CHEUNG HUNG YUK AND ANOTHER v. CHIU CHAI AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. On the 4th January 1983, at the construction site of Block 1, City Garden, Electric Road, Hong Kong, one Lau Yee Ngan fell to his death from the 14th Floor to the ground in the vicinity of a skip hoist.

2. The plaintiffs are the personal representatives of the estate of the late Lau Yee Ngan, deceased. The principal contractor of the construction site was Hing Kee Construction Co. Ltd. Hui Tak Yuk (or Yick), the 2nd defendant, was a sub-contractor of Hing Kee. The 1st defendant, Chiu Chai, was a sub-sub-contractor of Mr Hui for flooring. Chau Chung Lun, the 3rd defendant/Third Party took charge of the transportation and delivery of flooring materials to all levels for installation by the layers and polishers. I shall call them "Hing Kee", "Hui", "Chiu" and "Chau" respectively.

3. The deceased was engaged by Chau for the said delivery and transportation of these flooring materials. At the time of the accident, the deceased was assisting Chau in delivering teak wood floorings from the 14th Floor to the 24th Floor using a skip hoist in Block 1. He was on a working platform on the 14th Floor level and Chau was on the 24th Floor.

4. The plaintiffs sue as personal representatives all three defendants Chiu, Hui and Chau and the 1st defendant Chiu had brought in the 3rd defendant Chau as a Third Party. Only the 1st defendant was in attendance and legally represented. The 2nd defendant and 3rd defendant/Third Party were absent and unrepresented. Evidence given in the action was ordered to be taken as evidence for the Third Party proceedings.

5. At the construction site, the said skip hoist had been caused to be erected in Block 1 by the principal contractor, Hing Kee. It was the property of Hing Kee and operated on the ground floor by one of its workmen, Mr Au. The skip hoist was available for use by all the workers in Block 1. It was to be used by only one team at a time. The skip hoist was lowered or raised or stopped by the Hing Kee operator who would respond to simultaneous sound and light signals given by the use of a switch. The switch was connected by a long wire to a plug which would fit into a socket near the hoist. One socket had been installed on every other floor. Despite the evidence of Chiu, I prefer and accept the independent and technical evidence from the Labour Department Factory Inspector that the switch, once plugged into a socket, would inactivate the entire socket circuitry on all the floor levels above it. There was no need for a second switch. The skip hoist was only a cargo hoist for the transportation and delivery of materials. I do not accept the evidence of Chiu that the Chief Mechanic's Office on site would supply more than one switches to any team.

6. On the day in question, the 3rd defendant/Third Party Chau had obtained a switch from Mr Au, Hing Kee's skip hoist operator. He was using it on the 24th Floor and the deceased was loading the hoist with teak wood floorings and possibly bags of bitumen on the 14th Floor working platform. A fabric had been tired to the hauling wire of the skip hoist as a floor-level indicator, but it is difficult to infer precisely how it would work.

7. The switch signals were : one press to stop, two presses to ascend and three presses to descend. At the material time, Chau and the deceased were the only persons using the skip hoist. The arrangement between Chau and the deceased was that after loading, the deceased was to wave a piece of stick with a red plastic bag at one end to signal Chau that the hoist was ready to ascend. At the Inquest, Chau described this rudimentary device as "a red flag".

8. According to the evidence of Chau given at the Inquest, he last saw the deceased wave the stick with that red plastic tied to one end before he signalled the hoist to ascend. He said :

"on last occasion, I saw deceased wave red flag and I had ascended left (sic) [lift]."

9. The hoist did not arrive and he went to the 14th Floor but failed to find the deceased. He "became frightened". He rushed down and saw the deceased lying on the ground floor. The deceased was taken by ambulance to hospital and was certified death on arrival.

10. Mr Au described the incident at the same Inquest in this way :-

"As it ascended suddenly something jammed hoist. I stopped it right away. It was then about 6:15 a.m. (sic). Earth and sand fell down. An object also fell down as well. I left skip operating room to see. I found it was a person. I carried him up. He appeared to be unconscious."

11. On probabilities, I find that the deceased was knocked off his working platform by movement of the hoist and fell to his death from the 14th floor. The deceased would have kept clear of the hoist after loading. No evidence of operational negligence was led against the deceased. Even if (there is also no evidence) there had been some mere thoughtlessness or inadvertence or forgetfulness (short of negligence) in the deceased's timing, only the use of the switch cum flag waving for inter-floor traffic and/or Chau's negligence (if any) in pressing the switch could have caused the accident. It was not sought to be demonstrated that Chau was in error in his sighting of the flag waving and/or his pressing of the switch. The hoist was, as I shall explain, inadequate for inter-floor traffic, and no cure for such deficiency had been attempted e.g. by adopting an appropriate communication system, such as inter-coms. In all the circumstances, I find the defect in the hoist for inter-floor traffic as the culprit.

12. The construction site comprised 6 blocks, each of 28 storeys in height with 8 units on each floor. There was flooring to be done on 1,344 units. The 2nd defendant Hui was a sub-contractor. Hui sub-sub-contracted the flooring to 1st defendant Chiu under a written contract in the Chinese language, in which Chiu was specifically described as the sub-sub-contractor for the work. Chiu allegedly sub-sub-sub-contracted part of his own sub-sub-contract for flooring to the 3rd defendant Chau. That was for the delivery of materials. For the floor laying and polishing, Chiu claimed to have taken on another 30 odd sub-sub-sub-contractors for different units, possibly at different times.

13. The allegation is that Chau as well as these other 30 odd sub-sub-sub-contractors were all independent contractors operating entirely on their own. The difference between Chau and these 30 odd floor layers and polishers lay, so it was claimed, in the alleged written agreements given by Chiu to them. Chiu gave evidence that his written contract (sub-sub-sub-contract) with Chau was formulated in similar style and presentation as that of his own sub-sub-contract with Hui. As for the other 30 odd floor layers and polishers, Chiu maintained that they were given each a scrap of paper containing a few sentences to the effect : "I employ Party A to carry out a certain portion of work in 1, may be 10 or may be 100 units". None of these alleged documents was produced. In particular, Chau's written contract similar in style and presentation to that of Chiu's own sub-sub-contract was said to have been lost sometime in 1984/1985, about the time of or soon after completion of the development project.

14. Chau was paid by Chiu in periods of days on the measured quantity executed at the unit rate per every 100 sq.ft., described as "Cheng". Chau was free to engage his own helpers, the number and selection of whom rested entirely with him. Chau was said to have, from time to time, several helpers. On this occasion in block 1, between the 14th and 24th Floors, Chau was himself assisted by the deceased.

15. After the death of the deceased, employees' compensation was paid or contributed by Chiu and others, but it seemed to be agreed on all hands that payment of such compensation and statements given in the Labour Department reports with an eye to procuring insurance coverage were differently motivated and that they should not be treated as matters either to the advantage or prejudice of any of the parties to these proceedings.

16. The plaintiffs' claim is mounted on three fronts : first, it is alleged that Chau was a servant, not a independent contractor of Chiu. Thus, the deceased was taken on by Chau himself and/or on behalf of Chiu with Chiu's implied consent. In consequence, in whatever capacity the deceased worked, as Chiu's or Chau's workman or workman for both, all the alleged particulars of negligence raised against Chau would implicate his employer Chiu who was fixed with vicarious liability.

17. Secondly, if (which is not admitted) Chau had been an independent contractor operating freely on his own, Chiu would still have been liable under s.3(4) (b) of the Occupiers Liability Ordinance, Cap. 314 as an occupier answerable for the danger of unsafe premises or an unsafe system of work in that premises, which caused the death of a lawful visitor, the deceased. Section 3(4) (b) of our Ordinance is in pari materia with S.2(4) (b) of the Occupiers' Liability Act, 1957.

18. Thirdly, in whatever capacity Chau stood, with knowledge of the defective inter-floor user and taking no steps to render it safe, Chiu was Chau's joint tortfeasor in negligence :

19. Was Chau a servant or an independent contractor of Chiu's? I would first list out the aspects I regard as more favourable to the notion of an independent operation :

20. I shall try to comment on the above and then proceed to focus on some features which seem to be more supportive of a master/servant relationship :

21. In conclusion, I find the 3rd defendant Chau an employee of the 1st defendant Chiu. The deceased was employed by Chau for himself and/or Chiu. Except for the narrow approach to the possibility of a business loss, I have guided myself by the factors discussed in Wong Man Luen v. Hong Kong Wah Tung Stevedore Co., [1971] H.K.L.R. 390, in particular, the reliance heavily placed therein on "the fundamental test" as to "whether the person engaged to perform those services was performing them as a person in business on his own account and thus under a contract for services" and not "under a contract of services" (emphases added). See also Market Investigations Limited v. Minister of Social Security, [1969]2 W.L.R.1, per Cooke, J. as applied in Ferguson v. Dawson, [1976]3 A.E.R. 817 at p.824 letters g-h per Megaw L.J. and at p.830 letter d per Brown L.J. This finding will lose much of its importance when an occupier's common duty of care and the liability of joint tortfeasors are considered.

22. The allegations of negligence are : 1st or 2nd or 3rd defendant failed (1) to take all reasonable precautions for the safety of the deceased at work, (2) to protect him from any risk or damage or injury which they knew or ought to have known, (3) to provide and maintain a safe and adequate plant, (4) to take reasonable care to ensure that the place at which the deceased carried out the said work was safe, (5) to provide and maintain a safe and proper system of work and (6) to provide a safe system of signals. See para. 5 & para. 8 particulars (a), (b), (c), (f), (g) and (h) of the Re-Amended Statement of Claim.

23. On the same particulars, the plaintiffs also raise the common duty of care, under s.3(2) (b) of the Occupiers Liability Ordinance. See para. 9 of the Re-Amended Statement of Claim.

24. Chiu has been in the same business for some 42 years. At the inception, he visited the site and inspected the facilities for his sub-sub-contract with Hui. He was aware that the skip hoist was a facility available for "every field". With knowledge of how the skip hoist performed, he was satisfied that it was safe. Every day from dawn to dusk he supervised the progress and "the way they did their work". His purpose was to ensure no "wasted time" or "wasted work". He even did "a little bit" flooring himself whenever he had time. He was there throughout all seven months and had witnessed materials being moved between floors. He saw the deceased assist Chau on the day of the accident, but he denied having ever noticed the flagging signals given by a stick with a colourful piece of material tied to its far end. He was certainly aware that the hoist was to be operated by switch and that inter-floor traffic was necessary.

25. In Ferguson v. Welsh [1987]3 A.E.R. 777, at p.783 Letters g-h, Lord Keith said of an occupier's common duty of care in these terms :

"It would not ordinarily be reasonable to expect an occupier of premises having engaged a contractor whom he has reasonable ground for regarding as competent, to supervise the contractor's activities in order to ensure that he was discharging his duty to his employees to observe a safe system of work. In special circumstances, on the other hand, where the occupier knows or has reason to suspect that the contractor is using an unsafe system of work, it might well be reasonable for the occupier to take steps to see that the system was made safe."

26. The requisite knowledge was found wanting in Ferguson v. Welsh. The exposition by Lord Keith was not, therefore, put to the real test. His Lordship's opinion was supported by Lord Brandon and Lord Griffiths. Lord Oliver and Lord Goff preferred to rationalise it on the basis of a joint tortfeasor's liability rather than the common duty of care of an occupier.

27. At p.785 Letters b-c, Lord Oliver readily accepted the possibility of an occupier rendering himself responsible for a defective system of work adopted by an independent contractor "as a result of his state of knowledge and opportunities of supervision".

28. At p.786 letters b/c, Lord Goff said:

"Mr Ferguson's injury arose from a failure by the council to take reasonable care to see that persons in his position would be reasonably safe in using the premises for the relevant purposes, the answer must, I think, be no. There is no question as, I see it, of Mr Ferguson's injury arising from any such failure; for it arose not from the use of the premises but from the manner in which he carried out his work on the premises. For this simple reason, I do not consider that the 1957 Act has anything to do with the present case."

29. He continued at letters e/d - f :

"I wish to add that I do not, with all respect, subscribe to the opinion that the mere fact that an occupier may know or had reason to suspect that the contractor carrying out work on his building may be using an unsafe system of work can of itself be enough to impose on him, a liability under the 1957 Act, or, indeed, in negligence at common law to an employee of the contractor who is thereby injured, even if the effect of using that unsafe system is to render the premises unsafe and thereby caused injury to the employee. I have only to think of the ordinary householder who called in an electrician; and the electrician sent in a man who, using an unsafe system established by his employer, create a danger in the premises which results in his suffering injury from burns. I cannot see that, in ordinary circumstances, the householder should be held liable under the 1957 Act or even in negligence, for failing to tell the man how he should be doing his work. I recognise that there may be special circumstances which may render another person liable to the injured man together with his employer, as when they are, for some reasons, joint tortfeasors."

30. This case may be said not to have truly involved any system of work. Chiu and Chau found the skip hoist as part of the site, a fixture installed by Hing Kee. It is debatable whether the hoist was a fixture for the land, but there can be little doubt that it became a fixture of the construction site. The hoist was a permanent feature of the construction site and was expected to last up to completion when the compound ceased to be a construction site for surrender to the owners as finished premises. The fixture or part of the site was defective for a permissible user i.e. inter-floor traffic. This was a case in which a lawful visitor encountered an unsafe part of the site when it was put to that particular use. The improvised step did not succeed in wholly removing the defect. The flagging failed to make it reasonably safe.

31. There were indeed more unusual features in this case. The hoist was not of itself a system of work devised by Chau. The skip hoist was a facility prescribed by the principal contractor, Hing Kee. The skip hoist, itself inherently unfit for inter-floor traffic, was a fixture to and formed part of the site, thus rendering it unsafe. It was unsafe for one of the legitimate purposes i.e. inter-floor traffic. The hoist itself could also be regarded as a defective plant supplied to the deceased by Chiu and in turn by Chau when it was exclusively taken over by Chau for or under the authority of Chiu. The plant was unfit for inter-floor traffic, a use among others for which it was also intended.

32. In my judgment, the construction site to which the hoist had become affixed constituted, by this integrated part, a danger during the progress of hoist traffic between floors. Chiu retained a measure of control over this integrated fixture by the interest he displayed and his daily supervision over the workers. As an occupier of the site, he was liable for such a danger. Differently analysed, viewed strictly as a defective system of work known to Chiu, the hoist in use for inter-floor traffic had also given rise to an occupier's liability for his sub-contractors in the wider concept expounded by Lord Keith as the majority opinion in Ferguson v. Welsh, supra. Therefore, insofar as working on the skip hoist could be taken as "a manner in which (the deceased) carried out his work on the (site)", in other words an adopted defective system of work, I ought and propose to follow this majority decision in their Lordships' House, from the eminent panel of which members of the Judicial Committee of Her Majesty in Council are drawn. The provision of the hoist as part of the construction site coupled with Chiu's initial examination of the facilities, his interest and daily supervision were all the more special than the circumstances in Ferguson v. Welsh for imputing the requisite knowledge of defect and negligent user to Chiu. With Chiu in some degree of control and on the basis of Chau being an independent contractor, Chiu would in any event be also brought in as a tortfeasor by the minority speeches delivered in Ferguson v. Welsh, supra. In whatever capacity Chau was engaged and whether or not Chiu exercised sufficient control, on the facts found Chiu had involved himself as a joint tortfeasor in such negligent use of the hoist. Whether Chau was an independent contractor or a servant, for a known or suspected defective plant supplied to the deceased, as I have said both Chiu and Chau must also be responsible as joint tortfeasors. Evidently, if Chau was a servant, Chiu would be, in addition, vicariously liable for Chau's unsafe system work, plant or site.

33. In the circumstances, throughout Chiu knew or ought to have known of this inadequacy. It is unacceptable that Chiu could have laboured under any delusion that the hoist could function on more than one switch. The Factory Inspector's finding was otherwise and Chau was issued and was content with one switch. Chiu was familiar with all site activities for some 7 months. Chiu, I find, was fully aware that only one switch could be used and that unless otherwise supplemented the one-switch inter-floor traffic was an obvious potential danger to life and limb.

34. It was a folly for Chiu and Chau not to take precautions for the safety of the workers on inter-floor shifts e.g. by providing a satisfactory signal system. Chiu should also have made inquiry from Chau as to how Chau was to render the system safe for inter-floor traffic. Chiu made no such enquiry but instead stood by for some 7 months when it was used, from time to time, for traffic between floors.

35. The pleadings are, in my view, sufficiently wide to accommodate these liabilities. The claim is relatively small and Chau could obviously provide no good answer to any of his legal liabilities as found. Ex abundante cautela, I would treat the pleadings, if need be, as if they had been properly amended.

36. I find ail allegations of negligence against the 1st and 3rd defendants set out earlier proved. On any view taken of the analyses I have made, the 1st and 3rd defendants are liable as claimed.

37. The quantum of damages is uncontroversial. On the evidence led in this case, I accept and find :

The Law Reform Damages under the Law Amendment and Reform (Consolidation) Ordinance, Cap.23 :

Funeral expenses :	$7,500
Loss of expectation of life (as I assess) ;	$30,000
Loss of earnings, pre trial (from the Statistics and Census Department) $120 per day
$120 x 26 days =	$3,120 permonth
Loss of earnings, present day (from the Statistics and census Department)  =
$284.50 x 26 =   $7,397 per month	$284.50 per day
Therefore the average is :	$5,259 per month

38. The wife and children in China had $1,700 sent to them by the deceased. The deceased was himself earning $3,120 per month. So the deceased was left with $1,420 per month for his own benefit. It is not unreasonable that the deceased would have expended 45% of this net total on himself, leaving a free balance of 55% as a loss to his estate.

39. Therefore pre-trial loss is :

$5,259 average monthly income x 90 months x 55% free balance = $260,321

40. As for post-trial loss, the deceased was 31 according to his death certificate. I accept the jointly proposed multiplier of 14. $7,397 per month is the estimated present day earnings of the deceased if he had survived. From this multiplier of 14 years (168 months) deducted 90 months for his pre-trail period, that would leave 78 months for calculating the post-trial loss.

$7,397 x 78 months x 55% = $317,331

41. Therefore, the total would be $7,500 plus $30,000 plus $260,321 plus $317,331 = $615,152.

42. It is suggested that in the circumstances, the deceased was himself negligent to the extent of at least 33%. First of all, there is no evidence as to precisely how the deceased came to fall. On the evidence I have accepted, the deceased must have been knocked down by the movement of the hoist which was unfit for inter-floor traffic, the user at the material time. There is no evidence what the deceased's experience or background was, whether as a mere workman he knew or appreciated or had any reason to suspect the defect in the hoist for inter-floor traffic using one switch or whether in all the circumstances it was not reasonable for him in a relatively more submissive position to rely on the employer's obligation to suppply a safe plant and assume such a working hoist on the construction site as being adequate. It is not unknown that a workman will not necessarily be judged negligent although other persons in similar circumstances would have been. The deceased could not be said to have knowingly allowed himself to be involved with an unsafe system in the circumstances. It has not been proved that the deceased was negligent.

43. In conclusion, the plaintiffs are to have judgment as claimed against the 1st and 3rd defendants in the sums I have set out less the $148,000 employees' compensation. The claims under Fatal Accident Ordinance, Cap.22, are immaterial in these proceedings. The evidence of the father of the deceased failed to establish himself as a dependant. Therefore the total judgment by the plaintiffs against the 1st defendant and the 3rd defendant would be $467,152 ($615,152 - $148,000 compensation).

44. The contribution between Third Party Chau and his joint tortfeasor Chiu will be to the extent which this Court would consider to be just and equitable in all the circumstances. Both Chiu and Chau were almost equally to blame. I assess indemnity from Chau at 50% in the Third Party proceedings.

45. There is very little evidence concerning the 2nd defendant as an occupier. He was said by the 1st defendant to be confined to his office most of the time. There is no direct evidence imputing to him any prior knowledge of the defect and there is no evidence against him as a joint tortfeasor with the 3rd defendant Chau in respect to the unsafe hoist system.

46. Judgment against the 1st and 3rd defendants is in the sum of $467,152. Special damages are to have interest at half of what I regard as short term commercial rate i.e. 4% per annum from the date of death to the date of judgment. Loss of expectation of life is to attract interest at 2% per annum from the date of the service of the writ to judgment The 3rd defendant do indemnify the 1st defendant up to 50% of the judgment debt and costs. I also make the following order nisi for costs : costs of these proceedings be costs against the 1st and 3rd defendants and there be no order as to costs against the 2nd defendant and in the Third Party proceedings.