HKSAR v. VW-VES (HK) LTD AND OTHERS

HCMA 742/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 742 OF 2013

(ON APPEAL FROM TMS 11136 - 11138 OF 2012,

TMS 11140 - 11142 OF 2012, TMS 11144 - 11146 OF 2012

AND TMS 11148 - 11150 OF 2012)

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J U D G M E N T

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1.  The 4 Appellants laid a total of 16 industrial summonses and each were respectively prosecuted with the same set of summonses, each set containing 4 summonses, contrary to the Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) Regulation (hereinafter referred to as “the Regulation”) made under the Factories and Industrial Undertakings Ordinance (“the Ordinance”), Cap 59 J, as follows :

(I) Being an owner of an lifting appliance, failed to ensure that every part of the load, namely a stack of wooden boards and battens, to be raised or lowered by the lifting appliance is securely suspended or supported and adequately secured so as to prevent danger arising to persons or property as a result of the slipping or displacement of any part of the load contrary to regulation 7J of the Regulation (hereinafter referred to as “Summons Group (I)”);

(II) Being an on owner of the double fibre webbing slings failed to ensure that it is not used in raising or lowering or as a means of suspension when the upper ends of the sling legs are not connected by means of a shackle, ring or link of adequate strength contrary to regulation 18A(a) of the Regulation (hereinafter referred to as “Summons Group (II)”);

(III) Being an owner of the lifting gear failed to ensure that each lifting gear was thoroughly examined by a competent examiner in the preceding 6 months before it is used and a certificate in the approved form in which the competent examiner has made a statement to the effect that it is in safe working order has been obtained contrary to regulation 18(1)(e) of the Regulation (hereinafter referred to as “Summons Group (III)”);

(IV) Being the owner of the lifting gear failed to deliver, upon request in writing by an occupational safety officer within 14 days as specified in the request, to the officer a copy of or an extract from a certificate or report required to be kept by him under regulation 18C(1) contrary to regulation 18C(5) of the Regulation (hereinafter referred to as “Summons Group (IV)”).

2.  All the Appellants were convicted of the first 3 Summons Group but were acquitted of Summons Group (IV).  The Appellants appealed against all the convictions. 

Facts

3.  The facts briefly, and I am grateful to Mr Kuan for his synopsis, are that the 1^st Defendant had obtained a contract from the Government in relation to sludge treatment facilities.  That contract was sub-contracted to the 2^nd to 4^th Defendants who formed a joint venture.

4.  A safety officer from the Labour Department (PW2) had inspected the construction site managed by the Appellants.  She saw a truck‑mounted crane lifting a stack of wooden boards.  A pile of wooden battens was placed on top of the wooden boards and the wooden boards had tilted to the right.  At the material time, a worker employed by the 5^th Defendant (another subcontractor who had pleaded guilty) was standing near those wooden boards. It was not disputed that the wooden boards and battens were not adequately secured (see P2 which were the photographs taken at the time).  These facts the prosecution says supported the Group (I) summonses.

5.  As can be seen from P2, the wooden boards were wrapped with two nylon slings, which in turn were hooked to the crane without the use of any shackles or rings.  The slings were subsequently seized by PW2 and one can also see the photograph of it in Exhibit P2.  These facts formed the basis for the Group (II) summonses.

6.  The Labour Department subsequently issued letters to the Appellants requesting for a copy of the certificate for the slings, required under the Regulation.  The Appellants all replied, within the prescribed time limit, and furnished a copy of the certificate (“Form 7”) which can be seen in the Appeal Bundle at page 88.  These Form 7 purportedly were for the slings which were material to the summonses. The Form 7 stated that the numbers of the two slings were W72 and W73 respectively and it was also stated on the certificate the slings were 2” wide and 6m long.  However, evidence of the prosecution witnesses who measured the slings seized at the scene said that there were no marking visible on the slings and according to PW2, the length of those slings were 5.6m and 5.72m respectively.  These facts formed the basis for the Group (III) summonses.

7.  Thus, as Mr Kuan very succinctly pointed out, the main issues at the trial were :

(i) Whether the joint venture should be prosecuted instead of the individual appellants;

(ii) Whether the Appellants were the “owners” of the mobile crane and the slings;

(iii) Whether the slings seized were those referred to in Form 7;

(iv) Whether the offences were “absolutely liability”; and

(v) If not, whether any common law defences have been established.

8.  The learned magistrate after hearing submissions found that the prosecution of the Appellants individually and not the joint venture was proper and the offences were of absolute liability.  She also concluded that the Appellants were the owners of the crane and slings and were therefore guilty of the Group I and Group II summonses.

9.  The learned magistrate also found as a fact that the Form 7 submitted did not belong to the slings seized at the scene and therefore no certificate had been produced as charged under the Group III summonses.  However, as the Group III summonses and Group IV summonses overlapped, the learned magistrate acquitted the Appellants of the Group IV summonses.

Appeal

10.  All the Appellants are jointly represented by Mr Adrian Halkes leading Mr Alan Lo.  (I must note here the Grounds of Appeal which I have referred to follow the Skeleton Argument filed by Mr Halkes and Mr Lo in June 2014 and not the Perfected Grounds of Appeal which were filed in March this year because the numbering of the different Grounds of Appeal are different in both documents, so for the sake of clarity, I have decided to follow the numbering in the Skeleton Argument).

11.  The first Ground of Appeal is that the learned magistrate erred in law in finding the offences were all of offences of an absolute liability nature :

(1) The learned magistrate erred in failing to adequately or properly consider whether the stated statutory purpose, as expressed, could be sufficiently met by construing the statute as creating offences which were subject to an intermediate defence;

(2) The learned magistrate erred in finding that the purpose of the Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) Regulations (“Regulations”) was :

“ to encourage the contractors/owners concerned to take proactive steps and diligent measures at all costs to ensure the statutory requirements are met by the operators of the site”.

12.  Mr Halkes, on behalf of the Appellants, contended that the court must have regard to the statutory purpose of the legislation and the sufficiency of an intermediate defence in obtaining that statutory purpose where, as in this case, the owner of the lifting appliance is required to ensure that all mobile cranes are only operated by a person who holds “a valid certificate … specified by the Commissioner of Labour” (see Regulation 15A(I) of LALGR)[1]. Thus there is a requirement at law to employ a specific type of person to perform a task.  The learned magistrate had failed to consider how much management and supervision therefore is required or even possible in such situation.  Mr Halkes further submitted that too strict a regime would be counter‑productive to good management and supervision and this would lead owners to quantify such absolute liability into the budget for a specific project.

13.  Mr Halkes also sought to distinguish the case of Shun Tak Properties Ltd[2] as he said the imposition of absolute liability in that case was justified almost exclusively by the word “maintain”, as the obligation there was in relation to the maintenance of the machine to a specific physical standard.  In the present case, the specific task of lifting has to be performed by a specific person with a certificate as required under the Regulation and the word “ensure” under the Group I summonses does not “mean anything in the nature of warranty or guarantee” and only means “ascertaining or satisfying oneself” (see Reliance Permanent Building Society v Harwood‑Stamper[3]).  Mr Halkes also relied on the case of China State Construction Engineering Corporation[4] where Jackson J had observed that the implied common law defences are available when he was considering magistracy appeals under Regulation 7J (1) and 15B(1) of the same regulations under which the present summonses are issued and Mr Halkes submitted that the instant specific approach is the correct one at law today and one has to look at the words, subject matter and context to understand the matter before the court and should not adopt a “one definition fits all” style of approach and he maintained that the learned magistrate was unclear as to which if any view was held by her with regard to the above.

14.  It is clear from a reading of the learned magistrate’s Statement of Findings that she understood from the start that “before concluding the defence is one of absolute liability, the court should first determine whether the statutory purpose can sufficiently be met by construing the statute as creating an offence subject to the intermediate defence. Absolute liability should only be resorted to if the answer is in the negative”, and that “is pertinent also to inquire whether putting the defendant under strict liability (absolute liability in our circumstances) will assist in the enforcement of the regulations” (see paragraph 21 and 22 of the Statement of Findings).  It is clear therefore the learned magistrate understood the ratio in the case of Hin Lin Yee v HKSAR[5], which is the seminal case in the area of absolute  or  strict  liability. The mens reais required and she very correctly pointed out that in this particular circumstance that imposing stringent duties on owners to ensure that lifting appliances and gears are used properly and inspected regularly is important, in order to encourage proactive management and diligent supervision.  This court can also see from Exhibit P2, the photographs, that it is against the kind of shoddy work which can be seen from the photographs that the legislation was created to ensure the safety of the workmen on the site.  As the learned magistrate noted “It is exactly the purpose of the regulations to encourage the contractors/owners concerned to take proactive steps and diligent measures at all costs to ensure the statutory requirements are met by the operators on site” (see paragraph 25 of the Statement of Findings).

15.  I see, therefore, no merit at all in Ground 1 of the Grounds of Appeal as the learned magistrate had fully considered the statutory purpose and the instant specific approach looking at the context of the Regulations and did not adopt a “one definition fits all” style of approach.

16.  In closing, it is perhaps apt to note, as the learned magistrate had done, what I have said in HKSAR v Woo Hing Holding Limited t/a Woo Hing Company[6], unreported, that “the growth and prosperity of Hong Kong, both in the manufacturing and construction industry, was at an all time high and in the pursuit of profits accidents happened due to the lack of diligence in protecting the health and safety of workers in such industries, and very often the healthy and safety of such workers were sacrificed at the altar of profiteering”.  It is a sad fact that nowhere is that more clear than in the construction industry as evidenced by the photographs in Exhibit P2 as it was clear from the photographs that the wooden stacks and battens had not been properly secured as required under the Ordinance in order to protect the workers on site.  It is not enough for the owners to say that they had washed their hands off their responsibilities by sub-contracting the work to others.  It is a sad indictment on the construction industry that this is still happening today in Hong Kong.

Ground 2,3 and 4

17.  Mr Halkes complained that the learned magistrate erred in finding that the Appellants were each, individually an “owner” within the meaning of the relevant regulations as applied to the facts; and the learned magistrate erred in law by failing to address, or failing to properly address the role of the Veolia Water‑Leighton‑John Holland Joint Venture Body (“the VLJ‑JV”) as to its actions, status and functions with regard to the structure of the Regulations and the factual matrix at trial, and the relevance of such to the defence case in respect of each individual appellant. Mr Halkes, first of all, take issue with the fact that the learned magistrate found the 1^st Appellant was an “owner” because the 1^st Appellant was “the principal contractor undertaking construction work there” and also that the 1^st Appellant was “the contractor who has control over the way any construction work which involves the use of the lifting appliance or lifting gear is carried out” (see Statement of Findings at AB 1015/33 to 35).  Mr Halkes contended that although it is not disputed that the 1^st Appellant was the main contractor, there was insufficient evidence to prove that the 1^st Appellant was undertaking construction work there.  He submitted that the learned magistrate had misconstrued the admission made in Exhibit 7 because the contract was for two distinct phases, namely, the design and construction phase and the operation phase of the sludge treatment facility.  For the design and construction phase, the 1^st Appellant had appointed the VLJ‑JV (hereinafter referred to as the “Joint Venture”) for the design and construction work.  Mr Halkes therefore argued that although ultimately contractual responsibility for the contract rest with the main contractor, however, for the design and construction part of the contract in this case, the 1^st Appellant had entirely sub‑contracted it to the Joint Venture.  He prayed in aid the word of Tang PJ in Paul Y General Contractors Limited v HKSAR[7] :

“49. Take the case of a large site on which two towers are being built and where there is a principal contractor for the building of each tower. In such a case, there is no reason why each principal contractor could not be the principal contractor in respect of its tower and as such be regarded as the contractor responsible for such tower. Indeed, the definition of “construction site” as “a place where construction work is undertaken” supports the view that there could be more than one construction site at any place where more than one type of construction work is being undertaken. Or, as Mr Justice Ribeiro PJ pointed out, in the case of a large undertaking, such as the building of the Chek Lap Kok Airport, there could be many construction sites.”

18.  Therefore, Mr Halkes argued in this case as the 1^st Appellant had sub‑contracted out the whole of the design and construction phase to the Joint Venture, therefore the Joint Venture is wholly responsible and the 1^st Appellant should not be proceeded against as the owner responsible.

19.  Similarly, Mr Halkes argued the 2^nd, 3^rd and 4^th Appellants were not “owner” as there was no evidence at the trial that any of these Appellants were individual owners in the sense that any of them had control over the way any construction work which involved the use of the lifting appliance or lifting gear was carried out.  Instead, what evidence there was related only to the Joint Venture which the prosecution had not summonsed. He stressed that the evidence of the prosecution witness was clear and uncontested that none of the 2^nd to 4^th Appellants individually operated or ran the site.  It was the Joint Venture that ran the site and the Joint Venture management that organized and operated the construction site.  He submitted that the learned magistrate was wrong to rely on the decision in HKSAR v Hyundai-CCECC Joint Venture that the prosecution of each of the Appellants as separate legal entities was the correct approach in law.  Furthermore, he said that the learned magistrate had failed to address the question of why the prosecution never clearly stated what the specific allegation of failure was against each individual Appellant and how each Appellant had failed to meet the standard required of it at law in relation to the position and/or capacity held.  He asserted that as the construction industry is a highly technical enterprise, it is not possible for a court to determine whether safety ratios or standard had been exceeded or what a Joint Venture should do to prevent a fully qualified lifting appliance operator from selecting slings and/or failing to sling a load of wood, at a very short moment in time using a highly mobile piece of equipment by the lifting appliance operator who is fully trained in the use of and fully qualified to use it.

20.  Mr Kuan pointed out that in Halsbury’s Laws of Hong Kong, Vol 20 at paragraph 290.220 states :

“ There is no generally accepted definition of a joint venture. However, a joint venture may be defined for present purposes as any arrangement whereby two or more parties co-operate in order to run a business or to achieve a commercial objective.

This co-operation may take various forms, and may involve the running of a business on a long-term basis or the realization of a particular project.  The business may be entirely new or it may be an existing business which it is believed will benefit from the introduction of a further participant.  A joint venture is, therefore a highly flexible concept, and the nature of a particular joint venture will depend to a very large extent on its own facts and on the resources and wishes of the parties.”

Further, as Deputy Judge Day said in HKSAR v Gammon Skanska Ltd & Another[8] :

“17. Joint ventures are, on occasions, set up for a particular project as was the one in this case. They may well have a short life. If the appellants’ argument is correct, it would enable those responsible for such sites to interpose a barrier between the offences and those ultimately liable for them. A barrier which could be dismantled so soon as the joint venture finished its work, leaving no responsibility and worthless legislation. I do not believe that to be right either at law or in justice.”

And as Stock J (as he then was) said in Jiang Enzhu v Lau Wai Hing Emily[9] :

“ To convict an unincorporated association would be a legal nonsense”.

21.  Before dealing with the crux of the arguments, at the beginning of the hearing of the appeal, the Appellant had filed  Notice  of Motion to put in a business registration certificate of the Joint Venture.  This was in response to the learned magistrate’s Findings at paragraph 40 where she noted that although each of the Appellants had its own business registration, the Joint Venture did not.  It was submitted by the Appellants in Ground 4 that nobody particularly neither the learned magistrate nor the prosecution had referred to a business registration certificate and therefore the Appellants did not produce the business registration certificate of the Joint Venture at the trial.  With the greatest respect, it was not for the prosecution nor was it the duty of the learned magistrate to remind the Appellants at trial what evidence they would need to produce.  All along it had been the defence case that the prosecution should be against the Joint Venture and not the individual contractors.  Therefore, one would have thought it would have been part of the defence case to produce the business registration certificate to persuade the court that the Joint Venture was a separate legal entity.  However, after carefully considering the arguments of both sides, I decided to allow the production of the document so that none of the Appellants will have cause to feel grievously done by as it is material evidence.  I agree with Mr Kuan that the learned magistrate was not in error in saying what she did because the responsibility was indeed on defence counsel to have produced the same as part of their proof and when that was not done the learned magistrate was entitled to draw the conclusion as she did.

22.  Having allowed the business registration of the Joint Venture to be produced, still it is only a factor for the learned magistrate to consider whether the Joint Venture should have been proceeded against rather than the individual Appellants.  The existence of the business registration certificate, in my view, does not affect what had been said the above paragraphs that the Joint Venture is only in existence for a limited purpose in this case and as Deputy Judge Day so correctly observed, back in 2003, that if the Appellant’s argument should succeed then it would certainly defeat the objective of the legislation which was to protect the health and safety of workers on industrial and construction sites because every time an accident happens, the actual owners of the site can then point to the fact that a Joint Venture had been formed which would be dismantled in any event after the work had been finished and thus leaving behind a vacant non entity, which would be farcical in this day and age.  Therefore, like Deputy Judge Day, I do not believe that it is either right in law or just.  Therefore I agree with the learned magistrate that the summonses had been properly issued as against each of the Appellants and not against the Joint Venture.  And the fact that the Joint Venture has a business registration certificate does not bring the matter much further.

23.  Mr Halkes also took issue with the learned magistrate’s Statement of Findings in paragraph 3 of her Statement of Findings that “D1 was all along the principal contractor of the Site” when then she referred to it evidence in Exhibit P6 and she went along to say further “whereas D2‑D4 were sub‑contractors actually managing and operating the Works in the form of a joint venture … under an engineer procure construct contract … with D1” and at that stage she referred to the Admitted Facts paragraph 1, sub‑paragraph 2 and3.  And further at paragraph 33 of the Statement of Findings, the learned magistrate said “Exhibit P7 also showed that D1 was “the contractor was responsible for the construction site” at the material times.  Mr Halkes submitted Exhibit P7 does not say what the learned magistrate said.  It actually comes from Exhibit P8 where the 1^st Appellant had signed an Articles of Agreement with the SAR Government to carry out and “complete the design, the work and the operation of the sludge treatment facilities”.  Exhibit P6 is actually a Notification of Construction Work sent to the Commissioner of Labour by the 1^st Appellant notifiying them that the work on the site would be carried out by the Joint Venture sub‑contractor.  So from the above, I have come to the conclusion that the learned magistrate had made a typographical error in that when she referred to Exhibit P6 in the footnote of page 3 of the Statement of Findings to testify to the fact that the 1^st Appellant was the principal contractor, she had meant to type Exhibit P8.

24.  As for the complaint by Mr Halkes that the prosecution had not clearly stated what the specific allegation of the failure were against an individual Appellant is clear that the failure attributed to each individual Appellant was the fact that the stack of wooden boards and battens were not securely suspended or supported or had been properly fastened with shackle, ring or link of adequate strength as required under the regulations. And as each of the Appellants were responsible owners on site, they were also responsible for the work being carried out in such a shoddy manner although the joint venture may have sub‑contracted the actual lifting to the 5^th Defendant. And this is exactly a good example of how the legislation works to protect the workers on site.  It is for each individual owner, as the Appellants were, in this project to properly lay down a system of supervision wherein such work of a dangerous nature would be carried out.  As one can see from the photographs, the way the load was bound made it, likely, that should the wooden boards fall, that would fall on the heads of anyone standing nearby.  This is exactly what the legislation is all about.  I, therefore, see no merit in the argument laid by Mr Halkes in relation to Ground 2 and 3.

Ground 5

25.  In Ground 5, Mr Halkes submitted that the learned magistrate had erred in finding the Appellants had failed to establish an intermediate defence or that each had not made out such defence individually.  What Mr Halkes complained of is that having found that these offences were one of absolute liability, the learned magistrate in considering the “fallback position” made it appear that the learned magistrate was not totally certain of her findings and even if that was not the case, her findings on whether the intermediate defences were established, must have been coloured by her original finding that the prosecution had proved absolute liability. Therefore, Mr Halkes submitted that as a matter of perception, the learned magistrate should not have gone on to consider the intermediate defences but having done so, she seemed to be implying that she was not certain that these Regulations were one of absolute liability.

26.  I respectfully do not agree with the criticism of Mr Halkes.  It was clear that the learned magistrate was satisfied that these Regulations were of absolute liability after having considered the relevant law.  She very correctly went on to consider that, even if she was wrong in law in finding absolute liability, whether on the facts before her, the defence had made out the common law defence.  She then very properly from paragraphs 48 to 50 inclusive in her Statement of Findings set out the facts and at the end of the day came to the factual conclusion that even if she was wrong in law in finding that these offences were one of absolute liability, the facts before her were such that none of the Defendants had been able to prove on a balance of probabilities that they have “acted or omitted to act in an honest and reasonable belief that the circumstances or likely consequences of their acting/omissions were such that, if true, they would not be guilty of the offences”.  I do not consider that these words in any way derogate from her conviction that these were absolute liability offences nor would any member of the public reading the learned magistrate’s Statement of Findings come to the conclusion that she was in any way uncertain of her decision.  I do not find any merit in this ground of appeal.  Having said that the learned magistrate was correct in finding that the summonses were of absolute liability, there is no need for me here to dissect the learned magistrate’s analysis of why she came to that conclusion because the learned magistrate has explained it all very clearly and I can do no better than her Statement of Findings.

27.  I note also that the learned magistrate was sitting as both of judge and jury, and she was merely responding to the prosecution’s submission that even if absolute liability did not apply, the defendants had not made out any intermediate defences.  A further point submitted by Mr Halkes that the learned magistrate seemed to require direct supervision from each of the Appellants at the material time of the lifting operation, which is not what the learned magistrate meant at all.  The learned magistrate was querying the system that had been set up as to whether it was sufficient to prevent what was happening on that particular day from happening.  What the defence relied on was the fact that they had pointed a qualified lifting appliance operator and trade qualified signaller properly trained to handle the operation and therefore together with the site safety checks, etc, they had done everything they reasonably could under the circumstances.  What the learned magistrate was saying was that apart from hiring properly qualified people to handle the machinery, a system should be in place when heavy goods are being lifted to a height which if it crashed down might injure people standing nearby, that the goods should be properly secured, not just tied willy‑nilly without the proper stabilizers or shackles and as it turned out the slings themselves were of different lengths and that led to the unequal load that we could see in the photographs.  The construction site was an enormous one and, bearing that in mind, a proper system of supervision should have been set up to ensure as far as possible the safety of the workers on site.  I am therefore not persuaded by the arguments of Mr Halkes on Ground 5.

Ground 6

28.  Mr Halkes complained that the learned magistrate erred in finding that the Appellants failed to ensure that the slings were examined by a competent examiner in the previous 6 months in that the learned magistrate wrongfully rejected the Form 7 produced by each of the Appellants.

29.  The crucial evidence for the prosecution came from PW3 who had examined the slings and signed the relevant certificate.  He concluded that the slings seized by the Labour Department from the scene were not the ones he had certified because those certified slings were marked W72 and W73, but, those numbers were not legible on the slings seized by the Labour Department and the measurement of the slings on the Form 7 did not match with the measurement of slings seized by the Labour Department.  Mr Halkes criticised the learned magistrate for relying on the measurements made by PW3 that the slings seized by the Labour Department were 560 cm and 572 cm in length whereas the ones certified by PW3 was 600 cm in length.  Mr Halkes said there was a discrepancy in the measurement made by PW2, another labour officer, and PW3.  Both had used tape measures sourced from the ordinary hardware stores and which had not been properly calibrated.  Further Mr Halkes said the differences of the slings measurement and the Form 7 measurement were only in the region of 4 to 5 per cent so therefore taking into account all the surrounding circumstances he submitted that the prosecution had failed to prove beyond a reasonable doubt that the slings examined by PW3 in October were not the same slings seized by the Labour Department.

30.  This was the factual finding by the learned magistrate and this was part of the matters that have been submitted to her at the end of the case by counsel for the defence and the learned magistrate having considered all the evidence had made her factual finding which she had explained in her Statement of Findings and I do not find that she is in error, so this grounds of appeal fails.

Ground 7

31.  Finally Mr Halkes complained that the learned magistrate failed to analyse or to properly analyse all the material evidence or give adequate reasons for her conclusion.  In support of this ground, Mr Halkes did not point to any specific matter in which the learned magistrate had failed to give ample reasons for her findings.  I also fail to see any merit in this ground and I must add that the learned magistrate’s Statement of Findings were clear and unimpeachable and demonstrate the care she took over each point raised by the parties.

32.  In conclusion, for the above reasons, I find that there are no grounds to interfere with the learned magistrate, conviction and the appeal is dismissed.