WEI YAN ACTING ON BEHALF OF HERSELF AND THE MEMBERS OF THE FAMILY OF CHAN MAN FAI, DECEASED v. KONG SIU TONG t/a NGAI KO PANG YIP ENGINEERING AND OTHERS

DCEC 1129/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1129 OF 2015

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JUDGMENT

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INTRODUCTION

1.  On 20 August 2013, a fatal industrial accident happened at Dynamic Cargo Centre.  It is a multi-storey godown building situated at 188 Yeung Uk Road, Tsuen Wan, New Territories (“the Building”).

2.  The deceased, Mr Chan Man Fai, was a scaffolder.  He was 30 years old.  On that day, he was working at the Building with three co-workers in the late afternoon.  They were all employed by the 1^st respondent, Mr Kong Siu Tong who traded as Ngai Ko Pany Yip Engineering. 

3.  One of the co-workers, Mr Chan Chun Wai (“Chan”), was doing some minor repair works to the external wall between the UG/F and 2/F of the Building.  There were two small holes on the surface of the wall which needed to be filled up with sealant and re-painted.  They were too high up for Chan to fix them from the pavement.  In order to get to where the holes were, Chan abseiled down the external wall from the 2/F.  That floor is a carpark and is surrounded by a parapet wall of about 1.4 m high.  In order to repair the first hole, an independent lifeline was anchored to a fixture on the 2/F.  The lifeline was in turn attached to a safety harness.  Fitted with the safety harness, Chan climbed over the parapet wall and lowered himself to the position of the first hole. 

4.  Since the two holes were not located nearby, after fixing the first hole, Chan had to climb back up to the 2/F and found another anchorage point for the second hole.

5.  Throughout the whole process, Chan was assisted by a co-worker, Li Kin Ming (“Li’), who stood on the pavement and shouted out to Chan, guiding him to the exact locations of the two small holes. 

6.  Chan was also assisted by the deceased, who was on the 2/F delivering the tools, namely a sealant injection gun and a plastic cup filled with some paint.  The tools had been tied to the end of some long plastic strips.  The deceased would lower them to Chan after the latter had climbed down to the location of the hole.  In the process, the deceased was at times seen squatting on top of the parapet wall.  He was not equipped or fitted with any safety harness or other safety equipment.

7.  The accident happened just as when Chan finished fixing the second hole.  The deceased fell down from the top of the parapet wall to the pavement.  He suffered serious head injuries and was certified dead at Yan Chai Hospital shortly afterwards.  It remains unclear to this day precisely why and how he fell.  But it is not an issue which needs to be resolved in this action. 

8.  Instead, the questions of how the two small holes came about and why the workers went to fix them are material questions which will, amongst other things, determine the liability of the respondents.  I shall have to return to these questions shortly.

9.  This is the trial of the employees’ compensation claim made by Madam Wei Yan, the deceased’s widow, acting for herself and on behalf of his parents and grandfather.

10.  The applicant claims compensation from the 1^st respondent in his capacity as the employer of the deceased on the day of the accident.

11.  In respect of the work executed by the deceased, the applicant contends that the 1^st respondent was a sub-contractor of the 2^nd respondent, Mr Chan Kwok Hin trading as Hip Woo Decoration Engineering Co, who in turn was a sub-contractor of the 3^rd respondent, Ample Construction Company Ltd, in each case within the meaning of section 24 of the Employees’ Compensation Ordinance, Cap 282 (“the Ordinance”).  Accordingly, the applicant further seeks compensation against the 2^nd and 3^rd respondents.

12.  Toxicological analysis reveals that the deceased had consumed alcohol earlier that day.  At the closing stage, there has been a suggestion that any compensation claim may be barred given that the consumption of alcohol might constitute “serious and wilful misconduct” of the deceased under section 5(3) of the Ordinance.  This issue can however be disposed of quickly as the suggestion is clearly ill-founded.  To start with, this point is not raised in any of the pleadings of the respondents.  In any event, there is clear authority that as a matter of statutory interpretation, in fatal accident cases, the consumption of alcohol by itself does not amount to “serious and wilful misconduct”: see section 5(2)(d) and the Court of Appeal’s decision in Yuen Yuk Ying v Chan Kam Wing t/a Kam Bo Real Estate Co [1997] 1 HKC 198 at 202G-I.

FACTUAL BACKGROUND

13.  The background facts are largely uncontroversial.

14.  A project was undertaken at the Building in 2013.  It involved the removal of an advertising signboard mounted on the external wall between UG/F and 2/F and the erection of a new one of a slightly smaller size at the same location.

15.  The Building is co-owned by a number of entities, one of which is Goodman DCC Investments Limited (“Goodman”).  The other co-owners do not feature in the action.  The management of the Building is undertaken by a subsidiary company of Goodman.  There was a management office at the Building.  Various staff from Goodman, the management subsidiary and the management office had been involved in the project.

The project and the contracts

16.  In February 2013, Goodman awarded a contract to the 3^rd respondent to execute the project. 

17.  The contract was in writing and was comprised in a document entitled “Purchase Order”.  It was signed in late February 2013.  The “Services” to be provided by the 3^rd respondent was stated to be the “[r]emoval of existing signboard and [e]rection of new signboard on the external wall between UG/F & 2/F with BD submission”.  Materially for present purposes, due to the height of the signboard, a bamboo scaffold was to be erected alongside the external wall to carry out the work.

18.  The purchase order expressly provided that the contract consisted of a number of documents.  Two of them are relevant here. 

(1) First, a quotation dated 17 December 2012.  It spelt out the scope of works which comprised seven items.  Item 2 provided as follows:-

“Dismantle and dispose the existing metal signage (approx. 10,980 (L) x 4,579 (H)) on the façade between 2/F & UG/F c/w all necessary makegood work on the wall surface.” (emphasis added)

(2) Second, the conditions attached to the purchase order.  They appeared in small print.  Clause 10.2 provided that when the 3^rd respondent considered that the project was completed, it should notify Goodman and if satisfied Goodman would certify the date on which completion was achieved. That would be the date of completion.  Clause 11.1 then provided that the 3^rd respondent must promptly rectify all defects, errors or omissions in the services for a period of 12 months after the date of completion and that was referred to as the defects liability period.

19.  The 3^rd respondent then sub-contracted the entire project work to the 2^nd respondent.  The contract was evidenced by a one-page document, which was the first blank page of the above quotation, scribbled with some Chinese words and prices, and signed by the 2^nd respondent and dated 14 December 2012.

20.  The 2^nd respondent in turn sub-contracted the scaffolding work of the project to the 1^st respondent at a price of $6,000.  It would appear that there was no document signed between the parties.  The contract was concluded by the 1^st respondent making an oral quotation which was accepted by the 2^nd respondent.

21.  In this action, we are only concerned with the scaffolding work.  In this respect, there is accordingly a chain of sub-contracting relationship in the following order, namely, Goodman, the 3^rd respondent, the 2^nd respondent and, finally, the 1^st respondent. 

22.  The project commenced in about March 2013.  It took longer than expected to complete owing to adverse weather conditions and some change of requirements.  Eventually, on about 5 August 2013, a site inspection took place.  Mr Laurence Siew (“Siew”), who is Goodman’s facilities and project manager, gave evidence for the applicant at trial. He attended the inspection. Representatives of the 2^nd and 3^rd respondents were also present.  Since the new signboard had been erected, Goodman gave permission for the removal of the scaffold.

23.  On 8 August 2013, the scaffold was dismantled.  It was the 1^st respondent’s workers who carried out the work.

24.  The date of 8 August 2013 features heavily in this action, as all three respondents say that this is the day when the project was completed.  On this premise, the 2^nd and 3^rd respondents argue that they have, since that day, vacated from the site and they should not be held liable in any way for the accident, which happened there some 12 days later.

The scaffold

25.  As will shortly become clear, it is important to understand in broad terms some of the steps involved in the erecting and dismantling of the scaffold.

26.  The scaffold was fastened to the external wall by means of wall ties. For that purpose, when erecting the scaffold, small holes were drilled on to the wall for the attaching of the wall ties.  These holes have been referred to in the evidence interchangeably as “drill holes”, “screw holes” or “tie holes”.  Nothing turns on the use of these terms and I shall adopt the first of them in this judgment.

27.  Upon the removal of the scaffold, the drill holes would be exposed.  In the dismantling exercise, therefore, as the scaffolder removed the scaffold, he would at the same time fill up the holes with sealant and re-paint the filled up part in the same colour as that of the rest of the external wall.

28.  In other words, it is part and parcel of the dismantling of the scaffold that the drill holes were to be mended.

After the dismantling of the scaffold

29.  The erection and removal of the signboard was covered by the Minor Works Control System overseen by the Buildings Department.  Prior to the commencement of the project, Goodman had submitted documents and drawings as required under the System.  On 13 August 2013, after the dismantling of the scaffold, a certificate of completion was filed with the Buildings Department.

30.  At that time and in fact up to the time of the accident, however, Goodman had not certified that the work under the project was completed in accordance with the terms of the purchase order.

31.  Shortly after the removal of the scaffold (and, according to the 2^nd and 3^rd respondents’ case, on 10 August 2013), Mr Cheung Ho (“Cheung”), the project manager of the 3^rd respondent, received a call from Goodman saying that there was some touch up work which needed to be done to some holes on the external wall of the Building. 

32.  Cheung immediately telephoned the 2^nd respondent informing him of Goodman’s request.  Cheung asked the 2^nd respondent to first check whether the defects were caused by their work and to arrange for an inspection of the site.  If the defects were in fact caused by their work, the 2^nd respondent should ascertain the location of the holes and whether they could be fixed by using a ladder or a working platform.  Cheung asked the 2^nd respondent to report back to him as to how the matter should be handled.

33.  The 2^nd respondent replied that if the work had to be carried out at height, he had a portable set of aluminum pipes which could be assembled into a working platform.  It could be used by the worker to do the touch up work in a safe manner.

34.  On the same day, the 2^nd respondent called the 1^st respondent telling him about the holes and asking him to inspect the site in order to ascertain the work which would be required and at what height.  The 2^nd respondent expressly told the 1^st respondent to report back after the inspection and also mentioned that he had available the necessary equipment if the work was to be carried out at a height.  The 2^nd respondent told the 1^st respondent to give him at least one day’s notice before sending his workers to carry out the work because the 2^nd respondent needed to inform the 3^rd respondent.

35.  However, the 1^st respondent did not report back after the conversation.

36.  On about 15 or 16 August 2013, Cheung received another call from the management office inquiring when the touch up work would be done.  Cheung therefore followed up with the 2^nd respondent and asked him to give at least one day’s notice as Cheung would need to notify Goodman to grant access to the workers.

37.  The 2^nd respondent then called the 1^st respondent on the same day.  He reminded the 1^st respondent to send someone to visit the site and report back.  He also reminded the 1^st respondent to let him know at least one day in advance before the workers carried out the work as he had to arrange for the safety equipment, if needed, and to inform the 3^rd respondent.

38.  The 2^nd respondent did not hear back from the 1^st respondent over the next few days.  When the 1^st respondent eventually contacted him, it was in the late afternoon on 20 August 2013 when the 1^st respondent called and told him that a worker had fallen from the 2/F of the Building to the pavement.  At about the same time, Cheung was informed by Goodman of the accident. 

39.  As far as the 1^st respondent was concerned, when he received the first call from the 2^nd respondent, he was of the view that the sub-contracting work had been completed and therefore did not send his workers to follow up.  But, given the subsequent chaser of the 2^nd respondent, he instructed his workers, including Chan and the deceased, to pay a visit to the Building on 20 August.  And then the unfortunate accident happened.  Exactly what he had instructed his workers to do is a matter hotly contested between him and the applicant at trial.  I shall have to return to this in detail later.

40.  The important background points that emerge from the above narrative is that after the dismantling of the scaffold on 8 August and up until that fateful afternoon on 20 August, no work was carried out at all at the Building by the 1^st, 2^nd or 3^rd respondent. Furthermore, neither the 2^nd nor the 3^rd respondent was aware that workers had been sent to the Building on the day when the accident happened.  It is worth highlighting this at this juncture since these facts form the main plank of the defence of the 2^nd and 3^rd respondents.

The deceased

41.  The deceased was a casual worker and earned a daily wage of $800 when employed by the 1^st respondent. 

42.  According to the list of earnings filed by the 1^st respondent, the deceased’s employment commenced on 8 August and, up to and including the day of the accident, he worked for seven days.  However, in his oral evidence at the trial, the 1^st respondent was not so sure about the first day of the deceased’s employment and said it was about eight to ten days before the accident.  In either case, however, it is common ground that before the accident, the deceased had not been involved in the project at all. 

43.  On the day of the accident, the four workers had earlier worked on other sites.  At about 5 pm, they travelled together in a van to the Building.  Upon arrival, they registered as workers of the 3^rd respondent in order to gain access.  One of the workers collected the paint from the management office.  As recounted above, the accident happened just after Chan finished fixing the second hole.

THE EVIDENCE

44.  In this action, the applicant is legally aided and was represented at trial by Mr Wong Hay Yiu, counsel.  She called three witnesses to testify – Chan, Siew and the applicant herself.  Chan gave an account of, amongst other things, the instructions which the 1^st respondent gave to him and his co-workers with regard to the touch up work.  Siew gave an account of the contract between Goodman and the 3^rd respondent.

45.  The 1^st respondent acted in person.  He testified at trial and did not call any other witness.

46.  The 2^nd and 3^rd respondents were represented by Mr Kumar Ramanathan, SC, leading Mr Lai Ming.  The 2^nd respondent and Cheung gave evidence at trial.

47.  Immediately after the accident, the Labour Department conducted an investigation.  A number of individuals, including (but not limited to) Chan, Siew, the 1^st respondent, the 2^nd respondent and Cheung, attended interviews and made written declarations pursuant to section 4(1)(e) of the Factories and Industrial Undertakings Ordinance, Cap 59 (“the FAIU Ordinance”).  These declarations are disclosed in these proceedings and referred to at trial.  The findings of the investigation were recorded in the Fatal Accident Report dated 5 December 2013.  To the extent relevant and material to this action, those findings have been reproduced above.

48.  Following the investigation, the 1^st respondent was charged with various offences under the Construction Sites (Safety) Regulations made under the FAIU Ordinance.  Broadly, he was alleged to have failed to implement safety measures at the construction site.  He appeared at the Tsuen Wan Magistrates’ Court and pleaded guilty to all charges in June 2014.  He was fined $71,500 in total.

49.  The 3^rd respondent was charged with similar offences.  It was acquitted by the magistrate after trial, which took place in September 2014, more than a year after the accident.

50.  The transcripts of the above trials at the magistrates’ court are also disclosed in these proceedings.

ISSUES IN DISPUTE

51.  As between the applicant and the 1^st respondent, it is common ground that the deceased was the latter’s employee on the day of the accident. However, both sides have put forward different factual accounts of what the 1^st respondent had instructed the workers to do at the Building on that day.

52.  The 1^st respondent’s pleaded case is that he instructed Chan to clarify with the management office what the complaint was about and then to seek further instructions from the 1^st respondent as to the steps to be taken.  However, acting contrary to the 1^st respondent’s instruction, the workers, including the deceased, proceeded to carry out the repair works without consulting him first.  The work was done without his knowledge.  Because of that, the 1^st respondent says that the deceased acted outside of the scope of his employment.

53.  At trial, the 1^st respondent further contended that both Chan and the deceased were professional scaffolders and possessed the necessary knowledge about industrial safety.  They ought to have worn safety helmets and the deceased ought to have worn a safety harness.  He was at a complete loss as to why the two of them would undertake works in such a dangerous fashion.  He has been in the construction business for over 30 years and has never come across such an incident.

54.  In his cross-examination and submissions, the 1^st respondent also accused the management office staff of negligently allowing Chan and the deceased to work unsafely at the site.

55.  In the premises, the 1^st respondent says he should not be held liable to pay any compensation under the Ordinance.

56.  The applicant’s position is that the 1^st respondent had instructed the workers to go to the Building in order to carry out touch up works to the external wall.  Chan gave evidence to that effect at trial.  In any event, the applicant argues that even on the 1^st respondent’s factual case, he would still be liable to pay compensation by virtue of the express words of section 5(4)(b) of the Ordinance, which provides as follows:-

“an accident to an employee shall be deemed to arise out of and in the course of his employment, notwithstanding that the employee was at the time when the accident happened acting in contravention of … any orders given by or on behalf of his employer, or that he was acting without instructions from his employer, if such act was done by the employee for the purposes of and in connection with his employer’s trade or business;”

57.  The applicant says that what the deceased was doing at that time was clearly “for the purposes of and in connection with” the 1^st respondent’s trade or business.

58.  As between the applicant and the 2^nd and 3^rd respondents, the issue is whether the latter were sub-contractor and principal contractor, respectively, of the work executed by the deceased on the day of the accident.  Both respondents deny that they were.  They place much emphasis on the fact that the project was completed on 8 August 2013 and they left the site on that day.  There was no construction activity at the Building between that day and the day of the accident and there was therefore no connection in that interim period between the two respondents and the Building.  Mr Ramanathan submitted in closing:-

“In the absence of any evidential connection it is difficult to envisage how or why R3 is suddenly resurrected to become the principal contractor of the site and R2 as its subcontractor.”

59.  Mr Ramanathan further submitted that the request made by Goodman to the 3^rd respondent to execute touch up works at the Building does not turn the two respondents into sub-contractor and principal contractor.  This is because “the fundamental and core question” in these proceedings is this – “Was R3 the principal contractor of this site on 20^th August 2013?”  The answer, he submitted, is clearly “no”.  Crucially, neither the 2^nd respondent nor the 3^rd respondent was undertaking or executing any work at the Building.  Neither of them were aware that any workers were going to attend the site that day.

ANALYSIS

Liability of the 1^st respondent

60.  The liability of the 1^st respondent turns on whether the accident is one “arising out of and in the course of the employment” – section 5(1) of the Ordinance. 

61.  This is essentially the question that will be determinative of the 1^st respondent’s liability to pay compensation.  Once this is recognised, it is plain and clear that his complaint about the deceased carrying out the work in a dangerous manner and his accusation that the management office simply stood by and failed to warn or stop the deceased are simply irrelevant to the liability issue in this action.

62.  Here, the court needs to resolve the factual dispute as to whether the 1^st respondent had simply instructed the workers to check and report (as he alleges) or to proceed to execute the works on that day (as the applicant claims).  Essentially, this turns on the credibility of the 1^st respondent and Chan.

63.  Having considered the evidence as a whole as against the undisputed or indisputable background, I consider that Chan’s account is more credible than the 1^st respondent’s.  The following matters are, in my view, pertinent considerations.

64.  First, if the 1^st respondent had in fact instructed the workers to attend the site to merely check and report, an obvious question would immediately come to one’s mind – why would the workers defy that express instruction and proceed to mend the holes?  In this regard, the 1^st respondent’s evidence is inherently more improbable than Chan’s. 

65.  When cross-examined by the 1^st respondent on this, Chan said that without the boss’s instruction, the workers would not dare to execute the work and that they merely worked according to instructions.  Mr Wong, counsel, submitted that there was really no reason why the workers would all go ahead with the touch up works without being instructed.  In my view, that is a forceful submission on the evidence.  In fact, if what the 1^st respondent says is true, the workers did not merely work without instruction, they actually disobeyed his express instruction to report back first.  Again, there is no apparent reason why they would do so.  The workers were paid a daily wage.  Earlier on that day, they had been working on other sites and were about to go off duty as it was already about or shortly after 5pm when they arrived at the Building.  It is not the case that they were being paid by the number of pieces of works they had engaged in.  The 1^st respondent’s account in this regard is tainted with inherent improbabilities.

66.  Secondly, the 1^st respondent’s stance or evidence on this issue has been inconsistent.  This has significantly undermined his credibility.

67.  In this action, he has insisted that on the day of the accident, he had asked Chan to inspect first and find out what the complaint was and to report back to him before he decided what to do.

68.  This is to be contrasted with the statement which he gave during the Labour investigation.  He signed a declaration dated 18 September 2013, which is just under one month after the accident.  I set out below an extract of that declaration on this topic:-

“Q16: Why did Ah Fai [ie the deceased] go to work at Dynamic Cargo Centre on the day of the accident (ie 20 August 2013)?

A16: Previously received Hip Woo’s Chan Kwok Hin’s notification that the management office requested the contractor to send someone there to repair the surface of the external wall – that part facing Texaco Road, which had an advertising signboard mounted on it. This is because the management office said that there were still some drill holes on the external wall which were left after the dismantling of the scaffold. On that day, I telephoned my worker Ah Wai (ie Chan Chun Wai) and asked him to go there with the workers (including Ah Fai) to see what the management office’s request was and repair the external wall if necessary.” (my translation and emphasis)

69.  Further, in the proceedings at the Tsuen Wan Magistrates’ Court in June 2014, the 1^st respondent, through his lawyer, stated in mitigation that on that day, he sent four of his workers to attend the site to carry out the touch up works.  There was no mention at all that he had given specific instruction to them to report back first.

70.  At trial, the 1^st respondent was not able to give any satisfactory explanation in respect of these stark inconsistencies between his previous statements and the evidence which he now tenders.  In cross-examination, he said that the declaration was not as clear or detailed as his present evidence.  This explanation is of course totally incomprehensible. His statement in the declaration is clear and leaves no room for different interpretations.  In respect of the things said on his behalf in the magistrates’ proceedings, the 1^st respondent said that he had absolutely no idea what the lawyer was saying on his behalf.  He did not pay much attention as it was enough for him to know what the fine was and when he needed to pay up.

71.  In my view, the inconsistencies and, perhaps more revealingly, the 1^st respondent’s feeble attempt to put forward utterly unbelievable explanations for these inconsistencies cast serious doubt on the credibility and reliability of the 1^st respondent as a witness.

72.  Thirdly, it must be noted at the same time that there are also inconsistencies in Chan’s evidence in this regard.  Chan’s position, as disclosed in his declaration in the Labour investigation, in his evidence in the magistrates’ trial and in his witness statement, has all along been that it was he who spoke to the 1^st respondent directly over the phone and it was he himself who received the instruction to go and do the touch up works.  However, at the trial, in examination-in-chief, he said for the first time that the instruction was given over a conversation between the 1^st respondent and Li, not him.  In fact, he explicitly elaborated that (a) on that day the 1^st respondent communicated with Li, (b) he did not know what Li told the 1^st respondent, but (c) Li said it was the 1^st respondent who instructed all the workers to proceed to do some patch up works to some holes.

73.  When his previous inconsistent statements were put to him during cross-examination by Mr Ramanathan, Chan then said that since the events took place such a long time ago, he could not now remember clearly.  Besides, given that there were quite a few people involved, how could he now possibly remember who was calling who on that day?

74.  The change of position in Chan’s evidence in this regard is clearly a matter that I should take into account in evaluating its reliability.  On this issue, I consider that his explanation for the discrepancy makes sense and is believable.  Furthermore, unlike the change of stance of the 1^st respondent, there does not seem to be any reason or motive or anything to gain for Chan to change his evidence about who called who on that day and in particular who spoke to the 1^st respondent directly.

75.  On the basis of the evidence before me, I find that Chan’s evidence is more inherently probable and more consistent than the 1^st respondent’s.  I would prefer the former to the latter where they are in conflict.  Accordingly, I find that on the day of the accident, the 1^st respondent gave instructions to the workers to attend the Building, find out what the complaint was about and, if needed, carry out touch up works to the external wall.

76.  Based on such factual finding, there is no doubt that the accident arose out of and in the course of the deceased’s employment with the 1^st respondent.  The 1^st respondent is liable to pay compensation under the Ordinance.

77.  In any event, even if I found in favour of the 1^st respondent on the facts, he would still be liable by virtue of the deeming provision in section 5(4)(b) of the Ordinance.  I accept the applicant’s submission as set out in paragraphs 56 and 57 above.  The wording used in the section is clear.

Liability of the 2^nd and 3^rd respondents

78.  Section 24(1) of the Ordinance provides as follows:-

“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; …” (emphasis added)

79.  Under the employees’ compensation regime, the liability imposed on an employer is sometimes described as a “no fault liability” – see, eg, Ng Tat Kuen v Tam Che Fu HCPI 896/2013, 26 October 2015 at paragraphs 24 and 25, per To J.  This is because the employer is liable for injury suffered by his employee in an accident so long as it arose out of and in the course of the employment.  This remain so notwithstanding that the employer is himself at no fault in causing or allowing the accident to happen.  This “no fault liability” is extended to the principal contractor by virtue of section 24(1) of the Ordinance.

80.  In 莊鴻偉對林群 [2017] 3 HKLRD 222 and 227, the Court of Appeal commented as follows (at paragraph 8):-

“The ‘principal contractor’ is liable for compensation when an employee fits such criteria regardless of whether the accident occurred as a result of the negligence of the employee himself or the ‘sub-contractor’.”

81.  Accordingly, whether the 2^nd and 3^rd respondents are liable to pay compensation is dictated by whether they fit in with the definitions of “sub-contractor” and “principal contractor” laid down in section 24(1).  If they do, they will not escape liability merely because they are themselves at no fault or not negligent in any way. 

82.  Much is said by the 2^nd and 3^rd respondents in this action about the fact that they were “kept in the dark” about the works carried out on the day of the accident and that therefore there was nothing which either of them could have done to prevent the accident.  However, when the general nature of the employees’ compensation regime is correctly and sufficiently appreciated, it is plain that that mere fact is by itself not relevant at all to the liability issue.

83.  The two respondents place heavy reliance on some (admittedly) special features in this case, namely that they had vacated the Building as early as 8 August and that there was no activity in the interim period.  Because of that, it is necessary to identify the correct approach which the court should adopt in determining their liability.  (This analysis may not be necessary in other cases where the facts are more straightforward or “typical”.)

84.  Although not drafted in the most straightforward manner, it is sufficiently clear from a reading of section 24(1) that in the case which involves more than one layer of sub-contracting, the approach is as follows :-

(1) The court should first identify the work which was executed by the employee when the accident happened, and examine its nature.

(2) The court should then determine whether the employer and any intermediate sub-contractor are each contractually bound to carry out such work under their respective sub-contracting contracts.

(3) Lastly, the court should determine whether such work was “undertaken” by the principal contractor.

85.  If the answers to (2) and (3) above are “yes”, then each of the principal contractor and the intermediate sub-contractor would be liable under the section.

86.  Loosely speaking, in this action, the 3^rd respondent has undertaken to execute the project for Goodman.  It then sub-contracted the entire project to the 2^nd respondent.  He further sub-contracted the scaffolding work to the 1^st respondent.  On such facts, the above questions then become:-

(1) How did the two small holes come into being in the first place?  Were they, as claimed by the management office, drill holes that had not been properly done during the dismantling of the scaffold?  Or were they caused by some other reasons which had nothing to do with the project?

(2) Were the 1^st and 2^nd respondents contractually bound to fix the holes?

(3) Had the 3^rd respondent undertaken to fix the holes for Goodman under the project?

The first question – the two small holes

87.  The first question is a factual question.  It has not been explored in much detail in either cross-examination or submission.  It may have been due to the fact that none of the witnesses (save for Chan) had in fact seen the holes for themselves.  The 1^st respondent, the 2^nd respondent and Cheung never inspected the site after being informed of the complaint of the management office.  Siew had not seen the holes either. 

88.  Nonetheless it remains a material question.  If, as a matter of fact, the holes were not caused by, or did not arise from, the project, there is no legal basis whatsoever to attach liability to the 2^nd and 3^rd respondents in respect of the accident since the former would not be under any contractual obligation, and the latter had not undertaken, to fix them.  (In such a situation, the 1^st respondent would, however, remain firmly liable to the applicant since it was he who instructed the deceased to go and work on those holes.)

89.  This question can be resolved quickly.  The 2^nd and 3^rd respondents’ own evidence is that two days after the dismantling of the scaffold, the management office informed Cheung that there were some holes which had not been properly done.  

90.  I consider that the closeness in time between the dismantling and the complaint of the management office is highly indicative that the two small holes were in fact drill holes left by the scaffold which had not been properly mended. There is no other suggestion as to why else there were two small holes on the external wall.  The two respondents in fact submit that there was no interim construction activity taking place at that time.  Further, it should be borne in mind that the two holes were found at a level which is neither easy nor convenient for anyone who is not properly equipped to get to – either from the pavement or from the 2/F carpark.

91.  In conclusion, I find, on a balance of probabilities, that the two small holes were drill holes which were exposed after the dismantling of the scaffold but not filled or painted properly in the dismantling exercise.

The second and third questions

92.  These two questions are more logically and conveniently dealt with together but in reverse order.  The rival contentions are:-

(1) In favour of the applicant – the 3^rd respondent had undertaken, vis-à-vis Goodman, to fix the two holes as part of the project; further, the 2^nd and 1^st respondents were each contractually bound to carry out the works.

(2) In favour of the 2^nd and 3^rd respondents – the communications made and the steps taken by the three respondents were all voluntary, as opposed to having been done pursuant to any contractual obligation.  And they were done merely with a view to “maintaining on-going business relationships and as an extended exercise in public relations to foster future business and preserve present business relationships”.

93.  As to whether for the purpose of section 24(1), the work undertaken by the 3^rd respondent included the touching up of the two small holes at a time when the scaffold had been removed and the 3^rd respondent had regarded itself as having already vacated the site, the answer is, in my view, clearly “yes”.

(1) It is common ground that, generally speaking, it is part and parcel of the work of a scaffolder to fill up and re-paint drill holes on the wall when he dismantles a scaffold.

(2) The contract between Goodman and the 3^rd respondent expressly provided for “all necessary makegood work on the wall surface” – see paragraph 18(1) above.

(3) In his Labour declaration made in November 2013, Cheung accepted that the fixing of drill holes was part of the project, when asked by the investigating officer.

(4) By the time of the accident, the project had not yet been certified as completed in accordance with clause 10.2 of the purchase order.  It is inaccurate for the 3^rd respondent to argue that there had been completion of the project in the contractual sense.  (Hence, the argument as to whether the holes should be fixed pursuant to the 3^rd respondent’s obligation under the defect liability period as provided for in clause 11.1 is not even engaged and is irrelevant.)

(5) Cheung’s stance taken in cross-examination is also proof that the 3^rd respondent was contractually obliged to make good those holes.  Mr Wong asked him if, upon inspection, it was confirmed that the defects complained about by the management office were caused by the dismantling of the scaffold, whether the 3^rd respondent would proceed to carry out the touch up work.  Cheung answered of course yes.  He further said that it would not charge extra for such touch up work given that the defects were caused by its workers.

(6) All these show that the steps taken by the 3^rd respondent after it learnt about the complaint were steps intended to fulfil its contractual obligation which it had undertaken under the project.  They were not in any way voluntary in nature.

94.  As to whether for the purpose of section 24(1), the 2^nd respondent was, under his contract with the 3^rd respondent, obliged to make good the two small holes at a time when the scaffold had been removed, in my view, the answer is equally clearly “yes”. 

(1) In his Labour declaration made on 22 August 2013 (ie just two days after the accident), the 2^nd respondent confirmed that the scaffolding work which he had sub-contracted to the 1^st respondent included the filling up and re-painting of drill holes in general.

(2) The contract between the 2^nd and the 3^rd respondents, namely the one-page document, expressly provided for “all necessary makegood work on the wall surface” – see paragraph 19 above.

(3) There is no evidence that any other contractual terms had been agreed. In particular, there is no evidence to the effect that it had been agreed between the 2^nd and 3^rd respondents that the former’s obligations would be regarded as fully performed or discharged as and when the scaffold was removed.

(4) In the circumstances, notwithstanding that the 2^nd respondent might have subjectively thought that the contract was at an end after the scaffold was removed, as a matter of contract, he was clearly under an obligation to make good the defects concerning the two drill holes.

(5) In fact, it seems to be his stance taken when he testified.  He was rather economical with his words when he gave evidence.  But when cross-examined by Mr Wong on this point, he did confirm that it was part of the job to do touch up works and, more importantly, he said that if the drill holes were left there by the 1^st respondent’s workers, he would not expect the 1^st respondent to charge him anything extra for rectifying the defects.  Equally, he would not charge the 3^rd respondent for such rectification work.

(6) Later, in re-examination, counsel asked him why he would entertain Cheung’s request to follow up on the complaint, his answer was even more telling.  He said although the contract was completed, in terms of responsibility towards the job, he should do it.

(7) All of the above clearly shows that even though as a matter of practicality, the contracting parties would generally consider that the dismantling of the scaffold signified the end of the project or contract, when genuine defects arising from the work were subsequently discovered, the intention would remain that the defaulting party should take steps to remedy the defect as part of the deal.

95.  Lastly, as to whether for the purpose of section 24(1), the 1^st respondent was, under his contract with the 2^nd respondent, obliged to make good the two small holes at a time when the scaffold had been removed, I would also answer the question in the affirmative.

(1) In his Labour declaration made on 18 September 2013, the 1^st respondent confirmed that as the scaffolding sub-contractor, his job included the filling up and re-painting of drill holes in general.

(2) At the trial, the 1^st respondent expressed frustration at the complaint made by the management office.  This is because on 8 August 2013, the management office representative was there to inspect the work.  It was only after the work had been accepted that the 1^st respondent’s workers left the site.  He considered that once the scaffold was removed and the debris cleared away, that would be the end of the contract.  He was running a scaffolding business and he did not give any warranty or guarantee after the work was finished.

(3) Notwithstanding his frustration (which was quite possibly genuinely held), there is no evidence to the effect that it had been agreed between the 1^st and 2^nd respondents that the former’s obligations would be regarded as fully performed or discharged as and when the scaffold was removed.

(4) In the circumstances, notwithstanding the subjective view taken by the 1^st respondent, as a matter of contract, he was clearly under an obligation to make good the defects concerning the two drill holes, even though they were only subsequently discovered.

(5) In fact, similar to the evidence of Cheung and the 2^nd respondent, the 1^st respondent also confirmed in cross-examination (albeit with some apparent reluctance) that if 1^st respondent’s workers had omitted to fix some of the drill holes in the dismantling process, he would have been prepared to rectify those missed holes subsequently, even when he would not be paid extra.

(6) All of the above clearly shows that even though as a matter of practicality, like the 2^nd respondent, the 1^st respondent would consider that the dismantling of the scaffold signified the end of the project or contract, when defects in the work were subsequently discovered which had been caused by his workers, he would take steps to rectify the defect as part of the deal.

96.  On the whole, I reject Mr Ramanathan’s submission made on behalf of the 2^nd and 3^rd respondents that the steps which they took after learning of the complaint regarding the holes were steps voluntarily taken, whether as a business gesture to maintain good business relationships or as part of a public relation exercise.  The evidence plainly and clearly shows the opposite, namely that they did what they did with a view to discharging their respective contractual duties.

97.  In fact, the “voluntary” submission only emerged for the first time in cross-examination and was then put forward as a material point at the closing stage.  Never before had it been mentioned or alluded to in any of the pleadings or witness statements filed by the two respondents. 

98.  Further, at the magistrate’s trial, the 2^nd and 3^rd respondents’ stance on this seemed to be directly contradictory to their stance in this action.  I quote below the relevant part of the Q&As at that trial when Mr Ramanathan cross-examined the 2^nd respondent on the touch up work:-

“Q: And, with the dismantling of the scaffolding, the scaffolding contract workers also finished?

A: Correct.

Q: The only leftover part, if I can call it that, is that, if subsequently, some touch-up work is required to be done, then arrangements will be made as part of the contract to get that touch-up work carried out?

A: That’s correct.

Q: Now, two days after the dismantling of the scaffolding, you told the court about receiving a phone call from Mr Cheung; remember that?

A: Yes.” (my emphasis)

99.  To sum up, when the accident happened, the deceased was working together with the co-workers to fill up and re-paint the two drill holes which had not be fixed properly on 8 August 2013.  It was part and parcel of the project and the 1^st, 2^nd and 3^rd respondents were each contractually bound to fix those holes after the management office made its complaint.  In the circumstances, the 2^nd and 3^rd respondents qualify respectively as “sub-contractor” and “principal contractor” of the work and are liable under section 24(1). 

100.  It would be clear from the above analysis that it does not matter that on 13 August 2013, a certificate of completion of minor works was filed with the Buildings Department.  Such filing was clearly done in compliance with some other statutory regime.  It is not relevant to the liability issue under the employees’ compensation regime.

101.  In his closing submissions, Mr Ramanathan placed great emphasis on the fact that both the 2^nd and 3^rd respondents had handed over the site to Goodman on 8 August 2013 and had since left.  They should not be held liable to compensate as they could not possibly be held to be sub-contractor and principal contractor of the site – see paragraphs 58 to 59 above.

102.  This might well have been the ground on which the 3^rd respondent was acquitted on those charges brought under the safety regulations.  However, as submitted by Mr Wong, it is plain that those regulations and the Ordinance are aimed at very different purposes – the former is concerned with enhancing industrial safety at construction sites while the latter provides for a compensation regime for workmen. 

103.  It is unnecessary and indeed irrelevant to ask whether the two respondents were contractors of the site under the Ordinance.  When properly analysed, the proper questions to ask are those set out in paragraph 84 above.  It may be said that the questions to be addressed under the Ordinance should be “work-centric”, rather than “site-centric”.

QUANTUM

104.  It is not in dispute that the daily wage of the deceased was $800.  There was an apparent change in the 1^st respondent’s evidence regarding the deceased’s start date.  However, the weight of the evidence does suggest that he started working for the 1^st respondent on 8 August 2013. 

105.  The only dispute relates to the number of working days.  Chan gave evidence that he started working for the 1^st respondent since April 2013 and had worked for him for about four months by the time the accident happened.  He stated that he worked for an average of 20 days per month.  On the contrary, the 1^st respondent does not now have any earning records of those workers whom he employed at that time.

106.  I accept Chan’s evidence.  There is no good reason put forward by any of the respondents that his evidence in this regard should be disbelieved or that he has any motive in not being truthful about the number of working days.  Applying section 11(2) of the Ordinance, I hold that in calculating the deceased’s monthly earnings, it should be taken that he would have worked for 20 days in a month.

107.  On the day of the accident, the deceased was aged 30.  His monthly earning is $16,000 (ie $800 x 20).  Hence the compensation payable under section 6(1)(a) of the Ordinance is $1,344,000 (ie $16,000 x 84). 

108.  There is no serious dispute to the amount of the funeral expenses incurred by the deceased’s father in the sum of about $109,600.  This exceeds the statutory cap of $70,000 payable under section 6(5).  The father should therefore be reimbursed $70,000.

109.  The 1^st respondent mentioned in his submissions that he paid a sum of $40,000 as condolence money to the deceased’s family shortly after the accident.  This has not, however, been reflected in either his witness statement or his oral evidence.  At closing, none of the respondents made any mention of this sum.  As such, no deduction of this amount should be made.

110.  To sum up, the total amount due to the applicant, is $1,414,000.

ORDERS

111.  Accordingly, there shall be judgment against the 1^st to 3^rd respondents in the sum of $1,414,000.  Interest shall accrue on this sum at half the judgment rate from the date of the accident until the date of judgment and after that at judgment rate until payment in full.

112.  The sum awarded under section 6(1)(a) should be apportioned in accordance with section 6A(1) and paragraph 7 of Schedule 7 of the Ordinance, ie 80% to Madam Wei, 7% to the deceased’s father, 7% to the mother and 6% to the grandfather.  The sum awarded under section 6(5) is payable to the father.

113.  I further make an order nisi that the 1^st to 3^rd respondents do pay the applicant’s costs of the action, to be taxed if not agreed, with certificate for counsel and that the applicant’s own costs be taxed in accordance with the Legal Aid Regulations. 

114.  I shall also direct my clerk to inform the 1^st respondent that should he wish to have this judgment translated into Chinese to him orally, he should inform the court within 14 days from today.