Hsu Shu Chiao v. Lung Cheong Toys Ltd.

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES' COMPENSATION CASE NO. 599 OF 1997

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J U D G M E N T

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1. The applicant, who is the father of the late Hui Pak Sang (the deceased), claims compensation under various sections of the Employees' Compensation Ordinance ("the Ordinance") arising out of a fatal road traffic accident late at night on Saturday, 26 August 1995 which occurred in the outer suburbs of Shenzhen, Guangdong Province, PRC, in the course of which the deceased was fatally injured. At the time, the deceased, who was a single man aged 28, was employed by the respondents, a Hong Kong company, as a production manager at their toymaking factories in Dongguan which is a city about 130 kilometres north of Shenzhen.

2. Compensation has been agreed, subject to liability, at $500,000. The only issue that I need to decide is whether the deceased was in the course of employment with the respondents when he sustained his fatal injuries (see section 5(1) of the Ordinance).

3. The evidence, all of which is contained in the trial bundle, has been agreed. I propose to rehearse here the material parts of that evidence.

4. Whenever an issue of this sort falls to be determined by the court, it is important to understand precisely what the injured workman was employed to do.

5. The deceased's letter of appointment dated 1 July 1995 is to be found at page 44. It is in these terms:

"This letter is to confirm our offer of employment to you for the post of production manager, China operation, in our company, effective July 1, 1995. The terms and conditions are set out hereunder:

1)	Starting salary:		$27,000 per month
2)	Working site:		Lung Chung, Dongguan Factory, full-time station.
3)	Working hours:		0800 hours to 1700 hours, Monday to Friday;
			1200 hours to 1300 hours lunch hour.
4)	Probation and termination:		You will be on probation of 3 months during which your employment may be terminated by either party by giving to the other party notice of not less than 7 days. Upon satisfactory completion of your probation period, one month notice of payment in lieu is required by either party for termination of your employment, such one month excludes deduction of any balance days for annual leave brought forward.
5)	Benefit quarter:		The company will provide a quarter in China for your accommodation whilst stationed in China.
6)	Double pay and year-end bonus:		You will be entitled to receive before the Lunar New Year two months extra basic salary as double pay and year-end bonus after completion of one year's service or in the first year of service, a proportional pay according to the period you have undergone. However, if you should resign before December 31 in any subsequent year, no proportional double pay or year-end bonus will be paid in the year of resignation.
7)	Annual leave:		After completion of one calendar year's service, you will be granted 14 days annual leave with pay.
8)	Confidential information:		Any misconduct affecting interests of the company and any disclosure of the company's confidential information will be liable to instant dismissal and/or legal action.
9)	Others:		Leave and other fringe benefits, company rules and regulations and termination procedure are detailed and set out in our Chinese version employment handbook."

6. That handbook starts at page 62 of the trial bundle and the letter is signed by Mr William Ip, the respondent's managing director.

7. Mr Ng Kei-yin, whose statement is at page 40 and who is a director of the respondent, says that the respondent had two factories in Dongguan. He says that the deceased, in his capacity as production manager, received orders to produce toys from overseas buyers which the Dongguan factories would put into production. The finished product would then be transported to Hong Kong. There would also be an element of subcontracting by the respondents to factories within Dongguan. The subcontractors would come to the respondent's factories, collect materials, process them and return them to the respondent's factories where the deceased, as the production manager, would check their quality and either accept or reject the product. All of this would be done in Dongguan.

8. Mr Chan Hung-ming, whose statement is at page 23, was the respondent's general manager and the deceased's supervisor. As appears in the deceased's letter of appointment, his usual working hours were from 8 am until 5 pm, Monday to Saturday. He would also be required to work overtime without additional payment. Mr Chan says that the respondents would usually provide transportation for the deceased and for other employees at 5 pm on Saturday to take them from Dongguan to Shenzhen railway station so that they might return to Hong Kong for the weekend and do the same for them on Monday morning to get them back to Dongguan from the Shenzhen railway station. If the deceased had to work late on Saturday and missed the company-provided transport, he would arrange his own transport to Shenzhen and be reimbursed the cost by the company.

9. On Saturday, 26 August 1995, the deceased worked late. This is common ground. He was dealing with Japanese clients and he had to take them to some of the Dongguan factories to inspect the course of some production runs that they had ordered. At about 9 pm, he had dinner with the clients at a restaurant in Dongguan. From the restaurant (it was about 10 pm by now), he and the clients went by taxi to another factory in Dongguan where the clients had to inspect other products. The deceased left them at this factory shortly after 10 pm, or thereabouts, and took the taxi to Shenzhen. There is no doubt that on this occasion he was not going to Shenzhen railway station but to a hotel in Shenzhen where he was due to meet his girlfriend. He was already some hours late for his appointment because of his overtime work commitments.

10. When the taxi got to the suburbs of Shenzhen, it was about 11.50 pm. The taxi driver struck a barrel which was brightly painted to act as a marker in the road. The barrel struck the deceased on the head and he died from his injuries.

11. These are the facts that matter for the purpose of what I have to decide. I will have to consider the respective lines of argument more fully in a moment but a brief summary is appropriate at this stage.

12. Mr Gidwani for the applicant, submits that this journey by the deceased from Dongguan to Shenzhen was connected with his employment because it took place "overseas" and was undertaken to enable the deceased to return to Hong Kong. He is content to say that once the deceased got to Shenzhen, the "course of employment" would have come to an end if, as in this case, the deceased was to meet up with his girlfriend and stay in Shenzhen for social purposes unconnected with his employment.

13. Mr Ashok Sakhrani, who appears for the respondents, submits that the course of employment ended, at the very latest, when the deceased dropped the Japanese clients off after dinner and started his journey back to Shenzhen. Once he embarked on that journey, he was to be classed as any other employee on his way to or back from his place of work where, on good and long-established authority, such an employee has been held not to be in the course of employment.

14. Few areas of the law have given rise to more decided cases which bear on the various nuances that the evidence of the particular case will give rise to. This has meant that the argument before me has ranged widely and I have been shown a number of authorities, some more in point than others. With this in mind, it is worth bearing in mind Lord Wright's remarks in Weaver v Tredeger Iron & Coal Company Limited [1940] AC 955 at 975, where quoting Lord Buckmaster in Stewart's case [1917] AC 249, he said:

"The words of the act 'in the course of his employment' are very general, no doubt designedly so. Experience has shown how infinitely various may be the facts to which the words are to be applied. Lord Buckmaster in Stewart's case uttered a warning against the mistake involved in attempting to define a fixed boundary between the cases which are within the statute and those which are without. This, he said, it is almost impossible to achieve. No authority can, with certainty, do more than decide whether a particular case, upon particular facts, is or is not within the meaning of the phrase. The realities of each case must be regarded."

15. Similar sentiments were expressed by Sir John Donaldson (as he then was), M.R., in Nancollas v Insurance Officer [1985] 1 All ER 833 at 836, where he observed that:

"The authorities approve an approach which requires the court to have regard to and weigh in the balance every factor which can be said in any way to point towards or away from a finding that the claimant was in the course of his employment. In the context of the present appeals, there are a number of such factors to which we must have regard but none of itself is decisive."

16. In this matter, it is necessary to consider the situation at common law as well as under the Ordinance which contains an extension of the common law under section 5(4)(d) which will in due course require my express attention.

17. Of the modern "travelling cases", Smith v Stages [1989] 1 AC 929, is of great assistance because it contains in the speech of Lord Lowry an attempt to rationalise circumstances where an employee maybe or may not be in the course of his employment. Lord Lowry described them as some prima facie propositions which could be stated with reasonable confidence whilst recognising that it was impossible to provide for every eventuality. These appear at page 955H to 956F. They are the following:

"1) An employee travelling from his ordinary residence to his regular place of work, whatever the means of transport and even if it is provided by the employer, is not on duty and is not acting in the course of his employment, but if he is obliged by his contract of service to use the employer's transport, he will normally, in the absence of an express condition to the contrary, be regarded as acting in the course of his employment whilst doing so.

2) Travelling in the employer's time between workplaces, one of which may be the regular workplace or in the course of a peripatetic occupation, whether accompanied by goods or tools or simply in order to reach a succession of workplaces as an inspector of gas meters might do, will be in the course of his employment.

3) Receipt of wages, though not a receipt of a travelling allowance, will indicate that the employee is travelling in the employer's time and for his benefit and is acting in the course of his employment and in such a case, the fact that the employee may have discretion as to the mode and time of travelling will not take the journey out of the course of his employment.

4) An employee travelling in the employer's time from his ordinary residence to a workplace other than his regular workplace will in the course of a peripatetic occupation or to the scene of an emergency such as a fire, an accident or a mechanical breakdown of plant, will be acting in the course of his employment.

5) A deviation from or interruption of a journey undertaken in the course of employment, unless the deviation or interruption is merely incidental to the journey, will for the time being, which may include an overnight interruption, take the employee out of the course of his employment.

6) Return journeys, though, are both to be treated on the same footing as outwards journeys."

18. Mr Gidwani starts with the proposition that an employee is acting in the course of his employment when he is doing what he is employed to do or anything reasonably incidental to his employment (see Lam Min v Yau On Construction Company [1981] HKLR 646). The argument goes in this way:

19. The deceased was employed "overseas". An integral part of that employment was getting him from the doorway to that employment, which was Shenzhen, from where transport would be available for the employee's convenience to get the employee to Dongguan and vice-versa in the case after the week's work was over. The proper way to view this employment, therefore, is to say that it stops and starts at Shenzhen and not at the factory gates at Dongguan. It is necessary to have regard to the realities of the case, per Lord Wright in Weaver v Tredeger Iron & Coal Company Limited supra.

20. Mr Gidwani has invited me to adapt category (4) in Lord Lowry's propositions as apt to the circumstances in this case by treating the five or so hours of overtime worked by the deceased as equivalent to "an emergency" of the sort referred to by Lord Lowry.

21. I have difficulty in aligning the facts of this matter to what was contemplated by Lord Lowry in category (4). This cannot be right.

22. Mr Gidwani also relies on Paterson v Costain [1979] 2 Lloyd's Rep 204, a case which I drew attention to simply because it has some parallels to the present matter. This concerned an employee engaged to work in the Iranian oilfields in the early 1970s. The staging post was Abadan in Southern Iran from where he would be transported to the oilfields. Given the remoteness of Iran for a British employee and the all-embracing nature of the employment, the Court of Appeal was disposed to hold that, generally speaking, the employee went into the course of his employment from the moment that he arrived at Abadan and that the usual rule that going to and coming from work was not in the course of employment did not apply to the facts of that case.

23. It seems to me, if I may say so, that this case represents the high point of the applicant's case. Can one properly transpose Shenzhen for Abadan in this case?

24. Mr Sakhrani submits that the proper analysis is to be found in Lord Goff's speech in Smith v Stages supra at page 936F:

"As I have already observed, we are here concerned with a case which may be seen as one of those cases concerned with travelling to or from work. I have used guarded language in so describing it because, as will appear, I do not consider the present case to fall strictly within that category of case. Even so, it is helpful to use the cases in that category as a starting point.

We can begin with the simple proposition that in ordinary circumstances when a man is travelling to or from his place of work, he is not acting in the course of his employment. So, a bank clerk who commutes to the city of London every day from Sevenoaks, is not acting in the course of his employment when he walks across London bridge from the station to his bank in the city. This is because he is not employed to travel from his home to the bank. He is employed to work at the bank, his place of work, and so his duty is to arrive there in time for his working day.

Nice points can arise about the precise time or place at which he may be held to have arrived at work, but these do not trouble us in the present case. Likewise, of course, he is not acting in the course of his employment when he is travelling home after his day's work is over. If, however, a man is obliged by his employer to travel to work by means of transport provided by his employer, he may be held to be acting in the course of his employment when so doing."

25. He also relies on Vandyke v Fender [1970] 1 Lloyd's Rep 320 at 325 where Lord Denning, M.R., said:

"The cases show to my mind quite conclusively that when a man is going to or from work along a public road as a passenger in a vehicle provided by his employer, he is not then in the course of his employment unless he is obliged by the terms of his employment to travel in that vehicle. It is not enough that he should have the right to travel in the vehicle or be permitted to travel in it, else he is not in the course of his employment."

26. Mr Sakhrani submits, therefore, that the facts in the case before me are even more favourable to him than Vandyke v Fender. Here, the mode of transport was a common taxi which the deceased had decided to take. He was under no compulsion to take it and indeed, he had been advised to remain in Dongguan for the night because of the lateness of the hour.

27. I am bound to say that if there ever was a case which would attract sympathy for the deceased and for the applicant, it is this one. The deceased had to remain in Dongguan and do five hours of unpaid overtime and was killed on his way to start his weekend. Nevertheless, at common law, I can find no legitimate means of stretching these facts into a category of circumstances which could bring this journey as one incidental to his employment. The reality is that he was employed to work at Dongguan. This was simply a case of travel to and from work for purposes quite unconnected to that work. The motive was to get to his home in Hong Kong, or on this particular occasion, to spend time with his girlfriend in Shenzhen.

28. I also feel unable to fashion out of these facts a case of the type before the court in Paterson v Costain supra. The type of contract was very different and the circumstances of an expatriate British oilfield worker in a far-off Iranian oilfield in 1970 is not the same as a Hong Kong/Guangdong contract of employment for a Chinese person in 1995.

29. For all these reasons the claim at common law must fail. I find that at the time of the fatal accident, the deceased was not in the course of his employment.

30. That then leaves over the extension provided by section 5(4)(d) of the Ordinance which is in these terms:

"An accident to an employee shall be deemed to arise out of and in the course of his employment if it happens to the employee whilst he is with the express or implied permission of his employer travelling as a passenger by any means of transport to or from his place of work and at the time of the accident the means of transport is being operated;

i) by or on behalf of his employer or by some other person pursuant to arrangements made with his employer; and

ii) other than as part of a public transport service."

31. It seems to me that this provision was legislated into law to provide for cases where the employer was providing transport for its employees using the employer's transport, or transport contracted by the employer. It specifically excludes public transport.

32. The facts of this case do not fit this statutory extension. This was the hiring of a common taxi by the deceased.

33. The cruel irony, of course, is that had the deceased not worked five hours of unpaid overtime, he would have been able to use the company's transport aMTRnd had he encountered the fatality whilst using that transport, it is my judgment that a claim under section 5(4)(d) would have succeeded.

34. For all these reasons, I regret that this claim must fail with costs and certificate for counsel.

35. There must also be Legal Aid taxation of the applicant's costs.