HKSAR v. KADEN CONSTRUCTION LTD

HCMA757/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 757 OF 2010

(ON APPEAL FROM ESCC 9586 OF 2010)

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J U D G M E N T

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Background

1.  On 6 September 2010, the appellant was convicted after trial of an offence, contrary to Regulation 38B(1A), 68(1)(a) and 68(2)(g) of the Construction Sites (Safety) Regulations made under the Factories and Industrial Undertakings Ordinance, Cap.59.  It was fined the sum of $10,000.

2.  This is the appellant’s appeal against conviction.

3.  The particulars of the offence alleged that the appellant :

“On 21 September 2009, being a contractor who had direct control over the construction work which was being carried out at proposed residential development at 16‑18 Conduit Road, H.K., did fail to take adequate steps to prevent a person on a place where the construction work was being carried out from falling from a height of 2 metres or more, namely the provision, use and maintenance of working platform for carrying out the formwork erection work at the swimming pool area from 2/F to 3/F on the site.”

4.  It was admitted in the trial that :

(1)     On 21 September 2009 the appellant had a contract with Union Art Investment Limited to construct the main structural walls and swimming pool of the development at 16‑18 Conduit Road, Hong Kong (the construction site).

(2)     The appellant subcontracted the concreting, formworking and installation of precast concrete façade to ‘Cycle Links Company Limited’ (“Cycle Links”).

The offence

5.  On 21 September 2009, an Occupational Safety officer of the Labour Department inspected the construction site and observed a workman at the swimming pool area on the 2^nd and 3^rd floors standing on three partially overlapping horizontal wooden battens which were themselves placed on two perpendicular wooden battens, forming an ‘H’ shape platform.  The worker was not wearing a harness or a safety belt.  There was no fence or guardrail. 

6.  The Occupational Safety officer’s opinion was that the worker could easily have fallen from this primitive structure.  There was no challenge to this evidence. 

7.  It was a further agreed fact in the trial that Cycle Links had been prosecuted for the same offence arising out of the same facts and had pleaded guilty at the Eastern Magistrates’ Court on 17 May 2010.  It had been fined $7,000.

8.  The contract between the appellant and Cycle Links was produced as an exhibit. 

9.  A representative of the appellant gave evidence that the appellant was the “carcass contractor” of the construction site and it had subcontracted to Cycle Links the formwork construction. It was his evidence that Cycle Links was responsible for the safety of its employees on the construction site. 

10.  One of the critical issues in the trial was the extent of the control the appellant had over the actions of Cycle Links and its employees. 

11.  Thus it was that Clause 2(7) of the contract between the appellant and Cycle Links became relevant.  That clause reads as follows :

“2.7 The Contractor’s Representative shall be entitled to object to, and to instruct the sub-Contractor to remove, or cause to be removed from the Sub-Contract Works, any person employed thereon, including the Sub-Contractor’s Representative, who in the opinion of the Contractor’s Representative, misconduct’s himself or is incompetent or negligent in the performance of his duties, or fails to conform with any provision of the Main Contract with regard to safety or health or who persists in any conduct which is in the reasonable opinion of the Contractor prejudicial to safety or health or who is, in the reasonable opinion of the Contractor, of insufficient skill or experience to carry out his responsibilities in connection with the Sub-Contract Works and such person shall not be employed again with regard to the Sub-Contract Works. The Sub-Contractor shall replace any person so removed as soon as practicable with a competent substitute.”

12.  The magistrate’s was satisfied that notwithstanding that Cycle Links as the subcontractor had been prosecuted for the same offence and had pleaded guilty, the legislation did not prohibit the prosecution of the appellant.  The magistrate said :

“The only real issue here are the words ‘direct control over the construction work’ in the summons and whether that captured to the appellant.”

He then posed the following question :

“Has the appellant company who is a contractor ‘direct control’ over the construction site as far as the work in the summons referred to.”

13.  Whilst accepting that Cycle Links had pleaded guilty and been convicted of the same offence on the same facts, the magistrate said :

“But of course to my mind the matter did not stop there. The intention of the legislation here clearly is to increase the safety on building sites and the amendment in 2003 was to catch all parties with respect to being in direct control over the work on the construction site”.

14.  The magistrate determined that the appellant had direct control of the construction site and was therefore liable. 

This appeal

15.  A matter which arose in the course of the appeal was whether the appellant been charged under the wrong provision.  Should it have been charged under Regulation 38B of the legislation which provides :

“38B(1) subject to paragraphs (2), (3) and (4) the contractor responsible for any construction site shall take adequate steps to prevent any person on the site from falling from a height of 2 metres or above.”

16.  Mr Duncan SC accepts that in appropriate circumstances it would be proper to charge a contractor such as the appellant with a breach of Regulation 38B — and for the subcontractor to be charged under Regulation 38B(1A).  The contractor being responsible for the construction site, as that regulation provides and the subcontractor being responsible as the entity who has direct control over the construction work.  That is what occurred in two cases to which he refers.  HKSAR v Chun Wo Constructions and Engineering Co. Ltd, HCMA1190/2006 (unreported) and HKSAR v Adrian Engineering Ltd and Cedar Construction Company, HCMA561/2007 (unreported). 

17.  He also accepts, quite rightly in my opinion, that a contractor who falls within Regulation 38B could also be in direct control so as to attract liability under Reg. 38B(1A). This is so if the contractor being responsible for the construction site also retains direct control over the construction works in which case it may be prosecuted under either Regulation. 

18.  Direct control is defined under Regulation 2 of the Construction Sites (Safety) Regulations, Cap.591 as follows :

“direct control” in relation to any construction work, process, excavation operation or erection, substantial addition, alteration or dismantling of scaffold, means control over the way the construction work, process, excavation, operation, or erection, substantial addition, alteration, or dismantling of scaffold as the case may be is carried out.”

This definition was enacted in 2003 (L.N.258/2003).

19.  The first matter in my opinion which requires to be addressed is whether on a construction site such as this there can be one or more entities in “direct control” for the purposes of this offence.  I believe the answer to that must be yes.  Common sense will dictate that at any one time there will be one or more contractors or subcontractors on a site.  Each will have its on his own responsibilities and employees.  Each may be subject to an overriding control by a principal contractor.

20.  Whether such a situation exits will be determined by in the main part by the contractual relationship between the principal and subcontractor.  Mr Duncan accepts that this must be correct.  In the instant case Clause 2.7 of the agreement between the appellant and Cycle Links is illustrative of the degree of control which the appellant exercised over Cycle Links.  It gives wide ranging powers to the appellant over Cycle Links representative and employees on the site including the ability to remove any of them whose conduct is in the opinion of the appellant “prejudicial to safety or health” — it extends to the ability to instruct Cycle Links to cease to employ staff which it considers to be incompetent. 

21.  In the present case I must determine whether the magistrate fell into error when he concluded that this appellant was liable under Regulation 38B(1A).  Accepting that liability can attach under either Regulation the issue remains one of fact.  Was the appellant in direct control of the construction works as opposed to or as well as being in control of the construction site. 

The evidence

22.  In addition to the contract between the appellant and Cycle Links there was the evidence of : PW1 Lo Kin Yip who represented and was employed by Union Art Investment Limited a subsidiary of Cheung Kong Holdings Limited.  He was the project manager for the construction of the development at 16‑18 Conduit Road, Hong Kong.

23.  His evidence was that the appellant was one of three contractors on the site.  The appellant was responsible for the carcass construction framework which he described as being carcass work (i.e. the framework) included the overall structure of the project, the form working, bar fixing and concreting work, the swimming pool as well as the glass wall and aluminium panels of the façade.

24.  PW3 Lee Chi Ngai Louis was the Commercial Manager of the appellant.  His evidence was that the appellant was “the carcass contractor” for the site, which required it to construct the carcass of the construction including the external wall decoration windows and swimming pool together with formwork, bar fixing and concreting.  The form working it subcontracted to Cycle Links — he was asked. 

“Q. … did Kaden have the power to stop, or order the work conducted by Cycle Links?

A. Yes, it has the power of Cycle Links does any work that’s if not in compliance with the safety and health requirement.”

25.  In cross-examination he conceded that Cycle Links directly managed and controlled its workers on the site.  However in re-examination he confirmed that the safety officers of the appellant had the right to stop the work of Cycle Links employees if he found “misconduct or serious breaches on the site”.  He did not amplify what he meant by this but common sense suggests that if they were for example working at a height without proper safety provisions, this would amount to misconduct or serious breach.

26.  Did the appellant have direct control over the construction work.  Mr Duncan says no because Clause 2.7 in the contract should not be construed too widely.  It is, he suggests, a provision whereby the appellant can in effect punish breaches by the subcontractor of its responsibilities when they have occurred. Where there has been for example misconduct incompetence or negligence, in the past, then the appellant can act to remedy that situation.  Mr Duncan submits that the clause would not permit Cycle Links to be directed to comply for example with the requirement that its employees must obey basic safety requirements.

27.  This is to my mind too narrow a construction it assumes that had the appellant’s safety officer and not the safety officer from the Labour Department observed the activities of the workman which form the substance of the charge, he would have been powerless to direct that this cease immediately and the breach be remedied. This cannot be right.  The degree of control over the subcontractor in the instant case is such that it enables the appellant to ensure compliance by Cycle Links with this regulation.

28.  I also observe that where the appellant is the contractor responsible for the site (or where there are more than one contractor on the site, the principal contractor) then pursuant to Regulation 38B the actions of its subcontractor could fix it with criminal liability for that subcontractors incompetence or negligence and render it liable to a fine of up to $200,000 and imprisonment for up to 12 months — irrespective of the fact that the subcontractor itself could also be prosecuted — in which case it would be in the appellant’s interest to ensure that there was compliance with these and similar regulations.  Hence the very broad ambit of the particular provision in its contract. 

29.  I am satisfied, as was the magistrate, that it was with this in mind that the contract between the appellant and Cycle Links gave very wide powers to the appellant to control and even penalize the employees of its subcontractor Cycle Links.  This power was a direct control over the construction works — for the purposes of Regulation 83B(1A).

30.  The grounds of appeal therefore fail.  The appeal is dismissed.