MOHAMMAD AKHTAR v. LEUNG KWOK CHEONG formerly trading as CHUN LOK TRANSPORTATION COMPANY

DCEC 283/2022

[2024] HKDC 251

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 283 OF 2022

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JUDGMENT

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A.  Introduction

1.  This is an application by the Applicant for compensation under sections 9, 10 and 10A of the Employees’ Compensation Ordinance (Cap. 282) (the “Ordinance”) against the Respondent for an accident that happened on 28 February 2020 (the “Accident”).

2.  Initially, the Applicant also filed a Notice of Appeal under section 18(1) and (2) of the Ordinance to appeal against the assessment of the Employees’ Compensation (Ordinary Assessment) Board under the Certificate of Assessment issued on 2 June 2022 (the “Form 7 Assessment”). Such appeal was subsequently withdrawn by the Applicant pursuant to Order dated 27 October 2023. The Applicant indicated that he would accept the assessment under the Form 7 Assessment for the purpose of the present application. The Respondent does not challenge the same.

3.  The Applicant’s case is that he was employed by the Respondent as a lorry driver. The accident arose out of and in the course of the employment when he and a co-worker were loading carton boxes that were stacked on wooden pallets into a lorry. Some heavy carton boxes fell from the top and hit his feet. As a result, he suffered 0.5% loss of earning capacity permanently according to the Form 7 Assessment.

4.  The Respondent confirmed in court that he would not challenge that the Accident did happen. The major dispute by the Respondent is that the Applicant was not an employee of the Respondent.

5.  Hence, the resolution of the present action boils down to the question of whether the Applicant was an employee of the Respondent at the time of the Accident.

B.  Whether the Applicant was an employee

B1.  Parties’ evidence

6.  The Applicant gave evidence in court. The Respondent and his wife, 林慧 (“Madam Lam”), gave evidence in court. In relation to the Respondent’s evidence, their witness statements filed in court merely stated a sentence that there was no employer-employee relationship and another sentence that no insurance was arranged for the Applicant. When Madam Lam gave evidence in court, she was cross-examined by Mr John Massie acting on behalf of the Applicant. However, when the Respondent gave evidence in court, Mr Massie did not cross-examine him. Hence, the Respondent’s evidence in effect came from Madam Lam only.

B1.1  Initial work and initial termination

7.  According to the Applicant, he began working for the Respondent as a lorry driver in August 2018. He did not sign any employment contract. The terms of the verbal contract were that his salary would be HK$22,000 per month plus overtime and working hours from 9am to 7pm. He was required to work 6 days a week with Sunday off. Apart from driving duties, he was also required to load and unload goods.

8.  The Applicant produced a “work certificate” in Chinese dated 6 August 2018 which was signed by the Respondent with a business chop (the “Work Certificate”). The Work Certificate states as follows:-

“兹證明MOHAMMAD, AKHTAR，身份證號碼：[號碼]，乃本公司職員，自2018年7月開始在我司工作，擔任早間散工大車司機，其每日薪金是港幣 $800，今個月薪金為 $20800，特此證明。”

(translated as: “This is to certify that MOHAMMAD, AKHTAR, ID card [number], is a staff of this company. Since July 2018, he has begun working in my company. He has served as a morning casual work, being a large vehicle driver. His daily salary is HK$800. His salary this month is HK$20800. I hereby certify the above.”)

9.  The Applicant stated that he requested the Work Certificate from the Respondent a few days after he started his work because in case he needed proof, he could use it.

10.  Madam Lam testified that she attended to the administration of the Respondent’s business. She prepared the Work Certificate upon the request by the Applicant because he needed the letter to submit to the Immigration Department for his wife to come to Hong Kong. Madam Lam confirmed that the content therein reflected the fact at that time, including the fact that the Applicant was initially engaged as a casual worker.

11.  Madam Lam said that the Applicant worked for a month. Subsequently, she and the Respondent discovered that the Applicant was under sick leave of a previous job. Hence, the Respondent terminated the Applicant’s service. However, two or three months later, the Respondent learnt from a friend who was an employee of a partner company that the Applicant wished to return to work for the Respondent. Hence, the Respondent made what Madam Lam said was a popular arrangement within the industry, namely, to pay for the Applicant for his work, which Madam Lam alleged to be a sub-contractor arrangement. It was emphasized to the Applicant that there would be no MPF arrangement for him.

12.  The Applicant denied that the Respondent ever terminated his service in 2018 when he first started working with the Respondent.

13.  Having considered the evidence, I find that the Applicant was indeed engaged by the Respondent since July 2018, being a fact reflected in the Work Certificate which neither of the parties disputed the content therein.

14.  I also find that it is more likely than not that the Respondent had initially terminated the service of the Applicant in around August 2018 because it was discovered that the Applicant was still subject to sick leave of his previous work. This is because:-

(a)  First, the Applicant admitted in his witness statement that he was on sick leave in relation to his previous work-related injuries from 1 May 2018 to 23 July 2018.

(b)  Second, the Work Certificate dated 6 August 2018 indicates that the Applicant’s salary of the month was HK$20,800 based on a daily salary of HK$800. This means that the Applicant had worked for 26 days as of 6 August 2018. So he must have worked since early or mid-July 2018, that was, before 23 July 2018 when he was still subject to sick leave.

(c)  Third, in the cheques to the Applicant produced by both parties, there was a cheque dated 6 August 2018 in the amount of HK$20,800. The next cheque is 7 November 2018 in the amount of HK$23,520. The absence of cheque records in the months of September and October 2018 is consistent with the Respondent’s testimony that the Applicant’s service had been terminated for two months.

15.  From the parties’ evidence, the payment for the Applicant’s service was in arrears. Hence, in relation to the cheque dated 7 November 2018, it was likely a remuneration for the Applicant’ service from early October 2018 to early November 2018. I accept the Respondent’s case that the Applicant’s service was initially terminated for two months. I find the initial termination was between early August and early October 2018 (the “Initial Termination”).

B1.2  Description of work

16.  After the Initial Termination, the Respondent resumed engaging the service of the Applicant. Madam Lam explained the Applicant’s work as follows:-

(a)  The Applicant had to drive a lorry which was provided by the Respondent. The Respondent (or Madam Lam on behalf of the Respondent) would give instructions to the Applicant as to where and when to drive the lorry to pick up the cargoes and the necessary documents (such as airway bills and bills of lading). The Applicant would also have to pick up the company chops of the Respondent and/or the Respondent’s clients which the Applicant would then use to pick up the goods.

(b)  The Respondent would register the Applicant’s name for the shipments which the Applicant handled. It was necessary to register the name of the person who picked up the cargoes because if anything happened to the cargoes, the person who picked up the cargoes would have to bear the risk. Upon cross-examination, Madam Lam agreed that the Respondent had to register the persons who picked up the goods on behalf of the Respondent.

(c)  The Applicant was paid by the Respondent on a fixed monthly basis. The Applicant would not earn more if he got more cargoes. Nor would he earn less if he did less work. The Respondent provided the monthly earnings of the year before the Accident to be as follows:-

Date of payment	Amount
7 April 2020	HK$35,000
10 March 2020	HK$35,000
6 February 2020	HK$35,000
8 January 2020	HK$35,000
10 December 2019	HK$35,000
6 November 2019	HK$33,000
9 October 2019	HK$33,000
7 September 2019	HK$30,000
9 August 2019	HK$30,000
9 July 2019	HK$30,000
9 June 2019	HK$30,000
2 May 2019	HK$30,000
9 April 2019	HK$30,000

(d)  In relation to disbursements, the Applicant usually had to pay the money first and then the Respondent would reimburse him afterwards. There were only some very rare occasions when the Respondent would pay the Applicant in advance which involved a very large amount such as over HK$10,000.

17.  The aforesaid job description by Madam Lam did not seem to be controversial. The Applicant’s evidence was also that he was engaged as a lorry driver. Apart from driving duties, he was required to load and unload goods from airports and make deliveries. He would sometimes have to pay the disbursements in advance, such as warehouse charges (HK$200 – HK$300) and parking charges (HK$100 or more), and the Respondent would pay him back afterwards.

B1.3  The arrangement when the Applicant went to Pakistan

18.  What transpired to be the most controversial part of the evidence is an allegation which had never been raised in any of the Respondent’s defence or witness statements until his written opening submissions before the trial. The Respondent alleged that there was a one-month period in May 2019 when the Applicant returned to Pakistan. During this period, the Applicant engaged a substitute to take over his service for the Respondent. As a result, there was a cheque dated 11 June 2019 issued to the Applicant in the amount of HK$46,553 (the “HK$46,553 Cheque”), which was the payment to the Applicant for the work of his substitute when the Applicant was away. The Respondent alleged that this supported his case that the Applicant was a sub-contractor because he could engage his own substitute to work for him.

19.  The Applicant denied that he had ever engaged any substitute to perform his duties in discharge of his service to the Respondent. He stressed that he was the only person working for the Respondent. He denied receiving the HK$46,553 Cheque. He admitted taking one month leave to Pakistan from around 5 May 2019 to 8 June 2019 (the “One-month Leave”) when he looked at an air-ticket (the “Air-ticket”) produced for the first time by the Respondent enclosed in his written opening submissions. He said that he did not receive any payment during the One-month Leave. He said that he worked in April 2019 but he had not been paid for his work in April 2019 when he went to Pakistan in early May 2019. When he came back in early June 2019, he received a cheque in the amount of HK$30,000 which was for his work in April 2019.

20.  I reject the Respondent’s case that the Applicant had engaged a substitute to perform the Applicant’s duties during the One-month Leave:-

(a)  First, the Respondent had never mentioned anything about this substitute arrangement until his written opening submissions. When Madam Lam was asked why she did not mention about this earlier, she said that she did not recall this until she saw the HK$46,553 Cheque payable to the Applicant. She later cross-referenced this with the Air-ticket and discovered that it was both in around May 2019. So she put them together and came up with the allegation of substitute which was mentioned in the Respondent’s written opening submissions for the first time. I find this to be an afterthought of the Respondent by trying to make up a story in order to make sense of some pre-existing documents.

(b)  Second, the Respondent is unable to produce any documents in relation to the engagement of the alleged substitute arrangement.

(c)  Third, when Madam Lam was asked about how she came up with the amount of HK$46,553 for the substitute arrangement, she could not give a reasonable explanation. She uttered uncomfortably that it could be the Applicant’s salary (being HK$30,000 at that time) plus some miscellaneous expenses. When asked what miscellaneous expenses they consisted of which would make up to HK$16,553, she mentioned that it could be registration fees, tunnel fees and carpark charges which would be a few hundred dollars each to be incurred every day. Her allegation is inconsistent with her other evidence that it was unusual to have large amount of disbursements, but if they did have, the Respondent would pay the Applicant in advance instead of afterwards.

(d)  Fourth, I agree with Mr Massie’s observation that the HK$46,553 Cheque is only a bearer cheque despite the Applicant’ name being put on it. Hence, even if the cheque was banked in as shown in the Respondent’s bank statements, it was not necessarily paid to the Applicant.

(e)  Fifth, in around the same date of the HK$46,553 Cheque, there was a payment made by cheque in the amount of HK$30,000 as recorded in the bank statements of the Respondent. The bank entry date is 11 June 2019. The copy of this HK$30,000 cheque had not been produced by either party. As mentioned above, the Applicant said that this was the payment for his work done in April 2019 before he left for Pakistan. He was certain when he testified this in court. On the contrary, when Madam Lam was asked what this HK$30,000 payment was for, she initially said that it could be petty cash, but then she followed by saying that she could not remember. It is incredible for her to suggest that this amount was for petty cash when there was no suggestion that there was a practice of paying petty cash of such a large amount. It is also inconsistent with the Applicant’s list of earnings which the Respondent had previously provided to court which included such HK$30,000 as part of the Applicant’s earnings. If HK$30,000 was already paid in June 2019 to the Applicant, it cannot be explained why another HK$46,553 was paid on around the same day to the Applicant, particularly when the Applicant had been on the One-month Leave in the previous month.

(f)  Sixth, when the Applicant gave evidence in denying the substitute arrangement, he was firm and confident. I have observed his demeanour and assessed his overall evidence. I find him to be credible when he said there was no such substitute arrangement.

21.  Accordingly, I reject the Respondent’s suggestion that the Applicant had arranged a substitute worker to perform his duties under the service provided to the Respondent during the One-month Leave.

B1.4  The final termination

22.  There is no dispute that after the Accident on 28 February 2020, the Applicant continued working despite the grant of sick leave. He worked until around the end of March 2020. In around early April 2020, the Respondent terminated his service.

B2.  Legal principles

23.  The proper approach for determining whether an employer-employee relationship exists for the purpose of the Ordinance has been authoritatively laid down by the Court of Final Appeal in Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156 at paragraphs 11-18 (per Ribeiro PJ). The modern approach is to examine all the features of the relationship against the background of various indicia with a view to deciding whether, as a matter of overall impression, the relationship is one of employment, bearing in mind the purpose for which the question is asked. It involves a nuanced and not a mechanical approach.

24.  In short, the Court should adopt an overall evaluative-impressionistic approach in deciding whether an employment relationship exists: Ho Wai Keung v Billion Rich Investments Ltd [2023] HKCA 929 at paragraph 25.

25.  Some of the indicia of employment are summarized in Tang Chau Yuet v Fu Kin Po [2011] 1 HKLRD 509 at paragraph 12:-

“(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?

(2) Whether the alleged employee provided his own equipment for the task?

(3) Whether the alleged employee hired his own helpers for the task?

(4) Whether the alleged employee took any financial risk and the nature/degree of it?

(5) Whether the alleged employee had an opportunity of profiting from sound management in the performance of his task?

(6) Whether the alleged employee bore any responsibility for investment and management, and the nature/degree of it?

(7) Whether the alleged employee was properly regarded as part of the alleged employer’s organisation?

(8) Whether the alleged employer bore any responsibility in relation to insurance and tax for the alleged employee?

(9) Whether the alleged employee was carrying on business in the trade in question?

(10) What was the parties’ own view of their relationship?

(11) Whether the traditional structure of the trade or profession concerned and the practices within it would assist with the understanding of their relationship?”

26.  I would add that for the purpose of assessing indicia (1) above concerning control, the court may consider:

(a)  the alleged employer’s power of selection of his employees;

(b)  the payment of wages or other remuneration;

(c)  the alleged employer’s right to control the method of doing the work;

(d)  the alleged employer’s right of suspension or dismissal;

(see Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156 at paragraph 12 citing Short v J & W Henderson Ltd (1946) 62 TLR 427 at p 429)

27.  The above indicia should not be regarded as being exhaustive of all relevant considerations for determining the existence of an employment relationship as the exercise calls for a nuanced instead of a mechanical approach. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. 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 v Yim Siu Cheung (2007) 10 HKCFAR 156 at paragraph 18.

28.  Further, contracts of employment may arise on two different levels in the context of casual workers: (a) an umbrella or global contract (although uncommon), that is an over-arching and continuous agreement between the parties, encompassing a series of specific engagements within its span; and (b) a contract in relation to a specific engagement: Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156 at paragraphs 23, 34-50.

B3.  Discussion

29.  In the present case, I find that there was an employer and employee relationship between the Respondent and the Applicant. I find the following indicia to be relevant.

30.  First, the Respondent had a high degree of control over the Applicant. The Respondent gave instructions to the Applicant as to where and when to drive the lorry, what goods and documents to pick up, and where and when to load and unload the goods. The Applicant only provided labour to the Respondent as a lorry driver in driving the vehicle and arranging goods and documents.

31.  Second, the Applicant did not provide his own equipment. The lorry was provided by the Respondent. The goods and documents belonged to the Respondent or his clients. The Applicant was reimbursed for all disbursements he made.

32.  Third, the Applicant did not hire his own helpers for the task. As held above, I reject the Respondent’s case that the Applicant ever engaged any substitute worker during the One-month Leave. In any event, the allegation of engaging a substitute worker was a one-off arrangement which would not alter the pre-existing relationship between the parties.

33.  Fourth, the Applicant had no opportunity of profiting from sound management in the performance of his task. As confirmed by Madam Lam, the payment to the Applicant is a fixed sum per month. He would not earn more by performing more tasks. As can be seen from the pattern of earnings, the Applicant was paid at around the beginning of each month. His earnings were gradually increased over the years when he provided service. The consistent pattern of remuneration is more akin to an employee being remunerated for his provision of service in terms of salary.

34.  Fifth, the Applicant did not bear any responsibility for investment and management of the Respondent’s business. He was not properly regarded as part of the Respondent’s organisation except to provide his labour as lorry driver.

35.  Sixth, the Applicant confirmed that he paid salaries tax for his earnings from the Respondent, which is supported by salaries tax assessment from the Inland Revenue Department.

36.  Seventh, the Respondent recognized the Applicant as a casual worker initially as evidenced in the Work Certificate. As held in Poon Chau Nam, contract of employment might arise in the context of casual workers. Even though the Respondent labelled the Applicant as a sub-contractor subsequent to the Initial Termination, there was nothing changed in terms of the substance of the Applicant’s work before and after the Initial Termination. The Respondent’s allegation that a sub-contractor arrangement is popular within the industry is also a bare allegation unsupported by evidence.

37.  Eighth, although Madam Lam alleged that she would register the name of the Applicant for the shipments which the Applicant handled, alleging that the Applicant would have to bear the risk if anything happened to the cargo, this is unsupported by any evidence. It would not be surprising if the Respondent had to register the Applicant’s name as the person who would pick up the cargoes on behalf of the Respondent. I am not satisfied that there is sufficient evidence to show that the Applicant had to personally bear any risk of the business.

38.  Taking into account the aforesaid factors, I consider that as a matter of overall impression, the relationship of the parties at the time of the Accident was one of employment. Accordingly, the Applicant can rely on the Ordinance to claim against the Respondent for the loss from the injury he suffered as a result of the Accident.

C.  Quantum

C1.  Section 9 – compensation in case of permanent partial incapacity

39.  Under section 9 of the Ordinance, the amount of compensation shall be such percentage of the compensation which would have been payable in the case of permanent total incapacity under section 7.

40.  According to section 7(1)(b), in the case of an employee of or over 40 years of age but under 56 years of age at the time of the accident, the amount payable is 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. Here:-

(a)  The Applicant was 50 years old at the time of the Accident. The multiplier of 72 should be adopted.

(b)  Applying section 11(1)(a) of the Ordinance, the monthly earnings of the Applicant was HK$35,000, being the earnings for the month immediately preceding the date of the Accident.

(c)  The amount specified in the relevant part of the Sixth Schedule of the Ordinance which was effective at the date of the Accident (i.e. by L.N. 60 of 2019) was HK$30,530.

(d)  HK$30,530, being the lesser amount, should be adopted.

(e)  The percentage of the loss of earning capacity permanently according to the Form 7 Assessment is 0.5%.

41.  Hence, the amount of compensation under section 9 is:

HK$30,530 × 72 × 0.5% = HK$10,990.80.

C2.  Section 10 – compensation in case of temporary incapacity

42.  Under section 10 of the Ordinance, the amount of compensation payable shall be at the rate proportionate to a monthly payment of four-fifths of the difference between the monthly earnings which the employee was earning at the time of the accident and the monthly earnings which he is earning, having regard to the probable duration and changes in the degree of the incapacity.

43.  According to the Form 7 Assessment, the periods of absence from duty necessary as a result of the injury are:-

(a)  3 March 2020 – 23 March 2020 (21 days);

(b)  2 April 2020 – 31 May 2020 (60 days);

(c)  25 June 2020 – 28 June 2020 (4 days).

44.  Mr Massie fairly indicated that the Applicant had continued working despite the sick leave granted between 3 March 2020 and 23 March 2020, and that he was duly paid for that period. Hence, such period should not be included in the calculation of compensation under section 10. Hence, the number of months of sick leave for the purpose of calculation under section 10 is (60 + 4) / 30 days = 2.13 months.

45.  The amount of compensation under section 10 is:-

HK$35,000 × 2.13 months × 4/5 = HK$59,640.

C3.  Section 10A – payment of medical expenses

46.  Under section 10A(3), the medical expenses which the employer is liable to pay shall be in accordance with the Third Schedule.

47.  Paragraph 2 of the Third Schedule states that where an employee is given medical treatment other than as an in-patient in a hospital, the medical expenses payable by the employer are – (a) the total amount of the medical expenses incurred in respect of the medical treatment; or (b) the total amount at the rate of HK$300 for each day on which medical treatment is given, whichever total amount is less.

48.  I shall adopt the estimated medical expenses incurred as provided by the Applicant in the amount of HK$1,000, which is less than the other calculation based on HK$300 for each day of medical treatment.

C4.  The compensation to be awarded

49.  Accordingly, the compensation that should be awarded to the Applicant is:-

(1)	Section 9:	HK$10,990.80
(2)	Section 10:	HK$59,640
(3)	Section 10A:	HK$1,000
	Total:	HK$71,630.80

D.  Order

50.  I grant an award in the total sum of HK$71,630.80 for the Applicant against the Respondent.

51.  The Applicant is entitled to interest at half judgment rate from the date of the Accident (i.e. 28 February 2020) to the date of the judgment and thereafter at judgment rate until the date of payment.

52.  I make a costs order nisi that the Respondent do pay the Applicant the costs of this action (including all costs reserved, if any), to be taxed if not agreed. In the absence of an 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.