LAI WAI CHUN v. TONTEC LOGISTICS (HK) COMPANY LTD

DCEC 1538/2020

[2024] HKDC 1374

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1538 OF 2020

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ASSESSMENT OF COMPENSATION

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Introduction

1.  By a consent order dated 21 January 2021, interlocutory judgment was entered against the respondent leaving compensation to be assessed.

The accident

2.  The applicant was employed by the respondent as a driver. On 21 October 2019 while in the course of employment, the applicant was injured by spraining his back.

Section 9

3.  By a Certificate of Review of Assessment dated 12 March 2021 (Form 9), it was assessed that the loss of earning capacity of the applicant permanently caused by the injury at 0.75%. There was no appeal to the assessment by either the applicant or the respondent.

4.  Under the employment contract dated 1 August 2019, the basic salary of the applicant was HK$18,500 per month plus good attendance bonus of HK$500.   

5.  Miss Hannah Tang, counsel for the respondent, argued that the good attendance bonus of HK$500 should not be counted towards the applicant’s monthly salary because:

(a)  it is not of a nature that habitual giving and receiving is open and recognised by the respondent, citing section 3 of the Employees’ Compensation Ordinance (“the Ordinance”) in aid;

(b)  given that the accident happened within 3 months of the applicant’s employment, the HK$500 can hardly be shown to be of recurrent nature; and

(c)  the applicant has only shown himself that the good attendance bonus was paid habitually with a good track record of attendance.

6.  On the other hand, Mr Jethro Pak, counsel for the applicant, submitted that for the purpose of calculating compensation, section 11(1) of the Ordinance should apply. I agree.

7.  Section 11(1) of the Ordinance provides:-

“(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.”

8.  There is no dispute that the applicant’s monthly earnings for September 2019 was HK$19,000, which should be adopted for the purpose of calculating the compensation under section 9.

9.  The applicant was aged 32 at the time of the accident. Under section 7(1)(a) of the Ordinance, the multiplier is 96.

10.  Therefore, the compensation under section 9 is HK$13,680 (HK$19,000 x 96 x 0.75%).

Section 10

11.  According to the Form 9, the applicant was absent from duty due to the injury for a total of 446 days.

12.  The compensation under section 10 should therefore be HK$225,973.33 (HK$19,000 x 446/30 x 4/5).

13.  However, that is not the end of the matter.

14.  It is common ground between counsel that the applicant received the following payments (as stated in the schedule of payments in the witness statement of Mr Leung Wai Yip (“Leung”), the director of the respondent) by way of periodical payment under section 10:

Item	Month	Payment ($)
2	12/2019	14,800
3	1/2020	14,800
5	2/2020	14,800
9	5/2020	14,800
11	6/2020	14,800
13	7/2020	14,800
16	8/2020	14,800
17	9/2020	14,800
19	10/2020	14,800
21	11/2020	14,800
23	12/2020	14,800
28	2/2021	14,800 _______
	TOTAL:	177,600

15.  Further, both counsel are in agreement on the following payments:

Item	Month	Payment	Proportion of periodical payment
1	11/2019	$19,000.00	$6,050   $19,000 – ($18,500 x 21/30)
25	1/2021	$16,112.90	$5,012.90   $16,112.90 – ($18,500 x 18/30)
30	3/2021	$14,932.10	$13,698.77   $14,932.10 – ($18,500 x 2/30)

16.  As far as periodical payment is concerned, both counsel are not in agreement on the following payments:

Item	Month	Payment ($)
7	3/2020	1,750.00
8	3/2020	24,794.70
10	5/2020	5,520.00
24	1/2021	863.30
32	4/2021	18,500.00
33	5/2021	18,500.00
34	6/2021	18,500.00
35	7/2021	18,500.00
36	8/2021	18,500.00
37	9/2021	18,500.00
38	10/2021	18,500.00
39	11/2021	57,181.10

17.  It should be noted that neither the applicant nor Leung were able to say the nature of the payments made by the respondent to the applicant for the period from November 2019 to November 2021.

18.  It was silent in the applicant’s witness statement as to the amounts he had received from the respondent.

19.  In Leung’s witness statement, he only listed out the payments the respondent had made to the applicant after his injury.

20.  When cross-examined, both of them were unable to give definite answers. For example, the applicant was not sure what the HK$1,750 he received on 8 March 2020 was made up of. He said it might be the warehouse fee plus medical fee. Likewise, Leung was not certain why the said HK$1,750 was paid. He said it might be the medical fee.

21.  However, there is no dispute that the HK$24,704.70 paid to the applicant was the termination payment because the respondent intended to terminate the employment of the applicant. Leung, after learning that the applicant was still on sick leave, changed his mind. Accordingly, the applicant agreed that after taking into account of his entitlement, there was an overpayment of HK$9,994.70.

22.  The applicant denied that he was paid HK$5,520 in May 2020.

23.  Leung said that the HK$863.30 together with the HK$16,112.90 paid in January 2021 were wages plus sick leave pay.

24.  Leung said the monthly pay of HK$18,500 from April to October 2021 were paid by way of wages because the applicant was still the respondent’s employee. He added that it was his understanding that the employer is required to pay the injured employee up to 2 years. However, the applicant was not called upon to work during that period.

25.  Leung agreed that the HK$57,181.10 paid in November 2021 was the applicant’s termination pay.

26.  I note that the applicant was given sick leave from 9 March to 23 November 2020. On 8 March 2020, he was paid HK$19,000 at 16:30 hours (by cash deposit) and the said HK$1,750 at 16:34 hours (by transfer). As no sick leave was given to the applicant between 7 February and 8 March 2020, it is more likely than not that the applicant had worked for that period and the HK$19,000 was the wages therefor and the HK$1,750 was work related expenses.

27.  On the same day (ie 8 March 2020) at 16:31 hours, the respondent also transferred the sum of HK$24,794.70 to the applicant’s account. Both the applicant and Leung confirmed that this was the termination payment and it was supported by a termination notice of the same day. The applicant told Leung that he could not be terminated as he was still on sick leave. Leung then changed his mind. After deducting the periodical payment of HK$14,800 for that month, therefore, there was an overpayment of HK$9,994.70. The applicant said he was told by Leung that the said overpayment would be deducted from the periodical payment for the month of April. Nevertheless, the respondent still paid the applicant the full sum of HK$14,800 for the month of April on 7 May 2020 (ie no deduction was made). I think that was due to the oversight on the part of the respondent. In any event, the said HK$9,994.70 was still paid to the applicant as an overpayment of periodical payment.

28.  The respondent said it paid the applicant a sum of HK$5,520 in May 2020. It was denied by the applicant.

29.  First, there is no documentary proof of such payment. Secondly, the applicant was on sick leave in May 2020 and he was paid the periodical payment for that month. It seems unlikely that the respondent would need to pay the applicant anything on top of that. Therefore, I do not accept that such sum was paid.

30.  It was agreed by counsel that the HK$16,112.90 paid to the applicant on 7 January 2021 was partly wages and partly periodical payment because the applicant had worked for the period from 24 November to 11 December 2021. I note that the respondent also paid the applicant on the same day the sums of HK$863.30 at 11:32 hours and HK$865 at 11:30 hours by ATM transfer. Common sense dictates that they were separately paid to the applicant in order to distinguish the different natures of the 2 payments. As the sum of HK$863.30 is an odd figure (and the HK$865 was agreed to be medical expenses), I am inclined to think that it was work related expenses.

31.  As to the 7 sums of HK$18,500 paid to the applicant from April to October 2021, I have no doubt that they were wages for that period of time. This was exactly the basic salary of the applicant under the employment contract. The applicant was not given sick leave during this period. It was Leung’s understanding (be it mistakenly or wrongly) that the employer was required to pay the employee up to 2 years. The 2 years ended exactly in October 2021 and the applicant was terminated in the following month. It matters not that the applicant was not called upon to work.

32.  For the above reason, the sum of HK$57,181.10 paid on 16 November 2021 by cheque was the termination payment of the applicant.

33.  To sum up, I find that the respondent had paid the applicant a total sum of HK$227,156.37 by way of periodical payment under section 10 (HK$177,600 + HK$6,050 + HK$5,012.90 + HK$13,698.77 + HK$24,794.70).

34.  Accordingly, I find that the respondent had overpaid the applicant periodical payment under section 10 in the sum of HK$1,183.04 (HK$227,156.37 - HK$225,973.33). Therefore, no award is made under section 10.

Section 10A

35.  Both counsel are in agreement that the following payments in the total sum of HK$7,877 were made on medical expenses:

Item	Month	Payment ($)
4	1/2020	1,692.00
12	6/2020	600.00
14	7/2020	800.00
15	8/2020	600.00
18	9/2020	700.00
20	10/2020	1,100.00
22	11/2020	600.00
26	1/2021	865.00
27	2/2021	760.00
29	2/2021	80.00
31	3/2021	80.00

36.  Both counsel also agreed that the medical expenses claimable under section 10A is HK$9,625.

37.  Therefore, the award under section 10A is HK$1,748 (HK$9,625 - HK$7,877).

Section 10(4)

38.  Section 10(4) of the Ordinance provides:-

“(4) In the event of death or permanent incapacity following a period of temporary incapacity whether total or partial, no periodical or lump sum payments paid or payable under this section shall be deducted from any amount of compensation payable under section 6, 7, 8 or 9.”

39.  The Court of Appeal in Kan Wai Ming v Hong Kong Airport Services Ltd [2011] 3 HKLRD 497 held that the awards under section 10 and under section 9 should be kept separate and distinct, and where an employee was entitled to both, they could not be set off against each other.

40.  Accordingly, although I find that the respondent had overpaid $1,183.04 by way of periodical payment under section 10, such excess should not be applied to set off the award under section 9.

41.  However, deduction of the overpayment against the award under section 10A is not forbidden by the Ordinance. I see no reason not to do so.

Conclusion and order

42.  In the result, I find that the applicant is entitled to compensation in the sum of HK$14,244.96 which is made up of the following:

Section 9	HK$13,680.00
Section 10	nil
Section 10A	HK$564.96 (HK$1,748.00 - HK$1,183.04)

Interest

43.  The applicant is entitled to interest at half judgment rate from the date of the accident (ie 21 October 2019) to the date of judgment and thereafter at judgment rate until the date of payment.

Costs

44.  I make a costs order nisi that the respondent shall pay the costs of the assessment of compensation to the applicant, with certificate for counsel, to be taxed if not agreed.

45.  In the absence of any application by letter to vary the same within 14 days from the date of this judgment, the costs order nisi shall become absolute.