LEUNG KAM TO v. LAU KA YEUNG AND OTHERS

DCEC 342/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES' COMPENSATION CASE NO. 342 OF 2001

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Reasons for Judgment

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1. The applicant claimed compensation from the 2nd and 3rd respondents under sections 9, 10 and 10A of the Employees' Compensation Ordinance. The section 10A claim was abandoned. Following the trial I gave judgment in favour of the applicant against both respondents for $197,184.00 with interest and costs and ordered that the 2nd defendant under section 24 of the Employees' Compensation Ordinance indemnify the 3rd respondent for any sums paid by it to the applicant in satisfaction of the judgment and the costs ordered; and for the 3rd respondent's own costs in these proceedings. I now give reasons.

2. Originally the applicant claimed against the 1st respondent ("Lau"), the 2nd respondent ("Kinway") and the 3rd respondent ("Shui On") for compensation for personal injuries suffered in an accident which arose out of and in the course of his employment on 24 October 2000, on a construction site at Tseung Kwan O Town Lot 62, Area 65A, Sai Kung. It is not in dispute that Shui On was the principal contractor on the site, and Kingway was at the relevant time a sub-contractor to Shui On and responsible for remedial external mosaic tile work at Blocks 4 and 5 within the site. Lau had originally been a sub-contractor to Kinway for this work but before the relevant date he had ceased to work at the site. The action was discontinued as against him.

3. The applicant's pleaded case was that whilst he was doing mosaic tile work to the outer wall at the 9th floor level of a building, part of the bamboo scaffolding on which he was working suddenly broke, causing him to fall to the 5th floor level. As a result he suffered multiple abrasions over the left elbow, right wrist and right calf with residual pain, numbness and weakness, and microscopic haematuria was found.

4. Kinway put the applicant to strict proof of the accident. It denied that it had employed him. It averred that Shui On would only admit persons with working passes into the site, but that none had been issued to the applicant, so, effectively, he must have got in through a gap in the perimeter fence. There was no record that the applicant had signed on the 2nd respondent's daily work records, and no employee had been working on the 9th floor or any building on the day in question.

5. Shui On likewise made no admissions as to the occurrence of the accident. It averred that it issued working passes for all qualified and permitted workers; none had been issued to the applicant; it had set up security checks at the site entrance to ensure that only workers with permits could enter; and therefore the applicant should not have entered or worked at the site. Further or alternatively, if he did work there, he entered as a trespasser.

6. Further and better particulars were sought. The applicant gave particulars that he had entered the site by means of a gap in the wooden hoardings erected round the perimeter.

Evidence

7. Evidence for the applicant came primarily from the applicant himself. His solicitors had also served a subpoena on Lau. He refused to attend court. A message was received that he feared for his job. In any event the applicant had given the necessary notice and relied on Lau's statement under the hearsay rules.

8. In brief, the applicant's evidence of his employment was that his friend Ho Kam Yiu ("Ho") got him the job which he started on 23 October 2000. Ho told him that Shui On was the principal contractor and the employer. The pay was $800 per day; Ho would collect it and he would be given $700+. He was later given to understand that he was working for Kinway, and that Kinway belonged to Lau, and Lau would give the money to Ho.

9. Ho took the applicant to the site the next day, 23 October 2000. They entered the site through a hole in the hoarding, there being security men checking for passes at the main gate, and went to a room on the ground floor of a block where they changed and got tools, helmets and safety belts. They worked outside the 15th floor on scaffolding, repairing tiling; they removed and retiled damaged or improperly tiled areas. In the morning a foreman or supervisor came to check the work and Ho spoke to him. Ho later told the applicant that he had given the supervisor his name.

10. On 24 October 2000 the applicant entered the site by the same route, went and got the tools and safety equipment, then went to the 12th floor of the block, where he met Ho, and they worked together. They worked down to the 9th floor. As he was working there the applicant had to move to another part of the wall. He detached the shackle of his safety harness and walked along the horizontal scaffolding poles. There were no transverse bamboos, and no wooden boards. As he was manoeuvring with a bucket in each hand one of the horizontal poles broke and he fell to the 5th floor. Ho found him and called a Kinway supervisor called Ah Pui who came and took the applicant's details. When Ah Pui found that the applicant did not have a working pass or safety card he said that he would not be responsible, and the company would deny that the applicant was an employee. So Ho took him in a taxi to the United Christian Hospital.

11. On 26 or 27 October 2000 the applicant went to the site office of Shui On and met Ah Pui who told him that Shui On would not be responsible and would deny that he was an employee. Ah Pui suggested that he not report to the Labour Department and offered compensation of $2,000.00 to $3,000.00. But the applicant said he would go to the Labour Department. Some other Shui On employees came out and said that Shui On would not recognise him as an employee. So he went to the Labour Department the next day.

12. The applicant says that when he was making his declaration to the Labour Department, he was asked who were his employer and supervisor. He called Ho who told him that the company was Kinway and the boss of it was Lau.

13. A medical report from the United Christian Hospital shows that the applicant attended the Accident and Emergency Department on 24 October 2000, complaining that he had fallen from the 8th to the 5th floor platform that day. He had multiple abrasions over the left elbow, right wrist and right calf. He complained of left loin pain. He had left loin tenderness and microscopic haematuria was found. There was no fracture. He came back the next day with neck and back pain and this was treated as a sprain. His last attendance was on 28 October. He was given sick leave until 7 November 2000.

14. According to Lau's statement, he was working for Kinway as a ganger and recruiting workers for the external mosaic work. He was paid by the floor worked and shared the money with his gang. But this was completed in July 2000. Thereafter remedial work was needed. A supervisor called Man Shui Ko asked Lau to find workers for this. He introduced four or five workers. They, and others doing this work were employed directly by Kinway. The pay was $800 per day. Lau had introduced Ho to work at Kinway. Ho and others were paid through Lau's account.

15. Lau stopped working at the Tseung Kwan O site on 16 October 2000 and the workers were no longer to be paid through his account after the first payment for October had been made. He knew nothing of the applicant at this stage. On 24 October 2000, Ah Pui, who was the Kinway supervisor at Block 5, called him and said that the applicant, who was one of Lau's group had had an accident. Lau said that he did not know the applicant, and Ah Pui should report the matter to the Labour Department. After three days Ah Pui called Lau again and told him to update his passbook because the first payment for October had been made. He found that only half had been paid. So he called Ah Ham who was another supervisor, in charge of Kinway; and Ah Ham told him to come to the office to sort out the case of the applicant first, before he would be paid. Ah Ham wanted to know who had introduced the applicant; and he said that if Lau did not come in, his arrears would not be paid. Subsequently there was a meeting at which Ho said that he had introduced the applicant, but did not know how the applicant got into the site, and did not know that the applicant did not have a pass. Later Lau tried to have a meeting with the applicant but the applicant refused. The dispute over wages went on until November when Lau and those who were paid through him received their arrears.

16. The applicant also called as a witness Mr Shum who was the Safety Officer of the Labour Department who investigated the accident in February and March 2001. He had interviewed the applicant and spoken to various others including Leung Kam Pui, or Ah Pui. He had said in his report, which was produced that Kinway was the sub-contractor of Shui On and had further subcontracted to Lau and that Ho was one of Lau's workers. He had, it appears, got this information from Ah Pui or the safety officer of Shui On.

17. Evidence for Kinway came from Mr Wong Kam Shing. It appears from cross-examination that he is nicknamed Ah Ham. Mr Wong's evidence was that Kinway had no information about the applicant. Every new recruit had to be led to the contstruction site gateway by the foreman, where he would be issued with a temporary pass to enter the site. His application for a formal pass would be processed the same day. He would only get a pass if he had a safety card, or "green card" to show that he had taken a safety course. Even if a worker was allowed in on a temporary pass he could not work until he had passed the safety course and obtained a green card. The guards at the gate would strictly check all persons entering, and only those with green cards would be allowed to enter. There were no records relating to the applicant, in respect of such procedures. Further, every worker had to sign the daily work schedule; and the applicant had not signed it. Also, no arrangements were made for anyone to work on the 9th floor on 24 October 2000.

18. Cross-examined, Mr Wong said that he had checked the records and found that no one was working on the 9th floor of Block 4 on the day in question. The scaffolding was provided by a specialist sub-contractor but the workers themselves had to lay the boards for working platforms. Kinway did not do that. Kinway's workers, and all experienced mosaic tilers would know that they would have to lay the boards, and there were sufficient boards available.

19. Mr Wong agreed that once the gang work under Lau was finished, Kinway had taken back direct control to do the remedial work. So whoever was doing the remedial work would be working for Kinway and not for Lau or any other ganger or organiser. At that stage Ho was working directly for Kinway, but he was still being paid through Lau. That applied to all the workers; they would be paid through Lau or whoever was the labour provider. Kinway had left the recruiting to Lau, or people he nominated; but, according to Mr Wong, it was impossible for Kinway to hire anyone without the green card.

20. He said that after the accident, Ah Pui had told him of it, either the same day or the next day. Ah Pui was the foreman for Block 5 and he would have been the man to assign work there and who would have been contacted by anyone who had an accident. Ah Pui said that a person who sustained injury at the scaffold on the outside wall had been taken to hospital, suffering from slight injuries. However Mr Wong had not been told anything about an offer to pay off the injured person for $2,000. There had indeed been a dispute with Lau over payment of wages; Kinway had been trying to find out if the injured worker was one of Lau's workers, or who he was, and Lau had been unable to show the existence of such a person.

21. Evidence for the 3rd respondent came from a safety officer, Mr Kong Kin Ming. He too gave evidence of the system of employment of approved workers with green cards. He said that there was a canopy sheet at the 6th floor of every building which would have prevented anyone from falling from the 9th floor to the 5th floor scaffolding. There had been no report of any damage to this structure. As to the perimeter security arrangements he said that the guards patrolled it. Part of the perimeter was hoarding and part was wire mesh. In some places there was both. If there was a hole 6 feet high by two feet wide it would be easily seen by the guards or any other employee of Shui On who would report it and ask for maintenance. As to this accident he confirmed that the first he or Shui On heard of it was on 2 November 2000, from the Labour Department. He had asked Ah Pui about it but Ah Pui said it never happened.

22. The above is not intended as an exhaustive account of the evidence but rather to cover the salient points which are relevant in these proceedings.

The Issues

23. The two basic issues here are whether the accident happened at all, and if it did, who was the direct employer of the applicant at the time. If the accident did happen, then obviously it arose out of and in the course of the applicant's employment.

Evaluation

24. The applicant was a reluctant and confused witness. It would be difficult to rely on the accuracy of any details which he gives. However, his evidence of having met with an accident is supported by the medical evidence of his injuries. It is also clear that prompt report was made at least to Ah Pui and that a dispute followed between Kinway and Lau over the identification of the worker had been injured, where he came from and who brought him in. It is also significant that Ah Pui has not been called to give evidence. The plaintiff says that there was an attempt to pay him off and this is not contradicted; it suggests that Ah Pui at least knew perfectly well what was going on and was trying to cover it up.

25. It is more probable than not that the applicant met with an accident. Whether he fell from the 9th to the 5th floor as he says is rather more difficult. It seems impossible for him to have fallen to the 5th floor, for there was a canopy in the way at the 6th floor. But for the purpose of these proceedings I do not have to be satisfied as to how the accident occurred, only that it occurred in the course of and arising out of his employment. I accept, having heard his evidence and considered the medical report and the surrounding facts and circumstances that the applicant did fall while working on the scaffolding, and suffered injury thereby.

26. As to who employed him I think that Kinway is caught by the admissions of Mr Wong that whoever was doing the mosaic tile work was directly employed by Kinway, whether or not he was recruited by or paid through Lau. No doubt Kinway only intended to employ workers with green cards, properly admitted to the site, but in any event the question is not whether the applicant ought to have been employed but whether he was employed. It seems to me that once Ho brought the applicant on site his presence must have been accepted by Ah Pui even if it was not recorded. So he would be employed by Kinway. Of course even if the applicant had been employed by Lau, Kinway as a subcontractor above Lau in the "chain" would not have escaped liability.

27. For the purposes of the Ordinance, I have to be satisfied that the applicant suffered personal injury by accident arising out of and in the course of the employment. Having heard the evidence, I am satisfied that the applicant was at the relevant time employed by the 2nd respondent, Kinway. I am satisfied that he suffered an accident by falling from scaffolding, in the course of his employment and that personal injury was caused to him thereby.

Quantum

28. Compensation under the Ordinance is based on monthly earnings. There is a dispute over what figure is to be taken as the applicant's monthly earnings. The figure which the applicant pleads in his Application is $20,800. This represents a daily wage of $800 and 26 days' work per month. However, the applicant's evidence is that he was to receive his wages through Mr. Ho and that the latter would deduct some figure which would bring the actual figure received for a day's work down to something between $700 and $750. Further, the applicant's evidence is that in previous employment as a plasterer, he would work for 23 or 24 days per month.

29. The respondents and in particular the 3rd respondent argue that the earnings figure should be based on what the applicant would actually have received. If that was $700 per day, that, rather than what the employer paid, should be the daily figure. As to the number of days worked per month, there is simply no evidence to prove that the applicant would have worked for 26 days per month. The court should apply a realistic figure, if necessary making an estimate of the days worked, as various judges have done in the past in common law personal injury cases.

30. This is a statutory claim. Compensation under the Ordinance is based on monthly earnings. In section 3, "earnings" are defined as "any wages paid in cash to the employee by the employer...". The definition goes on to deal with allowances and the like but the words which follow are not relevant here. Section 11 provides the method of calculating earnings and the relevant parts read as follows:

(1) Subject to this section, for the purposes of this Ordinance the monthly earnings of an employee at the time of the accident shall be the earnings-

(a) for the month immediately preceding the date of the accident; or

(b) computed in such manner as is best calculated to give the rates per month at which the employee was being remunerated during the previous 12 months if he has been so long employed by the same employer, but, if not, then for any lesser period during which he has been employed by the same employer,

whichever calculation is more favourable to the employee.

(2) Where by reason of the shortness of the time during which an employee has been in the employment of his employer or of the casual nature of the employment, or of the terms of employment, it is impracticable to compute the rate of remuneration of such employee at the date of the accident, regard may be had to the average monthly amount which, during the 12 months previous to the accident, was being earned by a person of similar earning capacity in the same grade employed at the same work by the same employer, or, if there is no person so employed, by a person of similar earning capacity in the same grade employed in the same class of employment and in the same district.

31. I accept the argument of Mr Clough for the applicant that all legislation must by section 19 of the Interpretation and General Clause Ordinance, Cap. 1,

".....receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit."

32. The Employee's Compensation Ordinance is a piece of social legislation designed for the protection of employees and the legislature's consistent policy has been to enlarge is provisions in favour of employees; Hip Hing Construction Co. Ltd. v Wong Leung Tak & Anor. [1991] 2 HKLR 345.

33. Looking at the definition of "earnings" in that light, it seems to me that if an employee, and another employee who recruits him on the employer's behalf have some kind of collateral agreement between them for payment of a fee or commission to the latter I do not think that affects the position as between employer and employee. The position may be different where the employee is paid through an agent or payment is made to a service company, and there is a tripartite agreement between the employer, the employee and the agent or company, but there is no evidence that that was the situation here. I do not see that the employer can take advantage of any deduction by the recruiter when that is a matter solely between the latter and the employee. There is no doubt that the daily wage paid in cash by the 2nd respondent to its plasterers was $800.00 and I take that as the daily wage for the purpose of calculation of monthly earnings.

34. The other question is, what would the applicant have earned per month, if his daily wage was $800.00? The applicant was on his second day of employment with Kinway. It is not practicable to calculate how many days per month is the appropriate figure for calculation, from his past earnings with Kinway. So regard could, under the Ordinance be had to what was earned during the 12 months previous to the accident by a person of similar earning capacity employed by Kinway. There is no evidence of that. It is of course argued that the plaintiff must prove his case; he should have sought discovery of Kinway's records, to find out what its plasterers' average earnings were and that in the absence of such evidence I have to estimate a figure, as is often done in personal injury cases, some of which were cited. It is said that in so doing I should take into account the applicant's unreliable and contradictory evidence of how long he had been out of work before he started this job and his admission that the economy was not doing well.

35. It seems to me that the starting point must, even in common law claims be 26 days a month because that is what an employer expects an employee on a building site to work, in optimum conditions, using a 6-day week. If there is evidence that less work is available because of economic downturn or other reasons the figure can be reduced. Here there is simply no evidence on which I could base any realistic figure. To adopt 15 days as counsel for the 3rd respondent invites would simply be to make a wild guess. Now it may be that the applicant should have sought discovery of comparable employees' earnings in the previous year. However this is particularly in the knowledge of the 2nd respondent. It would have been easy enough for the 2nd respondent to have regard to the statutory method of calculation and, if its plasterers were not working 26 days a month in the previous year, to have brought evidence of it. I do not think it would be right for an employer, in the context of legislation which requires it to give details of what an applicant previously earned in its employment, simply to say, if there was no such employment, that the applicant must go through a discovery exercise to get the information which may or may not assist him. So I will take it that the that the proper number of days for the calculation here is 26 per month. So the monthly earnings will be taken as $800 x 26 = $20,800.00.

Section 9 Award

36. The loss of earning capacity is 4%. The applicant has not appealed the assessment and that is the figure to be applied. The calculation is $20,800 x 72 x 4% = $59,904.00 and that is the figure awarded.

Section 10 Award

37. There is no dispute that the sick leave period allowed in the Board's assessment, plus the intervening days for which certificates have now been found, is 81/4 months. The calculation is therefore $20,800.00 x 8.25 x 4/5 = $137,280.00. That is awarded.

Indemnity

38. The 3rd respondent seeks indemnity under section 24 for the claim and costs awarded against it. The 2nd respondent seeks to reduce the percentage but has not claimed contribution or indemnity.

39. On the plaintiff's evidence, he and Ho entered the site through a hole 6 feet high by 2 feet wide. He was not clear whether the hole was in wire mesh fence or a hoarding. Evidence for the respondents shows that the 3rd respondent guarded entry to the site jealously and there were patrols of the perimeter. There is nothing to contradict this evidence and I accept it. In the circumstances it is most unlikely that such a big hole existed. It is more likely that there was a loose part of the fence or hoarding which would not necessarily be seen by a patrolling security officer. For that reason I do not see that any liability for letting the applicant sneak on to the site can be laid at the door of the 3rd respondent; and therefore I am satisfied that there should be 100% indemnity in its favour.