YU XI v. 馮華強 AND ANOTHER

DCEC 2997/2019

[2022] HKDC 1115

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 2997 OF 2019

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IN THE MATTER OF AN APPLICATION BETWEEN

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ASSESSMENT OF COMPENSATION

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Introduction

1.  This is an assessment of compensation under sections 9, 10 and 10A of the Employees’ Compensation Ordinance (Cap 282) (“ECO”).

2.  The applicant, while employed by the 1^st respondent as a demolition worker, sustained an accident at work on 28 July 2018 on a construction site at 3 Cedar Street, Prince Edward, Hong Kong. The applicant fell from a 2-meter height when he was using a pry bar to demolish certain steel plates and wooden boards in the loft (the “Accident”). As a result of the Accident, the applicant sustained right tibia and fibula fracture.

3.  The 1^st respondent has throughout been absent in these proceedings. Interlocutory judgment on liability was entered against him on 8 June 2021 with compensation to be assessed. I am satisfied that he has been duly notified of the hearing and I therefore allowed the hearing to proceed in his absence.

4.  Pursuant to the Order of HH Judge Levy dated 24 December 2021, leave was granted to the 2^nd respondent, the Employees Compensation Assistance Fund Board, to intervene and join in these proceedings to contest the issue of quantum.

5.  The 2^nd respondent’s role in these proceedings is to test the applicant’s case and to assist the court in coming to a correct assessment. I bear in mind the principles set out by Ribeiro PJ in Wo Chun Wah v Employees Compensation Assistance Fund Board (2019) 22 HKCFAR 495 at §§43-45.

6.  The applicant relies on his 2 witness statements dated 19 August 2021 and 19 July 2022 and attended court to give oral evidence. I have also considered the joint expert orthopaedic report from Dr Fu Wai Kee and Dr Peter Tio Man Kwun (according to the Order of HH Judge Levy dated 6 June 2022, the report shall be adduced without the need to call the doctors to give oral evidence).

The injury and the subsequent documentation

7.  After the Accident, the applicant was sent to the Accident and Emergency Department of Kwong Wah Hospital. Physical examination revealed tenderness and deformity over his right leg. X-ray of cervical spine, chest, pelvis and right leg revealed right tibia and fibula fracture. He was then admitted to the Orthopaedics Department.

8.  The applicant submitted a Notification of Accident Form（工傷意外通知書）dated 13 September 2018 to the Labour Department.

9.  A Form 2 dated 27 November 2018[1] was lodged with the Labour Department. The 1^st respondent was stated to be the applicant’s employer at the time of the Accident. Furthermore, it was reported that the daily wage of the applicant was $1,500 and his average monthly earnings were $30,000 (ie 20 working days per month).

10.  Three days later on 30 November 2018, a Notice of Change of Information（資料更改通知書）[2] was submitted to the Labour Department, with the monthly earnings of the applicant revised to $39,000 (ie 26 working days per month).

11.  According to the Form 7 dated 13 October 2021, the applicant’s permanent loss of earning capacity was assessed at 7%. The percentage remained unchanged as shown on the Form 9 dated 19 January 2022. Further, on both forms the applicant’s sick leave was certified to be from 28 July 2018 up to 27 July 2021 (ie 3 years).

Issues to be determined

12.  Both parties confirmed at the hearing that there is no challenge to the matters set out in the Form 9. In other words, for the purpose of this assessment, it is common ground that the applicant’s permanent loss of earning capacity should be 7% and the applicable period of sick leave is 3 years.

13.  There are only 2 contentious issues that I need to decide:-

(1) The average monthly earnings of the applicant at the time of the Accident; and

(2) Whether the applicant should give full credit in relation to the advance payments provided by the 1^st respondent to him for medical expenses in the private sector.

Monthly earnings

14.  It is the applicant’s case that, as reported by the 1^st respondent in the Form 2 (as further supplemented), his daily wage was HK$1,500 and he worked 26 days per month on average. His average monthly earnings were therefore HK$39,000.

15.  In deciding whether the applicant has made out his case, it is essential to focus on the contemporaneous documents and the inherent probabilities. I consider the following matters to be pertinent.

16.  First, I accept the information reported in the Form 2 (as revised) as accurate. Although the Form 2 and the Notice of Change of Information were redacted as to the identity of the person who submitted the forms (see footnotes 1 and 2 above), I accept the submission of Mr Law, counsel for the applicant, that it is inherently likely that the 1^st respondent (or someone on his behalf) submitted both forms to the Labour Department. In the Form 2, personal information concerning the 1^st respondent was provided (including his address, mobile number and business registration number). Realistically such information could only have been provided by the 1^st respondent himself. And if the 1^st respondent lodged the Form 2, it follows that he is most likely to have been the person filing the Notice of Change of Information 3 days later. Indeed, the applicant’s evidence in this regard (which I accept) is that after the 1^st respondent filed the Form 2, the Labour Department informed the applicant that his monthly income was reported to be HK$30,000. The applicant called one Mr Choi (who was the 1^st respondent’s representative in charge of payments to workers) and asked him to check on the matter again, and soon thereafter the 1^st respondent (or Mr Choi on behalf of the 1^st respondent) revised the figure as per the Notice of Change of Information.

17.  Once it is accepted that the Form 2 and the Notice of Change of Information were submitted by the 1^st respondent or on his behalf, the information contained therein becomes extremely significant. After all, the employment relationship is strictly between the applicant and the 1^st respondent themselves – they know their contractual arrangements best. There is no evidence before me to show that the information which the 1^st respondent put forward, and now confirmed and relied on by the applicant, is incorrect or false.

18.  Second, I give weight to the contemporaneous notes prepared by the applicant’s wife recording payments that the applicant has received from the 1^st respondent and the sums that remained outstanding[3]:-

(1) In these notes, there were repeated references to the “daily rate” of HK$1,200 that was advanced by the 1^st respondent to the applicant. The applicant explains, and I accept, that the figure represents 4/5 of his daily income of HK$1,500. The parties obviously had in mind the mechanism of s 10 ECO (which requires 4/5 of the monthly earnings to be paid);

(2) There were also repeated references to 26 working days in a month (see eg the months of November 2018 to July 2019 on pages 117 to 120 of the hearing bundle);

(3) I consider that this is very strong evidence in support of the applicant’s case that he would work 26 days per month on average, at a daily rate of HK$1,500. That was precisely the basis adopted by both the applicant and the 1^st respondent when working out the figures for advance payment as recorded by these contemporaneous notes.

19.  I note from a letter issued by the Inland Revenue Department dated 17 November 2020 that the applicant’s annual income for the tax year from 1 April 2016 to 31 March 2017 was HK$398,400, and HK$129,400 in the tax year from 1 April 2017 to 31 March 2018. This might be seen as evidence against the applicant’s case on his average monthly earnings (those figures indicate monthly earnings less than HK$39,000). I however accept that due to the somewhat casual nature of the applicant’s work as a demolition worker, it is possible that not all his income has been accurately reported to the Inland Revenue Department for tax purposes.

20.  Taking matters in the round, in my judgment it is more likely than not that the applicant’s average monthly earnings at the time of the Accident was HK$39,000 (being 26 working days per month x 1,500/day). I will assess compensation accordingly.

Section 9 compensation

21.  The applicant was born on 19 July 1978. He was aged 40 at the time of the Accident. Hence, 72 months is the appropriate multiplier for the s 9 compensation (see s 7(1)(b) ECO). The applicable statutory maximum amount for monthly earnings as provided in the Sixth Schedule to the ECO as at the date of the Accident was HK$28,360. As mentioned above, it is common ground that the applicant’s permanent loss of earning capacity is 7%.

22.  Hence, compensation under s 9 ECO should be assessed at HK$28,360 x 72 months x 7% = HK$142,934.40.

Section 10 compensation

23.  The relevant period of sick leave is 3 years (from 28 July 2018 to 27 July 2021) as certified in the Form 9. Pursuant to s 10 ECO, the applicant is entitled to 4/5 of his monthly earnings during the sick leave period.

24.  Therefore, compensation under s 10 ECO should be assessed at HK$39,000 x 36 months x 4/5 = HK$1,123,200.

Section 10A compensation

25.  Under s 10A(3) of and the Third Schedule to the ECO, medical expenses which the employer is liable to pay shall be the amount incurred or an amount at the rate of HK$300 for each day the employee received treatment, whichever is the less (unless paragraph 3 of the Third Schedule applies but it is inapplicable to the present case).

26.  The applicant has compiled a schedule of medical payments (the “Schedule”)[4]. The 2^nd respondent has no challenge to the sums set out in the Schedule, subject to the question as to whether credit should be given for advance payments made to cover private medical expenses. The matter arose this way.

27.  The applicant accepts that he received a total of HK$346,041 from the 1^st respondent as advance payments. Out of that sum, it is said that HK$146,990 has been “earmarked” by the parties as advance payments for the applicant’s private medical expenses[5], particulars of which are as follows:

Date	Hospital	Department	Amount (HK$)	Amount paid by R1 (HK$)
15/11/2018	Union Hospital	Outpatient Clinic	2,190.00	2,190.00
22/11/2018 to 24/11/2018	Union Hospital	Inpatient	171,294.50	141,294.00
6/12/2018	Union Hospital	MEI, Outpatient Clinic	2,276.00	2,276.00
3/1/2019	Union Hospital	MEI, Outpatient Clinic	1,230.00	1,230.00
Total				146,990.00

28.  The applicant’s case is that since these were commonly intended by the parties to be advance payments for private medical expenses (and the money was in fact so applied), the applicant should not be asked to give credit for these sums in quantifying employees’ compensation. At the same time, the applicant is not entitled to claim (and there is no claim in the Schedule) for these medical expenses under s 10A ECO (capped at HK$300 as aforesaid).

29.  On the other hand, the 2^nd respondent’s position is that the entire sum advanced by the 1^st respondent (including those “earmarked” for private medical expenses) should be given credit, and if the court decides that this position is correct, the 2^nd respondent is content to “add back” HK$300 for each of the 4 entries set out above.

30.  I first observe that from the definitions of “hospital” and “medical expenses” in s 2 ECO, the compensation regime under the ECO does not appear to differentiate between private and public medical expenses.

31.  At the hearing, I inquired with the parties as to the exact legal basis for requiring credit to be given in relation to advance payments made by employers, since I am unable to locate any specific provision in the ECO in this regard. Mr Chow, counsel for the 2^nd respondent, informed me that this is more of an established “practice” in employees’ compensation cases.

32.  I have no doubt that such a practice exists, and for very good reasons. The ECO seeks to provide a quicker and cheaper route for employees to get some compensation without the need to prove fault on the part of the employer. As a trade-off, the amount that is recoverable under the ECO is generally less than what one might get in a common law negligence claim (see s 26 ECO). The ECO effectively provides a fast-track and no-fault regime for the benefit of the employees whilst at the same time imposing a “cap” on the employer’s liability thereunder.

33.  It is only consistent with the policy behind the ECO that employers should be encouraged, not inhibited, to make advance or interim payments to the injured employees even before the conclusion of the employees’ compensation proceedings. After all, the entire premise of the ECO regime is to protect and assist the (usually) relatively vulnerable employees.

34.  Hence, if an employer is kind enough to make advance payments to the injured employee (eg to ease his cashflow or to promptly reimburse out-of-pocket medical expenses in the interim), the employer’s position should not be prejudiced by the time when employees’ compensation is assessed – what he had paid earlier (ie accelerated payment) would eventually be given full credit, and the “cap” on his liability under the ECO still works in his favour. If the position were otherwise, no employer would be willing to provide advance payments in favour of the injured employee, and this defeats the policy behind and purpose of the ECO regime. But of course, if there is clear indication or express discussion between the parties that the payment will later not be given credit in quantifying employees’ compensation (i.e. effectively the payment is ex gratia or a gift from the employer), the position may well be different.

35.  It is therefore unsurprising that the court would usually deduct advance payments received by the employee from the assessed compensation, almost as a matter of course and without dispute between the parties. See eg Cheung Tuen Piu v China Talent Engineering Ltd (unreported, DCEC 841/2010, 15 June 2012) at §§4(4), 15 and 90; Law Sin Ha v Confidential Materials Destruction Service Ltd [2021] HKDC 1456, 23 November 2021; Rukhsar Begum v Native English Centre Ltd (unreported DCEC 867/2015, 3 April 2017) at §60.

36.  If in the assessment exercise the employer is entitled to the full credit of advance payments that have been made, the position of the 2^nd respondent seems to me to be a fortiori. The 2^nd respondent is a statutory authority holding public funds as trustee to act as a safety net for unsatisfied employees’ compensation claims. Its position cannot logically be worse off than that of the employer who has defaulted in making payment.

37.  For these reasons, in my judgment the applicant must give full credit in relation to all the advance payments that he received from the 1^st respondent, regardless of whether those payments were “earmarked” or intended by the parties for a specific purpose (in this case for private medical expenses).

38.  The total amount of medical expenses recoverable under s 10A ECO would therefore be HK$22,978 as per the Schedule plus HK$1,200 for the additional 4 items set out in paragraphs 27 and 29 above (HK$300 each), hence HK$24,178.

Summary

39.  I therefore order that the 1^st respondent do pay the applicant compensation assessed as follows:-

	Amount (HK$)
Section 9	142,934.40
Section 10	1,123,200.00
Section 10A	24,178.00
	___________
Less: Advance Payments	(346,041.00)
	___________
	944,271.40

40.  The applicant is also entitled to interest at half judgment rate from the date of the Accident to the date of judgment, and thereafter at judgment rate.

41.  I also make a costs order nisi as follows:-

(1) The 1^st respondent do pay the applicant’s and the 2^nd respondent’s costs of the assessment (including all costs reserved if any) to be taxed if not agreed with certificate for counsel;

(2) There shall be no order as to costs as between the applicant and the 2^nd respondent;

(3) The applicant’s own costs shall be taxed in accordance with Legal Aid Regulations.