CHAN YUK LEE v. CHAN CHIU YING ALSO SPELT CHAN SIU YINC AND OTHERS

1985 No. A235

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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JUDGMENT

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1. On the 31st of January 1982, the Plaintiff was injured as a demolition worker of the 1st Defendant at 386-390 Castle Peak Road, Kowloon. It was the second day of work for the Plaintiff. On the previous day, he was detailed by the 1st Defendant to demolish wooden boards on the ground floor of the old building. He was involved with the same demolition work at the time of the accident. Whilst the Plaintiff was working with one Lo Yick Ming, the 1st Defendant fell through a hole on the first floor, landing on him. The hole, 3½' x 3½', was not fenced or otherwise protected. According to the Plaintiff, no one had inspected or checked it. The Plaintiff had not been given any safety instructions; nor was he warned to keep clear of the opening. There was no artificial lighting, and inside the building, it was dark. The accident happened about 8 a.m. in the morning.

2. The 2nd Defendant had a demolition contract from the 4th Defendant company. The 2nd Defendant sub-let part of his works to the 1st Defendant. The 2nd Defendant was not himself a registered contractor under the Buildings Ordinance. The 3rd Defendant had been approached apparently before tender as he was known to be a registered contractor holding a licence, and it was then arranged for the 3rd Defendant to "lend" his licence to the 2nd Defendant. The registered contractor's licence of the 3rd Defendant was untransferable. The "licence-lending" transaction was in fact for the 3rd Defendant to come in formally as the registered contractor under the Buildings Ordinance so as to enable the 2nd Defendant to lawfully commence, execute and complete the demolition works.

3. The tender of the 2nd Defendant was accepted and formed part of the written contract of demolition ultimately signed between the 4th Defendant company and the 2nd Defendant. Clause 6 of the 2nd Defendant's tender reads as follows :-

"Only the contractor who is provided with a demolition works licence issued by the Building Development Department shall be qualified for tendering and responsible for managing for all relevant formalities. The site authority shall show the name of the person in charge on Form 37."

4. Although the 2nd Defendant tendered in his own name, he was not one of the five contractors invited to bid by the 4th Defendant company, through its architect. One of the invited contractors was Man Kee. According to the 2nd Defendant, he was allowed to tender under Man Kee who held a registered contractor licence. The 2nd Defendant had been unable to locate Man Kee, and the 3rd Defendant was approached instead for the "licence-lending" transaction. In passing, it would be convenient to refer to Regulation 8 of the Building (Demolition Works) Regulations, which requires a person of experience to be appointed to supervise demolition works and a Notice, Form 37, with the name of such an appointed person to be posted in a prominent position on the demolition site. Clause E1 of the 2nd Defendant's demolition contract with the 4th Defendant company also stipulated that the 2nd Defendant should "send experienced staff to stay at the site for" supervision throughout the period of demolition.

5. The 3rd Defendant had been known to the 2nd Defendant for about 30 years. The 3rd Defendant was said to have agreed to "lend" his licence to the 2nd Defendant unconditionally. Nothing of real significance may be made of the fact, either that the "lending" was gratuitous or that it was for a consideration. The practice of "licence-lending" is not unusual. Mr. Leung of the architects' office used "partners" for the close relationship for want of a better term. Broadly speaking, the Building Authority would look to the registered contractor for the demolition, the architect as the authorized person and the owner for compliance with what is required by law, but the architect would deal with the licence borrower for actual execution of the works. After the contract, on instructions of the architects' office, the 2nd Defendant requested and obtained two signed blank forms from the 3rd Defendant, a Form 16 for the Commencement of Demolition Works and a Form 21 for the Completion of Demolition Works. The 3rd Defendant obligingly signed and chopped both Forms in blank, and the 2nd Defendant returned the same to the architect in charge for submission to the Building Authority. The architect of the 4th Defendant company must have been supplied with or otherwise obtained particulars of the 3rd Defendant, for example, the registered contractor Registration Certificate No. 505 and the 3rd Defendant's address. The architect completed the signed Form 16 and sent it to the Building Authority with his covering letter. Both Form 16 and the covering letter were dated 11th January 1982. By Form 16, the architect in charge informed the Building Authority that the 3rd Defendant had been appointed as registered contractor for the demolition works. The 3rd Defendant was unknown to and had never met anyone from the architects' office. Mr. Leung explained that the architect accepted the 2nd Defendant's tender and would take any registered contractor whom he cared to nominate. The identity of each was known to all, and every one was fully aware of the respective capacity in which they participated and the role they played. The firm of the 3rd Defendant had been a registered contractor for over 30 years. It would hardly lie in the month of the 3rd Defendant to say that he assumed none of the responsibilities which he was expected to take by law.

6. Consent to the commencement of demolition works was applied for by Form 13 on the 5th August 1981 and granted by the Building Authority on the 9th September 1981. It was renewed for a period of another three months from the 23rd December 1981. Not only did the architect in charge inform the Building Authority of the appointment of the 3rd Defendant as the registered contractor for the demolition works, the architect as the authorized person further informed the Building Authority that the works would be commenced on the 18th January 1982.

7. This date, the 18th of January 1982, in Form 16 was the date of commencement notified to the Building Authority. Under the contract for demolition entered into between the 2nd Defendant and the 4th Defendant company, the time for completion was stipulated by Clause D to be 55 days: 40 days for demolishing the structure and 15 days for demolishing the foundation. By Clause E7, the 4th Defendant company was entitled to take the demolition works away from the 2nd Defendant for transfer to another person in the event of delay. Clause 13 of the tender included as part of the demolition contract between the 4th Defendant company and the 2nd Defendant, set down the same time for completion. By a letter dated the 30th January 1982, the architect informed the 3rd Defendant that "the official commencement date" for the demolition works was on the 1st February 1982.

8. On behalf of the 3rd Defendant, it was submitted that whilst the accident occurred on the 31st January, by virtue of this "official commencement date", the 3rd Defendant had not in fact become the registered contractor for these demolition works until the day after, i.e. the 1st February 1982. It is fairly obvious, so explained counsel for the Plaintiff, Mr. Barretto, that "the official commencement date" of the 1st February 1982 was for the purpose of computating the 55 days under the demolition contract between the 4th Defendant company and the 2nd Defendant company. Counsel further pointed out that for the 3rd Defendant, the 1st February 1982 was likewise, not the actual date of commencement of his appointment but merely "the official commencement date" for the computation of the contractual completion time under the demolition contract to which the 3rd Defendant was not even a party. He was appointed the registered contractor, being a requisite legal requirement for its implementation. Service of the notice of the "official commencement date" would not affect the actual commencement date. With all these submissions of Mr. Barretto, I agree.

9. Form 16 was submitted to the Building Authority on the 11th January 1982 with a categorical statement that the 3rd Defendant had been appointed as registered contractor in respect of the demolition works to commence on the 18th January 1982. It is untenable that the 3rd Defendant had no statutory duties and obligations before the 1st of February 1982.  According to the 2nd Defendant, the site was handed over to him on the 30th January 1982 and in turn, he handed the site over to the 1st Defendant who commenced demolition works on the same day. I am wholly satisfied that the 3rd Defendant was appointed registered contractor for the demolition works as from, at least, the 11th January 1982 and as such became responsible for and an occupier of the site from, at least, the 30th January 1982.   In my judgment, the 3rd Defendant was both the registered contractor for the demolition works and an occupier of the premises at the time of the accident. Moreover, by reason of the statutory duties of the 3rd Defendant as the registered demolition contractor, there was sufficient relationship of proximity or neighbourhood so as to imposed on him a duty of care towards the Plaintiff. I find no substance in the other contentions advanced on behalf of the 3rd Defendant, viz. the borrowing of licence simpliciter without any obligations whatsoever on the part of the 3rd Defendant and a sham transaction in this "licence-lending". The latter has not even been pleaded. I need say nothing further.

10. Under the demolition contract between the 4th Defendant company and the 2nd Defendant, in addition to the requirements for supervision by the 2nd Defendant and display of the name of the man appointed to supervise demolition on Form 37 as well as that for a prior site inspection under Clause 16 of the included tender, Clause 7 of the tender bound the 2nd Defendant to insure against labour and third party risks before commencement of any demolition. An insurance policy was taken out in the name of the 3rd Defendant, originally mis-spelt but subsequently corrected. The period of insurance was specified, probably in accordance with "the official commencement date" under the demolition contract, from 1st February 1982 to 12th March 1982. The demolition contract between the 4th Defendant company and the 2nd Defendant company appears to be undated, but the demolition sub-contract between the 2nd Defendant and the 1st Defendant is dated the 10th January 1982 with its Clause 6 providing for "demolition works to be completed within 30 days". After the injury, the 2nd Defendant, together with the 1st Defendant, sought and obtained a  compromise from the Plaintiff in the sum of $26,728.53 which was less than the Workmen's Compensation award subsequently assessed by consent. The 2nd Defendant signed the compromise agreement dated the 8th February 1982 as "the main contractor" and the 1st Defendant as "the contractor". The 2nd Defendant also gave notice as employer of the accident injury describing himself as one of the employers of the Plaintiff. However, the 2nd Defendant claimed to have been ill-advised by his then solicitor in this description. In the Interim Certificate, for Payment No. 1 dated the 23rd February 1982, the demolition contract is described as being dated 1st February 1982. But bearing in mind (1) the date of the tender, i.e. 30th December 1981 and its subsequent acceptance, (2) the letter from the architect in charge to the Building Authority dated the 11th January 1982, enclosing Form 16 with the information that the 3rd Defendant HAD BEEN appointed as registered contractor for the demolition works, (3) the date of the demolition sub-contract of the 10th January 1982 and (4) the ready acknowledgement, true or confused, of both the 1st and the 2nd Defendants as employers of the Plaintiff as at the date of the accident, i.e. 31st January 1982, the demolition contract must have been much earlier than the 30th January 1982, the hand-over date. The date of the demolition contract given as 1st February 1982 in the first Interim Certificate for Payment simply cannot be accurate. Hence the conclusions that I have reached against the 3rd Defendant are unaffected.

11. It was submitted by counsel for the Plaintiff that there must have existed a close relationship in the nature of either a partnership or agency between the 2nd and the 3rd Defendants. There is no or no sufficient evidence to substantiate counsel's contention, and I find that the 2nd and 3rd Defendants were not partners or parties to an agency.

12. Turning to the 2nd Defendant, he was in fact no employer of the Plaintiff, though he signed the employer's notification of accident injury sustained by the Plaintiff and the compromise agreement. Whether or not the 2nd Defendant was an employer of the Plaintiff within the Employees' Compensation Ordinance was not canvassed before me. The 2nd Defendant had sub-contracted part of the demolition works to the 1st Defendant who operated independently. It is clear, in my view, that at no time was the 2nd Defendant an employer of the Plaintiff despite the aforesaid documents that he signed.

13. Counsel for the Plaintiff and counsel for the 2nd Defendant, both argued on the basis that the 2nd Defendant was not a registered contractor under the Buildings Ordinance. All counsel endorsed the premise that the 3rd Defendant was not liable under the then Construction Sites (Safety) Regulations to the Factory and Industrial Undertakings Ordinance. I am content to assume these same respective premises.

14. However, I should deal briefly with my tentative views on the statutory provisions. First, the Buildings Ordinance: Section 21 of the Buildings Ordinance defines "building works" as including demolition. Section 9(1) enjoins every person for whom demolition is to be carried out to appoint a registered contractor in respect of it. By Section 9(2), a registered contractor, if unwilling or unable to work, shall have to be replaced by another registered contractor appointed in his stead. Section 9(2) would seem to envisage the appointment of only one registered contractor for a particular set of "building works". Should the Buildings Ordinance permit only one registered contractor to be appointed for any particular building works, then obviously the 2nd Defendant could not be a or an appointed registered contractor as well, and, more importantly, could not be called upon to share the 3rd Defendant's statutory duties. Further, the 2nd Defendant has never been on the contractors' register under S.8(1)(a) of the Buildings Ordinance. It is convenient here to refer also to Section 9(3)(a) which obliges an appointed registered contractor to give "continuous supervision to the carrying out of the building works". I have mentioned Regulation 8(1) and (3) of the Building (Demolition Works) Regulations, which require demolition works to be specifically placed under the supervision of an experienced person with his name duly put on Form 37 for exhibition in a prominent position on the demolition site. Regulation 8(2) regulates the situation, for the appointment of and consultation with such a supervisor, where "two or more registered contractors take part in the demolition works". Elsewhere in these regulations, the term used is "the registered contractor appointed in respect of the demolition works". Different types of contractors may well have been intended by the use of "registered contractors" simpliciter in Regulation 8(2), who are to "take part in" and not to "carry out" the demolition works. Since counsel for the Plaintiff and the 2nd Defendant were both prepared to exclude the 2nd Defendant from the Buildings Ordinance as a registered contractor thereunder for demolition works, I am content not to seek any final resolution as to whether there is room for more than one demolition registered contractor and whether the 2nd Defendant, though not on the register, could and did acquire any of the 3rd Defendant's statutory duties.

15. Turning to the Construction Sites (Safety) Regulations then in force under the Factory and Industrial Undertakings Ordinance, Regulation 2(2)(a) provided that where there was more than one contractor undertaking construction work at the site, "the principal contractor" would be responsible for the construction site under the regulations. The consensus was that the 3rd Defendant was not such a principal contractor, and I was left to decide whether the 2nd Defendant was one. The 3rd Defendant was the appointed registered contractor for the demolition works. He had statutory duties to discharge under the Buildings Ordinance and its regulations. He was certainly in a position to exert influence on the 2nd Defendant in the actual execution of the demolition works under the threat of reporting to the Building Authority or withdrawing from the "licence-lending" transaction. Thus, indirectly he could exercise a degree of control over the implementation of the demolition contract signed between the 2nd Defendant and the 4th Defendant company. But in reality, the 3rd Defendant had no effective control of the 2nd Defendant. The 3rd Defendant knew not even where the site was. He had no communication or contact with the architect or the 4th Defendant company. He was quite unaware of the work progress; nor was he really concerned.

16. As for the 2nd Defendant, he was managing, organizing and co-ordinating all the demolition works. He only sub-contracted a part of the demolition work to the 1st Defendant in a sum total of $60,000. The 2nd Defendant had another contractor by the name of Man Shing Hin for $38,000, and a further contractor, Ng wai for $13,000. There was also a hoarding carpenter who was paid $8,500. Of the 2nd Defendant's other contractual demolition obligations, the 1st Defendant was uninvolved with the erection of scaffolding, the taking of safety measures for the neighbourhood, directing traffic, hoarding, shoring and provision of safety halmets and belts. The 2nd Defendant was directly responsible to the owner and the architect. Although as the appointed registered contractor, the 3rd Defendant was personally responsible for discharging all the statutory duties and obligations, it was also in the interest of the 2nd Defendant to oversee their due observance and performance. There is no evidence that the supervision of the Project Engineer, Mr. Leung and the Site Foreman from the architects' office or the owner, had ever interfered with or otherwise undermined the overall effective control of the demolition site by the 2nd Defendant.

17. Regulation 2(2)(a) is arguably confined to the situation where there are present two or more separate contractors "undertaking construction work at the site". In their different capacities, one legal and one de facto, the 3rd Defendant and the 2nd Defendant may be appropriately said to be just one contractor or two aspects of the one contractor with their obligations and duties overlapping in the manner as I have earlier described. It may well be said, therefore, that the 2nd Defendant and the 3rd Defendant were not themselves independently undertaking construction work at the demolition site. I entertained, and still do, considerable doubt as to whether Regulation 2(2)(a) could at all apply to the unique situation of the 2nd and the 3rd Defendants - the former doing the actual demolition work, and the latter assuming all the statutory duties and obligations as the appointed registered contractor in respect thereof. If Regulation 2(2)(a) did not apply, then both the 2nd Defendant and the 3rd Defendant would fall squarely within the definition of "contractor" under the Factory and Industrial Undertakings Ordinance, thus, rendering both these defendants liable as such.

18. On the other hand, if, as counsel for the Plaintiff and counsel for the 3rd Defendant readily assumed to be the case, Regulation 2(2)(a) did apply vis-a-vis the 2nd Defendant and the 3rd Defendant, then, by reason of the more realistic, effective and prominent role of the 2nd Defendant, as between these two defendants, the 2nd Defendant must be "the principal contractor" throughout responsible for the demolition site under the regulations.

19. There can be also no doubt that as between the 1st Defendant and the 2nd Defendant, the 2nd Defendant was the main contractor and the principal one for the purposes of Regulation 2(2)(a).

20. It was suggested by counsel of the 2nd Defendant that the 4th Defendant company, Ledluxe Limited, or another contractor for the overall or major portion of the construction work on site could possibly have had a more prominent task to perform , or for a longer duration. Apart from the bare reference made by the Project Engineer, Mr. Leung, to the 4th Defendant company as developer, engaging Wah Sung Engineering Company for piling and Hung Sun for concreting, there was no evidence as to whether the 4th Defendant company had ever acted as a contractor itself or when and on what terms these other contractors were appointed. Therefore, we know not whether there were other contractors co-existing with the 2nd Defendant at the time of the demolition, what their construction works were as compared with the demolition works of the 2nd Defendant or whether the 2nd Defendant was subordinate to them or any one at all. I find that in all the known circumstances, the 2nd Defendant was "the principal contractor" for the demolition works within the meaning of Regulation 2(2)(a) of the Construction Sites (Safety) Regulations.

21. The 2nd Defendant referred to some notice or notice to the foreman from the architects' office for commencement of demolition works. He described it as a matter of paramount importance. Counsel did not pursue this vague reference. In any event, the 2nd Defendant conceded that he had never instructed the 1st Defendant that "he could not start".

22. To summarize: The 3rd Defendant was the registered contractor for the demolition works appointed under the Buildings Ordinance, and was to shoulder all the statutory duties and obligations. As such and through the entry of the 2nd Defendant and in turn the 1st Defendant, the 3rd Defendant was also an occupier at the time of the accident, owing a common duty of care to the Plaintiff, an invitee and licencee. Further, the 3rd Defendant owed a duty of care at Common Law to the Plaintiff as neighbour in the light of the sufficient degree of proximity or neighbourhood, there being no other considerations to displace it.

23. As for the 2nd Defendant, he was "the principal contractor" responsible for the demolition works site under the Construction Sites (Safety) Regulations. He was not an employer of the Plaintiff; nor was there any partnership or agency between himself and the 3rd Defendant. The 2nd Defendant was, in addition, an obvious occupier within the meaning of the Occupiers' Liability Ordinance. The 1st Defendant was engaged as an independent contractor, but the 2nd Defendant had not, in my view, acted "reasonably in entrusting the work" to the 1st Defendant, who was then about 62, and had deteriorating vision. The 1st Defendant had no contractor licence. If the 1st Defendant had been an experienced person with the requisite competence, he could have been properly appointed under Regulation 8 of the Building (Demolition Works) Regulations as a person with experience to supervise and with his name put on Form 37 for display in a prominent position on the demolition site. There may be many reasons for this Court to be left uninformed as to why he or anyone else was not so appointed. Evidence was led on the two workmen working on the ground floor, with the 1st Defendant groping in the dark on the first, on the day of the accident. The only observation from the 2nd Defendant was that the 1st Defendant was in the demolition trade and that "he knew how to do it". The 1st Defendant claimed that in the last ten years occasionally he was a worker himself because no one "wanted to employ him". Still the 1st Defendant claimed to be competent for the sub-contract, but his gross neglect in not taking any precautionary measures, lighting the premises or giving proper instructions to the Plaintiff reflect badly on his performance. On the little evidence adduced, the 2nd Defendant has failed to establish that he had acted reasonably in entrusting the work to the 1st Defendant or that he had taken "such steps as he reasonably ought in order to satisfy himself that the (1st Defendant) was competent". In my view, the 2nd Defendant had also failed to take "such steps as he reasonably ought in order to satisfy himself that the works had been properly done". It was contended on behalf of the 2nd Defendant by Mr. Mitchell that all the 2nd Defendant was required to do was to so satisfy himself with completed work but that it was not incumbent upon him so to do with work about to be or in the course of being done. Counsel argued that it was just the second morning when only preliminary works were being in the preparation or executed. Preparation for demolition was part of the 1st Defendant's sub-contract. In any case, at the time when the Plaintiff was injured, he had begun demolition works and was well into his second day in demolishing wooden boards, and all safety precautions and other preparatory works for commencement should have been completed. In not satisfying himself that proper precautionary measures had been taken, the 2nd Defendant had failed to satisfy himself that that part of the works had been properly done and could not avoid responsibility by engaging an independent sub-contractor in the person of the 1st Defendant. In my view, the exemption through an independent contractor under Section 3(4)(b) of the Occupiers' Liability Ordinance is not open to the 2nd Defendant. Lastly, the 2nd Defendant also owed the Plaintiff a Common Law duty of care because of the degree of proximity with the Plaintiff, he, the 2nd Defendant, being the main contractor.

24. In conclusion, as the appointed registered contractor for the demolition works, the 3rd Defendant failed to discharge his statutory duty under Section 9(3)(a) of the Buildings Ordinance, by not giving any or any continuous supervision to the carrying out of the same. Further, the 3rd Defendant also failed to appoint any or any experienced person to supervise the said demolition works. Such failures on the part of the 3rd Defendant, resulted in the premises not being artifically or well lit, the hole on the first floor level being not, or not adequately fenced or protected, both the 1st Defendant and the Plaintiff not keeping clear of the area near the hole at different floor levels, a safe system of work not being provided and consequently, the 1st Defendant falling through it in the dark onto the Plaintiff on the day of the accident. Such statutory duties aside, the 3rd Defendant was obviously negligent in not discharging his common duty of care, either as occupier or at Common Law towards his neighbours, including the Plaintiff, by failing to prevent objects, including the person of the 1st Defendant, from dropping through the hole onto workmen on the ground floor, in addition to all the other negligent omissions on the part of the 3rd Defendant, which I have earlier enumerated for breaches of his statutory duties.

25. As "the principal contractor" responsible for the demolition site, the 2nd Defendant was obviously in breach of Regulations 45(b), 49(1) and 50(a) and (d) of the Construction Sites (Safety) Regulations. In these proceedings, we are concerned with the Construction Sites (Safety) Regulations then in force in 1982. Regulation 45(b) required the hole on the first floor level to be securely fenced or otherwise protected to the satisfaction of the Commissioner. By Regulation 49(1), the 2nd Defendant as "the principal contractor" responsible for the demolition site, must take such precautions as are necessary to prevent any workmen from being struck by any falling object. The person of the 1st Defendant is, in my view, such an object, particularly, when one refers to Regulation 49(2) where a distinction seems to have been drawn between "materials and tools" and "other objects and material". In Regulation 49(1), not only does the work "object" appear disjunctively from the word "material", but in my view the clear import of Regulation 49(1) as compared with Regulation 49(2), is to separate "material or object" from "materials, tools" for use in the demolition works. I received practically no assistance on construction, and I hold in the Plaintiff's favour with much diffidence. Regulation 50(a) and (d) placed upon the 2nd Defendant a duty to ensure that the work place including the opening was adequately and suitably lit. In my view, the 2nd Defendant as "the principal contractor" within the meaning of Regulation 2(2)(a) were in breach of all these Regulations 45(b), 49(1) and 50(a) and (d). As an occupier and at Common Law, these same omissions in breach of his statutory duties constituted, in my view, also sheer negligence on the part of the 2nd Defendant. In addition, either as occupier or at Common Law, the 2nd Defendant was also negligent in not supervising the demolition work or providing a safe system of work.

26. The doctrine of Res Ipsa Loquitur was not commented upon, but in my view it clearly applied to the facts of the instant case.

27. None of allegations of contributory negligence against the Plaintiff was sought to be made capital of. Virtually, no question was asked on these allegations of the Plaintiff in his cross-examination, and no address in respect to them was made to me at the conclusion of these proceedings. The Plaintiff can clearly not be said to have been negligent himself in the circumstances.

28. At the commencement of this action, I was expressly informed that only the question of liability was to be tried and determined. I find both the 2nd and the 3rd Defendants wholly liable to the Plaintiff in respect to the accident on the 31st January 1982. Judgment on liability is therefore entered against both of these Defendants with costs, such costs to be taxed in accordance with the Legal Aid Regulations. These two Defendants' own costs be taxed in accordance with Legal Aid (Scale of Fees) Regulations.