CHAN SIK PAN v. WYLAM’S SERVICE LTD AND OTHERS

cacv 17/2003 & CACV 66/2003

in the high court of the

hong kong special administrative region

court of appeal

civil appeal nos. 17 & 66 of 2003

(on appeal from HCPI No. 648 of 1995)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  I have had the benefit of reading in draft the reasons of Le Pichon JA.  I agree with them.  There is nothing I can usefully add.

Hon Le Pichon JA:

2.  This is an appeal from the judgment of Suffiad J dated 16 December 2002 in a retrial ordered by Court of Final Appeal on liability only. The 3^rd defendant was found to be the plaintiff’s employer and the plaintiff’s claim against the 1^st and 2^nd defendants was dismissed.  At the conclusion of the appeal hearing, the appeal was dismissed with costs with written reasons to be handed down later which we now do.

Background

3.  The plaintiff who was a skilled fire installation worker sustained personal injuries in the course of employment at a construction site in Windsor House on 21 August 1992.  The plaintiff did not know as a fact who his employer was at the time of the accident.  Initially, he sued the 1^st and later added the 2^nd and 3^rd defendants on the basis that one of them must have been his employer at the time.  At the trial below, the plaintiff’s primary case was that the 1^st defendant was his employer, relying on the matters the judge identified in paragraph 8 of his judgment:

“(a) The 1^st defendant filled out a Form II, being notification to the Labour Department of an accident to an employee, in respect of the accident to the plaintiff in which the 1^st defendant admitted itself to be the employer of the plaintiff.

(b) According to the plaintiff, when he attended the office of the 1^st defendant in December 1992, he was told by both a Miss Ng of the 1^st defendant and by Mr Wong Ng Kun that the 1^st defendant was his employer.

(c) Two agreements entered into between the plaintiff and the 1^st defendant in January and May of 1993 in which the 1^st defendant, as the employer of the plaintiff, agreed to and in fact paid the plaintiff two-thirds of his salary during part of the sick leave period granted to the plaintiff.

(d) The worker’s Attendance Book in which reference is made to workers of the 1^st defendant.

(e) Letter from the 1^st defendant to the principal contractor, [Carrier] dated 15 June 1993 in which the 1^st defendant admits to being the employer.

(f) The objection by the 1^st defendant to the assessment of 15% loss of earnings capacity of the plaintiff in which the objection is made by the 1^st defendant as the employer of the plaintiff.

(g) Insurance claim made by the 1^st defendant to its insurers on behalf of the plaintiff as its employee.

(h) The payment into court made by the 1^st defendant and others in ECC Case No.502 of 1994 (‘the ECC Case’).”

The plaintiff also relied on estoppel. 

4.  The 1^st defendant’s stance was that he had merely subcontracted the wet part of the fire installation works to the 2^nd defendant who had sub-subcontracted the labour and small metal parts to the 3^rd defendant.  The relationship that existed between the 1^st, 2^nd and 3^rd defendants was a situation commonly known as “chau sam sha” in the trade.  It was submitted that the plaintiff was the employee of the 3^rd defendant who was the “sam sha” or sub-subcontractor.  The 2^nd defendant ran a similar case.

5.  While the 3^rd defendant accepted that a “chau sam sha” situation did exist between the defendants, he maintained that he was not a sub-subcontractor, that his position was akin to that of a head worker and, as such, was an employee himself and argued that he, the plaintiff and all the other workers were the employees of either the 1^st defendant or the 2^nd defendant, depending on the true relationship between them. 

The evidence

Pre-accident events

6.  On 8 June 1992 Carrier (Hong Kong) Limited (“Carrier”) as the primary subcontractor of the project at Windsor House entered into a secondary subcontract with the 1^st defendant who was described as the secondary subcontractor.  From the recitals, it is clear that the main contractor was OLS International Ltd.  The secondary subcontract works were for the “supply, installation, supervision, testing and commissioning of Fire Services System” (“the fire installation works”). 

7.  The 1^st defendant was a contractor registered with the Fire Services Department to carry out fire installation works and held the necessary license.  Carrier subcontracted the fire installation works in relation to the project to the 1^st defendant who, through its agent United Company, subcontracted the wet part of it to the 2^nd defendant and the dry part to another subcontractor.  The 1^st defendant entered into the subcontract with the 2^nd defendant on the understanding that the 1^st defendant would have the necessary insurance which would extend to and cover workers employed by the subcontractors. 

8.  Having entered into his contract with the 1^st defendant for the wet part of the fire installation works, which included all the material for pipes, spare parts, tools and labour, the 2^nd defendant entered into an agreement with the 3^rd defendant who agreed to provide the labour and small metal parts of the fire installation works at an agreed lump sum of $780,000.  An arrangement was made with a hardware shop which allowed the 3^rd defendant to obtain tools and small metal parts on credit to be paid for by the 2^nd defendant first but these expenses would ultimately be deducted from the amount due to the 3^rd defendant under the subcontract.  The 3^rd defendant agreed that as a “sam sha” he recruited all the workers, provided them with tools and instructed them what to do and where to do it.

9.  The 2^nd defendant was provided with name cards by the 1^st defendant describing the 2^nd defendant as a foreman of the 1^st defendant.  These were used when he was introduced to representatives from Carrier and at site meetings with those representatives, he would represent the 1^st defendant.  It was not made known to Carrier that the 2^nd defendant was a subcontractor of the 1^st defendant.

10.  Prior to August 1992, the 3^rd defendant employed only four to five workers including himself on site.  The decision as to the number of workers was the 3^rd defendant’s.  The 3^rd defendant supervised and instructed the workers himself although the 2^nd defendant would liaise with the 3^rd defendant concerning the works and monitored the quality and progress of work done.  The 2^nd defendant paid the 3^rd defendant periodically according to the value of the works completed.  The 3^rd defendant signed receipts for payments made.  It was the 3^rd defendant who paid the workers their wages.

11.  At the end of July 1992, the 2^nd defendant was contacted by Joe Wong of the 1^st defendant.  He was informed that as the project had been delayed by heavy rains that summer, the owners were anxious to catch up.  They requested that 30 workers be engaged to work on the day shift and if necessary night work should also be carried out to ensure completion by October.  The 2^nddefendant relayed this request to the 3^rd defendant who replied to the effect that the original subcontract between them did not contemplate night work and if that were to be done, the 3^rd defendant would require to be reimbursed the night work payment to workers.

12.  The owners not only agreed to the 3^rd defendant’s condition but also promised a bonus to all the contractors down the line.  The 2^nd defendant stood to receive $150,000 as his share of the bonus.   He, in turn, promised to pay $100,000 out of that to the 3^rd defendant.

13.  Carrier requested that a written record be kept daily of the workers on site.  That resulted in the attendance book being brought into existence.  All the workers working at the site were required to sign the attendance book each day since payment of wages during the special arrangement would depend upon the headcount of the workers working on the site.  The 2^nd defendant made the following entry on the front page of the attendance book:

“To every employee’s attention:

 Please sign your attendance before 10:00 every day.

 Thank you for cooperation.

Wylam’s Services Ltd”

14.  The 2^nd defendant’s explanation for this was that as Carrier had requested that a record of workers be kept and as it only recognised the 1^st defendant as its subcontractor on site because it was the 1^st defendant who held the necessary licence, the 2^nd defendant considered it appropriate to describe the workers who were required to sign that the attendance book as the 1^st defendant’s employees.

15.  The special arrangement lasted less than two months.  There was a conflict of evidence as to whether tools for the additional workers were provided as per the arrangement that was already in existence between the 2^nd and 3^rd defendants referred to in paragraph 35 of the judgment which was the 2^nd defendant’s evidence (and in this connection, it is to be noted that the first reference in paragraph 43 to the “3^rd” defendant is plainly a typographical error the “2^nd” defendant) or whether they would be provided at the expense of the 2^nd defendant as was the evidence of the 3^rd defendant. 

16.  The plaintiff was one of the additional workers brought to work as a result of the special arrangement.  When the plaintiff reported for work, the 3^rd defendant told him that he had to sign the attendance book whenever he reported for work.  According to the plaintiff, the 3^rd defendant held the key to the tool room where the workers also changed, took the workers to the works site, gave instructions to them and also inspected the work done.  He was of the view that as the 3^rd defendant had hired him, the 3^rd defendant could also fire him.  The accident occurred within about 10 days of the plaintiff working at the site.

Post-accident events

17.  After his discharge from hospital in December 1992, the plaintiff went to the Labour Department and was told that the 1^st defendant had, as the employer, already reported the accident.  A Form II had been filed on 8 October 1992 by the 1^st defendant giving notice of the accident pursuant to section 15 of the Employees Compensation Ordinance, Cap. 282 (“the Ordinance”).  That form named Carrier as the principal contractor.  The plaintiff was told to take his sick leave certificate to the 1^st defendant’s office which he did in December 1992.  He was seen by a Miss Ng who told him that the 1^st defendant was his employer.  He was then taken to see a Mr Wong to whom he gave the sick leave certificate. 

18.  Meanwhile the 1^st defendant made a claim on its insurance policy relating to compensation for the plaintiff.  Whilst the 1^st defendant did have an insurance policy, it only realised that that was restricted to direct employees of the 1^st defendant and did not cover workers of subcontractors when the insurance company rejected the claim for compensation made on behalf of the plaintiff on 1 December 1992.  In the past and up until the time of the claim made on behalf of the plaintiff, the insurance company had never questioned claims made by the 1^st defendant.  However, on that occasion, it required employment records from the 1^st defendant and when these could not be provided, the insurance company rejected the claim.

19.  The judge found that after that, in January 1993, the Labour Department contacted Mr Wong regarding the plaintiff’s complaint that he had not received his sick leave compensation.  When Mr Wong explained that the plaintiff was the employee of the 1^st defendant’s subcontractor, he was told that even if the 1^st defendant were “a principal contractor”, it remained liable to compensate the plaintiff and if it did not do so it would be prosecuted.  That Mr Wong was so advised this was supported by a letter dated 9 January 1993 from the Labour Department to the 1^st defendant.  It was in those circumstances that the sick leave compensation came to be paid to the 1^st defendant in January and May 1993.

20.  At about that time, the 1^st defendant was encountering difficulties with Carrier who was withholding further payment to the 1^st defendant until the issue of compensation was resolved because Carrier had been named as the principal contractor on Form II.  The 1^st defendant found itself in a quandary having regard also to what they had been told by the Labour Department.  It therefore decided to reply to Carrier by letter dated 15 June 1993 stating that the plaintiff was its “employee … within the meaning of the legislation” but that he was no longer an employee of the 1^st defendant as at the date of that letter.

21.  On 19 November 1993, the Employees’ Compensation (Ordinary Assessment) Board (“the Board”) issued a certificate of assessment assessing the plaintiff’s loss of earning capacity to be at 15%.  At about that time, the 2^nd defendant happened to mention to Mr Wong that he had seen the plaintiff transporting or lifting cloth.  That was the basis of the objection filed by the 1^st defendant pursuant to section 16G of the Ordinance on 27 November 1993.  It was Mr Wong’s evidence that the objection had been lodged by the 1^st defendant not as the direct employer of the plaintiff but as the principal contractor.  However, the printed form which referred to the party objecting as the employer was never amended or corrected when it was filed.  As a result of the re-assessment, the plaintiff’s loss of earning capacity was reduced from 15% to 14% on 4 March 1994.

22.  Sometime in 1993, the 3^rd defendant arranged to have tea with the plaintiff and the 2^nd defendant.  The purpose of this meeting was to enable the 2^nd defendant to make an offer to the plaintiff to settle the whole matter at $500,000 on behalf of the 1^st defendant.  The plaintiff wanted twice that amount and nothing came of that meeting. 

23.  In about October 1993, the 2^nd defendant and the 3^rd defendant settled the final accounts between them for the project, with the 2^nd defendant paying a further $189,179 to the 3^rd defendant.

24.  On 16 August 1994, the plaintiff made a claim for employee compensation in the District Court against the 1^st defendant and Carrier as employer and principal contractor respectively.  Whilst admitting that Carrier was the principal contractor, the 1^st defendant denied that it was the employer and in its defence in the present High Court proceedings, the 1^st defendant asserted that the 2^nd defendant and/or the 3^rd defendant was the plaintiff’s employer.  The 2^nd defendant in turn alleged that the 3^rd defendant was the plaintiff’s employer.  As a result, the plaintiff amended his claim for compensation under the Ordinance on 30 November 1996 and 2 April 1998 by suing the 2^nd defendant and 3^rd defendant as employer in the alternative. 

25.  On 19 June 1999, the 1^st defendant, the 2^nd defendant and Carrier (but not the 3^rd defendant) made a joint payment into court of $250,000.  After receiving advice from his solicitors based on the reassessment made by the Board, the plaintiff accepted the payment into court which brought the employee compensation claim to an end.

The judgment below

26.  The judge made the following findings:

“87. From all the evidence I find the following facts :-

(1) There was a subcontract between the 1^st defendant and the 2^nd defendant whereby the 2^nd defendant was subcontracted the wet part of the fire installation works for the project at Windsor House some time in March or April 1992.

(2) The 2^nd defendant further sub-subcontracted the labour, tools and small metal part of his subcontract in the project to the 3^rd defendant.  As such it was left to the 3^rd defendant solely to decide on the number of workers to engage to perform the works.

(3) A special arrangement was agreed to by all concerned to increase the day workers to about 30 and for night work to be carried out in order to hurry up the works to meet the deadline in October.  The special arrangement did not alter the underlying relationship between all three defendants in the project.

(4) The 3^rd defendant recruited and hired the plaintiff (with the assistance of Tong Hung and Ng Chi Hung) as one of the additional worker in respect of the special arrangement to hurry up the works in mid August 1992.

(5) Whilst the 1^st and 2^nd defendants were present on site either through representatives (in the case of the 1^st defendant) or in person (as in the case of the 2^nd defendant) to supervise the quality and progress of the works, the supervision and instruction of each of the worker including the plaintiff remained in the domain of the 3^rd defendant solely.  The right to hire and fire workers remained solely the responsibility of the 3^rd defendant.

(6) All the tools including the tools for the additional workers during the special arrangement were provided ultimately at the expense of the 3^rd defendant.

(7) The wages of the workers (with the exception of the overtime night work) was paid to the workers from the subcontract sum agreed between the 2^nd and 3^rd defendants, and therefore was paid to the workers, including the plaintiff, by the 3^rd defendant.”

27.  Those findings were made in the light of the judge’s assessment of the evidence.  The judge had found some aspects of the evidence given by Mr Wong and the 2^nddefendant to be somewhat unsatisfactory.  In paragraphs 69 and 75 of his judgment, the judge explained that this was due to the fact that he was left with the distinct impression that there was a scheme (involving the 1^st defendant and the 2^nd defendant) to hide the fact, at least from Carrier, that the 2^nd defendant was a subcontractor of the 1^st defendant but holding himself out to be its foreman and that the reason for that was the fact that it was the 1^st defendant who held the necessary licence for fire installation works.  It also followed that the 2^nd defendant did not want to divulge the fact that the 3^rd defendant was his subcontractor. 

28.  Other matters which weighed with the judge in reaching his findings included the judge’s acceptance of Mr Wong’s evidence that prior to the claim for compensation lodged with the insurers on behalf of the plaintiff, the 1^st defendant had never experienced any difficulties with insurance claims and as to what Mr Wong had been told by the Labour Department in January 1993, namely, that even as a principal contractor, the 1^st defendant was still liable to pay sick leave compensation to the plaintiff.  More importantly, and pivotal to his findings, was the fact that the 3^rd defendant did not dispute that there was an agreement between him and the 2^nd defendant to supply labour and small metal parts at a lump sum of $780,000.  As the judge explained (at paragraph 80 of his judgment),

“[For] the 2^nd defendant to be in a position to enter into such an agreement with the 3^rd defendant he (i.e. the 2^nd defendant) could not be anything other than a subcontractor of the 1^st defendant.”

29.  On estoppel, it was said that the 1^st defendant was estopped from denying that it was the employer because it had filed an objection to the assessment made by the Board of a 15% loss of earnings capacity, causing the Board to reassess the loss to 14%.  The plaintiff, relying on the reassessment, accepted the payment of $250,000 made by the 1^st and 2^nd defendants together with Carrier in settlement of his claim for employee’s compensation. 

30.  The judge rejected the plaintiff’s case based on estoppel for two reasons.  First, the judge found that the plaintiff was relying on the downward reassessment and not on the fact that the 1^st defendant was stated to be the employer on the objection form.  Secondly, at all material times up to the settlement of the employee compensation claim, the issue as to who was the plaintiff’s employer remained a live issue.  There was no question of the plaintiff being misled by any representation from the 1^st defendant that it was the plaintiff’s employer.

This appeal

31.  The 3^rd defendant’s appeal was confined to the judge’s finding that the 3^rd defendant was the plaintiff’s employer.  The plaintiff advanced an additional ground of appeal based on estoppel.  I will first deal with these in turn.

The judge’s factual finding

32.  Mr Wong who appeared for the 3^rd defendant challenged the judge’s finding that the 3^rd defendant was the plaintiff’s employer.  Although in his written submissions Mr Wong had raised a number of matters, at the appeal hearing, his substantive point was that the judge had erred in failing to make a finding of fact that the special arrangement that came into effect in August 1992 changed the underlying relationship of the 1^st, 2^nd and 3^rd defendants in the project.  Implicit in the submission was an acknowledgement that the judge was correct in his finding of the underlying relationship prior to the special arrangement.  It was the judge’s finding that the 1^st defendant had subcontracted the wet part of the fire installation works to the 2^nd defendant who had then sub-subcontracted the labour and small metal parts to the 3^rd defendant.  On that analysis, the 3^rd defendant was a sub-subcontractor with the necessary consequence that the plaintiff was the 3^rd defendant’s employee.

33.  It was submitted that once the special arrangement came into effect, that relationship changed and had to be reassessed.  As the plaintiff was only recruited to work at the site after the start of the special arrangement, that reassessment would effectively determine who the plaintiff’s employer was.  Mr Wong referred to a passage in the evidence of the 2^nd defendant relating to the special arrangement:

A.	He said he hoped that we would be able to complete the work in mid-October but he asked us if it was possible for us to increase the number of worker.  And he suggested that if we were to catch up with the delay and to complete the work on schedule, 30 workers, would it be enough to make up the delay.  After I had understood what he meant, I directly talked to Yu Chi-kong [the 3rd defendant] on this matter.  This was the idea of the landlord.
…
Q.	Yes.  And then what happened?
A.	After Yu Chi-kong had received this message, he reflected to me that judging from the original installation period in accordance with the contract, he thought that the installation period should not be so short.
Q.	Yes.  What else?
A.	So he said, ‘Apart from so many numbers of workers to do the work, if we still could not make up the delay, so what?  So what would happen?’  He raised such a question with me.  So I proposed to him in the event that 30 workers were still insufficient to make up the delay, how about doing work at night.
Q.	And how did he respond to this?
A.	Yu Chi-kong told me that in the price quotation he had given that he had not taken into consideration working at night.  He kind of raised his condition with me, that if night-time work was required I had to give him extra night-time work money.
…
Q.	And what is the agreement then you reached?
A.	From August onwards, that is to say, the main condition is that the project had to be completed in mid-October.  If we were able to accomplish this goal, then the night shift money would be supplemented.
Q.	By whom?
A.	Of course, the one above us who’s the representative of Wylam’s to supplement the money to me.
…
A.	Then I would distribute or to supplement the money to Yu Chi-kong.  But the book, the work number book, has to be signed in order to count the number of workers.
Q.	If you complete the work by mid-October, besides that you receive overpay or night-shift payment, do you have any other agreement of any other proposal?
A.	Yes.
Q.	What’s that?
A.	Wong Siu-keung passed the message on to me that Carrier would give a bonus.
Q.	Bonus to whom?
A.	The bonus, the monetary bonus, would also go step by step downwards.

(Tr. pp. 226L – 227S) 

Mr Wong submitted that once the special arrangement came into place, the 3^rd defendant’s employees ceased to be his employees and became employees of the 1^st or 2^nd defendant. 

34.  I do not see that that was so and certainly nothing in the transcript the court has been referred to compelled such a conclusion.  The special arrangement was nothing more than the 3^rd defendant agreeing to put more workers than had originally been envisaged on the job and therefore completing it in a shorter time.  He (the 3^rd defendant) would be reimbursed additional expense that had to be incurred in respect of overtime or night work since that had not been taken into consideration in the original quotation.  It was on that basis that the 3^rd defendant was eventually paid as appears from his evidence:

Q.	…  As far as you recall, did you receive more than 780,000 from Leung Kwok-chau?
A.	Yes, I thought so.  Over $780,000.
Q.	Then on what locus standi you chase him for the money?
A.	I chased him for one payment of nightshift worker payment and the bonus.
Q.	I see.  How much is that nightshift payment?
A.	$89,000-odd.
Q.	Yes.  And what was in your mind about the bonus?
A.	Because he had given a very firm promise that I would be paid a bonus, so I chased him for it.
Q.	I see.  What was in your mind how much you would be given?
A.	Bonus $100,000.
Q.	So how much you chased Leung Kwok-chau in total?
A.	$189,000-odd.

(Tr. p. 411C-H) 

As noted in para 23 above, the final accounts between him and the 2^nd defendant were settled on that basis.

35.  In my view, nothing in the special arrangement altered the underlying relationship between the 1^st, 2^nd and 3^rd defendants.  The special arrangement was but a temporary arrangement to cope with the need to have additional workers on the job to complete it by October.  It could not and did not have the effect of altering the 3^rd defendant’s role in the project and making him and the additional workers employees of the 1^st defendant.

36.  Mr Fung SC who appeared for the plaintiff placed reliance on the 8 matters set out in paragraph 8 of the judgment cited in paragraph 3 above.  But in making his findings of fact, the judge had considered each of those matters in the light of the evidence and in particular, the explanations given and the circumstances in which they came into existence.  It has not been shown that the judge had overlooked any of those matters or had misapprehended their effect.

37.  In my view, the judge’s findings are unimpeachable and I would uphold them.  Given those findings, there is but one conclusion, namely, that the 3^rd defendant was the plaintiff’s employer.

Estoppel

38.  The plaintiff’s case on estoppel was premised on the fact that only “an employer” and no one else had the locus to file an objection under section 16G of the Ordinance as it existed.  Unless that is a correct statement of the law, the plaintiff’s case on estoppel, whether by representation or by convention, cannot succeed.  It is accordingly necessary to consider the relevant statutory provisions.

39.  Section 16G provides:

“(1)An objection to an assessment by an Ordinary Assessment Board under section 16D(5) … may be made by the employer … in writing to the Commissioner within 14 days after the date of issue to him of the relevant certificate …”

Who then is “the employer” for the purposes of section 16G?  To answer that question, it is necessary to consider section 24 which provides as follows:

“Liability in case of employees employed by sub-contractors

24(1)Where any person (in this section referred to as the principal contractor), in the course of or for the purposes of his trade or business, contracts with a sub-contractor for the execution by or under the sub-contractor of the whole or any part of any work undertaken by the principal contractor, the principal contractor shall be liable to pay to any employee employed by that sub-contractor or by any other sub-contractor in the execution of the work any compensation under this Ordinance which the principal contractor would have been liable to pay if that employee had been immediately employed by him; and where compensation is claimed from or proceedings are taken against the principal contractor, then, in the application of this Ordinance, references to the principal contractor shall be substituted for references to the employer, except that the amount of any compensation calculated by reference to earnings shall be calculated by reference to the earnings of the employee under the employer by whom he is immediately employed.”  (emphasis added)

40.  For the purposes of the Ordinance, having regard to section 24 and the definitions of “principal contractor” and “sub-contractor” in section 3 of the Ordinance, the 1^st defendant was the “principal contractor” vis-à-vis the 2^nd defendant and the 3^rd defendant who were the “sub-contractors”.  That much is clear.  Since compensation was claimed from the 1^st defendant by the plaintiff, in the application of the Ordinance and therefore section 16G, references to the principal contractor i.e. the 1^st defendant shall be substituted for references to the employer.  In other words, in applying section 16G the reference to “the employer” has to be read as if it had been substituted by “the principal contractor”.  Accordingly, it must follow that the 1^st defendant as principal contractor has locus to file an objection under section 16G.  That being so, the plaintiff’s case on estoppel must fail. 

Hon Yuen JA:

41.  I have had the benefit of reading in draft the Reasons for Judgment of Hon Le Pichon JA and I agree with them.  I would only elaborate on one point.

42.  Mr Fung SC for the plaintiff submitted that there could only be one principal contractor in a contract and that Carrier, and not the 1^st defendant, was the only principal contractor here.  With respect, I do not agree.  It is clear from the definitions of “principal contractor” and “sub-contractor” in sections 3 and 24 of the Employees Compensation Ordinance that a person is liable under s.24 to compensate employees (whether of his own immediate sub-contractor, or any other sub-contractors down the line) who are injured in the course of doing the work that he (that person) has undertaken.  In other words, liability as a principal contractor follows the scope of work undertaken by that person.  There could therefore be many “principal contractors” against whom an injured employee can make a claim under s.24.  The smaller the scope of work undertaken by his own employer, the more “principal contractors” there would be.

43.  That is clear from sections 3 and 24.  Section 3 provides:

“‘principal contractor’ means a person referred to as a principal contractor in section 24”. 

Section 24 has been reproduced in paragraph 39 of Hon Le Pichon JA’s judgment.  I would only emphasize the following parts of that section stating that “principal contractor” refers to:  

“any person [who]

-in the course of or for the purposes of his trade or business,

-contracts with a sub-contractor

-for the execution

-by or under the sub-contractor

-of the whole or any part of any work undertaken by the principal contractor”.

44.  Section 3 provides:

“‘sub-contractor’ means –

(a) any person who enters into a contract, express or implied, with a principal contractor to perform all or any part of the work which the principal contractor has undertaken to perform;

and

(b) any other person who enters into a contract, express or implied, to perform all or any part of the work which a sub-contractor within the meaning of paragraph (a) has undertaken to perform”.

45.  Thus in the present case, the 1^st defendant had undertaken to perform fire installation work.  He had sub-contracted part (the wet part) of that work to the 2^nd defendant.  Assuming that the 2^nd defendant himself had an employee who was injured, the 1^st defendant would be liable as principal contractor under s.24 as the 2^nd defendant was a sub-contractor under paragraph (a) above, as he had entered into a contract with the 1^st defendant to perform the wet part of the fire installation work which the 1^st defendant had undertaken to perform. 

46.  The 2^nd defendant then sub-contracted part (the labour and small metal part) of his work to the 3^rd defendant.  The 3^rd defendant’s employee having been injured, the 1^st defendant would be liable as principal contractor under s.24 as the 3^rd defendant was a sub-contractor under paragraph (b) above, as he had entered into a contract to perform part of the work which the 2^nd defendant (who was a sub-contractor within paragraph (a) above) had undertaken to perform.