LAM HON KEUNG v. PANG MAY NGOR, RITA t/a TIN SHING (HONG KONG & CHINA) FREIGHT SERVICES CO

DCEC648/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 648 OF 2003

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JUDGMENT

Introduction

1. The Applicant was a cross-border container truck driver.  The application herein is made against his employer as alleged, Pang May Ngor, Rita t/a Tin Shing (Hong Kong & China) Freight Services Co. (Pang May Ngor Rita would be referred to as “the Respondent” or “Ms. Pang” and Tin Shing (Hong Kong & China) Freight Services Co will be referred to as “Tin Shing”) for compensation under ss.9, 10 and 10A of the Employee’s Compensation Ordinance, Cap. 282, Laws of Hong Kong (“the Ordinance”).  The Respondent opposes to the application.

2. The Respondent disputed liability and quantum of the claim.  The Respondent did not dispute that there was an accident, but argued whether it had arisen out of and in the course of employment. The alleged employment of the Applicant is the main issue at the trial.  The Respondent’s case is that the Applicant was an independent contractor to a company other than Tin Shing at the time of the accident.

The Applicant’s claim

3. The background of the claim is this.  The Applicant was aged 42 at the material time.  He said he was under the employment of the Respondent as a cross-border container truck driver shuttling between Hong Kong and Shenzhen.  He said he was so employed since August 1999. There was an accident on 9 September 2002 and from which the Applicant suffered injuries.

4. He said that Ms. Pang was the registered proprietor of business under the name of Tin Shing. As the accident arose out of and in the course of his employment, he makes the present application for compensation against Ms. Pang. 

The Respondent’s case

5. The Respondent did not put forward a positive case by way of Defence at the stage of Pleadings.  But at the trial, evidence was given and the content of the witness statements was adopted.  The Respondent maintained that the Applicant was not an employee but an independent contractor of a company in China, not of the Respondent.  It was also said that the Applicant had no duty to adjust the brakes and such work should have been done by a garage and therefore even if there was an employment relationship between parties, the Respondent should not be liable to the application or any claim as the accident did not arise out of and in the course of the employment.

Issues to be tried

6. The issues remain to be tried are as follows:-

(1) whether the Applicant was an employee of the Respondent at the time of the accident?

(2) did the accident arise out of and in the course of the employment?

(3) the appropriate quantum of award.

Evidence of the Applicant

7. Mr. Lam, the Applicant, gave evidence.  He adopted what he had said in his witness statement.

Employment

8. On the issue of employment he said that he was introduced to see Ms. Pang by a friend to work as a driver.  Ms. Pang called him for an appointment to see her husband Lee Chau Sang (“Mr. Lee”) for a job interview.  It was sometime in early August 1999. Mr. Lee discussed with him the terms of employment.  According to Mr. Lee, his duty would be to transport cargoes between Hong Kong and Shenzhen.  Mr. Lee said that orders for work would be given to the Applicant through himself.  Further the company would provide him with a truck; pay for the fuel, maintenance, parking fees, road and bridge tolls and insurance for the vehicle.  A deposit of HK$6,000 would be paid to the Applicant for disbursement of such expenses.  So every month, the Applicant would claim expenses with supporting documents to replenish the deposit.  For the fuel, normally the charges would be debited to the company account if the Applicant went to the prescribed fuel station.  Mr. Lee said that his income would be 30% of the fees collected from customers and his income would be in the region of HK$20,000.00 per month.

9. Then he started to work for the Respondent.  As it took time for him to finish the formalities to get permission to drive across the border, he carried out his duties within Hong Kong before he was asked to sign an agreement.  It was after he started to work for a week or so, Mr. Lee gave him an agreement to sign saying that if he was not willing to sign, he would not be employed. Without knowing the legal consequences, he signed the agreement on 12 August 1999 (“the 1999 Agreement”) at the office situated at the Yuet Sai Parking Yard in Lok Ma Chau (“the parking yard”).

10. On 1 August 2001, he was asked by Mr. Lee to sign another agreement (“the 2001 Agreement”), but the other party to the agreement was a company in the name of Hai Nan Tin Shing Transportation Company Ltd (“HNTS”) not the Respondent nor Tin Shing.  Mr. Lee said to him that HNTS was a business partner of the Respondent in China, if the Applicant refused to sign on it, he would not be employed any further.  In order not to lose the job, he signed on it.  Everything remained the same after the execution of the 2001 Agreement.  He had never had any contact with anyone from HNTS or to receive any instructions from them.  As far as he knew, several drivers were asked to sign a similar agreement.

11. He said that the couple (Ms. Pang and Mr. Lee) was his employer.

Arrangement of work

12. He was assigned with a truck KB7868 (“the Truck”).  He would park it near his home after work and drive it to the parking yard in the morning and wait for the call of Mr. Lee for assignment of work.  Upon receiving instructions from Mr. Lee he would have to drive the Truck to the designated location to collect the cargoes.  If he could not return to Hong Kong with the cargoes before close of border, he would have to spend a night in China.

13. The Applicant said he had to be on standby everyday and he never enjoyed any rest days or holidays.  If he had no alternative but to take some leave, replacement would have to be arranged by Mr. Lee (the replacement should be Mr. Lee himself due to the restriction imposed on the border permit) so Mr. Lee would make a lot of complaints about it.  As a result he seldom took any leave.

Monthly income and MPF

14. The payments were made basically according to what had been agreed at the job interview. He earned about HK$20,000 a month. He was paid by cheques issued by the joint account of Mr. Lee and Ms. Pang. Sometimes, money would be transferred into his own bank account.

15. At the commencement of MPF scheme, it was agreed by Mr. Lee that the Respondent would contribute HK$500 a month to the Applicant. Mr. Lee however only honoured his promise on 4 occasions, he paid the Applicant HK$500 on 1 June 2001, 3 September 2001, 4 October 2001, and 1 November 2000 in this regard.

The accident

16. The accident occurred on 9 September 2002 at about 4:50 p.m.  At the material time, the Applicant had no work order from Mr. Lee.  He was attending the Truck at the parking yard while waiting for an order.  He tried to adjust the pneumatic brakes of the trailer.  After he finished with the adjustment, he was to board the Truck again to start the engine for testing the brakes.  He slipped as he was stepping on a step at the side of the driver’s cabin.  He tried to grab with his hand whatever within reach to gain balance.  His right hand grabbed the ignition key which was inserted in the ignition colume at that time and his left hand got hold of the steering wheel.  Unfortunately, the engine was started by the turning of ignition key when it was being grabbed with force.  The Truck then dashed forward steering slightly to the right as he was grabbing the steering wheel at the same time.  It hit the container next to it and as a result the Applicant was trapped between the door and the side of the cabin and was injured.

The Injury

17. It was not disputed that after the accident the Applicant was admitted to Northern District Hospital.  He was diagnosed to have sustained fracture on left 6^th rib and the bones around the pelvis; and internal bleeding in the abdominal cavity. He was discharged from hospital on 5 October 2002 and was on sick leave from 9 September 2002 to 22 September 2003, i.e. about 12.5 months.

Post-accident earnings

18. The Applicant resumed driving in March 2004. Due to his residual pain arising from the injury he could now only work 5 to 6 hours a day.  His monthly income is about HK$10,000 a month.

19. The Board assessed his loss of earning capacity at 2.5 % initially, but adjusted to 3% on review.  He asked the court to assess his loss of earning capacity afresh.  He also asked for the periodical payment under s. 10 as he was not paid any sick leave pay, nor was he paid any medical expenses under s. 10A.

Evidence for the Respondent

Pang May Ngor, Rita

20. She is the Respondent herein and is sole proprietor of Tin Shing. She has been operating it since about 1994. She denied she was employer of the Applicant. 

21. Her evidence in her witness statement was virtually same as that of Mr. Lee’s. I shall set it out below together with the evidence of Mr. Lee.

Lee Chiu Sang

22. He is husband of the Respondent and the manager of Tin Shing. He adopted the content of his witness statement at trial.  In his witness statement he started with an explanation on the relationship between Tin Shing and HNTS.  It was said that the Respondent entered into a joint venture agreement with Hainan Province Custom Operation Company in January 1998.  Under the said joint venture agreement, a freight transportation company was set up and that was HNTS.  HNTS was incorporated in China.  The Respondent acted for HNTS as its agent in connection with its business operation in Hong Kong.  Insofar as the cross border freight service business was concerned, HNTS at early stage after its formation, entered into some co-operation agreements with respective contractors to carry out the freight service operation via its agent.  He said that no matter it was Tin Shing or HNTS who entered into co-operation agreement with the contractors, the operation would still be the same.

Business Operation with the Contractors

23. When Tin Shing or HNTS (“the companies”) received an order from a customer to deliver goods from one place to another, one of the contractors would be engaged to carry out the job order.  Upon completion of the job order, the customer concerned would pay the freight charges.  Under the terms of the said co-operation agreement, the companies and the contractor would share the freight charges at pro rata scale in respect of the work done.  Upon having received the freight charges and after deduction of expenses including the toll fee, car park fee and other miscellaneous items, the contractor concerned would be entitled to get his service charge at 30% of the balance.  If the customer had defaulted in the payment of freight charge in respect of the work done, both the companies and the contractor concerned would be exposed to risk of such delinquency.  Since the customers were given 3 months’ credit, contractors would only be paid after fees were received from those customers.

24. It was said by Mr. Lee in his witness statement that the contractor could take orders of his own customers.  In this case, the contractor could use the company’s vehicle to carry out the freight service, and share the freight charge according to the same scale under the said co-operation agreement.  

Operational Expenses

25. Pursuant to the said co-operation agreement, the companies would be responsible for all the incidental payment incurred in the performance of the freight order, including the fuel, vehicle maintenance and repair, and vehicle insurance etc.

Staff Benefit

26. There was no basic salary provided by the companies as the contractors were not employees, and there was no benefit like paid holidays but the contractors could take leave any time they like.

Supervision

27. Mr. Lee said that the companies would not stipulate any working hours for the contractors.  The contractors would not be required either to report, or to be physically present at the office or any other place as assigned.  Normally, the means of communication between the contractors and the companies was by way of telephone contact.  Under the co-operation agreements, the contractors were required to be equipped with a mobile phone at their own costs.  The contractors would be paid HK$500 each per month as subsidy towards the telephone bill.  The contractors would be informed of the job order through telephone.  The companies would get in touch with the contractors only when there was business transaction.  Unless the contractors had taken the initiative to inform the companies, the companies would not have known either their whereabouts, or whether they were performing other business engagements otherwise than the order placed with them by the companies. 

28. Mr. Lee said that the contractors were at liberty to decline job when called upon and in such case, the companies would resort to other contractor to take the job.  Once the contractor concerned had taken up a job order, he was to take charge of it and was left to carry out the job with his free hand.  Further the companies would not interfere with the way and means of the contractor concerned in the performance of the job.  The contractor could employ servant, at his own expenses and under his control, to carry out the job.  In the course of business, the companies dealt with the contractor as business partner in the business venture and would not interfere with any replacement arrangement.

Coverage of tax, insurance on the driver and MPF

29. As a general practice, when the companies entered into a co-operation agreement with a contractor, either Mr. Lee himself or Ms. Pang would state out in clear terms to the contractor concerned that he is a business partner, and he would be advised to take out adequate insurance cover for himself and/or for the servant employed by him for this business operation.  The contractor would also be informed that the companies would file tax information with the Inland Revenue Department on contractor’s remuneration as part of the expenditure.  At the same time, the contractor was required to file tax return on their own as self-employed entity. The contractor was asked to set up and contribute on their own towards the MPF, both for himself and for his servant, if any. At the time the Applicant entered into the 1999 Agreement with Tin Shing, the Applicant was advised of the same.

Insurance on the vehicle

30. The contractor was not required to make any contribution towards the vehicle insurance if there was no claim bonus.  In the event where there is insurance claim in relation to the vehicle, the no claim bonus would be gone.  In this case, the contractor concerned would be required to contribute, at his own costs, 30% of the loading towards the insurance premium of that particular vehicle.  If the vehicle was damaged when being used to carry out business operation, the contractor concerned would be required to contribute 30% towards the repair charges.

Ownership and usage of vehicles

31. At the material time, there were altogether 5 container tractors with 4 registered under Ms. Pang’s name and one registered under Mr. Lee’s name.  These vehicles were held on behalf of HNTS.  HNTS could not hold these vehicles because HNTS was not a local company and therefore was not eligible to be registered owner thereof.  These vehicles had been used by the contractors for use in the business operation.  The companies hired 5 vehicle parking spaces at the parking yard.  They were used to accommodate the said 5 container tractors.  However, the contractor could park the vehicle under his control elsewhere he preferred.  Should he choose to park at a place other than the parking yard, he would have to pay the parking fee out of his own pocket.  The contractor taking holidays would often choose to keep the vehicle, and would use it as a means of transport of his own during holidays.  No approval from the companies was necessary.  Under the co-operation agreement, the contractor concerned would take full charge and control of the vehicle.  But he would have to inform the companies concerning matters on any damage caused to the vehicle, or when servicing and repair was required.  Arrangement would then be made to fix the matter.  No replacement vehicle would be supplied to the contractor concerned during the period of servicing or repair in the garage.  In the circumstances where the contractor concerned could not take any job order without the vehicle, the companies would not be obliged to pay any compensation.  Further, the contractor was only obliged to return the vehicle concerned upon termination of the co-operation agreement.

32. Mr. Lee said that since there was no effective control towards the contractors, they could have made use of the companies’ vehicle to carry out other business without their knowledge.  Apart from getting the agreed share from the freight charges, there was no obligation to make any other payment to the contractors whatsoever.

The 1999 Agreement

33. Tin Shing entered into a co-operation agreement (“the 1999 Agreement”) with the Applicant on 12 August 1999.  Since then, the Applicant had become a contractor of Tin Shing.  Mr. Lee had discussions with the Applicant in respect of the matters concerning the business co-operation.  The business operation like what had been set out in paragraphs 23 – 32 above was outlined to him.  The Applicant eventually signed the 1999 Agreement, and Mr Lee signed on behalf of Tin Shing.  In this respect, Tin Shing provided vehicle GW 8331 to the Applicant.  About a few months later and because of the poor condition of GW 8331, another vehicle, HR 2365, was provided in place of GW 8331.  The day to day operation was same as those set out in paragraphs 23 to 32.

34. According to Mr. Lee, the Applicant well knew that he was not an employee of Tin Shing, but a business partner of it. 

The 2001 Agreement

35. Due to administrative reason, Tin Shing terminated the 1999 Agreement with the Applicant in about August 2001.  But the business co-operation did not really come to an end.  Immediately after having had terminated the 1999 Agreement, the Applicant entered into a co-operation agreement (“the 2001 Agreement”) with HNTS on 1 August 2001.  The terms of business co-operation between HNTS and the Applicant were same as those under the 1999 Agreement.  Under the 2001 Agreement, the Applicant was provided with a container tractor, KB 7868, for use in the freight service operation.  Mr. Lee signed the 2001 contract on behalf of HNTS.  HNTS and the Applicant were business partners and there had never been any employment relationship between them.  The operation remained just the same as before.

The Accident

36. According to Mr. Lee, the Applicant was only expected to perform the terms of the said two Agreements.  Under the terms, the Applicant was not required to do any repair work of the vehicle.  All repair, maintenance and routine servicing works were carried out by vehicle mechanics at the garage.  He had never been asked to carry out the work other than transportation.  Whenever the vehicle was out of order and in need of repair, the Applicant’s responsibility was to immediately inform Tin Shing, which would make arrangement to make good the repair at the garage to be arranged by Tin Shing (if repair work took place in Hong Kong).  But if the vehicle was in the Mainland where repair or servicing was needed, the Applicant had his discretion to make arrangement with the local garage to carry out the repair.  After the repair, he would then submit the payment receipt to Tin Shing for reimbursement.

37. Mr. Lee said he was aware that the Applicant sustained injuries in an accident at the parking yard on 9 September 2002.  Prior to the incident, he had no idea as to why he was at the parking yard and what was he doing there.

38. He said that on the day the accident took place, no job order had been given to the Applicant.  He did not inform anyone of his whereabouts on that day.  Prior to the said accident, he had no idea that the vehicle KB 7868 was in need of repair, nor that the Applicant was to do the repair or maintenance works in respect of that vehicle.  Had the vehicle been in need of repair or servicing, the Applicant should have informed them right away, then arrangement would be made to carry out the work.  At no times the Applicant was authorized or instructed to carry out any repair or maintenance works to any vehicle, and particularly KB 7868.

39. Mr. Lee said that the Applicant had never provided any medical documents to the companies concerning his injuries for paid sick leave and other employment benefits.  He was of the opinion that this showed that the Applicant never regarded himself as an employee. The Applicant later quietly lodged a purported employment claim to the Labour Tribunal without any warnings. The matter was eventually resolved and settled.  In the presence of Ms. Chan Ching, a staff member of the Labour Department, HNTS paid the Applicant a sum of HK$37,992.00 on 3 December 2002.  The said sum represented the Applicant’s share derived from the job orders performed by him in July, August and September of 2002.  In this connection, the Applicant signed the acknowledgment of receipt as prepared.

Analysis of Evidence and Application of Law

Whether the Applicant an employee or an independent contractor?

40. The law in this area is rather settled. The decision of Cook J in Market Investigations v Minister of Society Security   [1969]2 QB 173. was endorsed by the Privy Council in Lee Ting Sang v Chung Chi Keung [1990] 1 HKLR 764, 767-768. At pages 184-185, Cooke J. suggested that:

“The fundamental test to be applied is this: is the person who has engaged himself to perform these services performing them as a person in business on his own account? If the answer to that question is yes, then the contract is a contract for services. If the answer is no, then the contract is for service. No exhaustive list has been compiled of the considerations which are relevant in determining that questions, nor strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.(P184A to 185B)”

41. To decide whether the Applicant performed the services as a person on his own account, I have to consider all relevant factors set down in the relevant authorities. In the case of Tse Lam and Others v. Chan Tak Wai  HCLA 150/1995, the late Jerome Chan J. had set out 11 factors to consider in view of guidelines set down in authorities including Lee Ting Sang (supra) and Cheng Yuen v The Royal Hong Kong Golf Club CACV No 146 of 1996 .  I will go through the process of applying the tests and weigh each and every of the factors before I decide the issue on employment. 

The two Agreements

42. The Respondent relies heavily on the two Agreements to say that the Applicant was a partner not an employee. The terms and conditions in the two Agreements were identical except the identity of Party A (Tin Shing / HNTS), the registration no. of the vehicle to be assigned to be driven by the Applicant and the share of profit (30% and 32% respectively).

43. The title of the two Agreements was said to be Co-operation Agreement. It is well settled that the label given to a contract is not necessarily descriptive of its true nature. Whatever name it was given, the court is obliged to scrutinize the terms and find out the obligations of parties. The subjective beliefs and intention of, or labels used by, the parties are of no appreciable weight (Chan Kwok-kin v Mok Kwan-hing [1991] 1 HKLR 631 at 635H). The terms of the two Agreements would therefore be looked into individually in the light of the tests set down in the authorities in this area. It is for this reason that the agreement per se would not assist the Respondent as she might have hoped to be the case.

The relevant tests

Control and Supervision

44. There are a few factors to be looked at under this category. I shall look at those factors in the agreements first and then deal with them in the light of the operation in reality.

45. The relevant clauses in the two Agreements are as follows:-

(i)	clause 3:	the Applicant must adhere to and complete in a timely manner each job assignment given by Tin Shing & HNTS  and may not accept the jobs selectively. If the applicant fails to accept any job assignment in a timely manner, or accept jobs selectively, he shall give proper reasons to Party A.
(ii)	clause 4:	if the Applicant repeatedly violates job assignments of Tin Shing or accepts jobs selectively or fails to complete jobs in a timely manner without giving any proper reason, it shall be taken that he has terminated the cooperation on his own accord, in which case he shall pay 10% of the turnover of the preceding month to Tin Shing as additional compensation on top of the compensations payable under clauses (1) and (2).
(iii)	clause 5:	the Applicant may not contact customers direct or shout or cause confusion in front of customers whilst working. If goods are not provided in full or the loading and unloading process takes excessively long time or for other work-related questions, he shall contact Tin Shing immediately.

46. I am of the view that the said three clauses show that the Applicant did not enjoy freedom in his operation.  He was instead under strict control and supervision of Mr. Lee or Ms. Pang.

47. I note that this was not what Mr. Lee and Ms. Pang said during the trial. In their evidence they said that the Applicant was at liberty to decline work. I do not accept their such saying. It had been unequivocally stipulated here in the two Agreements that he could not do so. I accept the Applicant’s version that the operation in reality was like what had been set out in the two Agreements. I also do not accept Ms. Pang and Mr. Lee’s saying that the Applicant could take order from other source. If he could not decline work from the Respondent, I do not see how he would risk to take up jobs from other source. The two ideas were just incompatible with each other. Further, if there was no change in the profit share, I do not see why the Applicant would endeavour to source customers.

48. Further by clauses 6 and 7, the Applicant would face termination of contract if there were 4 complaints made against him in 12 months’ time. This is strong indication that the Respondent was in control as she had the power to terminate the relationship regardless of the intention of the Applicant.

49. It was the evidence of Mr. Lee and Ms. Pang that they had no knowledge on the whereabouts of the Applicant and there was no requirement for him to be on standby. Their evidence was again contradicted by clauses 10 and 11 of the two Agreements by which the Applicant was asked to make available for use a mobile phone which must always be in operation mode and that the Applicant shall make a reply as soon as practicable. I find that under the two Agreements, the Applicant had to make his whereabouts known to the Respondent when so required.

50. From evidence before me, I find that the degree of control and supervision was akin to what was stated in the two Agreements.  I find that the Applicant was under strict supervision and control of Ms. Pang and/or Mr. Lee.  This is an indicia that he was an employee.

Tools and Equipment

51. Clause 1 stipulates that the companies would provide vehicles and China-Hong Kong registered routes to the Applicant; it is not disputed that the Respondent also paid for the fuel, maintenance and insurance of the vehicle, parking, and toll charges. All along this is a feature considered to be indicative of an employment relationship. 

Hiring of Servant by the Applicant (*this test is similar to the test of Personal Performance in Fok Kall*)

52. It is the version of Respondent that there is no possibility for the Applicant to hire a servant to drive through the border because the necessary driver’s permit and papers were prepared and issued in the name of the Applicant. It is however theoretically possible that he could hire a replacement to carry out the task for the remaining trip. After considering the facts of the case and submissions, I find the facts in the present case indicative of an employment relationship under this test. There was no evidence that the Applicant did hire any replacement workers, and I accept his saying that he had never done so.

The degree of Financial Risk borne by the Applicant

53. It was said by Mr. Lee and Ms. Pang that if the customers defaulted payment, the Applicant would not receive his share and this was the risk he had to bear. In my judgment, this is not the financial risk to be borne exclusively by those who run his own business. Sometimes, employees would not get paid. The risk faced by the Applicant involved no loss of capital or investment put into the business. The risk the Applicant had to bear was nothing more than an employee in the same mode of operation would have to bear.  I find that the degree of financial risk he had to bear was low, if any; and it was commensurate to the degree of risk to be borne by many employees.

54. The income of the Applicant was calculated on the basis of transportation charge net of the basic outgoings like toll charges and parking fees. I would say that this still could not assist the Respondent. If there is no charge collected, the Applicant would not be asked to pay for the expenses. This was not a real risk factor. I find this is a factor which points to an employment relationship. 

Whether the Applicant was considered as an integral part of organization

55. The Applicant was driving the vehicle registered in the name of Ms. Pang and/or Mr. Lee through the border with permit granted to him by the Chinese government. The permit bears not only the name of the Applicant but also the name of Tin Shing/HNTS as the case may be.  In fact the wordings on the permit suggests that the permission was granted to the companies, the Applicant was only a driver named by the companies.

56. Further, the consequence of being complained by customers was mentioned in the two Agreements. This showed that in the mind of Ms. Pang or Mr. Lee, the Applicant was considered as representing the companies in the eyes of customers and his performance mattered as at the end of day the Respondent would be accountable for the work done by the Applicant, or at least, this was the case in the eyes of the customers. I find that the test under this head should be concluded in favour of an employment relationship.

Whether the Applicant has any role to play in the investment and management of the business

57. It was not disputed that the transportation fees were fixed by the Respondent, the Applicant had no involvement in it. The Applicant had no part to play in deciding how the business should be run, how many staff should be employed, how many vehicles to be put into the fleet and what area should the fleet cover to do business etc. I find that the situation is consistent with the Applicant being an employee.

Whether the Applicant was able to make profit from his management

58. The profit to be made by the Applicant depended on how many order the Respondent would place on him. I accept the Applicant’s version that even if another driver was asked to take over his load in Hong Kong to deliver it to the pier so that the Applicant could start another trip to Shenzhen for another load, this would have to be arranged by Ms. Pang or Mr. Lee. He could not ask for an extra trip nor could he refuse a second trip. Similarly, sometimes, he would take goods for local transfer for other drivers and receive a part of the income of that driver. All these were arranged by the Respondent. I find that this is an indicia of an employment relationship.

Whether the Applicant has run business which was of similar nature to that of the Respondent

59. It was not disputed that the Applicant did not run any transportation business. I consider this supported the Applicant’s saying that he was an employee.

Whether the Respondent was responsible for insurance, taxation, MPF of the Applicant

60. By the two Agreements, the companies were not responsible for the insurance and tax matters of the Applicant. It was the evidence of the Applicant that he was asked to take out an MPF scheme under the category of self-employed. He did so in order not to cross Mr. Lee and on the latter’s promise that the Respondent would still contribute HK$ 500 a month to the MPF payment. It was Mr. Lee who failed to honour the promise after making a few payments at odd intervals. I find the arrangement on insurance and taxation self-serving and that the Respondent had benefited from such arrangement. I find that they could not help the Respondent. For the arrangement of MPF, I accept the evidence of the Applicant that it was so arranged because of the instructions and promise given by Mr. Lee. So in the circumstances, I find that these factors could not assist the Respondent and even being taken to the highest, they are neutral to the issue.  

The parties’ own view or their intention on the relationship

61. It has been long settled that the view of the parties on the relationship carries no persuasive weight on the issue of employment.  I am therefore of the view that the settlement taken place in the Labour Department did not point to either direction.

The customs of trade

62. There was no conclusive evidence on this. This test is therefore of no assistance in the present application.

More tests set down in For Kall

63. H.H. Judge Carlson has also set out 10 factors to be considered in For Kall v Wong Cheung Hon, DCEC No 851 of 1999 (unrep). Some of them are same or similar to those listed above. I shall deal with those which have not been dealt with above.

Power of Selection, Appointment, dismissal and suspension

64. No doubt, the Respondent had the power to decide whether to recruit the Applicant as one of the operators or to terminate or suspend the relationship. The terms in the two Agreements imposed strict discipline on the Applicant to observe if he wanted to keep the relationship. This is usually taken as an indication of employment.

Payment of Wages and Salary

65. There was no dispute that the Applicant received payment from the Respondent (although the Respondent’s claim was that this was done on behalf of HNTS). It is noted that there is no fixed monthly salary, the income depended on the volume of work the Applicant had been asked to do. It has been said that if payment is by the job, i.e. in relation to a complete task, this points to an independent contractor. Piece-rated salary is however not uncommon among employed workers. So, I find that the facts under this test neutral to the issue.

The fixing of times and place of work

66. The power to fix the hours or times when a person is to work or when he is to take holidays is another pointer to a contract of employment, although not conclusive. In the present case, the time and place of work is obviously fixed by the Respondent. Under the terms of the two Agreements, the Applicant would have to carry out the task whenever he received the order. I would however take this factor to be neutral as this is equally true in the situation of a contractor.

The extent of the Obligation to work or to employ

67. If the contract entitles some persons to full-time or exclusive services of the other person, this points to the contract being one of the employment but if it is left entirely to one party to the contract to choose whether to do any work or not, there is almost certainly not a contract of employment. In this case, one could see from the monthly statement that the Applicant worked extensively for the Respondent. According to the monthly statements, subject to a few exceptions, the Applicants usually worked more than 20 days a month with the Respondent. He consistently worked on Sundays and public holidays. Further in the two Agreements, it has been expressly stipulated that the Applicant could not refuse to take orders.  I find that the Applicant was under an obligation to work, this points to a contract of employment. 

Conclusion:  The Applicant was an employee

68. After considering the factors listed above individually and collectively, I find as a matter of daily operation, the Applicant carried out the orders as an employee, he was not running his own business as he did so. The terms in the two Agreements confirmed such operation and the operation when actually being carried out was consistent with the terms as set out. I find the Applicant an employee. 

Who was the employer?

69. I now have to decide who was the Applicant’s employer. It was said on behalf of the Respondent that the 2001 Agreement was signed between the Applicant and HNTS. So even if the Applicant was an employee, he must have been an employee of HNTS.

70. On this the evidence of the Applicant was that after the signing of the 2001 Agreement, there was no change in the daily operation at all. Orders were still placed by Mr. Lee and all other matters were still in the supervision of both Mr. Lee and Ms. Pang. This was not disputed.

71. According to the Respondent the reasons for the termination of the 1999 Agreement was for administrative reasons (paragraph 7 in the witness statements of both witnesses for the Respondent). There was no elaboration on the reason for that. Mr. Lee, when being cross-examined, endeavoured to say that the 2001 Agreement was for the change of vehicle and this was suggested by HNTS because they were the owner of the vehicle. This was being criticized by Counsel for the Appellant as a recent fabrication as this was never said in any of the witness statements filed for the Respondent.

72. Ms. Pang further agreed that even after the execution of the 2001 Agreement, the payments made to the Applicant were included in the tax return filed on behalf of the Respondent. Her explanation on this was that it was done on behalf of HNTS.

73. There was a faint attempt made by Ms. Pang to say that the 1999 Agreement was also signed by Mr. Lee on behalf of the Respondent as agent of HNTS. This came up for the first time in cross-examination and was not consistent with what she had said in her witness statement in this regard. I do not accept such saying.

74. From the evidence before me, I accept that the termination of the 1999 Agreement and the execution of the 2001 Agreement was for administrative convenience only such as to make application for certain permits in China for both the vehicle and the driver easier, there was no change to the substance of the relationship between the Applicant and the Respondent. It was not disputed that there was no change in the operation after the execution of the 2001 Agreement except the vehicle was changed and the rate of commission was increased to 32%. It was still Mr. Lee who placed order to the Applicant and made payment to him out of the bank account in the name of Ms. Pang and Mr. Lee. All communication on work was still made between Mr. Lee and the Applicant as before. In my judgment, the Applicant was an employee of the Respondent at the material time of the injury.

Whether the accident arose out of and in the course of the employment

75. It was said on behalf of the Respondent that the accident did not arise out of and in the course of the employment as stipulated in s. 5(1) of the Ordinance and therefore no claim could be made. It was said that, first, the Applicant had no order for work at the time of accident; and secondly, it was not his duty to adjust the brake.

76. On facts, I accept that when the accident happened, the Applicant had finished a trip and parked his vehicle inside the parking yard. On his way back from China, he already felt that there was a minor situation with the brake, so after he returned to the parking yard he tried to fix it by himself knowing that it was very minor in nature and could be fixed by him without much difficulty.

77. I have the benefit of reading the relevant authorities, I find that although the Applicant was not specifically assigned the duties to adjust the brakes, it would not have taken him outside the scope of employment. In Lau Kam Nui v Sau Kee Co. Ltd DCPI 84/2001, the trial judge held that the accident did not arise out of his employment since it was not part of the deceased duty to recover a gas cylinder dropped into the sea. The decision was however reversed on appeal (CACV 65/1998). Mortimer, VP, held (at 168J to 169C) that:

“When considering that question, ….all that is necessary is to show that the workman was doing something which was an incident of his employment or was incidental to it.”

78. In Charles R Davidson & Co v M’Robb [1918] AC 304, it was held that:

“In the course of the employment does not mean during the currency of the engagement, but means in the course of work which the workman is employed to do and what is incidental to it.”

79. So, the next thing for me to deal with is the time element, i.e. the Applicant was not “working” at that time. It was a time he finished his trip but he was inside the parking yard. It was the Applicant’s case that he was on standby on a 24-hour basis. This was disputed by the Respondent who said that, first, there was no obligation for the Applicant to be on stand-by; and secondly, when he had no work order that meant he was not at work and therefore not acting in the course of his employment.

80. After viewing the evidence before me, I find that there must have been some minor duties incidental to his main duties as a driver, such as those in the aspect of maintenance, keeping the vehicle clean and tidy, making sure that fuel or lubricant were adequately supplied to keep the engine running smoothly, and to detect and fix some minor defects if he was able to do so. I find that to fix a minor defect in the brake to prepare for the next trip could not be said to be outside the scope of his duties.  Further, there was no fixed “work hours” for the Applicant. I accept that the Applicant was there at the parking yard after returned from a trip, and was waiting there for another order. I therefore could not agree with the Respondent’s submission that he was not doing his duties and it was outside his “work hours”. 

81. In any event, this is not a crucial factor to consider. In Poland v John Parr & Sons [1927] 1 KB 236 at 243, Scrutton, LJ referred to A.L. Smith, LJ in Rees v Thomas [1899]1 QB 1015 (at 1017) and said that:

“..The Lord Justice lays stress upon the act being done “in the interest of his master.”  That shows that an act is not placed beyond the scope of the servant’s duty by the mere fact that it was not one of the class of acts which he is specially employed to do or that the time is not an hour at which he is ordinarily at work.”

82. For reasons above, I find that the Applicant sustained injury caused by an accident arising out of and in the course of the Respondent’s employment.

83. It has been argued by the Respondent that the accident could not have happened in the way as described by the Applicant. It was said that the vehicle could not have started by an accidental grab on the ignition key when the Applicant strived for something to hang on to as he slipped. In my judgement, I do not have to resolve this dispute of facts so long as I am satisfied that the Applicant was attending to the vehicle when the accident happened and therefore the accident arose out of and in the course of employment. I borrow my support from HH Judge Muttrie’s decision in Leung Kam To v Lau Ka Yeung DCEC No. 342 of 2001where he said that:

“It is more probable than not that the applicant met with an accident. Whether he fell from the 9^th to the 5^th floor as he says is rather more difficult. It seems impossible for him to have fallen to the 5^th floor, for there was a canopy in the way at the 6^th 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.”

84. In the present case, I have heard the evidence of the Applicant and considered the medical reports, I accept the Applicant’s saying that he was trying to test the brake after making adjustment to the braking system, I am satisfied that an accident occurred at this juncture and as a result the vehicle dashed forward and hit a stationary container next to it and whereby trapping the Applicant between the door and the cabin. As a result he suffered injury. The main issue for the claim is whether the accident arose out of and in the course of the employment; as to how the accident happened and who’s fault it was is not material unless it would affect the findings in the main issues. I do not see that this is the case in the present application.

Quantum

Evidence on pre-accident earnings

85. It was said that the pre-accident monthly earnings of the Applicant was HK$18,555.75, an average over a period of 12 months plus HK$500 allowance of telephone charges (in his final submission, Counsel for the Applicant indicated that the Applicant would not pursue the MPF contribution supposed to be made by the Respondent as part of his earnings.)  He had been on sick leave for 12.5 months since the accident.

Appeal from the EC (Ordinary Assessment) Board 

86. The EC (Ordinary Assessment) Board’s assessment on the loss of earning capacity was 2.5%and 3% on review. The Applicant was of the view that the assessment did not reflect the real consequence of the injury, the residual pain and his future employment. Counsel for the Applicant asked the court to make the assessment afresh on the basis of the medical reports submitted on behalf of the Applicant.

87. According to Dr. Au Ka Kau, the complaint the Applicant had when he was interviewed included left buttock pain on walking; his walking tolerance was one hour; frequent muscle cramps in the left leg especially at night and tightness over the abdomen scar. He quoted the Applicant saying that he had to rest after driving for five to six hours, otherwise there will be buttock pain. Having considered these factors and his clinical findings, he came to the conclusion that the Applicant suffered a loss of earning capacity at 6%.

88. Dr. Edward Lai also reported on the Applicant. He suggested a loss of earning capacity at 20%.

89. After hearing the evidence of the Applicant and reviewing all medical reports on him, I accept the findings of Dr. Au Ka Kau. I find that Dr. Au has been careful and thorough in the examination and the preparation of the reports. He elaborated on the reasons why he came to the conclusion. As to Dr. Edward Lai, I must say his report is too brief to be persuasive. The percentage of loss of earning capacity was not included in his first report. When he gave his recommendation of 20% he relied only the reduction of working hours and no clinical findings were cited to support his recommendation. The appeal is therefore allowed to the extent that I find the loss of earning capacity to be at 6%.

Compensation under s.9

90. I have been asked to apply the Hong Kong Paper Mills formula as perfected in the case of Lui Kwong Yan v. Shui Hing Decoration Works & Another [1993]1 HKLR 168. It was said that the circumstances of the Applicant do bring him into the scope of s.9(1A). After considering the present condition of the Applicant, the fact that he could drive up to 8 hours as recommended by Dr. Edward Lai, and that he could take some rest during the journey for him to drive a longer journey, and that the Applicant agreed that the income for drivers (both local and cross-border) had been on the decrease since his injury, I find that there is no special circumstances for the Hong Kong Paper Mills formula to be applied.

91. The compensation under s.9 is therefore HK$19,055.75 x 72 (as the Applicant is 42 years old) x 6%. The total compensation under this head is HK$82,320.84.

Periodical Payment (s.10)

92. It is not in dispute that the Applicant had been on sick leave for 12.5 months. Counsel submitted on his behalf that he was not asking for any increase for the period beyond the first 12 months after accident. The compensation under this head is HK$190,557.50 (HK$19,055.75 x 4/5 x 12.5m).

Compensation on medical expenses (s.10A)

93. This is not disputed by the Respondent and the award is HK$2,376 as claimed.

Conclusion

94. To summarise, the quantum awarded to the Applicant is as follows:

Compensation under s.9	HK$  82,320.84
Compensation under s.10	HK$190,557.50
Compensation under s.10A	HK$    2,376.00
Total	HK$275,254.34
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95. On interests, I find it just and fair to award interest on the awarded sum at half judgment rate from the date of accident until judgement; and at judgement rate thereafter until full payment.

96. I also order the Respondent to bear costs of this application and such costs are to be taxed if not agreed.