LAI YUK TSAN v. POLY CHANCE (ASIA) LTD AND ANOTHER

DCEC 2601/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 2601 OF 2014

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JUDGMENT

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Introduction

1.  This is the trial of an employees’ compensation claim.  On 27 December 2013, the applicant was injured in an accident.  He was using a portable circular saw to remove some wooden flooring in a residential flat in Tin Hau, Hong Kong.  In the process, the revolving blade of the saw cut into his right calf.

2.  The applicant claims that he has suffered from right leg laceration and major depressive disorder.  He claims compensation from the 1^st respondent as employer under sections 9, 10 and 10A of the Employees’ Compensation Ordinance, Cap 282.

Procedural history

3.  The applicant commenced the present application in December 2014.  The 1^st respondent initially acted in person.  It was legally represented from March 2015 onwards.  After the case was set down for trial in August 2016, the solicitors then acting for the 1^st respondent was granted a “cease to act” order in late September 2016.  Since then, the 1^st respondent, who is not legally represented, has not participated at all in these proceedings, including today’s trial.

4.  By order dated 4 November 2016, the Employees’ Compensation Assistance Fund Board was joined as the 2^nd respondent in these proceedings.  The Board has made clear throughout that it does not take any position on the issue of liability and its intervention is limited to the assessment of quantum.

5.  The applicant has filed an affidavit of service proving that the last court order which, amongst other things, sets out the dates of this trial, has been served on the 1^st respondent at an address in Yuen Long.  This is the registered address as recorded in the 1^st respondent’s company returns with effect from 24 February 2017.  Very properly, the applicant’s solicitors conducted an updated search this morning, which reveals that no further filing has been made by the 1^st respondent at the Companies Registry since then.  I am satisfied that the 1^st respondent has had notice of today’s trial and the trial has proceeded in its absence.

6.  Given the above history, it is for the applicant to prove his case against the 1^st respondent on liability.  On quantum, the applicant and the Board are able to reach an agreement.

Liability

7.  The issue here is whether the accident arose out of and in the course of the applicant’s employment with the 1^st respondent.  In its answer, the 1^st respondent denies that to be the case and avers that on the day of the accident, the applicant worked as an independent contractor.

8.  The applicant testified at trial.  His evidence is as follows.  Prior to 31 May 2013, he worked as a full-time employee of the 1^st respondent, earning a monthly wage.  There was a change in the employment which took effect from 1 June 2013.  Under the new arrangement, he has been receiving wages on a daily basis, initially at $700 per day and, subsequently from September onwards, $800 a day plus overtime allowance and reimbursement of travelling expenses.

9.  A Mr Fok of the 1^st respondent would inform the applicant of any job and would usually let him know one day in advance.  When not working for the 1^st respondent, the applicant would also work for other contractors as a day worker.  When employed by the 1^st respondent, the applicant’s work hours would normally be from 9:30 am to 6 pm.  Fok’s approval would be required before the applicant did any overtime work.  A typical work day would start with the applicant reporting to the 1^st respondent’s office at 9:30 am.  He would be assigned work by Fok, including the jobs and the venue.  After finishing the day’s work, he would usually return to the office and handing back the tools to the 1^st respondent.

10.  The applicant stressed the following:-

(1) He earned a daily wage when working for the 1^st respondent.  He only worked according to Fok’s instructions and had no dealings with the 1^st respondent’s customers.  There was no profit sharing arrangement between him and the 1^st respondent.  The applicant was not required to invest any capital in the 1^st respondent’s operations or share any risk.

(2) In fact, the applicant was paid an overtime allowance and would be reimbursed for travelling expenses.  Taxi receipts and payment slips for taxi fares have been disclosed in these proceedings.

(3) All the tools and equipment that the applicant needed for the jobs were provided by the 1^st respondent and they were all placed in the storage room in the 1^st respondent’s office which was locked. The applicant would have to be given access by the 1^st respondent in order to get the tools he required from the room.  The applicant had a few small tools of his own, such as screwdrivers and spanners.

(4) The 1^st respondent, through Fok, exercised control over his work.  The applicant would not hire anyone to help him but if a job required more manpower, he would inform Fok and let him decide whether to hire another worker.  But the wages of the other workers would be borne by the 1^st respondent.

(5) Occasionally, Fok would ask the applicant to take up jobs on a lump sum basis.  But the applicant would still be earning his wages for his time spent and the costs of material would always be borne by the 1^st respondent.

11.  On the day of the accident, the applicant attended the 1^st respondent’s office and was instructed to go to work at the residential flat in Tin Hau.  He took some tools from the storage room, including the saw in question.  According to a photograph attached to the applicant’s witness statement, the saw bore the Chinese name of the 1^st respondent.

12.  In the circumstances, it is the applicant’s contention that at all times, including the day of the accident, the applicant, when working for the 1^st respondent, was the 1^st respondent’s employee.

13.  I accept that contention.  The applicant’s evidence on his working relationship with the 1^st respondent, as set out above, is unchallenged, the 1^st respondent being absent at today’s trial.  I accept the applicant’s evidence in this regard and find them as facts in this action.  Applying the well-known principle laid down by the Court of Final Appeal in Poon Chau Nam v Yim Siu Cheng (2007) HKCFAR 156 at §18, it is clear that the applicant was an employee of the 1^st respondent on the day of the accident - considering the degree of control exercised by the 1^st respondent, lack of interest on the part of the applicant in the 1^st respondent’s prospect of profit or risk of loss and the provision of equipment by the 1^st respondent.  All these indicia point to a relationship of employment.

14.  I therefore hold that the accident arose out of and in the course of the applicant’s employment with the 1^st respondent.  The latter is liable to pay employees’ compensation accordingly.

Quantum

15.  The applicant and the Board have reached an agreement on quantum.  In the absence of challenge by the 1^st respondent, I am prepared to give effect to the agreed figures so long as they are within the range of compensation payable under the Ordinance and are substantiated by evidence before the court.

16.  Having received the factual evidence, the joint orthopaedic report and the joint psychiatric reports, I am satisfied that is the case.

17.  I should however make a note of the position taken by the applicant and the Board on the agreed figure of “monthly earnings”, and how section 11(1)(a) of the Ordinance has been interpreted. 

18.  Where section 11(1)(a) applies, the term “monthly earnings” would be the earnings “for the month preceding the date of the accident”.  It would appear that there is room for disagreement as to what the word “month” in this subsection means.  The rival contentions are:-

(1) It means calendar month – see Lau Yiu Yee v Tung Lee Engineering Co [2003] 1 HKC 43 at §11;

(2) It refers to the period which ends on the corresponding date in the subsequent month – see Far East Drug (BVI) Co Ltd v First Pacific Co Ltd [2006] 2 HKLRD 157 at §11.

19.  The accident took place on 27 December 2013.  Under the first contention, the monthly earnings would be the earnings of the calendar month of November 2013.   The figures would be $24,640, according to the applicant, and $16,090, according to the Board.

20.  Under the second contention, the monthly earnings would be the earnings from 28 November 2013 to 27 December 2013.  The figure would be much lower and according to the Board would be $8,300.

21.  Where section 11(1)(b) applies, the monthly earnings would be the 12-month average prior to the accident, which would be about $14,100.

22.  Solely for the purpose of settling these proceedings, the Board’s position is that it is content to adopt the interpretation used in Lau Yiu Yee to calculate the monthly earnings but that does not necessarily represent its position in future or other cases.  That figure of $16,090 would be adjusted upwards under the mechanism set out in section 11(1B) to $17,500, which has now been agreed between the parties to be the applicant’s monthly earnings.

23.  Accordingly, I hold that the 1^st respondent is liable to pay compensation as follows:-

Section 9	$17,500 x 72 months x 10% = $126,000
Section 10	$17,500 x 28½ months x 4/5 = $399,000
Section 10A	$23,500
Total:	$548,500

Costs

24.  Costs should generally follow the event.  As far as costs incurred on liability are concerned, no doubt the 1^st respondent should be liable.  However, as the issue of quantum has effectively be dealt with by settlement agreement between the applicant and the Board, they both take the position that there is no “winning” or “losing” party in this settlement as between the two of them.

25.  The applicant submits that the 1^st respondent should bear his costs, whether incurred vis-à-vis the 1^st respondent or the Board.  The Board also asks for its costs to be borne by the 1^st respondent.  The reason is that the Board would not have intervened in these proceedings if the 1^st respondent had not ceased to be legally represented shortly after the case was first set down for trial in 2016.  Further, the parties would not have incurred the subsequent costs.  In such a situation, both parties ask for their respective costs to be borne by the 1^st respondent.

26.  I have been referred to a number of authorities, in which the employer (who was either absent or did not actively contest the action) was ordered to pay the costs of the employee and/or the Board.  See, eg:-

(1) Wong Kai Fun v Sun On Logistics Ltd DCEC 5/2013, 20 May 2015;

(2) Chan Ngan Fat v 李敬恒  DCEC 1382/2013, 7 October 2015;

(3) Hussain Kamran v Khan, Amar CACV 255/2014, 5 October 2016; and

(4) Yu Chun Kit v Wong Win Yau (the bankrupt) DCEC 1787/2015, 5 June 2017.

27.  It is clear from the above authorities that it is open to the court to exercise its discretion to order costs against the 1^st respondent although none of the cases concern settlement between an applicant and the Board.  In view of the above, I am prepared to exercise my discretion to award the costs order as proposed.

Orders

28.  There shall be judgment against the 1^st respondent in the sum of $548,500.  Interest shall accrue on this sum at half the judgment rate from the date of the accident until today and thereafter at judgment rate until payment in full.

29.  The applicant’s appeal against the assessment in Form 9 is allowed as provided for above.

30.  I also order that the 1^st respondent do pay the costs of the applicant in this action incurred vis-à-vis the 1^st respondent and the 2^nd respondent, and that the 1^st respondent also do pay the costs of the 2^nd respondent in this action, in each case with certificate for counsel and to be taxed if not agreed.

31.  I also order that the applicant’s own costs be taxed in accordance with the Legal Aid Regulations.