal subcontractor of the 2^nd defendant, which he found to be a company called Shun Lee Decoration Engineering Ltd (“Shun Lee Engineering”), which had in turn subcontracted the part of the work for which the plaintiff was employed to the 1^st defendant.  In the judge’s view, the third party was either a sub‑subcontractor, also employed by Shun Lee Engineering, but responsible for a different part of the work to that sub-subcontracted to the 1^st defendant; or alternatively a direct subcontractor of the 2^nd defendant (alongside Shun Lee Engineering), with responsibility only for the electrical and scaffolding works.  The judge did not find it necessary to decide which of these two possibilities represented the true position of the third party, as the third party would not be liable to the 2^nd defendant in either case.

6.  The 2^nd defendant appealed against the decision in relation to the third party proceedings.  Having heard Mr Chain for the 2^nd defendant, we dismissed the appeal without calling on counsel for the third party.  These are our reasons for doing so.

7.  Mr Chain acknowledged that in order to succeed in the appeal, he would have to overcome a substantial burden in order to persuade this court to overturn the judge’s finding of fact.  It is very well established that the Court of Appeal will not lightly interfere with a finding of fact, and that it will not be enough for an appellant to complain about the weight attached by the judge to particular pieces of evidence, as the weighing of the evidence is primarily the task of the judge dealing with the matter at trial.  A number of cases decided in this court make it clear that a factual finding will be reversed only when it can be shown to be palpably wrong, or one which plainly falls outside the range of findings that are open to the first instance judge on the basis of the evidence before him.  It is not sufficient for an appellant to suggest only that the judge gave too much or too little weight to one piece of evidence or another – the consideration of the evidence and the allocation of the weight to be given to different pieces of evidence is quintessentially the role of the trial judge, and an appellate court will be slow to second-guess the judge, interfering only when it is clear that something (which it is for the appellant to identify) has gone wrong in that process (see eg Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336; Bank of China v Tsang Sheung Bun [2013] 5 HKLRD 62; China Gold Finance Ltd v CIL Holdings Ltd (unreported, CACV 11/2015, 27 November 2015)).

8.  In this case, the onus of establishing that the third party was the main subcontractor of the 2^nd defendant, with responsibility for the work on which the plaintiff was engaged when he suffered his injury, lay on the 2^nd defendant.  It was not the plaintiff’s case that he was employed by the third party, or that the third party had any responsibility or involvement in the work that the plaintiff was doing (on the contrary, the plaintiff alleged that he was employed, as the judge found, by the 1^st defendant, who was responsible for carrying out that aspect of the work).  Rather, it was the 2^nd defendant who alleged that the third party was the actual employer of the plaintiff (a position which was abandoned in closing submissions), and was the main (indeed the sole) direct subcontractor of the 2^nd defendant in respect of the Kerry Cargo Centre project.  Accordingly, it was for the 2^nd defendant to establish this, and not for the third party to disprove it.

9.  In coming to the conclusion that the third party was not the main subcontractor of the 2^nd defendant (or more accurately, that the 2^nd defendant had not demonstrated that this was, on the balance of probabilities, the position), the judge considered the witness statements and oral evidence of the witnesses who gave evidence at trial, the limited documentary evidence that was put before him, and the surrounding facts and circumstances and the lack of certain types of documentation to his mind, surprising that he considered should have been available to the 2^nd defendant, and which might be expected to throw light on this question.

10.  So far as the witness evidence was concerned, on this issue the judge considered the evidence of the following witnesses:

(1) Mr Lam Tak Hing, a director and shareholder of the 2^nd defendant, who stated that the 2^nd defendant had subcontracted the work to be done in respect of the Kerry Cargo Centre project to the third party.  However, as Mr Lam had (on his own admission) no personal knowledge as to the identity of the 2^nd defendant’s subcontractor and relied on what he had been told by colleagues (who do not seem to have been identified) or gleaned from the 2^nd defendant’s records (although no details of the nature of such records were vouchsafed), the judge, not surprisingly, did not find his evidence worthy of any real weight.

(2) Ms Connie Tsui Pong Wing, a Senior Project Executive employed by the 2^nd defendant between September 2001 and March 2004, and again from late April 2011 onwards.  She was employed by the 2^nd defendant when she gave evidence at the trial.  She had responsibility for the Kerry Cargo Centre project, and signed a fee proposal presented to the 2^nd defendant’s client in respect of the project.  She said that she dealt with the third party in respect of the project, and that the third party was the 2^nd defendant’s subcontractor for the project.  She also said that although she had heard of the 1^st defendant and Shun Lee Engineering, she was not aware that either of them were sub-subcontractors of the third party.  She also stated that she had a supervisor to whom she reported (a Ms Cissy Luk, who was not called as a witness), and that although she signed the proposal for the project, her duties involved only on site monitoring.  She said that she had no contact with the proprietor of Shun Lee Engineering (a Mr Wong Wai Fuk), or with her successor at the 2^nd defendant, Mr Andy So Chuen Fai.  The judge did not consider her to be an entirely satisfactory witness, commenting that she gave the impression of being very conscious of the fact that the 2^nd defendant was her employer, and of wanting to keep her evidence to a minimum, to the extent that the judge felt that she was being deliberately evasive and was feigning ignorance.

(3) Mr Andy So Chuen Fai was Ms Tsui’s successor, and was similarly employed as a Senior Project Executive by the 2^nd defendant.  He joined the 2^nd defendant in June 2004, but had left the employ of the 2^nd defendant by the time of the trial. He was called by the third party.  He said that about a month after he joined the 2^nd defendant, he was given responsibility for the Kerry Cargo Centre project and was told to contact the third party in relation to it.  He also said that after taking up those responsibilities, he learnt that the 2^nd defendant’s subcontractor was Shun Lee Engineering, and that he later realised that there were in fact two subcontractors, the other being the third party (coming to this realisation on the basis of some invoices submitted by the third party).  He understood Shun Lee Engineering to be responsible for the main part of the work – the fabrication and installation of the metal framework and sign, while the third party was responsible for scaffolding and electrical works.  He said that he contacted his predecessor, Ms Tsui, on a number of occasions and that she told him that the main subcontractor was Shun Lee Engineering, and that the third party was its contact person.  His evidence thus differed from that of Ms Tsui in a number of respects – as to the identity of the main subcontractor, as to whether or not he and Ms Tsui were in communication with each other and as to the scope of their responsibilities.  The judge observed that unlike Ms Tsui, Mr So appeared to be a straightforward witness, doing his best to recollect the position as it was, with no particular reason to be partial to either party, and preferred his evidence to that of Ms Tsui.

(4) The third party, who also gave evidence at the trial.  The judge noted and clearly kept in mind that the third party had changed his version of the contractual relationship during the course of the proceedings, and in giving evidence at the trial.  The third party explained that he was the sole proprietor of Shun Fat, and said that in about 2001 he had entered into a business venture with the owners of Shun Lee Engineering (Mr Wong Wai Fuk and his wife, whom he had known since the 1990s), which was involved in the same line of business.  Under this venture, they set up the 1^st defendant with a view to referring business opportunities to it to carry out, with Shun Lee Engineering generally acting as the main contractor, charging a 10% fee for its services, and subcontracting the actual work to the 1^st defendant, in which each side was an equal shareholder.  The third party initially claimed (in his Third Party Defence) that he had no contractual relationship with the 2^nd defendant in relation to the works, but later accepted that his firm (Shun Fat) carried out scaffolding works, and subsequently that he carried out electrical works as well.  His evidence as to the relationship between the parties also underwent changes – initially he gave the impression that the third party was a sub-subcontractor under Shun Lee Engineering along with the 1^st defendant, but subsequently said that it was actually a direct subcontractor of the 2^nd defendant and thus in a similar position to Shun Lee Engineering, albeit being responsible for a different scope of work, which was not the work on which the plaintiff was engaged.  The third party also said that Ms Tsui was aware of the relationships and had negotiated not only with him, but also with Mr Wong Wai Fuk.  The judge made it clear that he regarded the third party’s evidence as not entirely satisfactory, and that he would accept it only if supported by other independent evidence, which, in the event, he found to exist in the evidence of Mr So, and in some of the documentary evidence.

(5) Mr Lee Siu Fai was the only other witness to give relevant evidence on this issue.  He was an employee of Shun Lee Engineering or the 1^st defendant, and a co-worker of the plaintiff, who was working with the plaintiff when the accident occurred.  The plaintiff said that Mr Lee was his supervisor, and Mr Lee seemed to have taken the initiative in deciding how to carry out the work. He gave evidence which supported the third party’s case as to the business relationship between the third party and Shun Lee Engineering, and the setting up of the 1^st defendant as a joint venture vehicle, stating that all employees of Shun Lee Engineering were transferred to the 1^st defendant in around 2003, and that Mr Wong Wai Fuk of Shun Lee Engineering required all work related matters to be reported to him. Although Mr Lee said that he took instructions from the third party in relation to his own work, he had the impression that Mr Wong Wai Fuk was the senior person, or boss, within the 1^st defendant, and that the third party was more of a subordinate who took instructions from Mr Wong Wai Fuk.

11.  The judge also had regard to the limited documentation that was put before him, consisting of:

(1) An employee’s compensation insurance policy issued to Shun Lee Engineering in respect of the Kerry Cargo Centre project.

(2) An invoice from the third party dated 15 June 2004.

(3) Two further invoices from the third party dated 19 September 2004.

(4) An invoice from Shun Lee Engineering dated 4 August 2004.

(5) A letter of completion signed by the third party dated 11 May 2005.

12.  The judge recorded his surprise at the paucity of the documents put forward by the 2^nd defendant, observing that as the main contractor, he would have expected the 2^nd defendant to have far more in the way of records relating to the project and the subcontracting arrangements it had made in respect of it.  The judge was troubled by the absence of any documentation to prove the existence of a subcontracting relationship between the 2^nd defendant and the third party, such as the written subcontract or any quotation leading up to it, or even documents or notes evidencing discussions between them concerning the costing of the project, which the 2^nd defendant would have needed to obtain from its subcontractor in order to put forward its own quotation to its client.  The judge also noted that no good explanation for the absence of any such documentation had been advanced by the 2^nd defendant.

13.  So far as the documents that were available were concerned, the judge, in our view reasonably, regarded these as being peripheral compared to the documentation that he had expected to see.  He also correctly observed that they were contradictory, in that while some pointed to Shun Lee Engineering as being the main subcontractor of the 2^nd defendant, one or two might tend to suggest that the third party was a subcontractor, and perhaps the main subcontractor.  Thus, the certificate of insurance was regarded by the judge as being a document of some significance, as it is generally the obligation of the main contractor or subcontractor to provide insurance in respect of the works undertaken.  The available certificate in this case had been taken out by Shun Lee Engineering, which pointed towards it being the entity (or at least, one of the entities) that had undertaken work as a subcontractor of the 2^nd defendant. The judge also accepted that the first invoice issued by the third party (which included some work that would have been done by the 1^st defendant and should on the third party’s case have been payable to Shun Lee Engineering) and the certificate of completion (which would normally be issued by the principal subcontractor) would tend to support the 2^nd defendant’s case, but accepted the third party’s explanation of these documents, which was that the invoice was created for the purpose of obtaining payment of monies owed to him by Mr Wong Wai Fuk, and the certificate of completion was signed by him without appreciating what it was in order to obtain payment of his fees, as the 2^nd defendant required him to sign it before it would pay him.

14.  Before us, Mr Chain criticised the judge’s assessment of the evidence, contending that the judge should have:

(1) Placed far more weight on the third party’s changes of position (as to the contractual relationship between the 2^nd defendant, Shun Lee Engineering and the third party) during the course of the proceedings and while giving evidence, and concluded that this showed that the third party was not giving truthful evidence on this matter.

(2) Had regard to the (in Mr Chain’s submission) inherent improbability of the 2^nd defendant entering into two separate subcontracts for different parts of the works, as opposed to a single subcontract with one subcontractor (which Mr Chain suggested was in fact the third party).

(3) Placed too much weight on Mr Andy So’s evidence, which was said to be equivocal, particularly as parts of it had not been foreshadowed in his witness statement.

(4) Placed too much weight on the certificate of insurance, which was also said to be equivocal.

(5) Did not give weight to the invoices or letter of completion issued by the third party.

(6) Accepted the third party’s explanation of the 15 June 2004 invoice and the letter of completion even though those matters were not corroborated by other evidence.

15.  Mr Chain submitted that in the light of these matters, the judge had erred in coming to the conclusion that Shun Lee Engineering, and not the third party, was the main subcontractor in relation to the Kerry Cargo Centre project.

16.  In our view, none of these criticisms, whether viewed in isolation or cumulatively, lead to the conclusion that the judge’s finding on the key issue was plainly wrong.  The judge was well aware that the third party had changed his case on the contractual relationships, and clearly had that in mind when considering whether or not to accept the third party’s version of events.  So far as the suggestion that it is unusual to have two contractors side-by-side is concerned, the evidence of Andy So (as well as the third party) was that this was what had happened in this case, and Mr So’s evidence, fairly read, does support the judge’s understanding of it.  As for the certificate of insurance, it clearly suggests that, even if the third party was a subcontractor of the 2^nd defendant, so was Shun Lee Engineering.  That being the case, the question arises as to what its role might have been – given the evidence as to the business venture between Shun Lee Engineering and the third party, and the evidence that the plaintiff was an employee of the 1^st defendant, to whom under the venture Shun Lee Engineering would subcontract work obtained by it, it seems to us to have been well open to the judge to conclude that Shun Lee Engineering was the main subcontractor, with responsibility for the work on which the plaintiff was engaged.  Finally, so far as the conflicting documents are concerned, the complaint is essentially one of the relative weight given to them by the judge, a matter which does not amount to a valid basis for saying that the judge was palpably wrong.

17.  More fundamentally, it seems to us that the conclusion to which the judge came was one which he was entitled to reach, bearing in mind that it was for the 2^nd defendant to establish that the third party was its main subcontractor, with responsibility for the work that the plaintiff was doing when he suffered his injury.  Keeping that in mind, it is quite plain that the evidence proffered by the 2^nd defendant fell short of what was required.  The basic subcontractual documents which one would expect to see had not been produced, with no good explanation being given for the failure to do so.  Simply to suggest, as Mr Lam did, that the 2^nd defendant had had a high turnover of staff does not, in our view, amount to a sufficient explanation for this.  That being the case, the judge was here left with a smattering of documents, which he justifiably described as being somewhat peripheral in nature, some of which pointed in one direction, and others in another.  They were, at best, inconclusive, and as such would not have sufficed to discharge the burden on the 2^nd defendant to make out its allegation that the third party was its main subcontractor.  Moreover, we are satisfied that the judge was entitled, for the reasons that he gave, to regard the evidence of Mr So, and the certificate of insurance, as being of real weight, and in those circumstances to go on to accept the third party’s evidence, despite its imperfections.

18.  For the foregoing reasons, we dismissed the appeal.  Having considered the parties’ submissions as to costs, we order that the costs of the appeal be paid by the 2^nd defendant to the third party, to be taxed on the party and party basis, with certificate for two counsel.