LEE CHEUNG CHIT v. WONG CHUN WA t/a OH TIN LOGISTICS COMPANY

DCEC 192/2023

[2024] HKDC 1311

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 192 OF 2023

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IN THE MATTER OF AN APPLICATION BETWEEN

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JUDGMENT

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1.  In the present case, the applicant claims against the respondent for employees’ compensation pursuant to Sections 9, 10 and 10A of the Employees’ Compensation Ordinance (“ECO”) in relation to an accident that took place on 29 January 2021.

THE ACCIDENT

2.  The applicant was a truck driver. In addition to driving a truck, he was also responsible for loading and unloading goods to / from the truck.

3.  On 29 January 2021 at around 7:15 am, he was working at Cathay Pacific Cargo Terminal at 3 Chun Wan Road, Hong Kong International Airport (the “Site”). The applicant unloaded the goods from the truck to a conveyor belt and when he was about to get back to the truck, someone at the Site suddenly turned on the conveyor belt without any prior warning. The applicant’s left foot was then trapped by the conveyor belt and was injured as a result (the “Accident”).

4.  After the Accident, the applicant was sent to North Lantau Hospital for emergency medical treatment. He was granted sick leave from 29 January 2021 to 12 July 2021.

5.  The extent of the applicant’s injuries was assessed by the Employees’ Compensation (Ordinary Assessment) Board (the “Board”). The Certificate of Assessment (“Form 7”) issued by the Board dated 28 April 2023 contained the following assessments:

(1) Injury: left foot injury resulting in residual weakness

(2) Period of absence from duty necessary as a result of the injury: 29 January 2021 to 12 July 2021

(3) Loss of earning capacity permanently caused by the injury: 0.375%

THE ISSUE IN DISPUTE

6.  It is the applicant’s case that at the time of the Accident, he was a truck driver employed by the respondent.

7.  According to the applicant, he started to work for the respondent since about 5 October 2020 as a casual worker. In around November 2020, his arrangement with the respondent was changed to one with a monthly minimum wage of $26,000. It is his case that at all material times, he was employed by the respondent, and he was never given any option to be self-employed or to work as an independent contractor for the respondent.

8.  On or around 7 December 2020, when the applicant was going to collect his salary at the respondent’s office, he was asked to sign a document with a heading “甲方承諾同意根據以下內容提供服務” (the “Contract”) together with a “承包工作協議書” (the “Declaration”) which contained, inter alia, a declaration that the applicant agreed to provide service to the respondent as a contractor. Both documents were undated.

9.  Under cross-examination, the applicant said that he only saw the heading “承包工作協議書” and he did not agree, but he was told that all the colleagues who became regular employees had to sign these documents. Fearing that he would not get his salary if he did not comply, the applicant signed the Contract and Declaration without reading their contents.

10.  In contrast, the respondent’s evidence is that in around October 2020, he had a telephone conversation with the applicant where he explained thoroughly that the applicant could work as an employee or independent contractor for the respondent. The applicant chose to be a self-employed contractor because he would earn more money, and he was asked to confirm and sign the Contract and the Declaration in the presence of the respondent’s accountant before the applicant commenced work in October 2020. The respondent thus contends that the applicant was fully aware of his choice to be an independent contractor all along.

11.  On the issue of quantum, it is well-established that the Board’s assessments are final and conclusive unless appealed under section 18 of the ECO: Ng Ming Cheong v Mass Transit Railway Corporation [1997] HKLRD 1231, 1236 -1237 per Le Pichon J (as she then was). No appeal has been lodged by the applicant or the respondent.

12.  The respondent does not dispute the applicant’s earnings as at the time of the Accident.

13.  Thus, the only issue that needs to be determined at this trial is whether the applicant was an employee of the respondent at the time of the Accident.

APPLICABLE LEGAL PRINCIPLES

14.  Section 5(1) of the ECO provides that:

“Subject to subsections (2) and (3), if in any employment, personal injury by accident arising out of and in the course of the employment is caused to an employee, his employer shall be liable to pay compensation in accordance with this Ordinance.”

15.  Section 2(1) of the ECO defines “employee” as:

“any person who has … entered into or works under a contract of service…with an employer in any employment, whether by way of manual labour, clerical work, or otherwise, and whether the contract is expressed or implied, is oral or in writing: Provided that the following persons are excepted from the definition of an employee … (b) any person whose employment is of a casual nature, and who is employed otherwise than for the purposes of the employer’s trade or business, not being a person employed for the purposes of any game or recreation and engaged or paid through a club and not being a part-time domestic helper…”

16.  The leading authority on the question whether one person is another’s employee is the Court of Final Appeal’s case of Poon Chau Nam v Yim Siu Cheung 10 HKCFAR 156 at §18, where Ribeiro PJ laid down the modern approach as one requiring the examination of all the features of the parties’ relationship against the background of the indicia of employment with a view to deciding whether, as a matter of overall impression, the relationship is one of employment. It involves a nuanced and not a mechanical approach.

17.  The relevant indicia of employment include (but are not limited to) the following:

(1) whether the alleged employer had the degree of control over the task of the alleged employee which was commensurate to his capacity as the employer (for example, the power to select employees, the payment of wages or other remuneration, the right to control the method of doing work, and the right of suspension or dismissal);

(2) whether and how far the worker took any financial risk in the performance of the task;

(3) whether and how far the worker could profit from sound management in the performance of the task;

(4) whether and how far the worker bore any responsibility for investment and management;

(5) nature of employment activity, ie skill required in the claimed independent operation;

(6) whether the worker was properly regarded as part of the alleged employer’s organsation;

(7) whether the worker was carrying on business on his own account or carrying on the business of the alleged employer;

(8) whether the worker provided his own equipment for the task; and

(9) whether the worker hired his own helpers for the task;

Poon Chau Nam per Ribeiro PJ at §§9-17.

18.  The object of the exercise is to paint a picture from the accumulation of detail, and the overall effect can only be appreciated by standing back from the detailed picture, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another: Poon Chau Nam per Ribeiro PJ at §18, citing Mummery J’s judgment in Hall v Lorimer [1992] 1 WLR 939 at 944.

19.  If, on the facts viewed objectively and applying the indicia of employment discussed above, the person injured is properly to be regarded as an employee, the ECO applies and, pursuant to section 31(1) of the ECO, any agreement seeking to remove that person from its scope is void. It may be suggested that where the relationship is highly ambiguous and it is not at all clear that the injured person is an employee, the parties’ express agreement as to the status of that person may be important. However, if there is objectively an employer-employee relationship, the compulsory statutory duty which the employer bears cannot be overridden by the express stipulation of the parties: Poon Chau Nam per Ribeiro PJ at §57.

20.  Thus, a contract’s label or the parties’ classification of their relationship in an agreement has no significant evidential value. After all, it is for the court to evaluate the facts and determine the true legal relationship between the parties based on all the relevant circumstances in a particular case: Poon Chau Nam per Ribeiro PJ at §59, citing Clough JA’s judgment in Chan Kwok Kin v Mok Kwan Hing & Another [1991] 1 HKLR 631 at 636; see also Fung Shuk Fan Cinni v Land Fortune Ltd, unreported, DCPI 1507/2006, 27 July 2007 at §21; Ng Tat Kuen v Tam Che Fu (譚志富) & Ors, unreported, HCPI 896/2013, 26 October 2015 at §16.

21.  There is no dispute between the parties in respect of the above applicable legal principles. The parties’ difference lies in how these principles are to be applied to the facts of this case, and the weight to be attached to the various indicia.

CREDIBILITY AND WITNESSES

22.  It is well established that in assessing the credibility of live evidence, the court will consider whether a particular part of a witness’s testimony is inherently plausible or implausible, and whether that part of the testimony is, in a material way, contradicted by other evidence (such as contemporaneous documents) which is undisputed or indisputable: Hua Tyan Development Ltd v Zurich Insurance Co Ltd (formerly known as Zurich Insurance Company) & Anor [2012] 4 HKLRD 827 per Chung J at §27.

23.  The applicant testified in court and did not call any other witness.

24.  As for the respondent, in addition to giving his own oral evidence, he also called陳子健 (“Mr Chan”), who was said to be one of the respondent’s former independent contractors, to give evidence about the specific arrangements between respondent and himself as a truck driver. Mr Chan is not an expert in the logistics industry, and he clearly could not testify on any general industry practice. Moreover, since the question of whether the parties were in an employment relationship is to be determined on a case-by-case basis taking into account all the relevant circumstances, I do not find Mr Chan’s evidence to be of any significant relevance.

25.  Ms Cathy Chan, counsel for the respondent, attacks the applicant’s credibility primarily on the inconsistencies between his evidence and his declaration to the Labour Department on 16 November 2021. First, Ms Chan points out that in the declaration to the Labour Department, the applicant stated that the daily wage offered by the respondent when he started working was $1,000, but the figure he provides in his witness statement is $1,500. Secondly, the applicant claims that the respondent promised to pay him a minimum monthly salary of $26,000 but, in the declaration, he wrote “每月以工作量計算” as his answer to how his wages were calculated. The applicant admitted in cross-examination that his answers in the declaration were inconsistent with his witness statement.

26.  Thirdly, Ms Chan submits that the applicant deliberately concealed the existence of the Contract and Declaration from the Labour Department even though he confirmed he remembered the occasion on which he signed the two documents. In court, the applicant denied any concealment and he claimed that he had not thought about it at the time of making the declaration.

27.  Meanwhile, the applicant’s counsel, Mr Richard Yip, argues that the respondent’s many answers under cross-examinations were implausible or incomprehensible. For example, the respondent has stated in his witness statement that at the time of the Accident, he had engaged three drivers (including the applicant) and all of them were independent contractors. During cross-examination, he said that it would make no difference to his business whether his drivers were independent contractors or employees, and his drivers were free to turn down the job orders given by him. He even said that his drivers could use his vehicles to take on outside orders, but they would need to share their profits with the respondent on a 50-50 basis.

28.  Mr Yip contends, and I agree, that it would make no commercial sense for the respondent to rely only on independent contractors, as he has three to four long term clients who require his services every day and he needs at least one driver per day. If the drivers were free to turn down his job orders, there would be a real risk that the respondent would be left with no (or no sufficient) drivers to meet the constant demands of his clients.

29.  There are other examples in which the respondent’s answers are, in my view, unreasonable or inherently incredible. I will deal with those matters in the discussion below.

30.  For present purposes, I accept Ms Chan’s submission that there are inconsistencies in the applicant’s evidence. However, such inconsistencies are not related to the commercial arrangements or realities of relationship between the parties at the time when the Accident occurred, which are crucial for the determination of the issue in dispute in this trial. Indeed, the applicant’s evidence in those regards is reasonable and logical, and largely consistent with the terms of the Contract, a document prepared and relied upon by the respondent.

31.  In contrast, I agree with Mr Yip’s submissions that many of the respondent’s answers under cross-examination are incoherent, commercially illogical or incredible. They are inconsistent with terms of the Contract and, importantly, they went to the very issue concerning the commercial arrangements and realities of the parties’ relationship. Thus, when analysing the nature of the parties’ relationship and when there is conflicting evidence between the applicant and the respondent, I will prefer the applicant’s evidence to that of the respondent.

EMPLOYMENT RELATIONSHIP OR NOT?

32.  The respondent relies on the Contract and the Declaration to show that the applicant was an independent contractor all along. Meanwhile, the applicant, while urging the court to disregard the Declaration, relies on the terms of the Contract as important indicia of an employment relationship.

33.  In view of the parties’ arguments, it is necessary to set out the relevant parts of the Contract here:

“                        甲方承諾同意根據以下內容提供服務

協議雙方達成如下協議條款

甲方承諾根據以下之條文，提供運輸服務，及傲天物流公司由簽署日期正式開始，同意委託甲方負責提供運輸服務，細則如下：

1. 協議書內容及服務守則：見附件

2. 甲方提供之服務項目：提供最少9小時司機之服務

3 地點：香港境內

4. 日期：由（ ) 開始

5. 服務時間：星期一至日及公眾假期

7[1]. 服務範圍：根據傲天物流指示於上述地點範圍內提供運輸服務。

8. 終止/解除協議：雙方均可解除此協議書，但必須一天通知。若甲方服務表現低於標準，或其行為不檢，以致損害傲天物流公司利益或聲譽，或未能履行此協議書內任何一項條款，傲天物流可立刻通知甲方終止此協議並不會作任何補償。

9. 如遇到黑色暴雨或8號或以上颱風信號，甲方需於當值之前二小時通知傲天物流是否提供服務。

10. 付款方式：與傲天物流公司負責人協商

甲方必須為本港之合法勞工，並提供正確的個人資料（包括姓名，身份證號碼，聯絡電話等作為傲天物流之存檔資料），如有抵觸法例，甲方必須自己承擔所有法律上責任。

甲方於此協議書生效或終止期間，均不可利用從傲天物流所獲得之所有資料或資源，從事開設另一同類型（即經營同一行業）之公司，及甲方不可將其工作私下再以外判形式給予第三者，否則傲天物流有權向甲方追究所有法律上責任。

甲方在運輸服務時間內嚴禁飲用含酒精成分之飲品。

甲方在運輸服務時間內必須穿着安全鞋和制服。

為確保傲天物流公司良好形象，甲方必須確保其承包工作之所有員工，在服務時間內嚴禁出現吵架，用粗言穢語侮辱上級及傲天物流之客戶所有員工，如有違反，將被即時趕離場而不獲補償。如發生打架衝突事件等情況，將會按程序交由警方處理，並即時解僱及不獲發放當日薪金。

甲方所提供之服務，必須按照有關工作程序及規則完成並不可有任何異議。

甲方必須確保能提供合理之服務質素，若有以下情況發生，導致傲天物流要向客戶補償損失，甲方必須負起所有法律責任，詳細如下：

1. 偷竊，遺失，損毁或蓄意拋棄任何傲天物流及其客戶的物件，

2. 所有客戶所提供的物品或物件，甲方必須全數交還傲天物流處理，不准向外銷售或饋贈與任何人士，

3. 在日常工作進行中因意外碰撞而引致有物件損毁或其他事故。

如發生偷竊事件，必定交由警方處理，絕不姑息，涉事者一律會被即時解除承包工作協議而不作另行通知。

經細讀後，甲方清楚明白及接受以上各項條款及責任與細則，並由雙方簽署作實。”

34.  The Declaration contains the following:

“                        承包工作協議書

…

雙方關係如下：

傲天物流和承包商為各自獨立的公司/個體，本協議並不產生任何僱傭或附屬關係，除非受到傲天物流的書面證明，否則承包商無權代表傲天物流承認、接受或引致任何傲天物流的責任或義務

本協議只是雙方之間提供服務的協議，而非僱傭協議，承包商需對自己向傲天物流服務時所引致需面對的任何稅務或其他的責任負責，承包商有義務保證傲天物流免受由承包商行為引[致]的成本、費用、罰息等等，傲天物流有權在付予的服務費中扣除部份或全部的相關成本和費用

***承包商或其員工之休假，法定假期薪酬，有薪年假，勞工保險，人壽，工傷意外，醫療費用，醫療保險，疾病津貼，遣散費，長期服務金，強積金等僱傭權益，一切福利均由承包商自行負責

如將來想轉換以僱傭合約模式繼續合作，可提前一個月以書面通知傲天物流有關意願

適用法律：本協議及各方在本協議項下的權利與責任均受香港特別行政區法律管轄，並按香港特別行政區法律進行解釋

協議聲明

本人（姓名）[李嶂哲]…明白傲天物流公司提供之合作模式，亦已詳細閱讀所有工作服務內容和承包協議，明白各項條款和合作模式之差異，經考慮後，現決定選擇以下合作模式：

1. 本人願意以承包協議模式，以承包商身份為傲天物流公司提供運輸服務，並將遵守該合作模式的協議內容與各項條款 申請人簽署 [applicant’s signature]

2. 本人願意以僱傭合約模式，以僱員身份為傲天物流公司工作，並將遵守協議內容與各項條款 申請人簽署

…”

35.  As mentioned, the respondent relies on the Declaration to show that the applicant was a contractor all along. However, such a label or declaration given by the parties (even assuming that the applicant had agreed to it when he signed the Contract) has no significant evidential value in the first place (see paragraph 20 above). Moreover, such a declaration should be wholly disregarded if the remainder of the contractual terms governing the realities of the relationship in fact indicate the relationship as one of employment. In Poon Chau Nam at §54, Ribeiro PJ quoted Megaw LJ in Ferguson v John Dawson & Partners (Contractors) Ltd as follows:

“My own view would have been that a declaration by the parties, even if it were incorporated into the contract, that the workman was to be, or was to be deemed to be, self-employed, an independent contractor, ought to be wholly disregarded — not merely treated as not being conclusive — if the remainder of the contractual terms, governing the realities of the relationship, showed the relationship of employer and employee. … I find difficulty in accepting that the parties, by a mere expression of intention as to what the legal relationship should be, can in any way influence the conclusion of law as to what the relationship is.”

36.  Thus, I will examine the terms of the Contract as well as the parties’ respective evidence to determine the true nature of the relationship. If my conclusion is one of employment, then the Declaration would have to be wholly disregarded.

Degree of control

37.  The applicant’s case is that the respondent had a strong degree of control over him as evidenced by the following arrangements.

(1) He was required by the respondent to work from 9 pm to 9 am, Monday to Saturday.

(2) The respondent would give him the job orders via WhatsApp and the applicant had no right to decline or select the orders from the respondent.

(3) While the respondent would not closely monitor the applicant’s performance or instruct him to take certain route, the applicant would seek the respondent’s instruction if he had any difficulty in performing the orders.

(4) He could not use the respondent’s vehicle to perform any job other than those of the respondent, whether within or outside the 9 pm – 9 am shift.

(5) Whenever he had finished a delivery, he would inform the respondent via WhatsApp.

(6) At the end of each shift, he would contact the respondent to check if there was any more work to do, and he would only get off if the respondent confirmed that there was no more work.

38.  In addition to the above evidence from the applicant, Mr Yip submits that the terms of the Contract also indicate that the respondent exerted a strong degree of control over the applicant:

(1) Clause 2: the applicant had to work for at least 9 hours a day. If the applicant was merely an independent contractor paid by the number of jobs he performed, then it would make no sense for the respondent to mandate the applicant to work at least 9 hours for him.

(2) Clause 5: the applicant had to provide service from Monday to Sunday, including public holiday. The requirement for daily attendance shows that it was an employment relationship. An independent contractor would have no obligation to show up for work on a daily basis.

(3) Clause 7: the applicant had to provide driving service in accordance with the respondent’s instruction.

(4) Clause 9: if a black rainstorm warning or typhoon signal No 8 is hoisted, the applicant would need to inform the respondent two hours before he was supposed to report to duty. The use of the words “當值” shows that the respondent treated the applicant as an employee.

(5) The applicant was prohibited from delegating work to any third party. It would not make sense if an independent contractor was unable to sub-contract his work to another party.

(6) The applicant was prohibited from using the information or resources obtained from the respondent to set up another business of the same nature. This is a typical non-compete term in employment contracts and is inconsistent with the nature of an independent contractor.

(7) The applicant was restricted from consuming alcohol on the job. This illustrates the control the respondent exerted over the applicant, which would not have been necessary if the applicant was an independent contractor, as the respondent could simply stop engaging the applicant’s services if he was found to have consumed alcohol while driving.

39.  The respondent’s case, on the other hand, is that despite the terms of the Contract, the applicant did not have a fixed reporting time or working hours, and he did not require the respondent’s approval to be released from work. The applicant was free to refuse the respondent’s orders, and could take up orders from another company, even using the respondent’s vehicle but subject to a 50-50 profit-sharing scheme. Ms Chan submits that these arrangements and the Contract terms were within the normal range of control over an independent contractor, so as to ensure smooth co-operation and protect the respondent’s interests.

40.  On the issue of degree of control, I prefer the applicant’s case to that of the respondent. My reasons are as follows. First, the applicant’s case is largely consistent with the terms of the Contract, a document prepared by the respondent and central to the respondent’s defence in this case. In contrast, the respondent’s evidence materially departs from the terms of the Contract – the respondent cannot have his cake and eat it too.

41.  Secondly, as rightly pointed out by Mr Yip, the Contract contained a number of terms which are typical (or at least indicative) of an employment relationship and they would have been unnecessary if the applicant was an independent contractor.

42.  Thirdly, the respondent tried to explain some of the terms to play down his degree of control over the applicant, but I have found his explanations contrived, inconsistent and/or implausible. For example, he maintained that the applicant did not have fixed working hours even though Clause 2 of the Contract required the applicant to work at least 9 hours for the respondent. The respondent said that if the applicant did not work for 9 hours, he was entitled under the Contract to terminate the relationship. Again, it would not be necessary for the respondent to terminate any relationship if the applicant was engaged as a contractor on a job-by-job basis. This explanation only goes to confirm the applicant’s case that he was employed and had to dedicate his time and service to the respondent for at least 9 hours per day.

43.  The second example was the respondent’s suggestion that his drivers could use his vehicles to take on orders not belonging to his company. He explained that his drivers were in effect renting his vehicles and, under the Contract and Declaration, he had the right to deduct certain costs for a driver’s use of his vehicle. He also said that if the drivers used his vehicles to work on outside orders, there was an industry practice for the driver to share his profits on a 50-50 basis with the vehicle owner. These allegations are wholly incredible for the following reasons.

(1) They were never mentioned in the respondent’s witness statement.

(2) There is not a shred of evidence to show that the applicant (or any driver) had to pay any rent for the use of the respondent’s vehicles. There is also nothing in the Contract or Declaration that mentions any profit sharing scheme if the drivers used the respondent’s vehicles.

(3) Contrary to the respondent’s oral evidence, the Contract prohibits the use of the company’s resources (which must have included the vehicles) to engage in the business of a company in the same field (“從事開設另一同類型（即經營同一行業）之公司”). Thus, under the Contract the applicant was debarred from taking on other job orders using the respondent’s vehicle. The respondent sought to iron out this inconsistency by arguing that the restriction under this clause is limited to the situation where the driver takes on orders through another company and not as an individual. But I am unable to see any material difference whether a job order is taken in a personal capacity or through a company. The respondent himself also runs his company as a sole proprietor with no separate legal personality and other drivers can no doubt operate as sole proprietors, too.

(4) More significantly, the respondent’s explanation defies commercial sense. If the respondent’s drivers were free to use his vehicles to take on orders from other companies, the respondent would run the risk of not having enough drivers and trucks to serve his clients. When pressed on how he would manage such a situation, the respondent answered that he would either hire other contractors with their own vehicles to perform the deliveries, or he would do the job himself. These answers were incredible. This is because, according to the respondent, a driver using his own vehicle would charge three times the fee to do the same job compared to one using the respondent’s vehicle. It would be commercially illogical for the respondent to allow his own drivers to use his vehicles to earn three times the fee on outside orders while he would pay three times the fee to engage other drivers with their own vehicles. Even if a 50-50 profit sharing scheme existed (which I do not accept), the respondent would still be financially worse off. As regards the respondent’s answer that he would do the job himself, it was never mentioned in his witness statement and, in any event, given that he had three vehicles, the respondent clearly needed more manpower. Therefore, the respondent’s suggestion that his drivers could freely use his vehicles to take on outside orders is wholly incredible.

44.  The respondent also stated in his witness statement that the drivers had to find a replacement driver themselves if they were unable to finish their job orders. This is contradictory to the respondent’s case in that (1) if the drivers were independent contractors, they could simply turn down the respondent’s job orders and there would be no need for such a replacement mechanism; and (2) the Contract stipulated that the applicant could not delegate his work to a third party. This demonstrates that the applicant was bound to complete his work as assigned by the respondent or otherwise risk termination of work. Indeed, when the applicant was asked if he had the right not to take on the respondent’s order, he frankly answered that he had never thought about saying “no” (to the respondent’s order), as that would mean resignation on his part.

45.  Having considered the parties’ respective evidence and the terms of the Contract, I am satisfied that the respondent exerted a high degree of control over the applicant.

Tool of trade

46.  There is no dispute that the vehicle for performing the respondent’s job orders was owned and provided by the respondent, who was also responsible for paying the fuel and other charges (such as toll and parking fees) of the vehicle.

47.  As mentioned above, the difference between the parties lies in the use of the vehicle. The applicant said that he was not allowed to drive any other vehicle at work, nor could he use the respondent’s vehicle for outside job orders or other purposes. On the other hand, the respondent said that the vehicle was rented to the applicant and the latter was free to use the vehicles for jobs from other companies. I have rejected the respondent’s contention above and I will not repeat my reasons here.

Part of respondent’s organisation

48.  Mr Yip submits that the following terms of the Contract show that the applicant was treated as part of the respondent’s organisation:

(1) The applicant was required to provide personal information including his HKID number and contact details for the company’s record. If the applicant was a contractor, such a matter would be superfluous and invasive of privacy.

(2) Clause 8: The respondent could terminate the applicant without notice if the applicant’s performance fell below standard, misconducted himself to damage the respondent’s interest or bring the respondent into disrepute, or failed to perform any of the terms under the Contract.

(3) The applicant must not enter into any arguments with or insult any senior (上級) or customers, for the sake of maintaining the goodwill of the respondent.

(4) The applicant was obliged to wear the uniform provided by the respondent. Even though the respondent did not enforce this term in practice, the existence of this term shows that the respondent treated the applicant as part of his organisation.

(5) The Contract spells out the applicant’s liability to take full legal responsibility for any illegal behaviour and this is indicative of an employment relationship. If the applicant was a contractor, he would be held responsible for his own illegality in any event and there would have been no need to spell out the legal liability.

49.  As I see it, these terms in the Contract are more indicative of an employment relationship than that of a principal-contractor. In particular, the respondent’s attempt to penalise the applicant for any wrongful behaviour by way of termination is counter-intuitive to his assertion that the applicant was merely an independent contractor engaged on a job-by-job basis. This is because the respondent could simply stop giving job orders to the applicant upon poor performance and there would be no need for any “termination”. The respondent said that he needed to explain to his clients for the contractor’s misconduct but this is wholly beside the point. In my view, the terms of the Contract tend to show that the applicant was treated as part of the respondent’s organisation.

Financial risk, potential profits, etc.

50.  There is no evidence that the applicant took on any financial risk in providing the delivery service or bore any responsibility for investment and management.

51.  Based on the discussion above, I am unable to see how the applicant could profit from sound management in the performance of his service.

Payment of remuneration

52.  The respondent made payment to the applicant by two instalments each month, one on the 15^th of each month in the sum of $12,000 and the balance on the 5^th to 7^th of the next month. I accept Mr Yip’s submission that if the applicant was only an independent contractor, one would expect him to be paid on a daily or job-by-job basis, as he would not know whether he would work for the respondent again. The regularity of payment indicates that their relationship is one of employment.

53.  The applicant’s remuneration was calculated by reference to the number of trips he completed in a month. This is not inconsistent with an employment relationship. In Lau Chan Wah v Pat Tat Transportation Limited, unreported, DCEC 1752/2014, 6 May 2016, the court held that a driver whose earnings were calculated by reference to the number of trips completed was an employee.

MPF, statutory holidays, etc

54.  There is no dispute that the respondent did not provide any employment benefits (such as contribution to MPF) and the applicant had to work even on statutory holidays. But this is a common feature in this type of cases and not determinative of the true relationship between the parties.

The alleged choice

55.  The respondent maintains that the existence of the two boxes in the Declaration represents the free choice he gave to the applicant to be a contractor or an employee.

56.  However, as rightly pointed out by Mr Yip, although the Declaration provides the second box for the choice of employment and it states that the signatory would be bound by the terms of the agreement, the Declaration only contains the terms relating to those of a contractor. The respondent did not provide any other document which sets out the terms of an employment should the signatory choose to tick the second box. Thus, it seems to me more likely than not that the purported choice in the Declaration was a sham and only one option, ie to be a contractor, was given to the applicant.

Conclusion

57.  Having considered all the relevant indicia of this case as well as the parties’ respective evidence, I am of the view that, as a matter of overall impression, the relationship between the applicant and the respondent is one of employment and the Declaration is to be wholly disregarded. The applicant is therefore entitled to claim compensation against the respondent under the ECO.

COMPENSATION UNDER SECTION 9 OF THE ECO

58.  Pursuant to section 7(1)(b), in the case of an employee of over 40 years of age but under 56 years of age at the time of the accident, the amount of compensation shall be a lump sum equal to 72 months’ earnings or 72 times the amount specified in the relevant part of the Sixth Schedule, whichever is the less.

59.  According to the payment slip issued to the applicant dated 31 December 2020, the applicant’s earnings in the month preceding the Accident was $42,650. However, the relevant statutory cap for the applicant at the material time was specified as $30,530 in the Sixth Schedule.

60.  Adopting the loss of earning capacity of 0.375%, the compensation under section 9 of the ECO shall be:-

$30,530 x 72 x 0.375% = $8,243.10

COMPENSATION UNDER SECTION 10 OF THE ECO

61.  The applicant was granted sick leave of 165 days from 29 January 2021 to 12 July 2021, and it was certified as necessary by the Board. It follows that the compensation under section 10 of the ECO should be:-

$42,650 x 165/30 x 80% = $187,660.00

COMPENSATION UNDER SECTION 10A OF THE ECO

62.  According to paragraph 2(b) of the Third Schedule to the ECO, where an employee is given medical treatment other than as an in-patient in a hospital, the medical expenses payable by the employer are the total amount at the rate of $300 per each day on which the medical treatment is given.

63.  The applicant had 43 visits to a private medical practice and the medical expenses exceeded $300 each time. Thus, the compensation under section 10A should be:

$300 x 43 = $12,900.00

SUMMARY

64.  In summary, I assess the compensation payable to the applicant under the ECO as follows:-

Section 9 compensation	$8,243.10
Section 10 compensation	$187,660.00
Section 10A compensation	$12,900.00
	__________
TOTAL:	$208,803.10
	=========

65.  I therefore hold that the respondent is liable to pay compensation to the applicant in the sum of $208,803.10 together with interest at half judgment rate from the date of the Accident to the date of judgment and thereafter at judgment rate until payment in full.

66.  I also make an order nisi that the respondent shall pay the applicant’s costs of the action (including all costs reserved, if any) to be taxed if not agreed, with certificate for counsel. In the absence of any application by summons for variation within 14 days from the date of this judgment, the costs order nisi shall become absolute. The applicant’s own costs shall be taxed in accordance with the Legal Aid Regulations.

67.  I thank counsel for their valuable assistance.