CHEN RONG v. INNOVATIVE DESIGN GROUP LTD AND ANOTHER

DCEC 8/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 8 OF 2013

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JUDGMENT
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Introduction

1. This is the applicant’s claim against the 1^st and 2^nd respondents for employee’s compensation pursuant to sections 9, 10 and 10A of the Employees’ Compensation Ordinance, Cap 282, Laws of Hong Kong (“the Ordinance”).

2. At the beginning of the trial, counsel for both respondents informed the court that the respondents conceded liability, leaving quantum as the only issue to be determined. 

3. On the question of quantum, the following matters are not in dispute:-

(a) the pre-accident monthly earnings was $22,100;

(b) section 10A compensation is $17,417.

4. There are two issues left to be determined by this court.  First of all, the Employees’ Compensation (Ordinary Assessment) Board (“the Board”) assessed that the applicant had suffered 8% loss of earning capacity.  The applicant has appealed against the said assessment.  It is the applicant’s stance that formula based on Hong Kong Paper Mills Ltd v Chan Hin Wu [1981] HKLR 556 and Lui Kwong Yan v Shui Hing Decoration Works & Another [1993] 1 HKLR 168 (“the Hong Kong Paper Mills forumla’) should apply for the purpose of calculating compensation under section 9 of the Ordinance.  Secondly, the parties are also in disagreement as to the amount of periodical payment actually received by the applicant and whether the period of entitlement should extend beyond 24 months.

Factual background

5. There is no dispute that at the material times the applicant was employed by the 1^st respondent as a plumber and electrician.  On 1 March 2011, the applicant was assigned by the 1^st respondent to work at the site at Caritas Bianchi Lodge, No 4 Cliff Road, Yau Ma Tei, Kowloon, Hong Kong (“the site”) where the 2^nd respondent was the main contractor.  While he was standing on an A-shaped ladder to demolish some pipes on the ceiling, the applicant slipped and fell on the floor.

6. As a result of the accident, the applicant sustained injury in his right elbow and left knee.  He attended the Accident and Emergency Department of Yan Chai Hospital on the same day and was treated and discharged.  As there was persistent pain in his left knee, he was referred to the Department of Orthopaedics & Traumatology of Yan Chai Hospital for further treatment.

The injury

7. According to the joint medical report prepared by Dr Kong Kam Fu James and Dr Tsoi Chi Wah Danny (“the joint report’), the applicant sustained right elbow contusion and left knee contusion with medial meniscus tear.  The applicant had undergone surgery on the left knee in March 2012 and had received physiotherapy and occupational therapy on the left knee thereafter.  He was granted sick leave until 10 October 2013.  Dr Kong suggests that the applicant suffered 9% of loss of earning capacity while Dr Tsoi suggests 6-8%.

8. Concerning working capacity, both doctors agree that it would be difficult for the applicant to resume to his previous job as a plumber and electrician because of the residual left knee pain and weakness.  Together with post-traumatic medial compartment denegation of the left knee, the applicant would have difficulty in resuming to his pre-injury job in good capacity.  It is advised that he could take up sedentary jobs such as watchman, receptionist, cashier or car attendant.

Whether the applicant can resume his work as a plumber and electrician

9. The applicant gave evidence and the 1^st respondent called two witnesses to testify on this issue.  In gist, it is the applicant’s evidence that after the injury he was unable to perform the job of a plumber and electrician.  At one point, he did find a job of operating some machines and the monthly salary was $10,000.  However, after working for one month he was terminated and the reason given was that he was unable to lift heavy objects.

10. On the other hand, the position of the respondents is that the applicant was able to resume to his previous job.  It was the evidence of the witnesses called by the 1^st respondent that the applicant did in fact go back to work during his sick leave period and was able to carry out the work as an electrician.  Further, it is the position of the respondents that even if the applicant cannot resume to pre-injury job, which they disagree, he can still perform the job as a supervisor or even sub-contractor which would be less physically demanding.

11. After carefully consideration of the evidence, I find that it is more likely than not that the applicant would not be able to resume the work he did before.  The applicant’s evidence is clear and straightforward and is well-supported by findings of the joint report.  He was unshaken under cross-examination.  I accept he did try to find other suitable employment after the injury.  After consideration, I accept him to be an honest and truthful witness and I accept his evidence in full. 

12. I note the submissions made by counsel for the respondents about the applicant’s failure to disclose to the doctors about his returning to work for the 1^st respondent after the injury.  After carefully consideration, I am not convinced that such information would affect the finding of the doctors.  The doctors made their finding based on clinical examination and not only what the applicant told them.  I do not believe that the doctors would have reached different conclusions should they know about the post-injury working experience of the applicant. 

13. As a matter of fact, the second witness called by the 1^st respondent, Mr. Chan Yu Kam, gave evidence that is more consistent with the case of the applicant. In cross-examination, Mr. Chan agreed that he had worked with the applicant after the accident.  Mr. Chan agreed that the applicant could not climb up the ladder because of his knee injury.  He also agreed that though the applicant did return to work, his role was mainly supervising and giving instructions. This is a very important piece of evidence that supports the case of the applicant.

14. To conclude, after careful consideration of the evidence, I accept the evidence of the applicant and find on balance that it is more likely that he would not be able to resume the job of plumber and electrician which involved climbing up and down of ladder and lifting heavy objects.  Given his physical condition, the applicant would have to settle for other jobs that are not as well-paid as plumber and electrician but are less physical demanding.

Whether the Hong Kong Paper Mills formula should apply

15. The respondents submitted that the circumstances of the applicant are not special enough to apply the Hong Kong Paper Mills formula.  Counsel for the 1^st and 2^nd respondents argue that the applicant could return to the field of construction as supervisor or even sub-contractor.  Then he would not be earning less than his previous employment. 

16. After careful consideration, I find that there is sufficient evidence for the court to invoke Section 9(1A) of the Ordinance and to assess a higher loss of earning capacity by applying the Hong Kong Paper Mills formula.  The injury suffered by the applicant might not appear to be very serious.  However, as a licensed electrician, his job inevitably involves high physical demand including lifting heavy objects and climbing up and down of ladder.  His knee injury no doubt affects his working capacity.  He certainly cannot continue to work as a plumber and electrician.  The applicant does not receive much education and does not possess any other special skills, the percentage of loss of earning capacity assessed by the Board would be substantially less than the percentage of actual loss of earning capacity suffered by the applicant.

17. Counsel for respondents submitted that the applicant can take up the job as a supervisor or even carry out the business of sub-contractor.  With respect, I find this submission difficult to accept.  Given the opportunity, I believe every worker would prefer to be a supervisor or sub-contractor because the income will certainly be higher and the work will be less physically demanding.  However, that does not mean that every worker can choose to be a supervisor or sub-contractor.  There is simply no evidence to suggest that there is such opportunity available to the applicant.  In the circumstances, I find that the realistic employment suitable for the applicant would be those suggested in the joint report. 

18. In the circumstances, I would allow the applicant’s appeal against the assessment of the Board and assess the section 9 compensation in accordance with the Hong Kong Paper Mills formula.

19. Concerning the applicant’s earning capacity after the injury, the applicant’s case is that since January 2014 he took up employment again and had worked for seven months.  His average monthly earning during that period was $6,514.  Counsel for the applicant asks the court to calculate the section 9 compensation on that basis.  The position of the 1^st and 2^nd respondents’ is that the amount suggested by the applicant is unreasonable and way too low.

20. The applicant has not elaborated the terms of his latest employment as to how many days he worked in a month or how many hours a day.  Compare with the Quarterly Report of Wage and Payroll Statistics – March 2011 (“the Report”), the average monthly salary of the applicant appears to be unreasonably low.  According to the Report, for miscellaneous non-production workers and general workers in different industries, the monthly salary should be in the range of $8,000 to $11,000. For watchman, guard and security officer, the salary should be in the range of $7,200 to $8,200.  Applying these statistics to the applicant’s case, given the education level, working experience and physical condition of the applicant, together with the effect on labour market after the Statutory Minimum Wage came into force from 1 May 2011, I assess that his earning capacity after the injury should be no less than $10,000 per month.

21. Base on the above analysis, the calculation of the section 9 compensation should be as follows:-

   ($22,100 - $10,000)/$22,100 x 96 x $22,100 = $1,166,880

The amount of periodical payment already received by the applicant

22. The applicant was granted sick leave by Yan Chai Hospital from 1 March 2011 to 10 October 2013, totaling 939 days.  According to the Certificate of Assessment issued by the Board dated 20 June 2013, it was certified that the applicant was absent from duty for the following periods:-

(1) 1 March 2011 to 29 March 2011; and

(2) 15 April 2011 to 6 June 2013

23. There is a dispute as to how much periodical payment the applicant actually received.  It is the applicant’s case that he received a total of $283,730 during the sick leave period.  However, it is the 1^st respondent’s case that the applicant had received $318,240 (according to witness statement of RW1, Mr Chan Wan Lam) or $324,360 (according to the closing submission of Mr Chan, counsel for the 1^st respondent).

24. After considering the evidence of the witnesses and the documents adduced by both sides, in particular those copies of cheques payable to the applicant, on balance I prefer the evidence of the applicant on this issue.  Looking at the figures of the cheques, I believe those cheques in odd figures such as $5,217 dated 12 Jan 2012 or $10,000 dated 17 November 2011 were not payment for periodical payments as the amount was nowhere near the amount the applicant was entitled.  In the circumstances, I accept the applicant’s evidence that he had actually received $283,730 as periodical payment.

25. Next issue is whether the applicant is entitled to have periodical payment beyond 24 months. It is the discretion of the court to consider whether to extend such period. After considering the authorities submitted by the parties, in particular Choy Wai Chung v Chun Wo Construction & Engineering Co Ltd [2001] 2 HKLRD 803, I see no reason why such period should not be extended beyond the initial 24-month period.  The applicant’s sick leave period (though not all) was confirmed by the doctors in the joint report and also the Board.  There is no evidence of fraud so that I should not apply section 10(2) of the Ordinance. The applicant was unemployed and only started to take up employment long after the sick leave period came to an end.  In the circumstances, I am satisfied that it would be just for me to exercise my discretion to extend the period of periodical payment entitlement beyond 24 months until 10 October 2013.

26. Accordingly, under section 10, the applicant is entitled to:-

   $22,100 x 12 x 939/365 x 4/5 = $545,803.40

27. As the applicant had already received $283,730 as periodical payment, the actually compensation under Section 10 should be:-

   $545,803.40 - $283,730 = $262,073.40

Conclusion

28. To sum up, the total compensation I award to the applicant is as follows:-

(1)	Section 9	$1,166,880.00
(2)	Section 10	$262,073.40
(3)	Section 10A	$17,417.00
	Total:	$1,446,370.40

29. Though the 2^nd respondent was not the employer of the applicant, by virtue of Section 24(1) of the Ordinance, it is liable to pay the compensation awarded by the court as the principal contractor.

30. In the circumstances, the 1^st and 2^nd respondents are to pay the applicant a total of $1,446,370.40 as compensation under the Ordinance pursuant to Sections 9, 10 and 10A with interest at half judgment rate from the date of the accident to the date of judgment and thereafter at judgment rate until payment. 

31. Costs should follow the event.  I therefore make a costs order nisi that the 1^st and 2^nd respondents do pay to the applicant’s costs, to be taxed if not agreed, with certificate for counsel.

Indemnity

32. The 2^nd respondent seeks, under Section 24(2) of the Ordinance, that the 1^st respondent to indemnify the 2^nd respondent for the compensation liable to the applicant and the costs incurred in the proceedings.  Considered all the circumstances, I see no reason why the 1^st respondent should not indemnify the 2^nd respondent.  I therefore order that the 1^st respondent to indemnify the 2^nd respondent for the compensation payable to the applicant, together with interest and costs incurred by the 2^nd respondent in these proceedings.