YU KIN YUET v. DESTINY ENGINEERING CO operated by DESTINY GROUP LTD

DCEC 790/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 790 OF 2012

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JUDGMENT

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INTRODUCTION

1.  This is an application by the applicant under sections 9, 10 and 10A of the Employees’ Compensation Ordinance, Cap 282 (the “Ordinance”) for compensation in respect of his injuries sustained in an accident on 11 April 2011 when he was working as an employee of the respondent to demolish a wall inside Flat D, 21^st Floor, Caineway Mansion, No 130 Caine Road, Hong Kong (the “Premises”).  It is the applicant’s case that the accident occurred arose out of and in the course of his employment with the respondent.

2.  The respondent admits that the applicant did suffer personal injury as a result of an accident inside the Premises on 11 April 2011.  However, in its Answer dated 5 June 2012, the respondent averred that the applicant was an independent contractor providing service to the respondent in a contract for services.  The respondent further averred that the applicant was contracted to remove garbage/waste from the Premises and the respondent specifically denied that the applicant was assigned to demolish a partition wall at the Premises.

3.  Arising from the accident involving the applicant, the respondent was summoned by the Labour Department for the following offences:-

(1)   Failing to give notice of non-fatal accident of an employee under section 15(1A)(a) and 15(6) of the Ordinance;

(2)   Failing to take out insurance policy for employees under section 40(1) and 40(2) of the Ordinance; and

(3)   Failing to pay compensation to an employee under section 10(10) of the Ordinance.

4.  After a trial at the Eastern Magistrate’s Court in October 2012, the respondent was acquitted of all the above offences.

ISSUES AT TRIAL

5.  The issues that arise for determination at this trial are as follows:-

(1)   Whether at the time of the accident the applicant was an employee or a contractor of the respondent;

(2)   If the applicant was an employee of the respondent, whether the personal injury by the accident did “arise out of and in the course of his employment”; and

(3)   If the answer to (2) is also in the affirmative, what is the compensation payable under sections 9, 10 and 10A of the Ordinance.

RELEVANT LEGAL PRINCIPLES ON LIABILITY

6.  The modern approach to the question whether a person was an employee is to examine all the features of their relationship against the background of the indicia of employment with a view to deciding whether, as a matter of overall impression, the relationship was one of employment.  This involves a nuanced and not a mechanical approach: painting a picture from the accumulation of detail.  The indicia include the degree of control exercised by the “employer”; whether the person performing the services provided his own equipment; whether he hired his own helpers; what degree of financial risk he took; what degree of responsibility for investment and management he had; and whether and how far he had an opportunity of profiting from sound management in the performance of his task.  [see: Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951 (CFA)]

THE APPLICANT’S CASE

7.  The applicant was born in mainland China in 1952.  He was about 58 years of age at the time of the accident and currently 61.  He received education up to about primary 5 level and worked as a farmer in mainland China.  He came to Hong Kong in about 1992.  He worked as a casual worker in construction sites and slopes since 2003.  He also worked for over 10 years in printing factories. He is married and living with his wife, a housewife.  The applicant speaks the Fuqing dialect and has difficulty in commanding Cantonese.

8.  Through introduction by a native villager, Ms Lin Yuxiang (“Ms Lin”), the applicant was introduced to Mr Chan Ka Yung (“Mr Chan”), the manager of the respondent.  Mr Chan is also of the same native village as the applicant and Ms Lin.  As a result, the applicant commenced working for the respondent on 8 February 2011 and met the accident on 11 April 2011.

9.  It is the applicant’s case that from early February 2011, he was employed by the respondent as a “miscellaneous labourer”, working at various residential flats in Hong Kong as assigned by Mr Chan on behalf of the respondent.  On 11 April 2011, the applicant and a co-worker Ah Lam were instructed by Mr Chan to demolish the internal decoration and partitions of the Premises.  In the morning, they demolished the kitchen area and in the afternoon, they continued the work and attempted to remove a partition wall between the bedrooms of the Premises.  The applicant took turns with the co-worker Ah Lam in using an 8-pound hammer to strike the wall.  The hammer was provided by the respondent.  During the course of the work, suddenly part of the wall collapsed and a large fragment of about 2’ x 2’ in size landed and crushed the applicant’s left foot.  Thereafter, the applicant attended the Yan Chai Hospital for treatment.

10.  It is further the applicant’s case that he was employed at the rate of $650 per “workday” with an extra $35 for meal allowance.  The prescribed working hours were from 9 am to 6 pm each workday and Sunday would be rest day. He was not a contractor of the respondent and shared no profit or loss in the work.  He was assigned by Mr Chan of the respondent to work at various designated premises.  The applicant had no say in pairing workers for the work.  All work equipment and materials would be provided by the respondent.  Occasionally, the applicant would purchase drinks, lunch boxes, materials and other miscellaneous items as directed by Mr Chan, who said that he would reimburse such expenses to the applicant later.

11.  At pages 74 and 75 of the Trial Bundle are copy of a small piece of paper (the “Slip”) containing handwritings both on the front side (page 74) and the reverse side (page 75).  At this trial, the applicant admitted his own handwriting and figures on the front side, save for the last 3 lines containing the figures of respectively $2,000, $7,500 and $31,925.  The applicant maintained that he had no knowledge of any of the figures written on the reverse side.  According to the applicant, the front side of the Slip correctly recorded that he had worked 8.5 workdays for the respondent in February 2011 and 26 workdays in March 2011.

12.  The applicant frankly admitted that he had made mistakes about the number of workdays in February and March in his first Witness Statement filed herein and in his declarations made to the Labour Department prior to the trial at the Eastern Magistrate’s Court in October 2012 (when the Slip was first produced to the court by the respondent during cross-examination of the applicant).  The applicant had previously said that there were 9 workdays in February and 27 workdays in March.  The error was therefore half a workday for February and 1 workday for March.  Not surprisingly, the balance figure for buying drinks, lunch boxes, materials and other miscellaneous items had also been wrongly given by the applicant, although the total sum remains the same, ie $31,925.

13.  It is also correct to say that when the applicant was first shown the Slip when testifying at the Eastern Magistrate’s Court as a prosecution witness, he agreed that the handwritings on the entire front page were his. According to the applicant, he did not have sufficient time to look closely at the Slip whilst being cross-examined in the witness box.  Indeed, when the applicant had the opportunity of looking again at the Slip after the trial, he realized and confirmed that the last 3 lines were not in his handwriting.

THE RESPONDENT’S CASE

14.  The respondent is and was at all material times engaged in the business of interior renovation/decoration.  Mr Chan gave evidence for the respondent and clarified that the properties handled by the respondent all belonged to family members or their related companies.  Despite this being essentially an “in-house” business, Mr Chan said that there were a number of residential flats up for renovation by the respondent in 2010 and 2011.

15.  The respondent raises the defence that the applicant was in fact engaged as a “cleaning contractor” at a daily rate of $650.  The respondent claims that as a decoration company, it had to engage a number of contractors to handle different areas of works, such as woodwork, electrical and plumbing work, flooring work, plastering work and cleaning work.

16.  Mr Chan is the only witness of the respondent.  He was the manager and person in charge of the renovation projects.  He received education up to about Secondary Form 4 level in Hong Kong and has over 20 years of working experience.  He had worked in the garment industry, sales of chemicals and property trading.  Initially, Mr Chan said it was in 2004 when he first became involved in the interior renovation/decoration business by assisting his father.  Later, Mr Chan retracted and said that it was with the set up of the respondent on 27 April 2010 when he commenced such business.  Previously, Mr Chan and his family used to engage a single contractor to handle all the renovation works up to completion and thereafter either sold or rented out the property.  In respect of the respondent’s business, Mr Chan was in charge and was the coordinator of all the renovation works by appointing a number of contractors to complete the renovation project.  Mr Chan said he was always busy.

17.  According to Mr Chan, on 9 April 2011, he orally contracted the applicant to do cleaning/waste removal works at the Premises.  He also gave the applicant the key to the Premises so that the applicant could gain access to the Premises to carry out the work.  He specifically told the applicant that the applicant was to remove the furniture and waste from the Premises.  Further, Mr Chan also asked the applicant whether the applicant knew of any independent contractor that did “demolition of internal partition wall works” because one of the internal partition walls at the Premises might have to be demolished. According to Mr Chan, he did not ask the applicant to perform such demolition work himself.  Accordingly, so say Mr Chan, the demolition of the wall which led to the accident was not part of the contract for services between the respondent and the applicant.

18.  The respondent admits having paid the applicant $10,000 each month for 3 months after the accident on respectively 11 May 2011, 1 June 2011 and 14 July 2011.  According to Mr Chan, these were just “good faith compensation”.  The same goes for the payment of $1,800 on 18 May 2011.

EVALUATION OF THE FACTUAL MATRIX

19.  I find no good reason to doubt the evidence given by the applicant regarding his dealings with the respondent via Mr Chan.  The applicant is a simple minded labourer with little education.  He did not appear to me as a scheming person at all.  When testifying, it is apparent that he had difficulties in understanding some of the simple questions put to him.  But on the whole (and in contrast with the testimony of Mr Chan, which I shall deal with below), I find him to be a straightforward and truthful witness.  I have no hesitation in accepting that the mistakes he had previously made (as set out in paragraphs 12 and 13 above) were indeed genuine mistakes, with no sinister motive behind them.

20.  Furthermore, the applicant’s version of events is supported by the evidence of Ms Lin.  As stated above, it was Ms Lin who introduced the applicant to work for the respondent.  Basically, the testimony of Ms Lin corroborated the applicant’s version.

21.  The respondent alleges that the applicant had previously worked for the respondent as a cleaning contractor in July 2010.  In support of this allegation, the respondent produced a document marked as “Exhibit R1” at trial.

22.  Exhibit R1 is said to be a faxed copy invoice dated 19 July 2010 issued by one 宏利建築材料運輸公司. The delivery address is stated to be No 3 Street, Hong Kong.  The contents are said to be description of various materials for plastering work with corresponding unit price and a total price of $5,188.  The words “俞建月” in manuscript appear at the bottom of the document.  However, it should be noted that this document is alleged to have been received by the respondent by fax on 28 August 2010 and the respondent is not able to adduce evidence from the sender that the document was indeed signed by the applicant.

23.  The applicant confirmed under oath that the signature at the bottom of Exhibit R1 was not his and that he had never worked for the respondent or Mr Chan in July 2010 as alleged.  It is to be noted that the letter from the Inland Revenue Department dated 8 May 2012 (page 340 of the Trial Bundle) shows that the applicant was working for one Cheomgtar Co from 1 April 2010 up to 31August 2010 at the average monthly salary of $15,465.  I agree with Mr Dennis Law, counsel for the applicant, that this is strong evidence that the applicant could not have worked for the respondent or Mr Chan on 19 July 2010 as alleged.

24.  Furthermore, it is doubtful why receipt of the plastering materials was not handled by the plastering contractor or his workers but rather allegedly by the applicant who had nothing to do with the plastering work at all.  The applicant clearly would not know whether those were the materials required by the plastering contractor or whether they were of the correct brand etc. Looking at the matter in the round, I do not feel able to attach any weight to the document.

25.  I agree with Mr Dennis Law’s submissions that Mr Chan’s memory and his ability to recall events fluctuated from time to time.  A glaring example is the alleged incident in July 2010 when cleaning work was allegedly contracted by the respondent to the applicant.  In paragraph 4 of his Supplemental Witness Statement signed on 20 August 2013, Mr Chan stated that he could not remember the price he had agreed with the applicant.  However, in his examination-in-chief, Mr Chan testified that for the job in July 2010, it was agreed to be $700 per workday, and altogether he paid the applicant $2,800 for 4 workdays.  Under cross-examination, Mr Chan was asked why he could remember these figures at trial but could not do so in August 2013 when he signed his Supplemental Witness Statement.  Mr Chan replied that it was Exhibit R1 that prompted his memory.  Mr Chan further clarified that it was the delivery address that assisted his recollection.  Mr Chan admitted that it was him who handed over Exhibit R1 to the respondent’s solicitors.  However, it was demonstrated to Mr Chan that by 1 August 2013 (ie more than two weeks before his Supplemental Witness Statement was signed), Exhibit R1 was already the subject matter of discussion between the solicitors for the parties.

26.  Mr Chan was unable to give satisfactory explanation in the witness box on a number of matters, in particular, his allegation that “…I also asked the applicant whether he knows of any independent contractor that does demolition of internal partition wall works because the Accidental Unit may need to have an internal partition wall demolished” (see: paragraph 12 of Mr Chan’s Supplemental Witness Statement).  Mr Chan admitted that there had been previous occasions where demolition work was required to be carried out in projects apart from the one at the Premises.  I agree with Mr Dennis Law that it does not make sense and is inherently implausible for Mr Chan to suddenly, for this particular project, ask the applicant for referral of a demolition work contractor.

27.  Furthermore, I agree with Mr Dennis Law that Mr Chan’s testimony has been contradictory in several material respects.  As to the payment of wages or contract fees, Mr Chan stated the following at paragraph 9 of his Supplemental Witness Statement: “On 9^th April 2011, the applicant called me and said the units where he was performing his contractual duties were performed and wanted payment for his work”.  In fact, Mr Chan boldly stated in the witness box that there was always money in hand to effect payment.  Apparently, it was only because the applicant did not ask for settlement of his fees that he was not paid until 9 April 2011.  On the other hand, in the respondent’s letter dated 19 July 2011 to the Labour Department, it was claimed that the applicant was paid every few days for his “light and simple” cleaning work.  Thus, a wholly different picture was painted by the respondent to the Labour Department.

28.  In the same letter, emphasis was made by the respondent that the aged applicant was only engaged on compassionate ground by the respondent to perform some easy and simple cleaning tasks.  Yet, Mr Chan admitted that for some of the project works taken up by the applicant, they did require strenuous and physical efforts, so much so that Mr Chan was prepared to pay an extra $9,500 to the applicant as recorded in the Slip.

29.  Mr Chan testified that for each renovation project, he had in his own mind an estimated number of workdays that should be charged by the applicant for the cleaning work.  Sometimes, Mr Chan would agree with the applicant in advance as to how many workdays he would charge for the particular project.  However, this evidence is contradicted by contemporaneous document. In particular, in the Slip, the applicant did not itemize his work by reference to different buildings.  Rather, the applicant itemized his work by reference to the number of workdays for each month, without any reference to the location where the work was performed.

30.  Further, Mr Chan repeatedly asserted in his oral evidence that it did not matter whether the applicant would perform the job by himself or hire other workers to assist him.  I agree with Mr Dennis Law that such evidence is contradicted by the manner in which Mr Chan has put the respondent’s case in his witness statements.  For example, in paragraph 7 of his Supplemental Witness Statement, Mr Chan stated that “In February 2011, the applicant only worked 8.5 days because he left town for reasons unknown to me”.  Again, at paragraph 9 of the same witness statement “On 9^th April 2011, the applicant called me and said the units where he was performing his contractual duties were performed and wanted payment for his work”.

31.  The so-called “good faith compensation” totaling $30,000 were made by the respondent at roughly one month’s interval on 3 occasions.  I agree with Mr Dennis Law that this is more consistent with the payments being sick leave payments, rather than ex gratia payments.  Similarly, the payment of $1,800 is more consistent with a demand for reimbursement of medical expenses, rather than for a good faith subsidy.

32.  To sum up, for the reasons set out above, I agree that Mr Chan is not a reliable or convincing witness.  On the balance of probabilities, I reject his evidence, in particular, as regards those parts which are in conflict with the applicant’s evidence.

CONCLUSION ON LIABILITY

33.  On the evidence adduced by the applicant (which I accept as being truthful), I find that the applicant was an employee of the respondent at the material time of the accident and the injuries sustained by the applicant during the accident arose out of and in the course of the employment with the respondent.

ASSESSMENT OF QUANTUM

Injuries, treatment and disabilities

34.  After the accident on 11 April 2011, the applicant was admitted on the same day to the Department of Accident & Emergency of the Yan Chai Hospital (“YCH”).  X-ray showed fracture of the 2^nd, 3^rd, 4^th and 5^th metatarsal bones in his left foot.  The applicant was then admitted to the Orthopaedic Ward of the YCH for further management and was eventually discharged on 27 April 2011 (after 16 days in hospital).

35.  There were abrasion wounds overboth the dorsum and plantar regions of his left foot.  The diagnosis was closed fracture of left foot metatarsal bones due to crushed injury to the 2^nd to 5^th metatarsals.  All the fractures were treated by open reduction and internal fixation

36.  He was walking with crutches on discharge.  He walked with crutches for about 6 months.  For another 3 months that followed, the applicant used a single crutch before he walked unaided.

37.  The applicant was followed-up regularly, including receiving 19 occupational therapy training sessions and 15 physiotherapy treatment sessions in 2012.  Implants were left in place with no obvious complications.

38.  The joint orthopaedic expert, Dr Arthur Chiang Si Chung, in his medical report dated 17 March 2013, opines that due to the residual stiffness in the toes, the tarsal joints, the tarso-metatarsal joints, and the mild decrease in inversion in the left ankle, the applicant might not be able to work in the pre-injury job.

The applicant’s monthly income

39.  The applicant was paid $650 per day with $35 meal allowance.  The evidence shows that he worked for 26 days in March 2011, being the month immediate preceding the accident.  His monthly earnings would be ($650 + $35) x 26 days = $17,810.

Loss of earning capacity

40.  According to the Certificate of Assessment (Form 7) issued on 6 December 2012:-

(1)   The applicant was assessed to have suffered a 4.5% permanent loss of earning capacity (for left foot injury resulting in left foot pain, numbness, scar and 4^th toe stiffness); and

(2)   The applicant was granted sick leave from 11 April 2011 to 22 November 2012 (592 days).

41.  Dr Chiang accepts the sick leave period of 592 days in Form 7 and opines that the loss of earning capacity should be about 5%.

42.  There is no appeal by the applicant against the assessment in Form 7. In the circumstances, I would adopt 4.5% loss of earning capacity and 592 days of sick leave as the basis of calculation.

Compensation under section 9

43.  The applicant was about 58 years of age on the date of the accident.

44.  The compensation for the applicant’s permanent partial incapacity pursuant to section 9 of the Ordinance is therefore $17,810 x 48 x 4.5% = $38,470.

Compensation under section 10

45.  The compensation for the applicant’s temporary loss of earning capacity pursuant to section 10 of the Ordinance is $17,810 x 592/30 months x 4/5 = $281,161.

Compensation under section 10A

46.  The amount of the medical expenses is supported by documentary evidence. I would allow the applicant's claim for medical expenses in the sum of $3,759.

Summary on quantum

47.  In summary, the total compensation awarded is as follows:-

48.  Interest is allowed at half judgment rate on the above sum from the date of the accident (11 April 2011) until this judgment and thereafter at judgment rate until payment in full.

Conclusion

49.  Compensation is assessed at the sum of $291,590.  The respondent is to pay such sum together with interest as aforesaid.

50.  I make a costs order nisi that the respondent do pay to the applicant the costs of this application (with certificate for counsel for the trial), such costs to be taxed if not agreed.  The costs order nisi shall become absolute in the absence of application to vary within 14 days.  The applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

51.  Lastly, I thank counsel on both sides for their helpful assistance in this matter.