LEE MUI FONG v. WONG KIT MAN AND OTHERS

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J U D G M E N T

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Introduction

1.  There are two applications for employees’ compensation before me, which arose out of the same fatal traffic accident on 8 July 2001.  In that accident, a refuse truck fell from Stubbs Road onto Village Terrace killing a refuse truck attendant, Mr Leung Yuk Chun (“Leung”) and the driver, Sze Chun Hing (“Sze”).  Leung was a visitor from China to Hong Kong holding a two-way permit and was not allowed to take up employment in Hong Kong. 

2.  The applicant in DCEC 455 of 2002 (the “1^st Application”), Madam Lee (the “1^st Applicant”), is the wife of Leung.  She claims employees’ compensation against the estate of Sze (the 2^nd Respondent), the owner of the refuse collection vehicle, Mr Wong Kit Man (“Mr Wong”, i.e. the 1^st Respondent), Miss Wong Kit Ting Karen, the proprietor of the cleaning company which Leung and Sze worked for (“Miss Wong”, i.e. the 3^rd Respondent) and its insurer, Jerneh Insurance (HK) Limited (“Jerneh” i.e. the 4^th Respondent).  

3.  In DCEC 693 of 2002 (the “2^nd Application”), the wife of Sze, Madam Yeung (the “2^nd Applicant”) claims compensation against Mr Wong and Miss Wong (the 1^st and 2^nd Respondents respectively in the 2^nd Application) and the insurer, Jerneh (the 3^rd Respondent in the 2^nd Application).  The two applications were ordered to be tried together.

4.  The litigation in these two applications had a chequered history.   The trial was extended over a period of fifteen months.  When the applications first came before me on 8 July 2004, I was asked to rule on a preliminary issue in DCEC 455 of 2002, namely whether I should exercise my discretion under section 2(2) of the Employees’ Compensation Ordinance to deal with the application despite the illegality of Leung’s employment.  I ruled in favour of the 1^st Applicant and gave oral reasons for my decision.  Mr Kwok, counsel for Jerneh, applied for a stay of the proceedings pending his application to appeal to the Court of Appeal against my decision.  I refused that application.  In fact, Jerneh never appealed.  On the following day, Mr Wong and Miss Wong applied for an adjournment to enable them to re-apply for legal aid.  In view of the complexity in these applications, I granted the adjournment and adjourned the hearing over the weekend to 12 July 2004, upon receipt of indication that the Director of Legal Aid would expedite the processing of Mr Wong’s and Miss Wong’s re-application for legal aid.   On 12 July 2004, I further adjourned the trial as Miss Wong was hospitalised due to a psychiatric problem.  The hearing was subsequently re-fixed to 22 November 2004.  At the adjourned hearing, Jerneh was represented by leading counsel, Mr Ozorio SC.  The hearing progressed for five days until 26 November 2004 when Miss Wong again fell sick and had to be hospitalised.  The hearing of these two applications were resumed almost a year later on 17 October 2005.

The preliminary issue – whether to exercise discretion under section 2(2)  of the Employees’ Compensation Ordinance

5.  Two preliminary point arose in respect of DCEC 455 of 2002: firstly, whether Leung’s contract of employment with Sze or Mr Wong and/or Miss Wong, was void for illegality with the result that Leung and his family members (represented by the 1^st Applicant) are not entitled to the protection under the Employees’ Compensation Ordinance (“the Ordinance”) and secondly, if it was, whether I should exercise my discretion under section 2(2) of the Ordinance and deal with the application as if Leung had at the time of the accident been a person working under a valid contract of service. 

6.  Mr Wong Chi Kwong, counsel for the 1^st Applicant, referred me to the headnote in Chan Cheuk-ting and Analogue Engineering Co Ltd and Another [1986] HKLR 935 which suggested that there is a distinction between a contract of service which is unlawful and one which is illegal and that the former is a valid contract under the Employees’ Compensation Ordinance.  He submitted that Leung’s contract of employment was unlawful but not tainted with illegality and that the 1^st Applicant is entitled to compensation under the Ordinance.  He argued in the alternative that if I found that the contract of employment was illegal, I should exercise my discretion under section 2(2) of the Ordinance to consider the 1^st Application as if Leung had been working under a valid contract of employment.  On the other hand, Mr Kwok, counsel for Jerneh, submitted that the contract of employment was illegal and urged me not to exercise the discretion.

7.  In Chan Cheuk-ting, the deceased employee was an illegal immigrant from China, who obtained employment by using a false identity card.  The trial judge found the contract of employment was illegal and refused to exercise the discretion under section 2(2) of the Ordinance.  The illegality in that case was very obvious.  The deceased was an illegal entrant remaining in Hong Kong illegality and not lawfully employable within the meaning of section 17G(2) of the Immigration Ordinance and the employer who employed him committed an offence, contrary to section 17I of the Immigration Ordinance.  On appeal, the Court of Appeal allowed the appeal, holding that the trial judge was wrong not to have exercised the discretion under the Ordinance.  

8.  It was reported in the headnote that the contract of service was unlawful but not illegal and was valid under the Ordinance.  There was a paragraph heading in the judgment to the same effect.  With respect to the editor of the report, I do not think this was what the Court of Appeal decided.  Indeed, in allowing the appeal and in holding that the trial judge was wrong not to have exercised the discretion under section 2(2) of the Ordinance, the Court of Appeal must have been of the opinion that the contract was illegal.  On the issue of illegality, Power J (as he then was) said at 940:

“We were satisfied that when the legislature used the words “illegal contract” they meant to include not only contracts which were being illegally performed but also those which could be treated as illegal and therefore void ab initio and that s. 2(2) was placed in the Ordinance to give protection to an employee who was doing lawful work under such a contract.  We were satisfied that the section was included so that protection was afforded to persons such as the child, in the case of Pounteney v. Turton (1917) 34 TLR 103, and the deceased in the present case.”

Thus, Power J did not distinguish between an unlawful contract and an illegal contract.  Nor did he say the former type of contract is valid but the latter is not.  He took a statutory interpretation point and held that the word “illegal” in section 2(2) is to be given a broad meaning to include all forms of illegality and unlawfulness and that section 2(2) was placed in the Ordinance to protect employees doing lawful work.

9.  I agree with that opinion and indeed I am bound by that opinion.  “Illegality” is a word which has been loosely used to include any form of unlawfulness.  Illegality can arise either from statute or from the common law.  It includes a wide range of activities such as commission of a crime which are overtly illegal but others which are less so, such as acts done in contravention of a statute as to how the work was carried out, or acts done contrary to public policy, or acts done involving non-compliance with certain legal formality.  The seriousness and turpitude of the illegality varies considerably.  The Employees’ Compensation Ordinance is a piece of social welfare legislation enacted for the protection of employees in case of accidents arising out of and in the course of their employment.  It could not have been the intention of the legislature that any form of illegality howsoever minor or trivial in nature should attract the same result and deprive the employee of the protection under the Ordinance.  For example, if a father and his child were employed on a boat while an accident occurred, there would be no reason why the father should be compensated but not his child for not being lawfully employable.  It would be different if both of them were employed to operate the boat for smuggling purpose.  The crucial point of distinction must be whether the work for which the employee was employed to perform was lawful or unlawful.  It must have been the intention of the legislature that the word “illegal” in section 2(2) should be given a broad interpretation and then to leave to the discretion of the court whether having regard to all the circumstances of the case it should deal with the matter as if the employee had been working under a valid contract.  Of course, in exercising that discretion, the overriding consideration is whether the work which the employee was employed to perform was lawful.  That must be the single and most important consideration.

10.  Leung was a visitor from China.  He came to Hong Kong on a two-way permit.  He was not a person lawfully employable under section 17G(2) of the Immigration Ordinance.  Whoever was his employer committed an offence contrary to section 17I of the Immigration Ordinance in employing him.  The illegality he was involved was of a lower turpitude than that in the case of Chan Cheuk-ting.  Leung’s contract of employment was nevertheless illegal.

11.  I now turn to consider whether despite the illegality of Leung’s employment, I should exercise my discretion under section 2(2) of the Employees’ Compensation Ordinance to consider his application for compensation as if he had been a person working under a valid contract of employment.

12.  Mr Kwok argued vigorously that the discretion should not be exercised.  He referred me to an endorsement in the insurance policy which provides that the policy does not indemnify the insured in respect of any claim arising in connexion with any work outside buildings.  He submitted that as the accident occurred outside a building, the accident was not a risk covered by the policy and Jerneh is not liable to indemnify the insured.  That is an issue to be considered after the liability of Leung’s employer has been determined.  Whether Jerneh is under any obligation to indemnify its insured is not a factor I need to take into account in considering whether I should deal with the application as against Leung’s employer in the first place.

13.  Next, Mr Kwok submitted that question of immigration policy had not been argued in the Court of Appeal in Chan Cheuk-ting.  He argued that there is an immigration policy to discourage illegal immigrants or two-way permit holders from taking up illegal employment to the prejudice of local workers and if I exercise the discretion in this case, I would encourage more of these people to come to Hong Kong for employment.  He said many of these people came from rural areas in China.  If they were given protection under the Ordinance, they would get a windfall making hundreds of thousands of dollars in employees’ compensation claim and millions of dollars in a common law claim by working just a few days in Hong Kong.  He said this would be a convenient way to get money and that there is no moral justification in this claim as no one should be allowed to benefit from his own wrong. 

14.  The Employees’ Compensation Ordinance is a piece of social welfare legislation to protect employees in case of accident arising out of and in the course of their employment.  It provides a statutory scheme backed by a statutorily required compulsory insurance.  Employers are liable to pay compensation to their employees who suffer injury arising out of and in the course of their employment.  Employers are required to insure for their employees.  Insurers are here to do business and not to provide welfare.  They provide insurance policies at a premium which had taken into account statistical and actuarial considerations which are calculated to result in a profit.  Had everything worked according to the rules, everything would have been well.  Employers do their business and make their money.  Injured employees receive their compensation.  Insurers make their profit.  Questions of illegality or unlawfulness of such a low turpitude could never have been a consideration or anything of a concern.  Workers have to be employed at work.  Whether a worker injured is one who is lawfully employable or not makes no difference to the insurer because the insurer must have taken actuarial considerations when deciding the premium.  So long as the work they are employed to do is lawful, I do not think an illegal worker should be treated any differently for the purpose of employees’ compensation from a local worker.  On the contrary, if the insurers can escape liability merely because the contract of employment was tainted by an illegality of such a minor turpitude, the insurers would be unjustifiably enriched.  They would get a windfall in receiving premium without having to bear the corresponding risk.

15.  Thus, with the greatest respect, I dismiss Mr Kwok’s arguments based on public policy as being misconceived and wholly devoid of merit.  There is no public policy to protect an insurer’s profit in its business.  Though it is illegal for these illegal immigrants or two-way permit holders to take up employment in Hong Kong, those who do find employment are here to earn honest money with their sweat and labour, just like any of our local workers.  There is no illegality or unlawfulness in the work they perform.  These mainlanders do not come to work in Hong Kong to get themselves injured or killed on purpose so that they can send home a fortune which they cannot spend for themselves.  There is nothing to compare with life and limb. 

16.  Accordingly, I hold that Leung’s contract of employment was illegal, but despite the illegality I shall exercise my discretion under section 2(2) to deal with the 1^st Applicant’s application as if Leung had been a person working under a valid contract of employment.  Having said that, I can see the important policy consideration if the burden of paying compensation to these illegal workers has to be met by public funds in the event that the insurer cannot pay through insolvency or whatever reason.  I also think there is no reason why public funds should be incurred for compensating those illegal workers who are in breach of our law by taking up employment in Hong Kong.  But that is a different issue altogether and a matter for the legislature. 

17.  Mr Kwok applied for a stay of proceedings pending his appeal to the Court of Appeal against the above ruling.  His grounds for the application were that I should have made the ruling after hearing all the evidence and that Jerneh would suffer prejudice if not allowed to appeal at this stage.  I dismissed the application for stay.  There was no arguable point of law in view of the decision by the Court of Appeal in Chan Cheuk-ting. Furthermore, at the hearing of the preliminary issue, I had invited Mr Kwok to refer to all documents and witness statements he would rely on in support of his application and my ruling on the preliminary issue was made on the basis of those documents and witness statements.  For the eleven months during which the hearing was adjourned pending Miss Wong’s recovery, Jerneh did not appeal against either my ruling on the preliminary issue or my refusal to stay the proceedings.  Effectively, Jerneh had the stay it wanted.  I now turn to the main issues in these applications.

The background

18.  The 1^st Applicant is the wife of Leung.  Both of them were residents of China visiting Hong Kong on two-way permits.  Leung had come to Hong Kong in April 2001 to take up employment.  On 6 June 2001, they came to Hong Kong again.  The 1^st Applicant resided in Causeway Bay while Leung resided in To Kwa Wan.  Leung told the 1^st Applicant that he worked as a refuse truck attendant; that Sze was the driver of the refuse truck and that his employer was called “Man Chai”, i.e. Mr Wong.  She had ridden on refuse truck GE3474 on one occasion and saw Leung at work.  After the accident, she telephoned Mr Wong.  Mr Wong’s mother answered the phone and made arrangement to meet her in To Kwa Wan.  At the subsequent meeting, Mr Wong’s mother gave the 1^st Applicant $20,000, saying that $8,000 was Leung’s accrued wages before the accident and the rest was for Leung’s funeral expenses and children.  The 1^st Applicant took the money and signed two receipts, which subsequently found their way into the possession of Miss Wong. 

19.  The 2^nd Applicant was the wife of Sze.  They were married on 7 July 1996 and had one son.   In December 2000, they separated.  Sze returned to live with his parents while the 2^nd Applicant lived with their son.  At that time, Sze worked as a refuse truck driver for Mr Chu while the 2^nd Applicant’s brother worked as his vehicle attendant.  Then after the Chinese New Year in 2001, Sze told her that he worked for another person called “Man Chai” for about $20,000.  Sze paid maintenance to the 2^nd Applicant and paid the school fees of their son.  Sze paid over most of his income to his mother.

20.  Mr Wong is the elder brother of Miss Wong.  He was the registered owner of the refuse truck involved in the accident, HF6106, but the truck was in fact owned by Miss Wong.  He used to carry on a refuse disposal business on his own account.  However, at the material time, he had given up his business and worked for Miss Wong at a monthly salary of $12,000 to $14,000. 

21.  Miss Wong was the sole proprietor of Wong’s Building Cleaning Service Company.  Their father was also in the refuse disposal business.  Miss Wong also drove refuse truck herself and used trucks belonging to her father’s company.  She sub-contracted refuse disposal work from superior sub-contractors.  The work involved collecting refuse from various refuse collection points in Hong Kong and Kowloon and discharging the refuse in Tseung Kwan O Refuse Dumping Site.  She engaged, to use a neutral word, Sze to perform one of those sub-contracts (“the said sub-contract”).  On the morning of 8 July 2001, while Sze was driving HF6106 in the course of performing the said sub-contract for Miss Wong, the truck fell from Stubbs Road onto the Village Terrace, killing both Sze and Leung and injuring another passenger on board, Mr To Hin Sam who was a mainlander visiting Hong Kong on a two-way permit.

The issues

22.  The 1^st Applicant’s case is that Leung was employed by Sze or Mr Wong and/or Miss Wong.  The 2^nd Applicant who is also the 2^nd Respondent in the 1^st Application denies that Sze was Leung’s employer.  Her case is that Sze and Leung were both employed by Mr Wong and/or Miss Wong.  Mr Wong’s and Miss Wong’s case is that Sze was Miss Wong’s sub-contractor who hired HF6106 from Mr Wong and employed Leung for the purpose of performing the said sub-contract for Miss Wong.  They do not dispute that Leung died in the accident which arose out of and in the course of employment.  Jerneh disclaimed liability on the basis that Sze was a sub-contractor of Miss Wong and Leung was Sze’s employee.  Essentially, Jerneh stands on the same front with Mr Wong and Miss Wong.  The issue in the 1^st Application is who was the employer of Leung.  The issue in the 2^nd Application is whether Sze was an independent contractor or an employee of Mr Wong and/or Miss Wong.  As my finding on the 2^nd issue impacts on the issue in the 1^st Application, it would be convenient to determine the nature of Sze’s contractual relationship with Mr Wong and/or Miss Wong first.    Neither the 1^st nor the 2^nd Applicant could produce any direct proof of the nature of the contractual relationship between Sze and Mr Wong and/or Miss Wong.  Thus, much of the 2^nd Applicant’s case is built on inference to be drawn from the evidence of Mr Wong and Miss Wong.

The case of Mr Wong, Miss Wong and Jerneh

23.  According to Mr Wong, in about December 2000 he was working for his sister Miss Wong instead of operating his own business.  He received jobs or works from superior sub-contractors and he drove refuse trucks.  In about January 2001, Miss Wong had received a sub-contract and was looking for a driver.  Through the introduction of a friend, Mr Wong came to know Sze who was driving refuse truck for Mr Chu and who would be soon out of work.  They had meal in the canteen in Tseung Kwan O Refuse Dumping Site and discussed about the work.  Mr Wong talked about sub-contracting the work under the said sub-contract to Sze.  Sze had no refuse truck and asked if the work could be sub-contracted on the same basis as Pang Kee, i.e. the work was sub-contracted to the driver for a lump sum with Pang Kee providing the refuse truck while the rental for the truck and its operational costs were deducted from the lump sum.  Mr Wong said he would discuss that with Miss Wong. 

24.  Mr Wong discussed the proposal with Miss Wong and suggested hiring his truck HF6106 to Sze so that Sze could sub-contract the work of the said sub-contract from Miss Wong.  Subsequently, Miss Wong met Sze in To Kwa Wan outside her office.  She discussed the terms of the sub-contract with Sze and test-drove Sze.  She was satisfied with Sze’s driving skill.  They agreed to sub-contract the work under the said sub-contract to Sze for a monthly sum of $80,000.  Sze was responsible for paying rental of the truck at $18,700 which was the exact amount of the monthly instalment Mr Wong had to pay for the hire-purchase of the truck.  In addition, Sze was responsible for the fuel, tunnel tolls, repairs and damage to the truck caused by Sze.  Sze was also responsible for paying his own lorry attendants.   Sze was to be paid twice monthly.

25.  Sze’s daily routine was as follows.  Sze had to collect HF6106 between 5 and 6 pm from the Wilson Car Park at Chi Kiang Street in To Kwa Wan.  He would first drove it to Tseung Kwan O Refuse Dumping Site to discharge the refuse on the truck before starting his daily round.  When the truck was full, he would make a second discharge at Tseung Kwan O Refuse Dumping Site.  Then he would make a second round of collection and then drive HF6106 with its load of refuse back to Wilson Car Park and swap for another vehicle, which was usually GE3474.  By then, it would be about 4 am or 5 am in the morning.  Sze would then start the third round of collection, after which he would park the loaded truck in Wilson Car Park.  By then it would be between 7 am and 8 am when Sze went off duty.  Sze was given a list of locations and the time when refuse would be available for collection.  He was to determine his route.  So in his daily routine, Sze had to make three collection rounds, two discharges of refuse and one swapping of vehicles between 5 pm and 8 am the following day.

The nature of Sze’s contractual relationship

26.  However, Mr Wong’s evidence in Court is inconsistent in some very material respects with his statements to the police made shortly after the accident and with his answer to the 1^st Application. 

27.  At 6:05 pm on 8 July 2001, i.e. the day following the accident, Mr Wong was interviewed by the police as being the owner of HF6106.  He was specifically asked about the nature of his relationship with Sze.  He said he was the boss of Sze and Sze was his employee.  He said he employed Sze at a monthly salary of $40,000.  He was asked about his relationship with Leung and the other passenger on board of HF6106.  He said two months prior to the accident he had employed Leung but Leung returned to China after working for one odd month.  Then Leung asked for employment again on 6 June 2001 and he told Leung to contact Sze.  He later knew Sze had employed Leung as a vehicle attendant.  He agreed with Sze to pay Leung’s wages on Sze’s behalf and to deduct the payment from Sze’s monthly salary.  In essence, in that statement he admitted he was Sze’s employer.  He attributed the inconsistency between that statement and his evidence in Court to his confusion at the time.

28.  On 22 October 2001, Mr Wong was interviewed by the police under caution in connection with the unlawful employment of Leung.  He did not dispute the voluntariness of the cautioned statement.  In the statement, he admitted employing Sze since January 2001 at a monthly salary of $40,000 under the terms that he was responsible for providing Sze with a refuse truck, its fuel and maintenance while Sze was responsible for engaging his own attendant.  He later saw Leung riding on board of HF6106 and he was told by Sze that Sze had employed Leung at a monthly wages of about $8,000.  This statement is consistent with his earlier statement that Sze was his employee.  This statement was taken more than three months after the accident when he could not be heard to be confused. 

29.  In his Answer dated 15 November 2002, Mr Wong averred that he and his sister engaged Sze as a sub-contractor at a monthly fee of $40,000 with he and his sister providing for the refuse truck and paying its fuel and maintenance.  This is the first time when he mentioned the sub-contractual arrangement with Sze.  This defence is inconsistent with his evidence in Court that the work was sub-contracted to Sze at a monthly sum of $80,000 with Sze being responsible for payment of the rental for the truck, its fuel and maintenance.  Under cross examination, Mr Wong explained that he erroneously pleaded that he and his sister were responsible for the truck and its fuel and maintenance and the sum of $40,000 pleaded was net of those expenses.  The Answer was prepared a long time after the accident when he had time to settle down and consider his defence.  There is no reason why he was confused and imprecise about the language.  The Answer is a serious legal document providing a defence to the present application.  It provides the totality of his defence and it is just incredible that he got his defences all wrong. 

30.  In both his statement given on 8 July 2001 and his cautioned statement given on 22 October 2001, Sze was featured as a salaried employee at a monthly salary of $40,000 which included the salary of his own vehicle attendant.  It should be noted that in these two statements and the Answer, there was no mention of either the sub-contract or the sub-contract fee of $80,000.  Mr Wong’s evidence in Court is so inconsistent with his Answer and with his previous statements that I have no difficulties to reject his evidence in Court as a recent concoction.  His Answer is also inconsistent with his previous statements and I do not find it credible.

31.  Mr Wong and Miss Wong claimed that the amount payable to Sze every month net of the rental for the refuse truck, fuel, tunnel tolls, maintenance and all other expenses was about $40,000 to explain Mr Wong’s statements and Answer.  In addition, they claimed that they had advanced various sums to Sze in the course of the month so that the balance payable to Sze every month was about $20,000.  However, none of these deductions, expenses or advances is supported by documentary evidence.  They explained that these documents were kept in a box in the truck which was lost in the accident.  That may be an adequate explanation for the lack of documentation for the expenses for the month of June or July 2001, but not the lack of documentations for the other months or for the alleged advances which were kept in the books of Miss Wong’s company.  Miss Wong said these documents were lost as the company had ceased business.  I do not find that credible either as she basically operated the company at her home.   I reject their explanation for the lack of documentation.

32.  An examination of Sze’s bank accounts showed regular receipts of between $20,000 and $23,000 at the beginning of the month (save for the payment on 26 February 2001) which could be traced to Miss Wong’s bank account and which are consistent with these amounts being salaries arising out of his employment with Mr Wong and/or Miss Wong.  There was not a single month in which Sze’s unexplained receipts exceeded $25,500, let alone nowhere near $40,000 as alleged by Mr Wong or Miss Wong. 

33.  On 26 February 2001, a cheque of $20,000 was issued from Miss Wong’s account with Sin Hua Bank Limited and a cheque of identical amount was deposited into Sze’s bank account with Hang Seng Bank.  Apart from this cheque deposit, there were two other cheque deposits in the amount of $6,758 and $274.50, which were not traceable to Miss Wong’s bank account.  In addition, there was a cash deposit of $15,000 which was shown by incontrovertible evidence to have been made by Sze’s mother at Sze’s request and a cash deposit of $3,000.  Even assuming this deposit of $3,000 was made by Miss Wong, the total receipt of Sze from Miss Wong was only $23,000 and nowhere near $40,000.

34.  Sze’s Hang Seng Bank account for the month of March 2001 showed no substantial receipts.  There were three ATM transfers in the total amount of $8,600, none of which was traceable to Miss Wong’s bank account.  Probably, the payment for the month of March was delayed to early April.

35.  Sze’s Hang Seng Bank account for the month of April 2001 showed an ATM cash deposit of $3,000 on 9 April 2001.  There were a number of ATM cash withdrawals from Miss Wong’s bank account on the same day.  In addition, Sze’s account with the Bank of China showed a deposit of $22,500 on 4 April 2001, which is traceable to a cheque withdrawal on the same day from Miss Wong’s bank account with Sin Hua Bank Ltd.  Apart from these deposits, there were no other substantial deposits into either of Sze’s bank accounts except a deposit of $2,000 which was shown by incontrovertible evidence to have been made by Sze’s mother into Sze’s account with Hang Seng Bank.  At the highest, Sze could only have received $25,500 from Miss Wong for the month of April 2001.

36.  For the month of May 2001, Sze’s account showed two cheque deposits of about $4,500 on 8 and 12 May 2001 which are not traceable to Miss Wong’s bank account.  But Sze’s account with Bank of China showed a cash deposit of $22,000 on 5 May 2001 which could have originated from a cash withdrawal of $23,000 from Miss Wong’s bank account with Sin Hua Bank Ltd.

37.  For the month of June 2001, Sze’s account with Hang Seng Bank showed a cheque of deposit of $23,000 on 7 June 2001 which is traceable to a cheque withdrawal from Miss Wong’s bank account with Sin Hua Bank Ltd on the same day.  There was also a deposit of $30,000 on 29 June 2001 which was shown by incontrovertible evidence to have been made by Sze’s mother.  A substantial part of that amount was promptly transferred to Sze’s current account and then paid out by cheque.

38.  It was submitted by Mr Ozorio SC that Sze’s mother had to deposit sums of money into Sze’s account suggested that Sze was engaged in business as a sub-contractor.  With respect, that is not a logical inference which flows from the evidence in this case.  Excluding the deposits made by Sze’s mother, which are incontrovertible, the total monthly receipt in Sze’s two bank accounts was in the region of $25,500.  If, as Mr Wong and Miss Wong contended, the monthly contract sum payable to Sze was $40,000 net of the rental, toll charges, fuel and maintenance, but inclusive of the wages of say $8,000 for the vehicle attendant, and if the deposits by Sze’s mother were cash flow injection into Sze’s business, one would expect to see the deposits made by Sze’s mother returned to the accounts at some stage or to see the full amount of the net contract sum of $40,000 or $32,000 net of the vehicle attendant’s wages paid into Sze’s bank accounts.  That was not the case.

39.  Mr Ozorio SC referred to one particular aspect of the evidence of Sze’s mother.  Sze’s mother said categorically that every month, on about the 5^th or 6^th, Sze brought home $25,000 in cash and put it on the table and after taking some money for himself, gave the balance to her.  This is inconsistent with the withdrawals from Sze’s bank accounts.  I fully appreciate the force of the criticism.  This aspect of Sze’s mother’s evidence is of doubtful credibility.  I reject it as an exaggeration.  But that does not affect the above observation of mine in respect of my analysis of Sze’s banks statements.  In fact, I give no weight whatever to the evidence of Sze’s mother and the 2^nd Applicant as to the nature of Sze’s contractual relationship with Mr Wong and/or Miss Wong or as to who was Sze’s employer. 

40.  However, there are two pieces of evidence which are fatal to Mr Wong’s and Miss Wong’s case.  Firstly, according to Mr Wong’s statement to the police, he had on one occasion paid Leung $10,000 on behalf of Sze as Sze was short of cash to pay his vehicle attendant.  Secondly, Miss Wong produced a receipt signed by the 1^st Applicant acknowledging receipt of $20,000 from Miss Wong’s mother.  According to the 1^st Applicant, after the accident, she made several attempts to contact Mr Wong.  Eventually, Miss Wong’s mother arranged to meet her in To Kwa Wan outside Miss Wong’s office and gave her $20,000; of which $8,000 was expressly for Leung’s accrued wages and $12,000 was a gratuitous sum to Leung’s family.  The payment of $20,000 was not disputed by Mr Wong or Miss Wong and in fact, it is part of Miss Wong’s case.  However, Mr Ozorio SC submitted that there was no breakdown of the payment into wage element and the gratuity element in the receipt and that what was said about the wages of $8,000 was an embellishment on the part of the 1^st Applicant.  I find the 1^st Applicant a simple minded mainlander.  She could not have invented the figure of $8,000.  Were she told to embellish a figure, she would have suggested a neat figure of $10,000 which would have tied in neatly with Mr Wong’s statement to the police and would have enhanced her claim for compensation.  I have no doubt about her credibility.  While there may be many plausible reasons for the generosity, the irresistible inference to be drawn from the payment of such a substantial sum by the mother was that Mr Wong and/or Miss Wong felt there was an obligation for the generosity because Leung’s death arose out of and in the course of his employment with either or both of them; that the mother made the payment as agent of Mr Wong and/or Miss Wong and that the sub-contractual arrangement between Sze and Mr Wong and/or Miss Wong was a recent concoction made for the purpose of defending the present applications.

41.  Mr Wong’s and Miss Wong’s allegation about Sze’s rental of HF6106 is also incapable of belief.  As the Tseung Kwan O Refuse Dumping Site closes between 11 pm and 8 am on the following day, Sze could only effect one discharge of refuse after he started his daily round and had to keep the refuse collected during his second round in HF6106 overnight in the car park and use another vehicle, namely GE3474, to perform his third round of collection. Thus he had to use two refuse trucks.  The other truck GE3474 belonged to Miss Wong’s father and there was no agreement for the hire of GE3474 between Sze and Miss Wong’s father.  There was no agreement as to how the fuel, repair and maintenance fees were to be shared in respect of that vehicle.  Mr Wong and Miss Wong argued that Sze’s use of GE3474 was covered under the rental agreement for HF6106.  While this is a possible arrangement, the total absence of any agreement involving that third party makes the arrangement unlikely to be true.  In addition, Sze’s work is inseparable from the operation of Miss Wong’s company.  Mr Wong had to discharge the refuse that Sze collected and kept in HF6106 during his second round and the refuse that Sze collected and kept in GE3474 during his third round on the early hours of the day; while Sze had to discharge the refuse that Mr Wong collected later during the day.  Thus in accordance with the above arrangement, Sze was neither fully nor solely performing his part of the said sub-contract.  While this may be explained as a mutual arrangement between Mr Wong and Sze, the more complicated the arrangement was and the more parties became involved in the arrangement, the less likely it is a simple case of sub-contract as Mr Wong and Miss Wong would wish me to believe.

42.  Furthermore, Miss Wong had test driven Sze before agreeing to engage Sze and to let him drive HF6106.  However, she said Sze was free to sub-sub-contract the work to a third party and let the third party drive HF6106 without her prior approval.  Mr Wong also corroborated that evidence by saying that he had seen the vehicle being driven by Sze’s replacement on one or two occasions.  If Miss Wong had taken the trouble of test driving Sze to satisfy herself as to Sze’s driving skill, it is incredible that she would allow such an expensive specialist vehicle to be used by a third party without her approval and without her test driving that third party.  The same applies to Sze’s driving her father’s vehicle GE3474.   

43.  Having disbelieved Mr Wong’s and Miss Wong’s evidence about their sub-contractual arrangement with Sze, I am left with the evidence that

(1)	HF6106 was registered in the name of Mr Wong but was beneficially own by Miss Wong;
(2)	GE3474 belonged to the father of Miss Wong;
(3)	Sze drove HF6106 and GE3474 for the purpose of discharging Miss Wong’s sub-contractual obligation with her superior sub-contractor;
(4)	there was no contractual relation between Sze and Miss Wong’s father in respect of his use of GE3474;
(5)	Sze was paid similar sums of between $20,000 and $25,500 regularly at the beginning of the month from Miss Wong’s bank account;
(6)	Leung worked as a vehicle attendant on board HF6106 and
(7)	Mr Wong’s and Miss Wong’s mother paid the 1st Applicant $20,000 of which $8,000 was expressly as Leung’s accrued wages.

44.  The principles upon which the Court must apply to the facts in determining whether a relationship is one of contract of service or contract for services are well settled.  I only need to refer to two authorities.  The first one is Lee Ting Sang v Chung Chi Keung [1900] 2 AC 374. In that case, in approving the fundamental test to be applied as set out by Cooke J in Market Investigations v Minister for Social Security [1969] 1 QB 173, the Judicial Committee of the Privy Council said at 184G:

“the fundamental test to be applied is this :’Is the person who has engaged hiMisself to perform these services performing them as a person in business on his own account ?’ If the answer …. is ‘yes’, 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 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 tasks.”

45.  The second one is Cheng Yuen v The Royal Hong Kong Golf Club [1996] 2 HKLR 302.  In that case, Bokhary, JA (as he then was) cited with approval the following paragraph in Chitty on Contracts, Vol. II, 27^th edition, pp.703 - 704, para. 37-008:

"	Recent case law suggests that the factors relevant to the process of identifying a contract of employment may usefully be listed as follows:
	(1)	the degree of control exercised by the employer;
	(2)	whether the worker's interest in the relationship involved any prospect of profit or risk of loss;
	(3)	whether the worker was properly regarded as part of the employer's organisation;
	(4)	whether the worker was carrying on business on his own account or carrying on the business of the employer;
	(5)	the provision of equipment;
	(6)	the incidence of tax and national insurance;
	(7)	the parties' own view of their relationship;
	(8)	the traditional structure of the trade or profession concerned and the arrangements within it."

The above factors are just some of the factors to be considered.  No single factor is determinative and it is unusual to find all these factors manifested in any particular case.  The weight to be given to any particular factor depends on the facts of the particular case.  Ultimately, it is for the court to balance all these factors in the light of the factual circumstances and ask itself whether the person who has engaged himself to perform the services did so as a person in business on his own account.  As I have rejected Mr Wong’s and Miss Wong’s evidence about their sub-contractual arrangements with Sze, the factual circumstances under which I consider these factors are that there is no evidence that Sze performed the services for a lump sum of $80,000 per month and that HF6106 was rented to Sze for the purpose of performing those services.

46.  Even assuming that Sze was free to determine his route and that Mr Wong or Miss Wong provided little or almost no control or supervision on the way in which Sze performed the work, I think control and supervision are not decisive or significant in the present case having regard to the nature of the work performed by Sze.  On the other hand, as I have rejected Mr Wong’s and Miss Wong’s evidence that they rented the trucks to Sze, it is significant these trucks, and there were two of them, were provided by Miss Wong to Sze for performing the work.  Miss Wong was the beneficial owner of HF6106 while GE3474 was made available to the use of her business by her father.  These are very expensive specialist vehicles. They are substantial capital investments for a business of that nature.  The way in which Sze performed his work which involved swapping of the trucks and in which Sze and Mr Wong discharged the refuse collected by the other before starting their collection rounds was indicative that, like Mr Wong, Sze was properly regarded as part of the employer’s organisation.

47.  Having rejected Mr Wong’s and Miss Wong’s evidence about the rental arrangement of HF6106 and that Sze was to pay for its fuel, toll charges, maintenance etc, I am left with the evidence that Sze was paid regular sums at regular times each month by Miss Wong.  The inference must be that the owner of these vehicles were to pay for the fuel, toll charges, maintenance and repairs in order that these vehicles may operate.  There is also evidence that Miss Wong considered herself liable for payment of wages to the vehicle attendant as evinced by her possession of the receipt signed by the 1^st Applicant in respect of the $20,000, which included $8,000 as Leung’s wages.  There is no evidence that Sze had to bear any financial risk.  There is no evidence that Sze had any role in the management of the business or ability to profit from good management.  He did not have to solicit business.  The sole benefit he might have in planning his route was that he could finish work earlier.  His duty was to drive to specific locations to pick up refuse at particular times and he was paid regular sums by Miss Wong.

48.  There is no evidence that Mr Wong or Miss Wong paid Sze’s tax or reported his income or contributed to the Mandatory Provident Fund.  I give little weight to the negative aspects of these factors.  These may be the result of breach of duty on the part of the employer or the result of a sub-contractual arrangement.  In other words, these factors are neutral.  But on the other hand, Miss Wong took out insurance under the Employees’ Compensation Ordinance, which is more consistent with the existence of a contract of service between her and Sze.

49.  There are other factors referred to by Mr Ozorio SC which are neutral and for which no weight could be given in my balancing exercise, such as custom of trade, Sze’s power of employment and dismissal of vehicle attendants, Mr Wong’s or Miss Wong’s power to fix the times and places of work etc.  Mr Ozorio SC has also referred to the parties’ own view of the relationship.  Mr Wong’s and Miss Wong’s view is that the relationship was one of sub-contractual relationship.  However, I have rejected their evidence on the basis that there was no such truck hiring arrangement or lump sum sub-contract agreement.  There was simply no basis for them to have held any opinion that their relationship with Sze was one of sub-contractual relationship.  They never held any such opinion.  On the other hand, though there is no evidence from Sze as to what his view of their relationship was, there is evidence from Sze’s mother and the 2^nd Applicant that Sze had told them that he was an employee.  That, being hearsay, I would accord little weigh to that piece of evidence.

50.  Balancing all these factors, the irresistible inference that I could draw from all the circumstances is that in performing the services he was was engaged to perform, Sze was not carrying on business on his own account but carrying on the business of Miss Wong as an integral part of her business.  I have no difficulties in coming to the conclusion that Sze was engaged by Mr Wong and/or Miss Wong under a contract of service.

51.  As to who was Sze’s employer, I also have no difficulties to find that it was Miss Wong.  Miss Wong interviewed Sze and tested his driving skill.  She was the person who entered into the contract of employment with him.  Sze performed the work in the discharge of Miss Wong’s obligation under her sub-contract with her superior sub-contractor.  Sze was paid by Miss Wong from the bank account of her business.  Miss Wong was in truth the beneficial owner of the refuse truck, HF6106, which Sze drove for most of the time, though it was registered in the name of Mr Wong.  On the evidence of Mr Wong, Mr Wong was also an employee of his sister, Miss Wong.  Miss Wong was the person who had the benefit of the management of the business.  Accordingly, I find that Sze was an employee of Miss Wong trading as Wong’s Building Cleaning Service Company.  

The nature of Leung’s contractual relationship

52.  Having found Sze was an employee of Miss Wong, it must necessarily follow that Leung was not an employee of Sze but also an employee of Miss Wong.  Leung or the 1^st Applicant might have understood “Man Chai”, i.e. Mr Wong, was Leung’s employer.  Mr Wong might have been the person more connected with Sze’s and Leung’s work arrangement than Miss Wong.  Such misapprehension as to who was the true employer is not uncommon among labourers, especially in view of the close relationship between Mr Wong and Miss Wong and the name under which the business was carried out.

Liability

53.  There is no dispute that Sze and Leung met with the accident in the course of performing their daily round of refuse collection.  The accident clearly arose out of and in the course of their employment.  Miss Wong as their employer is liable to pay compensation under section 5 of the Employees’ Compensation Ordinance.  Accordingly, I enter judgment on liability in favour of the 1^st and 2^nd Applicants against Miss Wong.

54.  Jerneh was the insurer of Miss Wong’s business who issued a policy of insurance for the purposes of Employees’ Compensation Ordinance which was in force at the time of the accident.  Any compensation payable by Miss Wong shall become due and payable by Jerneh under section 43 of the Ordinance.  In addition, Jerneh was given notice of the proceedings in both applications.  It applied to be joined as a party to the proceedings pursuant to Rule 24 of the Employees’ Compensation (Rules of Court) Rules.  Jerneh was made a party and contested the proceedings as a respondent.  In the circumstances, the Applicants are entitled to recover directly from Jerneh in their own names as though they were parties to the policy of insurance under section 43 of the Ordinance.  As Jerneh was a party to these proceedings, I enter judgment in favour of the 1^st and 2^nd Applicants against Jerneh jointly and severally with Miss Wong.

Quantum – 1^st Applicant

55.  The 1^st Applicant relies on the fact that she was given $8,000 by Miss Wong’s mother expressly as accrued wages due to Leung as evidence of Leung’s pre-accident monthly earnings.  This amount is consistent with Mr Wong’s evidence that on one occasion he gave Leung $10,000 on behalf of Sze as Leung’s wages, though he said he had no idea about the exact amount of Leung’s monthly wages.  The amount of $8,000 is also consistent with Mr Wong’s cautioned statement to the police in which he said Leung’s monthly income was $8,000.  However, according to Miss Wong’s evidence, she said that the range of salary paid to a vehicle attendant in 2001 was between $3,000 and $6,000.

56.  Mr Ozorio SC submitted that the figure of $8,000 would be explained on the basis that there were two vehicle attendants on board HF6106 at the time of the accident.  There was a second passenger on board the truck at the material time who, like Leung, was a two-way permit visitor from China.  Though the second passenger denied that he was a vehicle attendant and made no claim for compensation, Mr Ozorio SC submitted that the overwhelming inference is that he was also an attendant as there would be no other credible explanation for his presence on the truck at that early hour of the morning.  Hence, he argued that Leung’s monthly earnings was about $4,000.  He also drew support for his argument on the basis of the evidence of Sze’s brother in law who only earned $200 per day as Sze’s vehicle attendant while Sze was working for Mr Chu.  He said a local worker would obviously be paid more than an illegal worker.

57.  Though there is some force in Mr Ozorio SC’s argument, I think the evidence that Miss Wong’s mother gave the 1^st Applicant $8,000 expressly as Leung’s wages must carry more weight.  The working hours of Sze’s brother-in-law was much less than Leung’s as Sze worked shorter hours while working for Mr Chu.  Sze used to work until 3 am or 4 am while working for Mr Chu but he had to work until 7 am or 8 am while working for Miss Wong.  It also emerged from the 2^nd Applicant’s evidence that Sze told her that he worked “two shifts” meaning two discharges of refuse and he worked much later into the early morning while working for Miss Wong.  Hence, the wages of Leung must be much higher than that of Sze’s brother-in-law.  Furthermore, the work of a refuse truck attendant is an obnoxious work and had to be performed over the night.  In the present case, the working hours were exceedingly long, from 5:30 pm to 7:30 am the next day; that was 14 hours.  It is unlikely to attract local workers.  I do not think illegal workers would have worked for less.  The presence of a second passenger on board HF6106, who was also a two-way permit visitor from the mainland, may be strange, but not inexplicable.  The 1^st Applicant herself had made it an occasion to ride on GE3474 as well and in her words “to have fun”.  In connection with the ride, this passenger might have helped Leung in his work, but that does not make him a regular employee.  Furthermore, according to Mr Wong, he considered one attendant sufficient.  I therefore dismiss Mr Ozorio SC’s suggestion that the $8,000 paid by Miss Wong’s mother was for two attendants.  I give full weight to what Miss Wong’s mother told the 1^st Applicant was Leung’s monthly earnings.  I found that Leung’s monthly earnings were $8,000.

58.  Next, Mr Ozorio SC submitted that the words of section 2(2) do not preclude the Court from ignoring the loss of dependency in real terms and if the deceased’s future prospects of work in Hong Kong were nil, then it is difficult to understand why the award ought not to be based on any more than the deceased’s earnings in the PRC namely HK$2,000 per month.   I am not persuaded by the ingenuity of that argument.  The scheme of compensation under the Ordinance is a statutory one.  “Earnings” as defined under section 3 does not admit of the interpretation suggested by Mr Ozorio SC.  His argument would probably be valid in an action in personal injury but not in an application under the Employees’ Compensation Ordinance.

59.  Leung was 38 years of age at the time of the accident.   His family members shall be entitled to compensation in the amount of 84 months of his pre-accident earnings pursuant to section 6 of the Ordinance.  Thus, on the basis that Leung’s pre-accident earnings was $8,000 per month, the amount of compensation payable to Leung’s family members shall be $672,000 ($8,000 x 84).  In addition, there shall be an award in the sum of $3,489 to the 1^st Applicant being funeral expenses for Leung. Accordingly, there shall be judgment against Miss Wong and Jerneh jointly and severally in the amount of $675,489 together with interest at judgment rate from the date of the accident until judgment.   

Quantum – the 2^nd Applicant

60.  Sze was 32 years old at the time of the accident.  According to the deposits made into his bank account between February and June 2001, his pre-accident monthly earnings were at least $22,000. His family members shall be entitled to the maximum compensation in the amount of $1,764,000 ($21,000 x 84).  In addition, there shall be an award in the sum of $1,220 to the 2^nd Applicant being funeral expenses for Sze.  Accordingly, there shall be judgment against Miss Wong and Jerneh jointly and severally in the amount of $1,765,220 together with interest at judgment rate from the date of the accident until judgment.   

Conclusion

61.  In Application DCEC 455 of 2002, the Applicant’s claims against the 1^st and 2^nd Respondents are dismissed.  I enter judgment in favour of the Applicant against the 3^rd and 4^th Respondents jointly and severally in the amount of $675,489 together with interest at judgment rate from the date of the accident until judgment.

62.     In Application DCEC No 693 of 2002, the Applicant’s claim against the 2^nd Respondent is dismissed.  I enter judgment in favour of the Applicant against the 1^st and 3^rd Respondents jointly and severally in the amount of $1,765,220 together with interest at judgment rate from the date of the accident until judgment.

Costs

63.  I make the following costs order nisi in respect of all costs which have not been provided for or which have been reserved.

64.  In Application DCEC 455 of 2002, the 1^st Respondent has put litigation on himself by reason of his statements to the police and as being the registered owner of HF6106.  Accordingly, there shall be no order as to costs between the Applicant and the 1^st Respondent.  As the Applicant and the 2^nd Respondent are both legally aided, there shall be no order as to costs between the Applicant and the 2^nd Respondent.  The 3^rd and 4^th Respondents shall pay the Applicant’s costs on a common fund basis.  The Applicant’s own costs shall be taxed in accordance with Legal Aid Regulations.

65.  For similar reasons, in Application DCEC 693 of 2002, there shall be no order as to costs between the Applicant and the 2^nd Respondent.  The 1^st and 3^rd Respondents shall pay the Applicant’s costs on a common fund basis.  The Applicant’s own costs shall be taxed in accordance with Legal Aid Regulations.

Apportionment

66.  In Application DCEC 455 of 2002, according to the Applicant, the deceased has four children from the wedlock and a mother in Guangxi.  The compensation in the amount of $672,000 plus interest shall therefore be apportioned according to section 6A and paragraph 6 of the Seventh Schedule of the Employees’ Compensation Ordinance, i.e. 45% to the 1^st Applicant, 45% to the children to be shared equally among them and 10% to the mother of the deceased. 

67.  In Application DCEC 693 of 2002, Sze is survived by his wife (the 2^nd Applicant), his son and parents.   The compensation in the amount of $1,764,000 plus interest shall be apportioned according to section 6A and paragraph 6 of the Seventh Schedule of the Employees’ Compensation Ordinance, i.e. 45% to the 2^nd Applicant, 45% to the child and 10% to the parents of Sze.