YEUNG MAN TSAN v. FAMOUS DRAGON ENGINEERING LTD AND OTHERS

DCEC594/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 594 OF 2003

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DCEC595/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 595 OF 2003

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JUDGMENT

1. In these two Applications, the Applicant is claiming against the 1^st Respondent (“R1”) and/or the 3^rd Respondent (“R3”) for compensation under sections 9, 10 and 10A of the Employees’ Compensation Ordinance, Chapter 282, Laws of Hong Kong (“the ECO”).

2. The 2^nd Respondent (“R2”) was the insurance company that was providing insurance coverage in favour of R1 at the material times to cover its liability towards its employees for compensation under ECO.

The Accidents

3. On 19^th January 2002, the Applicant started his new employment as a delivery worker for delivering construction materials inside construction sites.  He was deployed to work in a construction site for a private development project consisting of 2 residential buildings near Tuen Mun Ferry Pier.  His duties were to unload marble sheets that were transported to the site by trucks and then deliver them upstairs to specified flats in each floor of the buildings for installation inside kitchens and toilets.  He started delivering marble sheets in this manner at around 2 p.m.  He worked overtime that day.  About 7 p.m. on the same day, after he had delivered a piece of marble sheet into a flat and reclined it against the wall, the marble sheet suddenly collapsed and hit his left big toe.  As a result, the marble sheet broke, and his left big toe bled and was injured (“the First Accident”).

4. The Applicant dared not report this incident to his site foreman or his employer, or ask his colleagues to do so, because he feared that he might be dismissed from the job.  After he had finished the day’s work, he received treatment in the Accident & Emergency Unit of Yan Chai Hospital.  He was told that he had sustained a fracture of distal phalanx of his left foot.  He was discharged after treatment, but was given 3 days sick leave between 20^th and 23^rd January 2002.  He took a day’s rest on 20^th January 2002 which was in fact a Sunday.  He received further treatment in Yan Chai Hospital on that day.

5. Although the Applicant had not yet recovered from his injuries, he reported to his duties on 21^st January 2002.  Again, he delivered marble sheets in various places in the morning, and then in the same construction site where the First Accident occurred in the afternoon.  On this occasion, inside the carpark of the construction site, he was on board a truck and moved marble sheets from the inner part to the outer part of the truck at its rear, so that his colleagues on the ground could unload them.  Whilst he was so doing, 20 odd pieces of marble sheets suddenly collapsed and fell onto him (“the Second Accident”).  He lost his consciousness.  He sustained crushing injuries to his left anterior chest wall and left shoulder.  He was sent to Tuen Mun Hospital for treatment.  He was granted sick leave from 21^st January 2002 to 18^th April 2002.

The Proceedings

6. The Applicant first brought these two Applications against R1 on 5^th June 2003.  In each Application, he alleged that personal injury by accident arising out of and in the course of his employment with R1 was caused to him. 

7. The First Accident was the subject matter of DCEC595/2003, while the Second Accident was the subject matter of DCEC594/2003. 

8. By an Order made by His Honour Judge Lok on 18^th July 2003, the R2 was granted to leave to intervene and join in as a respondent.

9. By an Order made by His Honour Judge Christie on 26^th November 2003, R3 was added as a respondent in both Applications.

10. By an Order made by Her Honour Judge Ng on 18^th March 2005, it was ordered that the issue of liability in both Applications was to be tried together, but separately from and before the issue of quantum.

11. Neither R1 nor R3 files an Answer to oppose these two Applications.  Mr. Tsang, Solicitor for the Applicant, informs me that R1 and R3 are now nowhere to be found, and that it is not clear whether R3, like R1, had taken out any insurance policy to cover its liability for employee’s compensation at the material times.  Both R1 and R3 do not appear at the trial.  There is no record that they have been wounded up.

The issue at trial

12. In its Answers, R2 denies that the Applicant was employed by R1 at the material times and puts the Applicant to strict proof.

13. It is clear that R2 does not really take issue with the fact that these two accidents had occurred, that they were accidents arising out of and in the course of an employment to which the Applicant was an employee, and that he had sustained personal injuries as a result.

14. The only issue that this Court has to determine is: at the time of the First and the Second Accidents, was the Applicant employed by R1, or by R3, or jointly by R1 and R3?

Witnesses and Documents

15. Mr. Tsang and Mr. Lee, Counsel for R2, inform me that all witness statements and documents in the trial bundles have been agreed as to contents, subject to the parties’ submissions on weight. 

16. The Applicant is the only witness who testifies in Court.  He confirms the truth of his two witness statements and adopts them as evidence.  He is not cross-examined at all.

17. I shall just refer to the evidence pertaining to the issue that falls for determination.

The Applicant’s Evidence

18. The Applicant was born in Mainland China.  He settled in Hong Kong in 1991.  He was 54 years old at the time of the accidents.  At that time, he was living in Tsuen Wan, but his son was working in Fotan.  He therefore intended to find a job in the vicinity of his son’s workplace.

19. On 18^th January 2002, the Applicant went to Fotan and walked around to see if any job was on offer.  When he arrived at Fotan Industrial Building, he saw a recruitment poster being displayed by the side of the ground floor shop premises of R3.  It was written on the poster that a number of construction site general workers were wanted.  The name and telephone number of R3 were also given in the poster.

20. The Applicant then made a phone call according to the telephone number shown in the poster.  A lady received his call and asked him to attend an office on the 1^st Floor of the building for a job interview.

21. When the Applicant arrived at the 1^st Floor of the building, he did not see any signboard stating the name of the company.  He went inside an office.  A lady whose name was unknown to him asked him if he was coming for a job interview.  He replied in the affirmative.  She then gave him a form and asked him to fill it in.  She also took away his identity card for photocopying.

22. According to the Applicant, the form he was asked to fill in did not mention which company was going to employ him.  It just required him to put down his personal particulars.  After he had filled in the form, he handed it over to the lady.  He was not given a copy of it.

23. The lady then asked him whether he had worked as a general worker before.  The Applicant replied that he had been a lorry attendant delivering goods for several years.  She then told him that the job required him to be a lorry attendant delivering construction materials.  She further said that the job was quite tough because the materials were relatively heavy.  She said that the Applicant’s monthly salary would be $6,500, and that he would be given extra pay for overtime work.  At the end of the interview, she told him to wait for her telephone call.  The Applicant then left her office.

24. The Applicant then took a public light bus home.  Whilst he was on his way, the lady in the office called him by phone and told him to start working the following day.

25. On 19^th January 2002, the Applicant went back to the office.  He and his colleagues, altogether 5 persons, were taken to a construction site by a vehicle arranged by the company.  At the construction site, they joined other fellow workers, making a total of 10 persons.  Inside the site, they were waiting for the arrival of the truck that was transporting marble sheets from the Mainland to the site.  The truck only arrived at about 2 p.m.   The site foreman was Ah Keung.

26. Whilst the Applicant was waiting for the arrival of the truck, he had a chat with one of his colleagues.  The colleague whose name was unknown to him told him that their boss had a factory manufacturing marble sheets in the Mainland, and that the marble sheets to be used in that construction site were transported from the Mainland factory to Hong Kong.  The Applicant then asked whether the boss’ factory in the Mainland and R3 were the same company.  The colleague said that the company should have two names.

27. Upon arrival of the truck, the Applicant started working in the construction site.  The First Accident later occurred.

28. On 21^st January 2002 when the Applicant reported duty again, he first went to the office in Fotan.  At that time, his colleagues told the lady in the office and Ah Keung that the Applicant had sustained injuries during work on 19^th January 2002.  The lady told the Applicant that it was quite difficult to find a job at that time, and that he should act as a man to ignore the injuries.  She then told Ah Keung to assign work to the Applicant.  In the afternoon of that day, the Second Accident occurred.  The Applicant was sent to Tuen Mun Hospital for treatment.

29. According to the Applicant, he stayed in hospital, first in Tuen Mun Hospital and later in Yan Chai Hospital, until 31^st January 2002.  He was given sick leave until 18^th April 2002.  He had regular medical consultation in hospitals and clinic.

30. After the accidents, the Applicant called back the company by phone and asked for payment of his outstanding wages and periodical payment.  At first, the “lady boss (老闆娘)” promised to transfer money into his bank account to pay his outstanding wages, and to deposit money regularly as periodical payments.  When the Applicant found no money being deposited, he called the lady boss again.  She said that the company had no money to pay, but said the Applicant would be paid later.  A few days later when he found no money was in, he called the lady boss.  She said that the insurance company had refused to admit liability because the sick leave certificates produced by the Applicant did not have the words “injured during work”.  On 21^st February 2002, the Applicant went to hospital to seek help, only to be told by the social worker there that doctors would not write on the sick leave certificates in this manner.

31. On 22^nd February 2002, the Applicant discovered that $520 had been transferred into his bank account from the personal bank account of Ng Yuk Chun.  This sum of money was for payment of the arrears of wages for 19^th and 21^st January 2002.  Having received no payment for periodical payment, the Applicant complained to the Labour Department.  A labour officer asked him to state his complaint in writing.  By a letter dated 12^th March 2002, the Applicant filed his written complaint.  His complaint was referred to the Occupational Safety and Health Branch of the Labour Department for follow-up investigation.

32. The Applicant kept on asking the lady boss for payment of periodical payments both by phone and in person.  She refused to pay on the ground that the payment would be made in one sum after the true extent of the Applicant’s injuries had been assessed.

33. On 12^th December 2002, the Employees’ Compensation (Ordinary Assessment) Board issued a certificate of assessment in respect of loss of earning capacity suffered by the Applicant.  He immediately went to the office to inform the lady boss who then said that payment would be made to him within a few days.  However, he was never paid and he made a complaint to the Labour Department.

34. In paragraph 36 of his witness statement, the Applicant states that labour officer informed him that his true employer, according to the notice of accident filed by his employer, was in fact R1, and that the company should have two names.   He states that he is not clear which company employed him, though he had all along been under the belief that his employer was R3 until the Labour Department told him that his true employer was R1.

Documents filed by the Applicant in the Labour Department

35. By a notice of accident dated 5^th February 2002 and received by the Labour Department on 7^th February 2002, the Applicant gave notice of the Second Accident.  In this notice, he stated that his employer was “榮高裝橫工作有限公司” which was very similar to the Chinese name of R3.  R1’s name in Chinese also appeared on the face of this document, but it appeared to be made in a different handwriting and was added in at a later stage.

36. By a letter dated 12^th March 2002, the Applicant complaint to the Labour Department that his employer did not pay him periodical payments after he had been injured in the two accidents.  In this letter, he described his employer as “榮高裝飾工程公司” and him as its employee.

37. By a declaration made by the Applicant and taken by an occupational safety officer on 24^th April 2002 pursuant to section 4(1)(e) of the Factories and Industrial Undertakings Ordinance, Chapter 59, the Applicant stated that he went to “榮高裝飾工程公司” in Fotan Industrial Centre on 18^th January 2002 to apply for the job of a construction site sundry worker.  He stated that the site foreman Ah Keung was responsible for assigning work in the site during the time of the accidents.  When he was asked which company employed him, he answered that according to what he knew, he was employed by “榮高裝飾工程公司”.

Records in the Companies Registry

38. According to the respective certificates of incorporation, R1 was incorporated on 6^th July 1993, and R3 was incorporated on 2^nd April 1997 under the Companies Ordinance.

39. According to R1’s Annual Return dated 6^th July 2000, it was a private company.  The record shows that at the material times, R1 had only two shareholders as well as directors, namely, Mr. Hui Ping Biu (“Mr. Hui”) and Madam Ng Yuk Chun (“Madam Ng”).  They had the same address.  Mr. Hui was the company secretary.

40. According to R3’s Annual Return dated 2^nd April 2001, it was also a private company which registered address was the same as that of R1.  The record shows that at the material times, R3 had only two shareholders as well as directors, namely, Mr. Hui and Mr. Hui Ping Kwong.  Mr. Hui Ping Kwong was the company secretary.

41. On 10^th June 2002, i.e. 4½ months after the occurrence of the First and the Second Accident, Mr. Hui Ping Kwong resigned from R3, and his positions as a director and the secretary of R3 were taken over by Madam Ng who was so appointed on the same day.

Registered office of R1 and R3

42. According to the respective Annual Returns filed by R1 and R3, they had at the material times the same registered address at No. 15, 9/F., Transport City Building, 1 – 7 Shing Wan Road, Tai Wai, Shatin, New Territories.

43. According to amendment history kept by the Business Registration Office, R3 changed its business address on 8^th March 2002 to Flat 4E, G/F., Fotan Industrial Centre, 26 – 28 Au Pui Wan Street, Shatin, New Territories.  The change therefore occurred after the accidents.  No similar amendment has been made in respect of R1 according to the amendment history kept by the Business Registration Office.

The insurance policy

44. At the material times, R1’s liability for employees’ compensation was covered by Policy No. 01321074 issued by Winterthur Swiss Insurance (Asia) Limited, which changed its name to R2 on 1^st January 2002, and the Policy was issued under R2’s name.

45.  According to the Schedule of the Policy, it covered R1’s liability for employees’ compensation to 1 indoor clerical staff, 2 site coordinators, 1 site foreman, 3 delivery workers and 3 interior decorators.  The period of insurance was from 18^th February 2001 to 17^th February 2002.  The total amount of premium and surcharge paid by R1 for the Policy was $28,478.60.

Documents filed by Madam Ng in the Labour Department

46. Madam Ng filed two Form 2s pursuant to section 15 of ECO.  The first Form 2 was filed on 11^th February 2002 in respect of the Second Accident.  The second Form 2 was filed on 28^th May 2002 in respect of the First Accident.  In both Forms, Madam Ng described herself to be a “partner” of R1.  She stated that R1 was the Applicant’s employer.  She put down R1’s address as Flat 4E, G/F, Fotan Industrial Centre, 26 – 28 Au Pui Wan Street, Shatin, New Territories.  D1’s chop was appended on both Forms.  Madam Ng had also affixed her signature on the first Form 2 but not on the second.

47. By a declaration made by Madam Ng and taken by an occupational safety officer on 13^th May 2002 pursuant to section 4(1)(e) of the Factories and Industrial Undertakings Ordinance, Madam Ng stated that she was a clerk of R3.  (She was appointed director and secretary of R3 only on 10^th June 2002).  She said she interviewed the Applicant when he applied for the job, and told him to work as a lorry attendant to deliver artificial marble sheets with other colleagues.  When she was asked about the operation of her company, she said R1 mainly supplied artificial marble sheets from the Mainland to R3.  When she was asked who actually employed the Applicant, she said that it was R1.  She added that she was a director of R1.

Accident Reports prepared by Occupational Safety Officer

48. Mr. Sin Ching Yuen, an occupational safety officer, investigated the First and the Second Accidents and prepared two accident reports.  In both reports, he stated that R1 was the direct employer of the Applicant.  He further stated that R1 was the supplier of artificial marble sheets to be installed in the toilets and kitchens of the residential buildings, and the installation work was to be done by R3.  He further stated that R3 was “a sister company” of R1, and that on the day of the Second Accident, the installation work had not yet started.

Statements obtained by the loss adjuster

49. R2 relies upon a number of statements obtained by United Adjusters (HK) Limited which was a firm of loss adjusters instructed by R2 in or about May 2003 to take statements from the Applicant’s employer and colleagues regarding the two accidents in question.

50. Pursuant to R2’s instruction, a Mr. Kong Man Yiu (“Mr. Kong”) of the loss adjuster interviewed Madam Ng, Mr. Lee Luen Keung, Mr. Chung Tak Fai, and Mr. Chan Yat Fung.  Mr. Kong has not testified at the trial.  According to a witness statement filed by Mr. Leung Siu Lin on 3^rd February 2004 who was the supervisor of Mr. Kong at the material times, Mr. Kong had been admitted to hospital since 10^th July 2003.

Statement of Madam Ng

51. This statement was taken by Mr. Kong from Madam Ng on 9^th May 2003 when he interviewed her face-to-face inside Flat 4E, G/F., Fotan Industrial Centre.  In page 1 of the statement, Madam Ng stated that she was willing to provide information to assist in the investigation into the injuries sustained by the Applicant on 19^th and 21^st January 2001.

52. Madam Ng stated that she was a partner of both R1 and R3.  She said that R1 was incorporated between 1991 and 1992, and that it would purchase marble tabletops to be installed in kitchens and toilets from marble factories in the Mainland and sell them to construction sites.  She further said that “about 2 to 3 years ago after R3 had been set up, the company no longer used the name of [R1] to receive orders.  The company name was only used to receive goods.  Employing people was also done in the name of [R1]”.

53. Madam Ng went on to speak about the employment interview with the Applicant.  She stated, “I employed [the Applicant] in the name of [R3], on a casual basis, daily wages HK$250, working in construction sites designated by the company between 0900 and 1800 hours, there was no other allowance, wages to be paid by the bank account of [R3]”.

54. She then described the events that took place on 19^th January 2001 and 21^st January 2001.  She said that the site foreman on both days was Lee Luen Keung.  She said neither the Applicant nor Lee told her that the Applicant was injured on 19^th.  She did receive a call by phone from Lee on 21^st January 2001 when Lee told her that the Applicant was injured in work.  She also mentioned that several days after 21^st January 2002, the Applicant chased her for payment of wages.

55. When Mr. Kong asked Madam Ng which company would pay wages to the Applicant if he had not been injured, she replied that he would be paid by R3.

Statement of Lee Luen Keung

56. This statement was taken by Mr. Kong from Mr. Lee on 9^th and 12^th May 2003 inside Choi Ming Shopping Arcade.  Likewise, it was recorded in page 1 of the statement that Mr. Lee was willing to provide information to assist in the investigation into the injuries sustained by the Applicant on 19^th and 21^st January 2001.  It was not signed by Mr. Lee.

57. Mr. Lee stated that he joined R1 two or three years prior to the taking of the statement.  His occupation was described as “delivery (foreman)”.  He said the company would transport marble sheets from China to construction sites everyday, and he together with colleagues would be responsible for unloading them from trucks and delivered them to designated places for installation.  He described what happened on 19^th and 21^st January 2001.  When he spoke of the event on 21^st January 2001, he stated that when manpower subsequently became insufficient in the site, he telephoned “Mrs. Hui” to ask for reinforcement, but Mrs. Hui refused.  Later, the Applicant was injured when marble sheets fell on him.

Statement of Chung Tak Fai

58. This unsigned statement was taken by Mr. Kong from Mr. Chung on 12^th May 2003 via a telephone interview.  It was also recorded in page 1 of the statement that Mr. Lee was willing to provide information to assist in the investigation into the injuries sustained by the Applicant on 19^th and 21^st January 2001.  Mr. Chung stated that he joined R3 sometime between 1999 and 2000 as a delivery worker, and that the Applicant was his colleague.  He confirmed that he had worked with the Applicant, Lee Luen Keung and his other colleagues on 19^th and 21^st January 2001. 

Statement of Chan Yat Fung

59. This statement was taken by Mr. Kong from Mr. Chan on 13^th May 2003 in Sands Street during a face-to-face interview.  On page 1 of this statement, it was recorded that Mr. Chan was willing to provide information to assist in the investigation into the injuries sustained by the Applicant on 19^th and 21^st January 2002. 

60. Mr. Chan confirmed that he had previously been employed by R3.  He did not remember the events clearly.  According to his impression, on both 19^th and 21^st January 2002, the foreman Lee Luen Keung led him, the Applicant and other colleagues to work in the site.

The Applicant’s submissions

61. Mr. Tsang submits that R1 was the Applicant’s employer at the material times in light of the statements made by Madam Ng in the first Form 2 dated 11^th February 2002 in respect of the Second Accident, her declaration made on 13^th May 2002 to the occupational safety officer, and the second Form 2 dated 28^th May 2002 in respect of the First Accident.  Mr. Tsang stresses that Madam Ng was a director of R1 but was not a shareholder, director or secretary of R3 at the material times. 

R2’s submissions

62. R2 through its Counsel Mr. Lee submits that R3 rather than R1 was the employer of the Applicant at the material times by reasons of the following matters: -

(1)	The intention of R3 to employ workers was clearly evinced by the recruitment poster which stated the name and telephone number of R3, and was displayed right next to the shop premises bearing the trade name of R3.
(2)	There was no direct evidence from the Applicant to show that R1 was connected with the recruitment, negotiation, interview and eventual offer of the job to him.
(3)	On the contrary, the Applicant’s own version of event showed that he was employed by R3 as evidenced by the documents he had filed with the Labour Department.
(4)	The Applicant is suing R1 solely because an officer of the Labour Department told him that R1 was his “true” employer.
(5)	The accident reports prepared by the occupational safety officer stating that R1 was the Applicant’s employer had little weight.
(6)	The two Form 2s submitted by Madam Ng were not conclusive to prove that R1 was the Applicant’s employer.
(7)	Madam Ng transferring money from her personal account to the Applicant’s account did not show that R1 was his employer, even though Madam Ng was a director and shareholder of R1.
(8)	In her statement given to the loss adjuster, Madam Ng stated that the Applicant was employed by R3, and that the Applicant’s wages would be paid out of R3’s account.
(9)	Madam Ng’s statement that R3 was the Applicant’s employer was consistent with the version of event given by the Applicant.
(10)	In any event, the various statements given by Madam Ng were conflicting, inconsistent and full of discrepancies, and it is not clear which of her versions is to be preferred.
(11)	The Applicant’s fellow workers were employed by R3.
(12)	The fact that the Applicant was told by a fellow worker that the company had two names did not connect R1 to be the Applicant’s employer.

63. Mr. Lee stresses that the burden is on the Applicant to prove, and not on R2 to disprove, that he was employed by R1, either alone or jointly with R3.   

Assessment of the Evidence

64. The Appellant’s evidence has not been challenged in cross-examination.  The other evidence placed by the parties before me does not contradict his evidence either, save for some minor details on the course of the accident.  I accept that all the events testified to by the Appellant had occurred in the manner as he has described.  In addition, I make the following findings of facts on balance of probabilities.

65. First, while the Applicant used different names in Chinese in the documents he filed with the Labour Department when he referred to his employer, I find that he was at all material times referring to R3.  The names “榮高裝橫工作有限公司” and “榮高裝飾工程公司” bear close resemblance to R3’s name in Chinese, and all included the name “榮高”, and most importantly, the Applicant had all along been referring to the company with a ground floor shop premises in Fotan Industrial Centre, which became the registered office of R3 on 8^th March 2002.

66. Second, I find that the lady in the office referred to by the Applicant in his witness statement to be Madam Ng.  Although the Applicant said he did not know the identity of this lady who interviewed him on 18^th February 2002, Madam Ng in her declaration pursuant to section 4(1)(e) of the Factories and Industrial Undertakings Ordinance and in her statement to the loss adjuster had clearly admitted that she was the person who had interviewed and employed the Applicant.

67. Third, I find that the “lady boss (老闆娘)” referred to by the Applicant in his witness statement to be Madam Ng as well.  While he did not say specifically that the lady boss and the lady in the office were the same person, he did say that he chased after the lady boss for payment of wages and periodical payment after the accidents, and the statement made by Madam Ng to the loss adjuster in which she said that the Applicant had chased her for payment of wages after the accidents filled up the lacuna in evidence.  Confirmatory proof also comes from the fact that Madam Ng had transferred $520 from her personal account into the Applicant’s bank account to settle his outstanding wages.

68. Fourth, I find that Madam Ng to be the wife of Mr. Hui Ping Biu, the only other director of R1.  Three pieces of evidence point to this fact: (i) The foreman Mr. Lee Luen Keung said in his statement that he phoned “Mrs. Hui” on 21^st February 2002 when he found the manpower in the site was insufficient.  Madam Ng, in her statement to the loss adjuster, did say that Mr. Lee was her site foreman, and that Mr. Lee had phoned her on 21^st February 2002, though she mentioned only his report about the accident to the Applicant but not his request for manpower.  (ii) R1’s Annual Return dated 6^th July 2000 shows that it has only two directors, namely, Madam Ng and Hui Ping Biu who is of course a male and surnamed Hui.  They have the same address.  Each holds the same number of issued shares.  (iii) The Applicant addressed Madam Ng as “lady boss”.  In making this finding, I place no reliance on the small annotations in Chinese “Mrs. Hui” and “Mr. Hui” by the side of the signatures of Madam Ng and Mr. Hui on R1’s Annual Return (page 185 of the Trial Bundle 1) since it was not clear by whom and upon what basis these annotations were made.

69. Fifth, I find that at all material times, R1 and R3 were either part and parcel of a family business owned and operated by Mr. Hui and Madam Ng, or had close and substantial connection with one another.

70. R1 is clearly a family business with a married couple to be its only directors and shareholders.  As far as R3 is concerned, although Mr. Hui and Madam Ng achieved exclusive directorship of the company only on 10^th June 2002, i.e. about 4½ months after the Second Accident when Madam Ng took over from the ex-director Mr. Hui Bing Kwong and was appointed a director and the secretary of R, it is obvious that R1 and R3 had all the times a very close connection.  At the material times, they shared the same office as their registered address.  Even after R3 had changed its registered address to the ground floor premises in Fotan Industrial Centre on 8^th March 2002 while R1 had not done so officially, Madam Ng had, as early as on 11^th February 2002 when she filed the first Form 2, already stated R1’s address to be the same as R3’s new registered address.  In terms of the human agents of R3, at the material times, Mr. Hui was of course a common director and shareholder of R1 and R3.  His wife Madam Ng was not only a director of R1 but also a clerk of R3 according to her declaration to the occupational safety officer.  She was not just holding a mere title but in fact taking an active part in running the business (leaving aside for the time being whether she did so on behalf of R1, or R3, or both of them), ranging from interviewing recruits, giving instructions to the site foreman, and attending Labour Department for investigation on behalf of R3.  There is no evidence that the ex-director Mr. Hui Ping Kwong played any role in the running of R3, and he was due to withdraw completely from the management of R3 4½ months later.  Although Mr. Hui Ping Kwong held one of the only two issued shares of R3, his share influence could only be minimal because Mr. Hui held the other issued share and 9,998 shares had not yet been issued.  In my view, when all these factors add up together, it is more likely than not that R3 was in reality under the complete and effective control of Mr. Hui and Madam Ng at the material times.  From this perspective, R3 was also in substance their family business.  If not, it cannot be doubted that they had substantive control of R3 and dictated its operation.

71. From this analysis, it is my view that R1 and R3 were in fact two businesses running hand in hand at the same time, in the same place, and by the same married couple at the material times.  In view of Madam Ng connection and involvement in both companies, I have no doubt that, for whatever she had done at the material times, she was acting with the interest and benefit of both companies in her mind.  Hence, she could have done anything, including the employment of the Applicant, as an agent for R1, or for R3, or for even both of them.

72.  I should add that there is no question of Madam Ng employing the Applicant in her personal capacity.  The Applicant was well aware that Madam Ng was only acting in the capacity of an agent since it is his evidence that he had been under the belief that his employer was R3 until he was told that R1 was his true employer.

73. Mr. Tsang submits that since Madam Ng was a director and shareholder of R1 but just a clerk of R3, it is more likely that she employed the Applicant on behalf of R1.  I do not agree.  I have already found that Madam Ng had deeply involved herself in both companies.  Even if she was just a clerk and not an office bearer in R3, she could be given the authority to employ the Applicant on its behalf.

74. However, the fact of the matter is there was no evidence from the Applicant that Madam Ng had told him explicitly which company had employed him.  Similarly, Madam Ng had not stated in her declaration to Labour Department or in her statement to the loss adjuster that she had during the job interview or offering of the employment made known to the Applicant the true identity of his employer.  There was no signboard bearing the name of the company in or in the vicinity of the 1^st Floor premises where the Applicant was interviewed.  There was also no indication of the identity of the employer in the form on which the Applicant had filled in his personal particulars during interview.

75. Mr. Tsang submits that this is therefore a case involving an agent acting for an unnamed principal and that it was for Madam Ng to decide which company was to employ the Applicant.

76. In my view, Mr. Tsang’s submissions are correct.  In order to determine the identity of the true employer(s) of the Applicant, the decisive factors are the subjective intention of Madam Ng and the subjective intention of the unnamed principal(s) for whom she was acting at the material times.  What are to be ascertained are their subjective intentions, and not the objective intentions that might be gathered from the surrounding circumstances through the eyes of a reasonable man.  Likewise, the subjective understanding or belief of the Applicant as to who he was contracting with is irrelevant.  The pre-contractual as well as the post-contractual words and conducts of Madam Ng and the Applicant, and the surrounding circumstances are relevant only for assessing their credibility and to be used as a guide to find out their subjective intentions at the material times.

77. These propositions are based on the trite principles of the agency law that an undisclosed or unnamed principal can enter into a valid contract with a third party even though the agent, acting with that subjective intention, has failed to disclose to the third party that it is acting as an agent for the undisclosed or unnamed principal: Bowstead & Reynolds on Agency (17^th Edition), paragraphs 8-070 to 8-074 and 2-065; Lai Wo Heung v Cheung Kong Fur Fty Co. Ltd. [2004] 1 HKLRD 959.

78. To ascertain the subjective intentions of Madam Ng and R1 and/or R3 at the material times, I take into account the following matters.

79. First, Madam Ng had stated repeatedly that it was R1 who was the Applicant’s employer at the material times.  In about 20 days after the Second Accident, she filed the first Form 2 stating that R1 was the employer, and she made that admission in the capacity of a “partner” as stated in the Form and as a director of R1 in law and in fact.  On 13^th May 2002 she attended an interview with the occupational safety officer in the capacity of being a clerk of R3, and in her declaration, she was asked specifically and she answered unequivocally that R1 was the Applicant’s employer.  About two weeks later, she re-confirmed the truth of her declaration by filing another Form 2 on 28^th May 2002 in the capacity of a “partner” or a director of R1.

80. Second, the statements made by Madam Ng in the two Forms 2 and in the declaration must be accorded with substantial weight because she was under a statutory duty to tell the truth, or else she would be criminally liable: see section 15(6)(b) of ECO; and section 10(3)(b) of the Factories and Industrial Undertakings Ordinance, Cap. 59.

81. Third, the evidence relied upon by R2 is not sufficient to discredit the admissions made by Madam Ng on behalf of R1, or to discredit the denial made by Madam Ng on behalf of R3.

82. R2 relies substantially upon the statement obtained by Mr. Kong of the loss adjuster from Madam Ng.  It was recorded in this statement that Madam Ng had said, “I employed [the Applicant] in the name of [R3].”  Based on this statement, Mr. Lee submits that R3 was the true employer of the Applicant, and that in any event, Madam Ng had been making inconsistent and conflicting statements so that the Applicant cannot rely upon her admissions or statement to prove that R1 was his employer.  This statement obtained by Mr. Kong is clearly hearsay evidence.  It is nevertheless admissible as evidence for finding the truth: section 47 Evidence Ordinance, Chapter 8, but I have to consider what weight to be accorded to it.  I have borne in mind particularly the factors listed out in section 49(2), Evidence Ordinance.

83. It is clear that this statement obtained by the loss adjuster from Madam Ng was not just hearsay but in fact double-hearsay because it was a record made by Mr. Kong of what Madam Ng had allegedly said.  That has to be contrasted with the Forms 2 filed by Madam Ng in which she made the statements directly herself.  In addition, the statement “I employed [the Applicant] in the name of [R3]” is inconsistent with all prior documents and declaration made by Madam Ng.  Hence, it is important to ascertain whether the inconsistency stemmed from a change in evidence on the part of Madam Ng, or whether it was due to a mistake made by Mr. Kong when he recorded the statement.

84. In my view, the accuracy of the record is seriously in doubt.  Firstly, there is a clear mistake on the face of the record.  In this statement obtained from Madam Ng, as well as in the statements obtained from Lee Luen Keung and Chung Tak Fai, Mr. Kong had stated that the two accidents took place in January 2001, while it is crystal clear that the accidents took place in January 2002.  Secondly, there is strong force in Mr. Tsang’s submission that the sentence “I employed [the Applicant] in the name of [R3]” was strange and out of context.  According to the statement, Madam Ng was recorded to have said, “About 2 to 3 years ago after [R3] had been set up, the company no longer used the name of [R1] to receive orders.  The company name was only used to receive goods.  Employing people was also done in the name of [R1]”, but right in the next sentence, she was recorded to have said she employed the Applicant in the name of R3.  If this record were correct, it would have meant that Madam Ng, who had been sticking to the version that R1 was the Applicant’s employer for 1 year and 3 months prior to this interview and who had just reiterated before Mr. Kong that workers would only be employed in the name of R1, went to say, within the next several seconds, that R3 was the Applicant’s real employer to overturn all her earlier versions.  That does not make sense.  Mr. Kong had made no attempt to clarify from Madam Ng this glaring discrepancy made within the space of one sentence.  In addition, being instructed by the R1’s insurance company to investigate the accidents, Mr. Kong should have realized that someone in R1 must have previously claimed to R2 that the Applicant was R1’s employee.  Yet, he made no attempt to clarify the apparent inconsistency.  He has not testified at trial.  There is no evidence from him or from any source to substantiate the accuracy of his record.  In my view, there is a strong likelihood that Mr. Kong had made a mistake in recording what Madam Ng had said to be the Applicant’s employer.

85. On the other hand, the statement made by Madam Ng to the loss adjuster that worker would only be employed in the name of R1 was supported by other evidence.  The strongest evidence in this regard is the existence of an insurance policy taken out by R1 with R2 to cover its liability for employees’ compensation, and the absence of such a policy on the part of R3.  As I have found earlier, R1 and R3 were at all material times owned and operated by Mr. Hui and Madam Ng.  This was a fact known to their workers.  According to the Applicant, a co-worker had told him that the company had two names, and that the boss had a factory in the Mainland that would supply the marble sheets to be installed in the construction sites.  The occupational safety officer had found R3 to be a “sister company” of R1.  Madam Ng had told the loss adjuster that R3 would execute marble sheet installation work in Hong Kong, while R1 would supply R3 with the required marble sheet installation by sourcing them in the Mainland.  All this evidence points to only one conclusion, namely, R1 and R3 were just the two arms of one family business.  In this factual matrix, it is not surprising at all that Mr. Hui and Madam Ng would decide to employ workers in the name of one company, rather than employing one batch of workers for R1 and another batch for R3.  In so doing, it was administratively convenient, and it would not be necessary for two companies to acquire separate insurance policies for covering the liability for employees’ compensation, with consequential savings in premium expenditure.  After all, the workers so employed could be asked to perform work of both R1 and R3.  Furthermore, it is significant to note that in the insurance policy taken out by R1 with R2, the number of employees covered was 10, including both delivery workers, whose work the Applicant was employed to perform, and interior decorators, whose work would be within the sphere of business engaged in by D3.

86. Mr. Lee alerted to the possibility that it was because of R3’s failure to take out insurance to cover its liability for employees’ compensation that Madam Ng wrongly alleged R1 to be the Applicant’s employer.  There is no such direct evidence, and there is no evidence upon which such an inference can be drawn.  After all, when Mr. Hui and Madam Ng had spent money to provide insurance coverage for some of their workers, why didn’t they provide for all of them, especially they could just use one company to employ all workers?  Furthermore, if it were said that Madam Ng was lying to obtain insurance benefit, the last person she would have confessed to the truth would be the loss adjuster who represented the insurance company to investigate R1’s claim, especially when she had maintained that lie for over 1 year 3 months up till and including the early part of the interview.

87. Mr. Lee also refers to the answer given by Madam Ng, in response to a question put by Mr. Kong, that R3 would pay wages to the Applicant had he not been injured.  In my view, this answer does not help R2’s case.  Even if there is no problem about the accuracy of the answer, it is trite law that while payment of wages is evidence of a contract of employment between the payer and the payee, it is not conclusive: Crocker v Plymouth Corporation [1906] 2 AC 63; Hooley v Butterfly Co. Ltd. [1916] 2 AC 63.  Furthermore, there is no clear evidence that R3 had paid wages to the Applicant.  The fact is Madam Ng paid him out of her personal bank account.  Of course, Madam Ng had different capacities.  She could have paid the Applicant as an agent for R1, or for R3, or as Mr. Lee submits, for the sake of convenience.

88. Apart from the statement obtained by the loss adjuster, Mr. Lee also relies upon a number of matters.   He strongly relies upon the recruitment poster that attracted the Applicant to the job to say that the true employer was R3.  There is considerable force in his submission.  However, after careful deliberation, I do not find the contents of the recruitment poster to be necessarily inconsistent with a subjective intention on the part of Mr. Hui and/or Madam Ng to employ workers just in the name of R1.  I say so because I take into account the particular relationship between R1 and R3.  As I have said earlier, R1 and R3 were just the two arms of the same family business.  Hence, it really made no difference to them as to which company would put up the poster.  They just wanted to recruit workers to work.  After all, the new recruits could be employed and directed to take up the work of both R1 and R3.  The primary function of the recruitment poster was to attract interested workers to approach Madam Ng for job interview, and it had served its function.  After that, it was for Madam Ng to decide which one of R1 or R3 would employ the new recruit, and only her subjective intention as well as the subjective intention of her principal count.

89. Mr. Lee also relies upon the understanding or belief of the Applicant that he was employed by R3.  I have no doubt that but for the fact that he was told by the Labour Department that his true employer was R1, the Applicant would only institute these proceedings against R3.  However, on the basis of the judgment given by the learned judge in Lai Wo Heung v Cheung Kong Fur Fty Co. Ltd., I rule that the understanding or belief of the Applicant can hardly shed light on the subjective intentions of Madam Ng and her principal.

90. Mr. Lee also relies upon the fact that some of the Applicant’s co-workers were employed by R3.  Mr. Chung Tak Fai and Mr. Chan Yat Fung did inform the loss adjuster that they were employed by R3.  However, were they actually employed by R3, or did they just believe they were so employed?  It was not clear from their statements the factual basis upon which they said they were employed by R3.  Furthermore, whatever inference that might be drawn will be neutralized by the fact that the site foreman Lee Luen Keung, who was the most senior officer in the frontline supervising workers including the Applicant, was employed by R1, according to his statement to the loss adjuster.  Mr. Lee submits that it would not be right to say that if the site foreman were employed by R1, then everyone else would also be employed by R1.  That submission is correct.  But the same rationale is also applicable to answer the submission by Mr. Lee.

91. I have carefully considered all arguments put forward by Mr. Lee on behalf of R2.  I am not persuaded.  I bear in mind that the burden is on the Applicant to prove who his employer was at the material times.  I find that substantial weight can be attached to the statements made by Madam Ng in the Form 2s and her declaration to the occupational safety officer, which was made by her not only in her personal capacity but also in the capacity of a director of R1 and a representative of R3.  The two Form 2s and her declaration provide proof, on balance of probabilities if not more compelling, that it was Madam Ng’s subjective intention at the material times that she employed the Applicant on behalf of R1, and that it was R1’s subjective intention to employ the Applicant as its employee. For these reasons, I find that R1 was the Applicant’s employer.

92. In the Application, the Applicant alleges that he was an employee of R1 and/or R3.  Hence, I still have to consider whether R3 was the Applicant’s employer at the material times.

93. It must follow from my earlier finding that Madam Ng did not intend to act as R3’s agent when she employed the Applicant.  However, it does not necessarily mean that there is no basis for holding R3 to be the Applicant’s employer.

94. I refer to Lai Wo Heung v Cheung Kong Fur Fty Co. Ltd.  The learned judge had the following to say: -

“

16.

Secondly, if a person makes representations to a third party, the objective effect of which is that another person has the authority to represent him, then the first-named person will be taken to have clothed the last-named person (the apparent agent) with apparent authority to act as his agent in making a contract with the third party. In that case, if the apparent agent, when he entered into the contract in question with the third party, actually intended on that occasion to act as the agent of someone else, the first-named person may well be regarded as a contracting party to the contract vis-à-vis the third party, regardless of whether the person actually intended to be the principal by the apparent agent would also be regarded as a co-contracting party to the contract. See generally Bowstead & Reynolds on Agency (17th ed., 2001), paras. 2-099 to 2-101, on agency on estoppel.” (page 965)

95. In other words, R3 can be held to be the Applicant’s employer on a different basis, namely, estoppel.  In this regard, the test to be applied is not subjective, but an objective one.

96. In the present case, the recruitment poster bore the name and telephone number of R3.  It was displayed by the side of its ground floor shop premises.  The inference to be drawn, on balance of probabilities, must be either that R3 had put up this recruitment notice, or that it had acquiesced in its being put up.  Applying the objective test through the eyes of a reasonable man, R3 had represented to the public at large that it was recruiting workers.  Through providing a telephone number that led to the Applicant contacting Madam Ng who asked him to attend a job interview, i.e. asking the Applicant to do what the poster invited him to do, R3 had also clothed Madam Ng with the authority to represent it in recruiting workers.  During the interview, Madam Ng had never told the Applicant that it was not R3 but someone else who wanted to recruit workers.  Bearing all these matters in mind, I find, on balance of probabilities, that R3 had made Madam Ng its apparent agent, and clothed her with the apparent authority to enter into employment contract on its behalf with the Applicant.  The Applicant had clearly relied upon that apparent representation by R3, or else he would not have accepted the offer for employment, worked two days in the various construction sites as directed, and eventually injured in the course of the employment.  The fact that Madam Ng and R3 had a different subjective intention is irrelevant in the realm of estoppel.  For these reasons, I find that R3 was also the Applicant’s employer.

Conclusion

97. In each of these two Applications, there will be judgment for the Applicant against R1 and R3 jointly and severally with compensation to be assessed.

Costs

98. I see no reason why costs should not follow the event.  As far as R2 is concerned, it has intervened and fails.

99. In each of these two Applications, I make an order nisi that R1, R2 and R3 shall jointly and severally pay to the Applicant the costs of the action up to and including the trial herein, including all costs orders that have been reserved, to be taxed if not agreed.  Unless application is made for its variation, this order nisi will become absolute after 14 days of the date when this judgment is handed down.

100. I further order the Applicant’s own costs to be taxed in accordance with the Legal Aid Regulations.