Chan Kam Fai v. Yip Sau Mei t/a Fat Kee Cleaning and Transportation

DCEC944/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES' COMPENSATION CASE NO. 944 OF 2001

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Judgment

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1. This is an application for Employees' Compensation by the Applicant, aged 37 on the date of the accident, who was injured on the 26 March 2001 in the course of demolition work when the mirror hung on the wall that he was knocking down fell off the wall and crashed onto him causing him injury. The Applicant claims compensation pursuant to sections 9, 10 and 10A of the Employees' Compensation Ordinance Cap 282.

2. The issues before this Court are:-

1.	whether the Applicant was an employee of the Respondent at the time of the accident;
2.	whether the Applicant suffered injuries in the course of and arising out of his employment with the Respondent and;
3.	the amount of compensation payable to the Applicant by the Respondent under the Ordinance.

The 1st Issue

3. The parties' evidence in relation to their working relationship differ.

The Applicant's Version

4. The Applicant gave evidence that he was a recipient of comprehensive social security. He was employed by the Respondent at the time of the accident, as a casual worker. He had worked for the Respondent, in demolition work 3 times, before the demolition job wherein this accident occurred. On each occasion he was employed on a casual basis and paid a daily wage. On the first job in Ngau Tau Kwok, he was paid $450.00 per day. His duties included demolishing walls and cleaning building debris. His working hours were between 9 a.m. and 6 p.m. In the second job at Tokwawan, he was paid $500 per day. The third job was at mid-levels where he was paid a daily wage of $500 per day. He did not share any profit with the Respondent and worked as a casual worker paid on a daily wage basis. The Respondent provided all the implements and tools. In relation to the job wherein he suffered the accident the subject of this claim, he stated that on the 24 March 2001, he met the Respondent Yip Sau Mei at the commercial center. She asked him whether he had work. He said 'no'. She informed him that she had a contract and asked him to go to work the next day and he did. He asked whether he could also ask his sister-in-law Luk Fung Hok to work there as she had no work. The Respondent said 'yes', so he asked his sister-in-law whether she would like to take the work and she agreed. He did not know who gave the job order to the Respondent. So Luk Fung Hok also went with the Applicant to work on the 25 March 2001. When he got to the work-site, on the 2nd Floor of The Summit Insurance Building in Nathan Road, Kowloon, he found that the demolition work had already started and a portion of the work had been done. On the work-site there were lots of tools of the Respondent. The Respondent also had a tipper lorry to be used for removal of the construction debris which had to be cleared from the site after the demolition work. The Applicant gave the view that the job would have been completed in between 3-4 days. At the work-site, on arrival of Luk Fung Hok, the Respondent asked to look at the I.D. card of Luk Fung Hok. The Applicant stated that the understanding between himself and the Respondent was that there were fixed working hours of 9 a.m. to 6 p.m. beyond which overtime would be due.

5. In the course of the demolition, on the 26 March 2001, he suffered the injury when the wall he was knocking down fell and a mirror which was hung on the wall crashed down against him causing him injury.

6. Subsequent to the accident, an ambulance was called and he was taken to the hospital by Luk Fung Hok. After his discharge from hospital, the Respondent and her husband visited him at his home and gave him and Luk Fung Hok $1,000.00 each in respect of the 2 days' work. The Respondent also brought a chicken and tonic food and gave him an additional $1,000. Subsequently, at the Applicant's request, the Respondent lent him $2,500 when his mother was injured in Shenzhen and required money for medical treatment. At the instigation of the Respondent, he went to meet with the Respondent and a District Board Member, Mr. Chiu, at his office when through Mr. Chiu's mediation an offer of $60,000 in compensation was made to him by the Respondent. However he would not accept it. Instead he asked the Respondent to provide him with medical treatment to treat his injuries and to pay him his sick leave pay.

The Respondent's Version

7. The Respondent and her husband gave evidence. The Respondent's version of facts and that of her husband was different from that of the Applicant. They state that the Applicant was their partner with whom they entered into the demolition job on the 25th March. The Respondent and her husband denied the fact that the Applicant had worked for the Respondent 3 times before the job in question wherein the Applicant was injured. The Respondent stated that she and the Applicant first entered into partnership on the 9 March 2001. She stated that the Applicant telephoned her to enlist her help to work as his partner. The Applicant did not say how much she would be paid. However, at the end of the job the Respondent was paid $900. Both the Respondent and her husband sought to say that the basis of their pay was calculated on the size of the wall demolished. Were two walls demolished of the size of 10 feet by 10 feet they would be entitled to the sum of $800. With an element of profit this would come to $900. In fact, both the Respondent and her husband, 蔡瑞發 , stated that the job they were asked to do on the 9 March consisted of clearing the construction debris at the premises in Ting Kok Road, in Tai Po, New Territories, after the demolition work and thereafter transporting one tipper lorry full of such debris to a site for disposal. Both the Respondent and her husband stated that the Applicant was not at the site when they got there. They did not see the Applicant doing any demolition work at the site, for, when they arrived at the site, the demolition work had been completed. The Respondent's husband at first gave the same account as the Respondent for the basis for the calculation of the $900 paid to them. Subsequently, he gave another version and stated that the $900 must have been calculated on the basis of half a days work at $250, for himself, his son, and another half day's wage for provision of the tipper lorry by them coming to $250 X 3 = $750. The profit element must have been the remaining sum of $150. From this it was clear that the Respondent and her husband were struggling to establish that the basis of computation of the $900 paid to them included some element of profit sharing although how $900 was made up was not clear to them.

8. In relation to the job wherein the Applicant was injured, the Respondent's husband gave evidence that he received a demolition contract that was too big for their family business. It had to be completed in 5 days time. The Respondent suggested to her husband that they asked the Applicant to be their profit sharing partner in this job. He himself did not like the idea but the Respondent reminded him of the fact that the Applicant had previously given them the job on the 9 March 2001, hence they should repay the Applicant. The Respondent then asked the Applicant to be her partner in this job. The Respondent gave evidence that at that point, the Applicant asked whether the job was a big one and whether they needed an extra worker. The Respondent replied yes, and the Applicant called his sister-in-law Luk Fung Hok to work for him in this job. Both the Respondent and her husband were careful to say that Luk Fung Hok was the employee of the Applicant and not their employee. The Respondent stated that although she did not spell out the terms of the partnership to the Applicant, the Applicant knew that by their past course of dealing i.e. in the last partnership on the 9 March 2001.

9. The terms of partnership were that each worker would be paid $500 per day. The one who provides tools and equipment and the vehicle would be paid an additional day's wage for that. When the job is finally costed, out of the total sum paid the daily hire would be calculated and paid out to those entitled. If there is any profit remaining it would be divided between the partners namely the Respondent and the Applicant. The Applicant and the Respondent would equally bear the risk of loss and would equally share any profit made. However, were the partners unable to complete the job because their principal contractor has a job for them to do or because of injury, they could resign from the partnership and immediately cease to be liable to bear the risk of loss and would not be entitled to share profit but would be entitled to the daily wages of the days of work undertaken. However, upon cross-examination, the Respondent's husband stated that the right to resign from the partnership in the situation aforesaid is only available to the partner who had been invited to join the partnership. It did not apply to the partner who obtained the order. Hence the party invited to be partner would have the option to cease the partnership without notice whilst the partner who obtained the job order would not be so entitled. The rationale for the right of the invitee partner to cease partnership without notice is to provide for the situation wherein that partner's principal contractor may call on that partner to do a job and in this line of work one cannot afford to turn down job orders from one's principal contractor as one cannot afford to lose this relationship as jobs are hard to come by.

10. Both the Respondent and her husband did not dispute that they provided the tools equipment and the tipper lorry. The Respondent stated that she could not remember if the Applicant brought tools.

11. The Respondent said that there was no fixed working hours. The Respondent's husband stated that the reason he engaged the Applicant in a partnership is because when the job needed to be finished in a fixed number of days and the job was a big one, if he engaged a partner, the partner would not insist on leaving work at 6 p.m. but because of the profit element would work over-time to complete the job on time. He stated that employees may, on pretext of family circumstances, refuse to do over time, and he would be left in the lurch.

12. The Respondent stated that during the demolition work on the 25 March 2001, he had to warn the Applicant that his manner of knocking down the wall was dangerous. He told him not to do it in that way as that manner of demolition of walls was generally termed "suicidal" as the wall could fall on the worker. Again immediately before the accident he warned the Applicant about the manner he was knocking down the wall on which the mirror which eventually crashed on him was hung. He also told the Applicant to break the mirror first. It was shortly after that the accident happened. He stated that this did not amount to an order given by him because the Applicant was his partner. He stated that were the Applicant his employee he would have dismissed him on the spot or asked him to work in another spot.

13. Shortly after, he heard a crash and the morror fell down and he saw that the Applicant was injured. He rushed to where the Applicant was and helped him tie a wire around his arm to stop the bleeding. He called for an ambulance and he and Luk Fung Hok took the Applicant down to wait for the ambulance and he told Luk Fung Hok to take the Applicant to the hospital.

14. After the Applicant's discharge from hospital, the Respondent and her husband went to visit the Applicant at his home and brought a chicken and $1,000 as a gift. They also paid the Applicant $1,000 for his wages for 2 days work and also paid Luk Fung Hok $1,000 wages for 2 days work. On this occasion, the Respondent's husband asked the Applicant and Luk Fung Hok whether they wished to continue with the contract. Both said they did not want to. The Respondent and her husband saw this as the Applicant's decision to cease the partnership. Hence, the Applicant only had the right to be paid the 2 days wages. Subsequently, the Applicant had requested a loan from the Respondent and her husband 3 times. On the 1st occasion, the Applicant informed the Respondent that his mother in Shenzhen had met with an accident and needed money for treatment. The Respondent and her husband lent him $2,000. Thereafter they did not lend him anything. They arranged with the Applicant to see their insurance broker who came to visit and this insurance broker looked at the Applicant's insurance policy and advised the Applicant that his accident insurance policy had expired.

15. Subsequently, the Respondent and her husband attended at the office of Mr. Chiu, a District Board member who attempted mediation between him and the Applicant. This mediation was at the Applicant's instigation. At the suggestion of Mr. Chiu, the Respondent offered the compensation of $60,000 to the Applicant. However in doing so, he stated that as the Applicant was a partner he was not liable to compensate him.

Assessment of Credibility of Witnesses

16. I formed the impression that the Applicant gave evidence in a straightforward manner. I formed the impression that Luk Fung Hok was also straightforward and direct in her evidence. Both stood up well to cross-examination. The Applicant gave me the impression that he had nothing to hide. I found the contents of his evidence credible. I found no inconsistencies, no contradictions.

17. In relation to the Respondent and her husband when they gave evidence I was aware of the fact that this case could have caused a lot of pressure on them and some of this reflected in their demeanour. They admitted that they had not purchased Employees' Compensation Insurance. They both stated that their family finances were tight as they had purchased a home with a mortgage to pay off. The Respondent's business is a family business run on a tight budget. Personally the Respondent's husband had suffered from cancer of the esophagus and is still feeling the effects of this. The Respondent is illiterate and her husband has not had much education. These were obvious factors which I took into consideration when observing their demeanour. Despite having considered these, I found their credibility as witnesses wanting.

18. I found many aspects of their evidence incredible and did not hold up to scrutiny. In relation to the first contract on the 9 March 2001 when the Respondent and the Applicant were alleged to have partnered, it is clear, that the job that the Respondent actually did amounted to nothing more than to clear rubbish and to transport the rubbish away after demolition work. There is no evidence of anything more than a job order given to the Respondent to do that. It seems there had been no terms agreed between the Respondent and the Applicant about partnership nor profit sharing. Hence, the Respondent and her husband were at a lost as to how the alleged profit element is to be worked out. Both stated that they did not see the Applicant on the work site nor did they have any information as to how the job was done or who did it. For the Respondent to say that this job was a partnership is to grab in the air as there is clearly no partnership terms to speak of. The Applicant himself stated in evidence that it was not a job where in he was involved. The Applicant merely stated that he was the conduit for introducing the Respondent to the contractor for the transportation job. He was also the conduit for payment to the Respondent. I see nothing from the Respondent's evidence that could contradict this.

19. In relation to the terms of the alleged partnership between the Applicant and the Respondent, of the job on the 25 March 2001 it seems that these were not spelt out between the Respondent and the Applicant. According to the Respondent's evidence all that was said by the Respondent to the Applicant was to ask the Applicant to be her partner. The various terms related to by the Respondent and her husband were alleged to be customary terms of partnership. However there is no evidence of such terms having been stated to the Applicant. Nor is there evidence of custom.

20. I form the view that it is highly improbable that the Applicant was offered a partnership by the Respondent on profit sharing terms. The reason stated by the Respondent's husband for the offer is not credible. He stated that the job was a rather big one requiring to be completed in 5 days. Were the Respondent to hire workers, workers may not be willing to work over-time and hence if the job needed to be rushed through, the workers may not co-operate. Whereas if the Respondent partnered with another, the partner would, because of the profit element be willing to work overtime to rush through the job. However, one of the terms of partnership is that the partner that had been brought in could terminate the partnership without notice if his own principal contractor offered him a job. This being the case if this were to happen, the Respondent would be left high and dry and would have real difficulty in completing the job on time. Hence he would in a worse position than he would have been in if he had hired workers. Were he to hire workers there would be an element of predictability. Further, the Respondent stated the reason why she offered the Applicant this job was because the Applicant had given the Respondent a job on the 9 March 2001. However, the job which the Applicant participated in on the 25 and 26 March was worth $30,000 with a much higher profit potential than the job on the 9 March 2001 where the Respondent was paid $900. As the Applicant's solicitor pointed out, in the circumstances of the Respondent who had family expenses and a mortgage to repay, it would seem exceptionally generous to offer to the Applicant a partnership in the job with equal profit sharing as this would inevitably decrease the Respondent's share of profit. For all these reasons I find the Respondent and her husband's version of facts where it contradicts that of the Applicant and his witness Luk Fung Hok to be highly improbable and not capable of believe. I prefer the Applicant's version of evidence and I also accept the evidence of Luk Fung Hok which I find credible. I therefore accept the Applicant's version of facts and that of his witness Luk Fung Hok.

The Test to be Applied

21. The starting point is the decision of Cook J. in Market Investigations Limited v Minister of Social Security [1969] 2 QB 173 which was approved and applied in the Privy Council case of Lee Ting Sang v Chung Chi-keung [1990] 2WLR 1173. Cooke J. stated in the cited caae;

"The fundamental test to be applied is this:

'Is the person who has engaged himself to perform these services performing them as a person in business on his own account?' If the answer to that question is 'yes', then the contract is a contract for services. If the answer is 'no' then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task."

Chitty on Contract Volume II pages 530 to 536 paragraphs 35.08 to 35.23, sets out 10 factors which should be considered in determining whether there was an employer employee relationship. These have been clearly set out in the judgment of HH. Judge Carlson in the case of Fok Kall v Wong Cheung Hon in ECC No. 851 of 1999 and I will not herein set them out but shall rely on his clear summary.

22. Having reference to the aforesaid, I come to the finding that the Applicant was an employee of the Respondent for the following reasons:

1.	Control and Superintendence It was clear from the evidence of Luk Fung Hok that she had been directed by the Respondent's husband to work in a certain sector of the work-site and even after the Applicant had an accident, when she wanted to go to help him the Respondent's husband directed her to stay in her area. He also directed her to take the Applicant to the hospital. Therefore it is clear that even Luk Fung Hok received instructions as to what to do and she followed the instructions. The Applicant stated that he had to take the instructions of the Respondent and her husband. The Applicant had to take his commands related to the demolition of the walls. The Respondent told him to be careful in demolition of the ceiling and to remove the rubbish. When he had completed the job she would come to inspect the work and give comments. There was clearly an element of superintendence and control.
2.	The Organization Test The Respondent had asked to look at the I.D. card of Luk Fung Hok before she started work. The Applicant could not be said to have engaged himself to perform the services as a person in business on his own account. He and Luk Fung Hok were doing a specific task which is a part of the main business of the Respondent who undertakes demolition and cleaning work.
3.	Power of Selection and Appointment The Respondent had the power to select and appoint her employees. The Applicant was selected by her when she approached him to ask him to work for her. Similarly even when the Applicant wished to recommend his sister-in-law, he had to ask her to employ her.
4.	Payment of Wages and Salary The Respondent paid the Applicant $1,000 representing 2 days' work and also Luk Fung Hok $1,000 for 2 days' work. According to the Applicant that was the prevailing daily wage.
5.	Supply of Equipment and Ownership of Assets The Respondent had supplied the tools and equipment and also the tipper lorry for the work.
6.	The Fixing of Times and Place of Work The Applicant stated that the working time was fixed by the Respondent from 9 a.m. to 6 p.m. Before 6 p.m. he could not leave the work site.
7.	Personal Performance From the evidence it would seem that the work had to be personally performed by the Applicant. It is clear that there was no possibility of delegation of his work to another to take his place.
8.	The Extent of the Obligation to Work or to Employ It is clear that this is a contract which entitles the Respondent to the full-time or exclusive services of the Applicant for the period of the job.

23. I therefore find that the Applicant was an employee of the Respondent.

2nd Issue

24. The injuries were clearly sustained in an accident arising out of and in the course of employment of the Applicant by the Respondent.

3rd Issue

25. This relates to the assessment of compensation.

Section 9 Compensation

26. Both parties agree to the Assessment on Review of Assessment of the Employees' Compensation (Ordinary Assessment) Board of Loss of earning capacity permanently caused by the injury at 11%.

27. Compensation for permanent partial incapacity under section 9 is calculated by multiplying the percentage of loss of permanent earning capacity assessed at 11% by the compensation payable in the case of permanent total incapacity as set out in Section 7(1)(a) which in the case of the Applicant being under 40 years of age at the date of the accident is 96 times monthly earnings or $2,016,200, whichever is the less.

28. The Applicant worked on a casual basis and had worked for the Respondent for 2 days before this accident happened. Section 11(2) of the Employees' Compensation Ordinance applies to this situation. The subsection states:-

"(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 . . .was being earned. . . by a person of similar earning capacity in the same grade employed in the same class of employment and in the same district."

29. The Applicant's solicitor sought to rely on the statistics "Average Daily Wages of Workers Engaged in Government Building and Construction Projects" in March 2001 kept by the Wages and Labour Costs Statistics Section of the Census and Statistics Department's of the Hong Kong Special Administrative Region. The average daily wage stated there for an unskilled labourer, excavator, concretor's labourer stated therein was $628.20. However there is no statistics of the average number of days that such a casual labourer would work per month.

30. The Applicant's solicitor asked that I adopt 20 days being the average number of days that such a labourer would work per month. Having regard to the fact that the Applicant had been on comprehensive social security and must have had difficulty in finding work and from the evidence of the Respondent's husband that work was not easy to come by, I am not able to adopt 20 days being the average number of days that such a labourer would work per month. I adopt 10 days being the average number of days that such a labourer would work per month.

31. I assess section 9 compensation at $628.20 X 10 X 96 X 11% = $66,337.92.

Section 10 Compensation

32. The Applicant was granted sick leave from 26 March 2001 to 29 March 2002. The Applicant is entitled to be paid 4/5 of his wages throughout the sick leave period. The compensation under this section is therefore $6,282.00 X 4/5 X 12.1 = $60,809.76.

Section 10A Compensation is agreed at $255.

33. Total compensation is calculated at $66,337.92 + $60,809.76 + $255 = $127,402.68.

34. I give judgment for the Applicant in the sum of $127,402.68 together with interest from 26 March 2001 to date of judgment at half judgment rate and thereafter at judgment rate until payment. I grant an order nisi for costs of this application to the Applicant to be paid by the Respondent to be taxed if not agreed and the Applicant's own costs to be taxed in accordance with the Legal Aid Regulations.