CHONG YIU TAT v. FONG MAN CHI & OTHERS

HCPI 742/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 742 OF 2001

____________

____________

_______________

J U D G M E N T

_______________

I. Background

1. On 8 September 1998 the Plaintiff ("Chong") was working at a construction site ("the Site") around the Jusco Department Store at Tuen Mun Town Plaza I in the New Territories. The 1st Defendant ("Fong"), Chong's employer, had instructed Chong to install air-conditioners at the site. To carry out his work, Chong had to hold one side of an air-conditioner unit with his left hand while climbing up a wooden ladder ("the ladder") with the aid of his right hand. A co-worker (named Ah Kwan) held on to the other side of the air-conditioner while climbing up another wooden ladder. When Chong was about 8 feet above the ground, the rung of the ladder on which he was standing suddenly broke. Chong fell to the ground and sustained injury.

2. The 4th Defendant ("Quiet & Cool") was the nominated sub-contractor for the installation of air-conditioning units at the Site. Quiet & Cool engaged the 3rd Defendant ("Yau Luen") as sub-contractor. Yau Luen engaged the 2nd Defendant ("Siu Yip") as sub-sub-contractor. The proprietors of Yau Luen and Siu Yip are brothers. Siu Yip engaged Fong as sub-sub-sub-contractor.

3. There is a dispute between the 5th Defendant ("HKC") on the one hand and the 1st and 2nd Third Parties (respectively, "Ping Kai" and "Ping Kee") on the other as to who the principal or main contractor at the Site was. Ma Hung Kwan ("Ma") or Ping Kee is the controlling shareholder and director of Ping Kai. I will consider the issue between HKC, Ping Kai and Ping Kee in detail below. For now, I note that there was no evidence at the hearing before me of any formal sub-contract having been executed between either HKC or Ping Kai on the one hand and Quiet & Cool on the other.

4. At the time of Chong's accident the Site was owned by Entertainment City Limited ("ECL"), a subsidiary within the Sino Group ("Sino"). ECL was the Employer for the Site project which involved renovation and decoration work.

5. By the accident Chong sustained a pilon (distal end) fracture of the left tibia involving the ankle joint. He initially suffered from post-traumatic oedema. An operation was postponed until the oedema was controlled. On 17 September 1998 Chong underwent an operation entailing close reduction and external fixation. He was hospitalised for 17 days. On 11 November 1998 he was re-admitted to Tuen Mun Hospital because of an infection from an inserted wire. The wire was removed and 6 days later Chong was discharged. He was again hospitalised for 4 days in December 1998 for removal of the external fixator. This was followed by regular treatment and physiotherapy.

6. Chong still suffers from residual pain and stiffness of the left ankle, with a chance of degenerative arthritis. The pain and stiffness are aggravated when Chong walks on uneven surfaces or goes for prolonged walks. The pain and stiffness may be due to damage to the articular surface of Chong's distal tibia. He will have to minimise strenuous use of his left ankle in the future. Chong cannot return to his pre-injury occupation of installing air-conditioners at construction sites. But he can take up light duty jobs such as that of an indoor cleaner and a car-park attendant.

7. On 7 January 2002 Deputy Judge Yu gave judgment in Chong's favour against Fong as Chong's employer in Employees' Compensation Case No. 877 of 1999. Judge Yu awarded Chong a total of $337,974.40 in employees' compensation together with interest from the date of application for compensation to date of judgment at half the judgment rate and thereafter at the judgment rate until payment.

8. Judge Yu further found that:-

(1) HKC was the principal contractor at the Site;

(2) Quiet & Cool was HKC's sub-contractor;

(3) Yau Luen was Quiet & Cool's sub-contractor;

(4) Siu Yip was Yau Luen's sub-contractor; and,

(5) Fong was Siu Yip's sub-contractor.

Accordingly, Judge Yu held that Siu Yip, Yau Luen, Quiet & Cool and HKC were respectively liable under Employees' Compensation Ordinance (Cap. 282) ("ECO") s. 24 for the amount awarded to Chong. As against Fong, the judge gave Yau Luen, Quiet & Cool and HKC an indemnity under ECO s. 24(2) in respect of such employees' compensation as they might pay Chong.

II. Discussion

A. Chong's claims

9. Neither Fong nor Siu Yip served a Defence. On 1 February 2002 Chong obtained an Interlocutory Judgment on liability against them with damages to be assessed. Therefore, as far as Fong and Siu Yip are concerned, the trial before me was for the assessment of damages payable by them. I shall refer below to the other Defendants (that is, apart from Fong and Siu Yip) as "the Remaining Defendants".

10. Mr Chan (appearing on Chong's behalf) concentrated on the following claims against the Remaining Defendants:-

(1)	Yau Luen and Quiet & Cool breached their respective duties of care at common law and under the Occupiers Liability Ordinance (Cap. 314) ("OLO").
(2)	HKC breached its duty of care as principal contractor under Construction Sites (Safety) Regulations (Cap. 59I sub. leg.) ("CSSR") regs. 38A, 38B and 38O.

A.1 Chong's claims against Quiet & Cool and Yau Luen

11. On the OLO claim, much play was made in submission by Mr Hingorani (appearing for HKC) and Mr Wong (appearing for Ping Kai and Ping Kee) that the ladder could not constitute "premises". They suggested that, having been caused by a defective ladder, Chong's injury cannot be attributed to "dangers due to the state of the premises or to things done or omitted to be done on them" (see OLO s. 2(1)).

12. In their support, Mr Hingorani and Mr Wong cited Chapman J in Wheeler v. Copas [1981] 3 All ER 405 (at 408c-d):-

"The plaintiff puts his case to a considerable extent on the Occupiers' Liability Act 1957, but it seems to me that there may be considerable difficulty in relation to that because the Act is dealing with an occupier. It is true that it covers moveable structures, such as vessels, vehicles and aircraft. I do not doubt that in appropriate circumstances it could apply to a ladder, but I see considerable difficulty in saying that once the defendant had handed the ladder over to the plaintiff and his partner for the purpose of the bricklaying the defendant was still the occupier of this ladder."

They also mentioned Lam Yuet Kam v. Tsui Fong Fun, unrep., HCPI 235/2001, 9 October 2002, where Suffiad J stated (at §48):-

"[T]he cause of the accident was due to the defective ladder. This is not a case relating to dangerous premises or a danger on the premises, rather it is a case concerning defective or dangerous equipment brought along or provided by Mr Chan (for whom the 1st defendant must be vicariously liable)."

13. Although attracted at first to the notion that application of the OLO could be dismissed because a ladder cannot be premises, on further reflection I do not think that the analysis is so straightforward. Chong was required to work at a height on Site. Unless the occupier of the Site (whoever that might be) provided a means of access to that height, the premises (including the height from which Chong was expected to work) would constitute a danger. The danger would arise because of the failure to provide a safe means of access to that higher level of the premises in which Chong was supposed to install an air-conditioning unit.

14. The real question is whether any of the Remaining Defendants were "occupiers" and (if they were) whether they can rely on OLO ss. 3(3)(b)¹. According to Clerk & Lindsell on Torts (18th ed.), §10-09(p. 565):-

"Apart from owners and lessees, a person is likely to be regarded as an 'occupier' if he has sufficient degree of control over premises to be able to ensure their safety, and to appreciate that a failure on his part to use care may result in injury to a person coming on to them. The control need be neither entire nor exclusive. So someone with the immediate supervision and control of premises, such as a builder in de facto control of part of a house, may be an occupier, whether or not he has the power of permitting or prohibiting the entry of other person to it."

On that footing, both Yau Luen and Quiet & Cool would qualify as "occupiers" within the meaning of the OLO. Quiet & Cool as nominated sub-contractor for installing air-conditioners at the Site would have had sufficient supervision and control over working conditions to ensure that the Site was safe for its employees and agents to work. Similarly, Yau Luen would have had enough control of the Site to ensure safe working conditions for employees and agents.

15. Mr Chan's difficulty in ascribing liability to Quiet & Cool and Yau Luen is that each sub-contracted all or part of the work for which they were responsible at the Site to sub-contractors who were experienced in the installation of air-conditioners and who might reasonably have been expected in the exercise of their calling to appreciate and guard against the obvious and ordinary risks arising from installing air-conditioning units at a height.

16. Quiet & Cool, for instance, sub-contracted work to Yau Luen. The evidence of Chan Shun Kwong (also known as Tai Kong), the sole proprietor of Yau Luen, was to the effect that he had previously been engaged in air-conditioning installation work. There was no suggestion made in cross-examination that Yau Luen was inexperienced or incompetent. Chan Shun Kwong also mentioned that he had previously sub-contracted work to Siu Yip and knew that the work at the site which Siu Yip was asked to do was within Siu Yip's expertise and competence. This evidence was not challenged in cross-examination.

17. On the evidence, both Quiet & Cool and Yau Luen could reasonably expect their respective experienced sub-contractors (Yau Luen in the case of Quiet & Cool and Siu Yip in the case of Yau Luen) to know what they were doing and to appreciate the obvious fact that, if one uses ladders to install heavy air-conditioning units, safe ladders must be used. This is not a situation where a putative occupier has engaged a plainly incompetent contractor or failed to take steps to ensure that an appropriate person was hired to work in relevant premises. Even if Quiet & Cool and Yau Luen could be characterised as occupiers, they would be entitled to rely on OLO s. 3(3)(b) in their defence against Chong's claim. They complied with their common duty of care in the circumstances of this case.

18. Mr Chan did not press an argument that, regardless of the position on the OLO, Quiet & Cool and Yau Luen breached their respective duties of care owed at common law. Insofar as Quiet & Cool and Yau Luen can be said to have fulfilled their common duty of care under the OLO, they would also have met the standard of reasonable care required of them at common law.

19. Chong's evidence was that, prior to its use, he obtained the ladder from a room at the Site where air-conditioners and other ladders were stored. There was no evidence as to who owned the ladder or provided it for Chong's use. Presumably, Fong as employer would have arranged for the ladder to be made available to Chong. Beyond that I do not think that I can safely infer anything else in light of the paucity of evidence on the point. It is hard to see how I can attribute negligence at common law to Quiet & Cool or Yau Luen in respect of the provision of the ladder.

20. In my judgment Chong's claims against Quiet & Cool and Yau Luen fail.

A.3 Chong's claims against HKC

21. The relevant provisions of the CSSR (as at the time of Chong's accident) were as follows:-

(1)	Reg. 2:-
	"(1)	In these regulations, unless the context otherwise requires:-
	...
		'construction site' means a place where construction work is undertaken and also any area in the immediate vicinity of any such place which is used for the storage of materials or plant used or intended to be used for the purpose of the construction work;
	...
		'plant' includes any plant, equipment, gear, machinery, apparatus, or appliance, or any part thereof;
	...	(2) For the purposes of these regulations:-
		(a) a contractor is responsible for a construction site if he is undertaking construction work there or, where there is more than one contractor undertaking construction work at the site, if he is the principal contractor undertaking work there;
		(b) a contractor is responsible for any plant referred to in these regulations if it is located at a construction site for which he is responsible."

(2)	Reg. 38A:-
	"Without prejudice to the other provisions of this Part, the contractor responsible for any construction site shall ensure that:-
	(a)	there is, so far as is reasonably practicable, suitable and sufficient safe access to and egress from every place on the site at which any person at any time works, which access and egress shall be properly maintained; and
	(b)	every place on the site at which any person at any time works shall, so far as is reasonably practicable, be made and kept safe for any person working there."

(3)	Reg. 38B:-
	"Without prejudice to the other provisions of this Part, where work cannot safely be done on or from the ground or from part of a building or other permanent structure, the contractor responsible for the construction site concerned shall provide, place and position for use and properly maintain either scaffolds or, where appropriate, ladders or other means of support, all of which shall be sufficient, strong and suitable for the purpose."

(4)	Reg. 38O:-
	"(1) The contractor responsible for a construction site shall ensure that a ladder or a folding step-ladder is not used:-
		(a) unless it is of good construction, of suitable and sound material and of adequate strength for the purpose for which it is used and is properly maintained; and
		(b) if any rung thereof is missing or defective.
	..."

Since the date of the accident, CSSR Reg. 38O has been repealed.

22. Mr Chan says that HKC, as the principal contractor at the Site, is liable to Chong for breach of the statutory duties imposed on it by CSSR Reg. 38A, 38B and 38O. Mr Hingorani argues that Ping Kai and not HKC was the principal contractor at the Site within the terms of CSSR Reg. 2(2). Mr Wong denies Mr Hingorani's allegations about Ping Kai.

23. All counsel before me agreed that, where there were many contractors undertaking construction work at a site, there could only be one "principal contractor" or "contractor responsible for a construction site" within the terms of Reg. 2(2). This seems correct. If more than one contractor could be a "principal contractor," the words "or, where there is more than one contractor undertaking work at the site, if he is the principal contractor undertaking work there" would be superfluous. Reg. 2(2) has the effect that:-

(1)	where only 1 contractor is undertaking work, he is the contractor responsible for the construction site; and,
(2)	where there is more than 1 contractor undertaking work, only the "principal contractor" is the contractor responsible.

24. The question is then who is a "principal contractor", a term which the CSSR leaves undefined. Guidance on the application of CSSR Reg. 2(2) is given by Hooper J in Attorney General v. John Lok & Partners and another [1986] HKLR 325, at 335F-I:-

"A person can carry out, carry into practice or carry through construction work without actually performing the physical work himself. There have been many cases where a principal contractor has contracted for the carrying out f the work, but has in fact sub-contracted the whole of the operation to someone else. Indeed the case of Tom K Engineering & Construction Company Ltd. Crim App No. 2/78, unreported, was one such case. In my view, he can carry out the construction work even though he does not perform the physical work involved in the operation. He is undertaking construction work there if he is managing, organizing or supervising etc. the work. I am of the opinion that there is an implication in the use of the words 'is undertaking' that the contractor has made himself responsible for the carrying out of construction work which has been commenced or entered upon. It would be ludicrous if a head contractor or principal contractor having made himself responsible for the carrying out of certain works could avoid liability under these provisions by saying that though work had begun, he had not himself performed any physical work or acted in accordance with his contractual obligations. The whole purpose of this legislation is to make sure that the person having the primary responsibility under the contracts in relation to the carrying out or carrying into practice or carrying through the construction work, should be responsible for the site where that construction work has commenced."

Hence, the principal contractor would be the person who makes himself primarily responsible contractually for undertaking the whole of the construction work to be done at a site. That person may sub-contract all or part of the work (including the work of supervision) which he has agreed to carry out. But, even though he actually performs none or only some of the construction work which he has contractually undertaken, that person remains statutorily liable for any failure to observe the obligations imposed on a principal contractor by the CSSR.

25. Kwok Tin Yan ("Kwok"), HKC's executive director, gave evidence on the relationship between HKC and Ping Kai. Kwok stated that, despite having been invited by Sino to tender for the Site project, HKC was uninterested since its main business was construction, not renovation. But Wu Ming Sang ("Wu") of HKC's staff mentioned that Ma was interested in tendering for the work. The problem was that ECL was not prepared to engage Ma or Ping Kai as the main contractor on the Site project because ECL had not previously dealt with either.

26. Mr Kwok stated that a meeting was arranged between Ma and Ko Chin Fung ("Ko"), HKC's managing director. The outcome (Mr Kwok said) was that it was agreed that HKC would place a tender with ECL for the Site project on behalf of Ping Kai. The intention was that HKC would become the main contractor on the project "in name only" and "as between HKC on the one part and Ma and Ping Kai on the other part, Ma and Ping Kai would be the main contractor in fact".

27. According to Kwok the following were also agreed between Ma for Ping Kai and Ko for HKC:-

(1)	Ma and Ping Kai would be responsible for carrying out HKC's contract with ECL and be responsible for any claims arising as a result.
(2)	Ma and Ping Kai would indemnify HKC against all losses, liabilities, expenses and claims arising out of the Site project.
(3)	Ma or Ping Kai (and not HKC) would register with the Building Authority as the building contractor for the Site.
(4)	HKC would only pay Ma or Ping Kai upon receiving payments from ECL.
(5)	HKC would appoint a site representative to monitor the quality of the work done by Ma or Ping Kai.

Kwok referred to the arrangement between HKC and Ping Kai as one of "back-to-back contracts".

28. Kwok said that ECL was aware of the arrangement between HKC on the one hand and Ping Kai and Ma on the other. Indeed, so keen was ECL to secure HKC's involvement that, in consideration for HKC's promise to enter into the main contract with ECL in HKC's own name, ECL agreed to pay $1 million to HKC.

29. Ma has a different version of events. According to Ma, Wu told him that HKC was looking for sub-contractors to do general building work in future projects. Ma expressed an interest and Wu introduced him to HKC. Consequently, Ma did a few projects for HKC in late 1997 and early 1998.

30. Ma denies entering into an agreement of the nature alleged by Kwok. Ma stated that in June 1998 Kwok invited Ma to tender with HKC for builder's works at the Site project. Since Ma did not understand English, Kwok explained to him details of the tender in Chinese. On Ping Kai's behalf, Ma submitted an initial tender (which was restricted to builder's works) on about 30 June 1998. Since the specifications were revised on a number of occasions, the initial tender was also amended several times. But at no time did the scope of works for which Ping Kai tendered, ever include items, such as air-condition installation, for which there would be specialist sub-contractors.

31. Ma admits that he caused Ping Kee to file a Form BA10 ("the BA10") with the Building Authority. In the BA10 Ping Kee identifies itself as the building contractor for the Site. Ma says that he only did this because in July 1998 "[HKC] told me that since we were doing the builder's works we had to be responsible for it, and so we had to be the one to file a BA10 notice to the Building Authority". Ma filed the BA10 in the name of Ping Kee rather than Ping Kai because the former (but not the latter) was registered as a building contractor and only a registered contractor could complete the BA10.

32. Ma said that work commenced at the Site on 21 July 1998. He says that he later provided to ECL a Letter of Undertaking which guaranteed that the works would be carried out in accordance with specifications. He states that he did this because Kwok and Ko asked him to do so. He comments that: "This undertaking is to be given by the registered contractor who put in the BA10 notice, and the Employer had to know who was the registered contractor responsible for completing the BA10 notice." Ma agreed to Ko's request "since it was our obligations to carry out the builder's work properly as the sub-contractor and having given the BA10".

33. So much for the conflicting accounts by Kwok and Ma of what happened and of what was intended. In evaluating their evidence, it is useful to have regard to some contemporaneous documents.

34. The BA10 is dated 27 July 1998. It gives 27 July 1998 as the commencement date for work at the Site. It informed the Building Authority that Ping Kee had accepted appointment as the registered contractor appointed to carry out the works in compliance with the provisions of the Buildings Ordinance and Regulations.

35. By letter dated 29 August 1998 ("the August 1998 letter") Kwok acting on behalf of HKC wrote to the Ma acting on behalf of Ping Kai as follows:-

"Enclosed please find the letter of award for the captioned project [at the Site] for your signing.

Please be reminded that all terms and conditions stated in the Letter of Award between you and your company will be same as we make it with Entertainment City Ltd after receiving your signed document. Furthermore, all benefit such as payment, variation order (if any) will be released upon we receive the same from Entertainment City Ltd."

36. The August 1998 letter enclosed an unsigned letter ("the 1st award letter") from ECL to HKC confirming the award of a lump sum fixed price of $58,027,969 in respect of the Main Contract for alteration work at Tuen Mun Town Plaza I. The 1st award letter stated that it was "subject to and conditional upon your agreement to the terms and conditions as stated in our Tender Document together with the following supplementary conditions". Of the $58,027,969 mentioned in the 1st award letter, $33,631,969 was attributed to builder's works.

37. On the last page, the 1st award letter stated: "Unless and until a formal agreement is prepared and executed, this mutually confirmed Letter of Award shall constitute a binding contract between you and us". At the end of the 1st award letter, there was a space designated for signature on behalf of ECL and another space ("the Main Contractor space") provided for signature "For and on behalf of Main Contractor". Under those 2 spaces, HKC typed on the left side:-

"Yours faithfully,

For and on behalf of
Hong Kong Construction Co. Ltd."

Kwok signed on behalf of HKC beneath this typescript ("the HKC space"). To the right of the HKC space, HKC typed:-

"Confirmed & Accepted by:

For and on behalf of
Ping Kai Engineering Co., Ltd."

Ma signed on behalf of Ping Kai beneath this typescript ("the Ping Kai space") and dated his signature as having been affixed on 29 August 1998.

38. On 29 August 1998 Ping Kee executed a standard Form of Undertaking in the following terms:-

"To [ECL] (the Employer) in respect of Alteration & Addition Works for Tuen Mun Plaza (the Main Contract Works) at TMTL 209 (the Site)

We [Ping Kee] (the Main Contractor) undertake that in consideration of your selecting us as the Contractor for the said Contract Works, we will:-

A)	undertake to give the 'Letter of Guarantee' (a specimen of which is attached herewith);
B)	undertake to sign and endorse undated copies of the 'Form BA11' and 'Form BA13'; and
C.	submit the above and forward to you prior to any payment with respect to the Contract Works is payable to us."

39. Ping Kee also signed a standard "Form of Undertaking to be given by the Main Contractor to the Employer". The document is in the form of a letter to ECL whereby Ping Kee undertook due performance of the Main Contract Works in accordance with the provisions and stipulations of the Main Contract.

40. On 8 September 1998 ECL wrote to Quiet & Cool to confirm the award of the MVAC (that is, Mechanical Ventilation and Air-Conditioning) Installation Nominated Sub-Contract for a lump sum of $13 million. Quiet & Cool signed a copy of the letter to confirm acceptance of its terms on 14 September 1998 and returned the same to ECL. Section 6 ("Insurance") of ECL's letter provided (among other things) as follows:-

"You are required to effect the Employee's Compensation Insurance in accordance with the Specification-Preliminaries."

The letter was copied (among others) to HKC but not to Ping Kai or Ping Kee.

41. On 9 September 1998 HKC faxed to Ping Kai a copy of a letter of award ("the 2nd award letter") dated 8 September 1998. This 2nd award letter was addressed from ECL to HKC and confirmed the award of a lump sum fixed price of $59,027,969 in respect of the Main Contract at the Site. Of the total contract sum, $34,631,969 was attributed to builder's works. That was $1 million more than sum in the 1st award letter. This difference of $1 million was intended to go to HKC.

42. Section 4 ("Scope of Works in Phase") of the 2nd award letter stated:-

"It is expressly understood and agreed that the scope of works in each phase in which the Main Contractor shall be completed and handed over to the Employer shall be defined as the followings:-

Phase Description

I	All the Works in respect of Filling up Voids, structural opening for internal twin travelators, Alterations works for external single travelator, Demolition of ex-yaohan sign board, New Glass Wall Enclosure nearby the Internal twin travelators.
II	All the works at Shop Area; Installation of grease traps with all necessary drainage pipe works, Renovation to toilets.
III	All the Works at the rest of ex-yaoho area (except the Shop Area); Temporary chilled water supply to Jusco's Lease area.
IV	All the MVAC works with Testing and commissioning.
Last	All the works other than those mentioned in Phase I, II, III & IV,"

43. Section 7 ("Insurance provision") of the 2nd award letter stipulated:-

"An 'Employer Controlled' insurance programme will be taken out by us in the joint name of Employer/ Main Contractor and/or their Sub-Contractors, including the Nominated Sub-Contractors, to cover damage to the Contract Works and Public Liability as well as Employee's Compensation (except for Nominated Sub-Contractors Nominated and Suppliers). It is explicitly agreed that you are fully satisfied with the terms, exclusions, provisions and conditions contained in the Policy and you have allowed in the Contract Sum for indemnifying us against all exclusions and excess clauses as stated in the Policy.

If you consider the limit of indemnity is inadequate to cover your contractual obligations, you are at liberty to take out an additional Policy for the increase limit of indemnity but the additional premium shall be at your own expense."

44. The last page of the 2nd award letter was similar to that in the 1st award letter, save that ECL's signature appears on the 2nd award letter and the typescript in the Main Contractor space was replaced by the following: "Confirmed & Accepted by: For and on behalf of Hong Kong Construction Co. Ltd.". Kwok signed the 2nd award letter on 11 September 1998 in the HKC space typed in by HKC for its signature, while Ma signed on the same day in the Ping Kai space typed in by HKC for Ping Kai's signature.

45. On 11 September 1009 Ma faxed back to HKC a copy of the 2nd award letter duly signed by Ping Kai.

46. On 18 September 1998 HKC sent a copy of the 2nd award duly signed by HKC to ECL. This latter copy did not have the HKC and Ping Kai spaces. It was not signed by Ping Kai. On the other hand, HKC affixed its signature in the area designated by ECL for HKC's confirmation and acceptance.

47. The documents and the evidence point to the following contractual relationships among the parties:-

(1)	ECL engaged HKC as the main contractor on the Site project. There is no direct contract between ECL and Ping Kai. As Kwok himself said, ECL did want to contract with Ping Kai, as it had not dealt with Ping Kai previously. This was the reason why only the signatures of ECL and HKC appear on version of 2nd award letter returned by HKC to ECL on 18 September 1998. As main contractor, the scope of HKC's obligations included supervision of the MVAC works, including the air-condition installation work undertaken by Quiet & Cool as nominated sub-contractor. ECL paid HKC the sum of $1 million for agreeing to be the main contractor for the Site project.
(2)	HKC entered into a "back-to-back" arrangement with Ping Kai. In other words, HKC sub-contracted its obligations under its contract with ECL to Ping Kai. I am not persuaded by Ma's evidence that Ping Kai's involvement on the Site was restricted to builder's works. The words of the August 1998 letter are clear: the terms of engagement between HKC and Ping Kai would mirror those between ECL and HKC. Ma acknowledged and accepted this fact by signing first a copy of the 1st award letter and later a copy of the 2nd award letter. Thus, the scope of work of Ping Kai, as HKC's sub-contractor, also involved supervision of the MVAC works on the Site, including installation of air-conditioners by Quiet & Cool.
(3)	There was no evidence that Quiet & Cool entered into a contract (whether in writing, orally or by conduct) with either HKC or Ping Kai. In the absence of cogent material, I cannot assume that there was a direct relationship between Quiet & Cool and either HKC or Ping Kai. It appears that what ECL imposed on HKC, and in turn HKC on Ping Kai, was the contractual obligation to ensure (as part of the scope of HKC's and Ping Kai's respective works) that MVAC installation was properly and duly carried out by Quiet & Cool.

48. It follows from the foregoing findings and the discussion of Attorney General v. John Lok Partners above that HKC as main contractor was the principal contractor for the site within the terms of CSSR

Reg. 2(2). The fact that HKC sub-contracted all its contractual obligations to Ping Kai cannot, as Hooper J pointed out, absolve it from the consequences of its undertaking to ECL to be the main contractor responsible for the Site.

49. Interestingly, in its Amended Defence, HKC pleads as follows:-

"3. Save it is admitted that the 5th Defendant was engaged by the employer Entertainment City Ltd. ('the Employer') as the main contractor in respect of certain decoration and renovation works ('the Main Works') including, inter alia, air-conditioning work at the site in or about Jusco Department Store in Tuen Mun Town Plaza, New Territories, Hong Kong ('the site'), paragraph 1(c) of the Statement of Claim is denied and the Plaintiff is put to strict proof thereof. The 5th Defendant avers as follows:

(i)	that it was not the contractor undertaking the Main Works at the site and was therefore not the contractor responsible for the site within the meaning of the Construction Sites (Safety) Regulations, Cap. 59I;
(ii)	that it had, immediately after having main awarded the Main Works by the Employer, wholly subcontracted the Main Works to a contractor, Ping Kai Engineering Co., Limited ('Ping Kai') who undertook the Main Works in association with one Ma Hung Kwan trading as Ping Kee Construction Engineering Co. ('Ping Kee');
(iii)	that as evidence by a Form BA10 pursuant to Regulation 20 of the Building (Administration) regulations, Cap. 123A submitted by Ping Kee to the appointed Authorized Person in respect of the Main Works on or about 27th July 1998 which form was in turn submitted to the Building Department, Ping Kee was appointed the registered contractor to carry out the Main Works at the site and had commenced the same on 27th July 1998; and
(iv)	that Ping Kai and/or Ping Kee were, at all material times, the persons having actual occupation and control of the site and were therefore the contractors responsible for the site within the meaning of the Construction Sites (safety) Regulations, Cap. 59I and also occupiers of the site within the meaning of the Occupiers' Liability Ordinance, Cap. 314."

There is an admission by HKC in its Amended Defence to being the main contractor for the Site under a back-to-back arrangement. The inference of law to be drawn from that admission is that HKC is liable as principal contractor for any default in respect of CSSR regs. 38A, 38B and 38O.

50. I briefly consider some of the submissions raised by Mr Hingorani on why HKC should not be treated as the principal contractor of the Site under the CSSR.

51. Mr Hingorani attempted to differentiate the situation before and after 18 September 1998 (the date when HKC returned a signed version of the 2nd award letter to ECL). Before 18 September 1998 (Mr Hingorani submitted) there could only have been a relationship between ECL and Ping Kai since no binding contract had yet been signed between ECL and HKC. Given that Ping Kai had been admitted onto the Site in late July 1998 and commenced works there and that Ping Kai (through Ping Kee) had submitted a BA10 and a Form of Undertaking before 18 September 1998, the inference (Mr Hingorani suggested) must be that, whatever the position was after 18 September 1998, Ping Kai was in charge of the Site as main contractor on 8 September 1998 when the accident occurred.

52. I disagree. Mr Hingorani's case is at odds with the Amended Defence. The latter does not draw any difference between the period before and after 18 September 1998. The case is also at odds with Kwok's evidence. Kwok characterised the arrangement between HKC and Ping Kai as being "back-to-back". He did not distinguish between the period before and after 18 September 1998 in terms of the existence of a back-to-back arrangement.

53. More fundamentally, Mr Hingorani's argument is contrary to the evidence. Thus, documents show that from the beginning HKC was heavily involved in the Site project. For example, the minutes of a project site meeting on 24 July 1998 record HKC as having been in attendance in the persons of F Y Cheng ("Cheng"), K F Yu ("Yu") and Ma. Cheng and Yu were employees of HKC charged with supervising Ping Kai's work on-site. Although Ma worked for Ping Kai, he is listed as having attended on behalf of HKC, because as far as everyone was concerned HKC was going to be the main contractor on the Site. In item §5 headed "Main Contract", a number of tasks were assigned to HKC (for example, submission of an organisation chart, provision of a master programme indicating a critical path, provision of a BA10, submission of a site office location, provision of a sequence of work, provision of insurance and implementation of site safety and fire safety measures) which one would expect to have been given to Ping Kai if (as Mr Hingorani suggests) HKC was not involved as main contractor until after 18 September 1998. It may have been the case (as Kwok said in the witness box) that some or all of those tasks were passed on by HKC to Ping Kai as HKC's back-to-back sub-contractor. But that does not change the reality that HKC was (and was universally regarded as) the main contractor responsible for the Site as early as July 1998.

54. It may be the case that the formal contracts regulating the parties' relationships among each other were not all signed until 18 September 1998. But it seems that, taking the evidence as a whole, the formal documents executed at that later time were merely intended to record in writing the arrangements orally worked out and agreed among the parties beforehand.

55. Mr Hingorani attached significant weight to the fact that Ping Kee on behalf of Ping Kai submitted a BA10 and Letter of Undertaking. These would conventionally be done by a main contractor. Mr Hingorani asked rhetorically: Why would Ping Kee undertake the heavy responsibilities associated consequential on the filing of such documents unless it was the main contractor?

56. Here I accept Ma's evidence that he filed such documents because HKC asked him to do so. Ma wanted the work at the site (which in monetary terms was the largest he had ever undertaken). He thought Ping Kai could do a good job. Ping Kai was not registered as a contractor with the Building Authority, but Ping Kee was. Ma saw no harm in Ping Kee filing the BA10 and Letter of Undertaking at HKC's instruction. In so doing he did not pay any regard to the fact that the standard forms once completed would identify Ping Kee as the main contractor on the Site. Ma is not a lawyer. His English is poor. He wanted to get on with the work. If that meant filing the BA10 and Letter of Undertaking, so be it.

57. I should not be taken to be saying that a registered person can sign a BA10 or a Letter of Undertaking lightly. Undoubtedly by signing such documents, a person assumes responsibilities and liabilities towards the Building Authority and an Employer. But that serious consequence is different from the limited issue before me here, namely, to determine in the specific circumstances of this case who the principal contractor with responsibility for the Site was.

58. Mr Hingorani also put weight on the fact that much correspondence between HKC and various sub-contractors was copied by HKC to Ping Kai for action by the latter. Ping Kai personnel even corresponded with sub-contractors using HKC letterhead. These circumstances seem to me to be consistent with my conclusion and the case pleaded in Amended Defence §3 that HKC sub-contracted its obligations under the Main Contract to Ping Kai.

59. Given that HKC was the principal contractor, was it in breach of CSSR regs. 38A, 38B and 38C as Mr Chan alleges? In my judgment, it breached all 3 regulations.

60. The ladder provided to Chong was clearly sub-standard in violation of Reg. 38O. A proper ladder would not have rungs which break when used.

61. Given the ladder was the means provided for access to higher levels of the Site, the ladder could not have been regarded as a safe means of access to such heights. There was thus a violation of Reg. 38A.

62. There was evidence from Yau Luen that metal scaffolds (not on wheels) were available at the Site. It is unclear how many scaffolds were provided or how many were in use at the time of the accident. In order to climb up to the working platform of a metal scaffold which was at a height of 4 to 5 feet above ground, it would still be necessary to use a ladder. Therefore, it seems to me that it can hardly be said that any available metal scaffold was safer to use than the ladder. Further, the scaffolds supplied were not convenient. To be moved from place to place, they had to be dismantled and then re-instated. This feature would hardly render a scaffold reasonable or practical for a worker such as Chong to use, since he would have to install a number of air-conditioning units in different places in the course of a day. For all these reasons, I find that there was a breach of Reg. 38B.

63. I conclude that HKC (and not Ping Kai) was liable to Chong as principal contractor for breach of the statutory duties imposed by CSSR regs. 38A, 38B and 38O.

64. My conclusion on this issue makes it unnecessary for me to determine whether Mr Chan is right in suggesting that HKC is estopped by Judge Yu's findings in connection with the incidence of compensation under the ECO from denying that HKC is the principal contractor under the CSSR.

A.4 Contributory negligence?

65. HKC's Amended Defence alleges that Chong was contributorily negligent by:-

(1)	"Failing to take any or any adequate care for his own safety";
(2)	"Exposing himself to the risk of danger he knew or ought to have known"; and,
(3)	"Failing to take reasonable care for his own safety and to take necessary measures to prevent the said accident".

I reject the allegation. The Amended Defence is vague and unparticularised as to what precisely Chong ought to have done (but did not) or ought not to have done (but did). The evidence indicates that Chong had little option except to use the ladder which had been provided for his work. As for Chong's possible use of the metal scaffolds mentioned by Yau Luen, see above.

B. HKC's claims

B.1 HKC's claims against Quiet & Cool

66. By Notice of Contribution dated 25 October 2003 HKC claimed that Quiet & Cool was liable to contribute towards any damages for which HKC may be found liable. The Notice alleges the following in support of its claim:-[

(1)	Quiet & Cool failed to effect employees compensation insurance; and,
(2)	Quiet & Cool is liable to make a contribution to HKC under the Civil Liability (Contribution) Ordinance (Cap. 377) ("CLCO").

67. Mr Hingorani's argument as to the consequences of Quiet & Cool's failure to effect employees compensation insurance is convoluted. It may be summarised as follows:-

(1)	By section 7 of the 2nd award letter the insurance taken out by ECL did not cover employees' compensation in relation to persons employed by the nominated sub-contractors on the project.
(2)	Quiet & Cool's letter of award in section 6 required the taking out of employees' compensation.
(3)	To lend business efficacy to the agreement between ECL and Quiet & Cool, it was an implied term that:-
	"(i) Quiet & Cool would carry out their works in accordance with the requirements of the terms and conditions of Standard Form of Sub-Contract for nominated subcontractors used in Hong Kong.
	(ii) Under the Standard Form of Sub-Contract for nominated sub-contractors for use in Hong Kong, the sub-contractor was required to indemnify the Main Contractor as pleaded by [HKC]."
(4)	"Quiet & Cool did not file any defence to [HKC's] contribution notice and is therefore to be taken as having admitted the same."
(5)	"Quiet & Cool confirmed the same by their letter2 of 16.1.2002 to [HKC] ..."

68. Mr Hingorani attempts by his sustained series of premises to reach a stage where he can rely on cl. 3 of the Standard Form of Sub-Contract in use when a sub-contractor is nominated under the Standard Form of Building Contract for Hong Kong (1st RICS (HK Branch) edition, 1986). Clause 3 stipulates that the relevant sub-contractor shall indemnify the main contractor against loss or damage resulting from the sub-contractor's performance of its obligations. See §§6-8 of HKC's Statement of Claim dated 7 November 2003 against Quiet & Cool.

69. I do not follow Mr Hingorani's reasoning. I do not understand how the failure by Quiet & Cool to take out employees' compensation in accordance with its obligations to ECL gives rise to a claim for contribution against it by HKC. I do not see why the implied term suggested needs to be read into the contract between ECL and Quiet & Cool to give it business efficacy. Nor am I certain how reading a term into a contract between ECL and Quiet & Cool, gives rise to a claim by HKC which is not privy to that contract. This is especially so where the alleged implied term is that Quiet & Cool should enter into a specific form of sub-contract which in fact Quiet & Cool never entered into with HKC.

70. Mr Hingorani says that Quiet & Cool in failing to file a Defence must be taken to have admitted HKC's claim for contribution. I do not think that it follows from the failure to file a Defence that a Court is bound to give judgment when the alleged claim does not make sense or is ill-founded. See, for example, RHC Order 19 Rule 7 and Hong Kong Civil Procedure 2004 Note 19/7/13 (pp. 333-4). The Court retains a discretion in the matter.

71. I do not see that the 16 January 2002 letter (written more than a year before HKC raised its claims in October and November 2003 by a Notice of Contribution and a Statement of Claim against Quiet & Cool) advances Mr Hingorani's contentions. Properly construed, I do not think the letter is anything other than an acceptance by Quiet & Cool of any claim which might be made against HKC as a result of Quiet & Cool's negligent performance of its obligations. The letter does not excuse HKC from having to establish that Quiet & Cool was negligent in the first place. In any event, whatever Quiet & Cool's letter might mean, it cannot amount to an admission of any claim whatsoever which HKC might plead against Quiet & Cool.

72. For the above reasons, I reject the 1st limb of HKC's claim for contribution against Quiet & Cool.

73. CLCO s. 3(1) provides that to maintain a claim for contribution a defendant must establish that he and the alleged contributor are jointly or severally liable in respect of the "same damage".

74. CLCO s. 2(3) stipulates:-

"A person is liable in respect of any damage for the purposes of this Ordinance if the person who suffered it (or anyone representing his estate or dependents) is entitled to recover compensations from him in respect of that damage (whatever the legal basis of his liability, whether tort, breach of contract, breach of trust or otherwise)."

75. The relevant damage is that suffered by Chong. In respect of that, the test for a claim of contribution is as has been stated by Lord Bingham in Royal Brompton Hospital NHS Trust v. Hammond [2002] 1 WLR 1397 (HL), at §6 (pp. 1401-2):-

"When any claim for contribution falls to be decided the following questions in my opinion arise: (1) What damage has A suffered? (2) Is B liable to A in respect of that damage? (3) Is C liable to A in respect of that damage or some of it? ... I do not think it matters greatly whether, in phrasing these questions, one speaks (as the [CLCO] does) of 'damage' or of 'loss' or 'harm,' provided it is borne in mind that 'damage' does not mean 'damages' ... and that B's right to contribution by C depends on the damage, loss or harm for which B is liable to A corresponding (even if in part only) with the damage, loss or harm for which C is liable to A."

76. I have explained above why in my view Quiet & Cool cannot have been liable for Chong's accident. It follows that an essential ingredients for HKC's claim in contribution to succeed (namely, that Quiet & Cool is liable in whole or part for Chong's injury) is missing. HKC's claim against Quiet & Cool for contribution under the CLCO must accordingly fail.

77. I conclude that HKC has no basis for claiming contribution against Quiet & Cool.

B.2 HKC's claims against Ping Kai and Ping Kee

78. HKC claims contribution or indemnity from Ping Kai or Ping Kee under a number of heads:-

(1) under CSSR s. 2(2);

(2) under an express oral agreement for an indemnity;

(3) under the CLCO;

(4) under the OLO; and,

(5) at common law.

79. Mr Hingorani advanced the possibility that HKC and Ping Kai were joint principal contractors under the CSSR. In my view, the evidence does not justify such a conclusion. Ping Kai was simply a sub-contractor of HKC. I reject the claim by HKC based on the CSSR.

80. As for an alleged oral indemnity, I am not persuaded that Ma orally agreed with Ko to indemnify HKC as alleged by Kwok in his witness statement. Kwok was not impressive on this point. In the course of cross-examination, Mr Wong pointed out to Kwok that, according to him, an indemnity was expressly agreed between HKC and Ma. Kwok said that he could not remember. Mr Wong directed Kwok to §5 of his witness statement. Kwok said that this is what his statement said and matters were carried out in accordance with the spirit of the contract between HKC and Ping Kai. Mr Wong then suggested to Kwok that he could not now recall whether the question of indemnity was discussed or agreed. Kwok replied in the affirmative. Despite Mr Hingorani's submissions to the contrary, I do not see why I should take Kwok's statement otherwise than at face value. In light of his present inability to recall whether or not an express indemnity was given by Ma on behalf of Ping Kai, I am unable to hold that one was agreed.

81. I do not think that there can be a claim under the CLCO. As sub-contractor, I do not see in what way Ping Kai could have been liable in respect of the damage suffered by Chong. Again, an important ingredient for ascribing liability under the CLCO is missing. The choice of Quiet & Cool as sub-contractor was not made by Ping Kai. ECL nominated Quiet & Cool for the MVAC installation. Ping Kai had no say in the matter. Quiet & Cool chose a competent sub-contractor (Yau Luen) to carry out installation of air-conditioning. In turn, Yau Luen cannot be faulted for choosing Siu Yip. In the premises, Ping Kai can hardly be liable for Fong's default, further down the line of sub-contractors, in providing a safe system of work for Chong.

82. Finally, for the same reasons that Quiet & Cool and Yau Luen cannot be liable under the OLO and at common law, Ping Kai cannot be liable under either head.

83. HKC's claim for contribution or indemnity against Ping Kai fails.

84. As for Ping Kee, there is likewise no basis for the claim against it. That case must also be rejected.

C. Ping Kai's counterclaims against HKC

85. Ping Kai advances 2 counterclaims against HKC.

86. First, Ping Kai alleges that HKC negligently failed to inform ECL of the accident within the time required by the insurance policy effected by ECL. As a result, Ping Kai lost the possibility of being reimbursed against liability to Chong by the insurers. Had it been able to make a claim under the insurance policy in respect of Chong's injury, Ping Kai would have claimed the amount for which it would have to indemnify or make contribution to HKC. There would have been a complete set-off by Ping Kai of HKC's claim against monies receivable under the insurance policy.

87. Second, Ping Kai says that HKC owes $500,000 for works carried out on the Site. That amount is evidenced by an Invoice

No. 01/02113 dated 27 December 2001. There is no dispute that HKC owes that amount. HKC claims to be entitled to set-off that amount against any contribution payable by Ping Kai to HKC in respect of Chong's injury.

88. In light of my conclusions, there is no need for me to determine Ping Kai's 1st head of counterclaim. As for the 2nd head of counterclaim, HKC not being entitled to any contribution from Ping Kai, the $500,000 claimed must be payable immediately.

D. Quantum

D.1 Pain, suffering and loss of amenities

89. Chong claims $400,000 under this head. HKC says that the appropriate amount should be $250,000. Although not always consistent, recent cases (for instance: Lau Kin Wah v. Lam Shu Kan [2000] HKLRD (Yearbook) 379; Ho Sik Tung v. Lau Kin Sun [2001] HKLRD (Yearbook) 429; Wong Woon Hei v. Dickson Construction Co. Ltd., unrep., HCPI 521/2000, 3 July 2001; Lai Kwan Ming v. Lee Yin Hing t/a King Yip Company and other, unrep., HCPI 765/2000, 11 October 2001; Chan Yan Nam v. Hui Ka Ming t/a Kar Lee Engineering and others, unrep., HCPI 1169/2000, 8 July 2002;) suggest that awards for similar injuries are conventionally in a range between $350,000 and $400,000. I award $350,000 under this head.

D.2 Pre-trial loss of earnings

90. Chong earned about $10,000 per month at the time of the accident.

91. There was evidence from Yau Luen that air-conditioning workers now receive about $800 per day and average between 20 and 22 working days per month. This being a rough guess from Yau Luen, I take the lower figure of 20 working days per month. On that basis, but for his accident, Chong would now be earning about $16,000 per month. Chong's median earning would be $13,000 per month (that is, {($10,000 + $16,000) ÷ 2}).

92. Chong was on sick leave from 8 September 1998 to 6 October 1999, about 13 months.

93. Chong cannot return to his pre-injury job by reason of his injury. I accept Mr Chan's submission that Chong can only be expected to earn about $6,000 per month by taking up light duty jobs.

94. Allowing Chong about 3 months to look for a suitable job after sick leave, one obtains the following calculation for pre-trial loss of earning:-

$13,000 x 16 months + ($13,000 - $6,000) x (62.5 - 16 months) = $533,500.

D.3 Future loss of earnings

95. Chong is now 48 years old. I agree with Mr Chan's suggested multiplier of 9. That produces the following calculation of future loss of earnings:-

($16,000 - $6,000) x 12 months x 9 = $1,080,000.

D.4 Loss of retirement benefit

96. Chong should be entitled to the following:-

(1)	From 1 December 2000 to 26 November 2003:-
	($13,000 - $6,000) x 36 months x 5% = $12,600.
(2)	For future loss of earnings:-
	$1,080,000 x 5% = $54,000.

The total amount is $66,600.

D.5 Loss of earning capacity

97. I agree with Mr Chan's figure of $100,000 for this head.

D.6 Medical expenses

98. I allow Chong's claim for medical and other expenses in the amount of $16,500.

99. I accept that Chong has a significant chance of developing degenerative arthritis of the left ankle which may require future surgical treatment. I accordingly accept Chong's claim of $120,000 for future medical expenses.

D.7 Interest

100. Interest on all pre-trial special damages is to run from the date of accident to date of judgment at half the judgment rate.

101. Interest on the award for pain, suffering and loss of amenities is to run from the date of service of the writ until date of judgment at 2% per annum.

D.8 Employees' compensation award

102. Chong must give credit for the employees' compensation of $382,077.42 (inclusive of interest) received by him.

D.9 Summary of damages

III. Conclusion

104. There will be final judgment in Chong's favour against Fong, Siu Yip and HKC jointly and severally for the damages summarised above. Interest is to run on the judgment debt from date of judgment until payment at the judgment rate.

105. Chong's claims against Quiet & Cool and Yau Luen are dismissed.

106. HKC's claims against Quiet & Cool, Ping Kai and Ping Kee are dismissed.

107. There will be judgment in Ping Kai's favour against HKC for the amount of $500,000. Interest is awarded on that amount at 1% over Hong Kong prime from the date of the Counterclaim (24 June 2002) until date of judgment and thereafter at the judgment rate.

108. I make the following Orders Nisi:-

(1)	Chong is to have the costs of his claim against HKC and (insofar as not already awarded) the costs of his claims against Fong and Siu Yip.
(2)	Yau Luen and Quiet & Cool are to have their costs against Chong.
(3)	As against HKC, Quiet & Cool is to have its costs of and occasioned by HKC's Notice of Contribution and HKC's Statement of Claim against Quiet & Cool.
(4)	As against HKC, Ping Kai and Ping Kee are to have their costs of defending HKC's third party proceedings against them as well as the costs of their Counterclaims against HKC.
(5)	All costs are to be taxed if not agreed.
(6)	Chong's own costs are to be taxed in accordance with Legal Aid Regulations.

1 OLO s. 2 sets out the duty of care owed by an occupier as follows: "The common duty of care is a duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there." The "circumstances" mentioned in s. 3(2) are defined in ss. 3(3)(a) and (b). In particular s. 3(3)(b) provides: "The circumstances relevant for the present purpose include the degree of care, and want of care, which would ordinarily be looked for in such a visitor, so that (for example) in proper cases:-... (b) an occupier may expect that a person, in the exercise of his calling will appreciate and guard against any special risks ordinarily incident to it, so far as the occupier leaves him free to do so".

2 That letter from Quiet & Cool's Deputy General Manager (Eddie Yu) to HKC's Ko and Lawrence Mak reads: "Refer to the captioned [that is, HCPI No.742/2001] we confirmed that we will be responsible for any claim and loss and damage arising from this case for your company and if there is any loss which cannot be settle by this contract, we are willing to deduct the cost from any other contract with your company. Thank you for your kind attention."