RAI BALARAM v. GURUNG GUMAN SINGH AND GURUNG TOL PRASAD, TRADING AS T&K UNITED (A FIRM) AND OTHERS

DCEC 1654/2023

[2026] HKDC 959

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 1654 OF 2023

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JUDGMENT

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INTRODUCTION

1.  In the present case, the Applicant seeks employees’ compensation against the 1^st, 2^nd, and 4^th Respondents (collectively “Respondents”) pursuant to sections 9, 10 and 10A of the Employees’ Compensation Ordinance (Cap. 282) (“ECO”) in relation to a workplace accident which occurred on 2 August 2021.

2.  Interlocutory judgment was entered against the 1^st and 2^nd Respondents on 2 August 2024, leaving compensation to be assessed. The 1^st and 2^nd Respondents were also ordered to pay the Applicant’s costs on liability up to that date.

3.  By a consent summons dated 30 April 2026 (“Summons”), the Applicant and the 3^rd Respondent applied for an order that:-

(1)  Leave be granted to the Applicant to issue and serve a writ of subpoena on 王柏堅 (“Mr Wong”), the vice safety manager of the 3^rd Respondent, to testify in the trial as the Applicant’s witness;

(2)  The Applicant’s claims against the 3^rd Respondent be discontinued;

(3)  Leave be granted to the 3^rd Respondent to (a) be excused from attending the trial on the issues of liability and quantum, and (b) attend the hearing on the issue of costs only; and

(4)  Costs of the 3^rd Respondent in the action be reserved and determined upon the conclusion of the trial.

4.  An order in terms of the Summons was made on 7 May 2026. Hence, the proceedings against the 3^rd Respondent were discontinued.

5.  The writ of subpoena on Mr Wong was issued on 15 May 2026.

6.  Accordingly, the trial proceeds against (1) only the 4^th Respondent on liability issue; and (2) the Respondents on assessment of compensation.

7.  The 4^th Respondent was formerly legally represented. On 10 March 2026, the 4^th Respondent filed and served a Notice to Act in Person.

8.  The Applicant was represented by counsel Mr Kelvin Leung in trial. Following his written opening submissions dated 8 May 2026, Mr Leung supplemented his submissions by the statement of compensation on 15 May 2026.

9.  Upon reviewing the statement of compensation, it became apparent to the Court that the periodic payments the Applicant had received exceeded the compensation for which he is claiming under sections 10 and 10A of the ECO. For that reason, Mr Leung submits that the Court need not deal with the Applicant’s claims under those two sections.

10.  The Respondents did not send any representatives to attend the trial. Having read the affirmation of service, I am satisfied that notice of the trial had been duly given to the Respondents and that it was appropriate to proceed with the trial in their absence pursuant to Order 35 rule 1(2) of the Rules of the District Court (Cap. 336H).

11.  The Applicant and Mr Wong gave oral evidence at the trial. As the Respondents did not attend the trial, the evidence of the Applicant and Mr Wong was not challenged.

THE ACCIDENT AND INJURIES

12.  At the time of the Accident (as defined below), the Applicant was employed by the 1^st Respondent as a construction worker and was assigned to work at the Site (as defined below).

13.  On the morning of 2 August 2021, the Applicant was working at a construction site known as Hopewell Centre II, Wanchai, Hong Kong (“Site”). While he was working with a ganger to take measurement of a metal frame with a metal measuring tape, the ganger suddenly snatched the metal tape from him. As a result, the metal tape cut along his right hand, causing injuries to his right palm and right middle finger (“Accident”).

14.  Following the Accident, the Applicant was sent to the Accident and Emergency Department of Ruttonjee & Tang Shiu Kin Hospital for medical treatment. Physical examination of his right hand revealed a 3 to 4 cm deep laceration over zone 3 with oozing, and another 1 to 2 cm deep laceration over the pulp of his right middle finger. X-ray showed no obvious fracture.

15.  The Applicant was transferred to the Department of Orthopaedics of the Pamela Youde Nethersole Eastern Hospital on the same day. He underwent surgery, which revealed that his index finger radial digital nerve and artery were torn, the adductor pollicis was partially torn, and the middle finger FDP tendon was partially cut. Branches of the ulnar digital nerve and artery were likely torn.

16.  The Applicant was discharged on 3 August 2021 and was referred to occupational therapy for rehabilitation.

17.  There is a small discrepancy with respect to the time of the Accident. The medical report of the Ruttonjee Hospital dated 28 November 2023 reportedly stated the time of the Accident was at around 9am (and the Applicant was admitted to the hospital at 9:27am); whilst the Applicant’s own evidence suggests that the Accident took place at about 10am.[1] I do not consider this small discrepancy affects the credibility of the Applicant’s account of the Accident. His account of the Accident was corroborated by contemporaneous medical records, which reported that the injuries suffered by the Applicant were caused by a metal measuring tape. I accept the Applicant’s account of the Accident, and find that the Accident took place in the course of the employment with the 1^st Respondent. I also accept that the Applicant’s injuries were caused by the Accident. 

WHETHER THE 4^TH RESPONDENT IS THE PRINCIPAL CONTRACTOR

18.  The Applicant’s case against the 4^th Respondent is that the 4^th Respondent at the material times was a principal contractor within the meaning of section 24(1) of the ECO, and is therefore liable to pay employees’ compensation to the Applicant.

19.  Section 24(1) of the ECO provides that:-

“(1) Where any person (in this section referred to as the principal contractor), in the course of or for the purposes of his trade or business, contracts with a sub-contractor for the execution by or under the sub-contractor of the whole or any part of any work undertaken by the principal contractor, the principal contractor shall be liable to pay to any employee employed by that sub-contractor or by any other sub-contractor in the execution of the work any compensation under this Ordinance which the principal contractor would have been liable to pay if that employee had been immediately employed by him ...”

20.  In Poon Hau Kei v Ho Shui Keung [1999] 2 HKC 242 at 247B-E, the Court of Appeal held that in order to bring a claim under section 24(1) of the ECO, it must be shown that:-

(1)  There must be work undertaken by the alleged principal contractor;

(2)  The work must be in the course of, or for the purpose of, the alleged principal contractor’s trade or business; and

(3)  The alleged principal contractor must contract with another person for the execution of the whole, or some part, of the work.

21.  The Applicant contends that the 4^th Respondent, as the principal contractor, contracted work of the Site to the 2^nd Respondent, which in turn contracted work to the 1^st Respondent, who employed the Applicant.

22.  The Answer filed by the 4^th Respondent on 15 April 2025 contained nothing but non-admissions. The 4^th Respondent also confirmed and elected not to adduce any evidence.[2]

23.  Having considered the evidence before me, I am of the view, and so find, that the 4^th Respondent was the principal contractor at the time of the Accident for the following reasons:

(1)  First, according to Mr Wong’s witness statement, the 4^th Respondent was engaged by Hopewell Holdings Limited to perform slipform work at the Site.[3] The 4^th Respondent then sub-contracted the slipform work to the 2^nd Respondent, who further sub-contracted the work to the 1^st Respondent, who then employed the Applicant.[4]  This is consistent with the Applicant’s case.

(2)  Second, as reflected from a quotation form dated 29 March 2021 (“Quotation Form”) signed by both the 2^nd and 4^th Respondents, the 2^nd Respondent agreed to supply day work labours to the 4^th Respondent for the slipform erection and operation for the HC2 Development Project. At trial, Mr Wong, who had been subpoenaed to give oral evidence at trial, confirmed that the “HC2 Development Project” refers to the construction project at Hopewell Centre. The Quotation Form also stated that the 4^th Respondent would provide labour and third party insurance, all necessary equipment, materials, hand tools, and consumables.

(3)  Third, a “事實聲明書” signed by the 2^nd Respondent (“Declaration”) dated 28 August 2024 also refers to the Quotation Form. The Declaration states that upon receiving notice from the 4^th Respondent in early March 2021 to commence construction work at the Site, the 2^nd Respondent decided to sub-contract part of the work to the 1^st Respondent, who in turn employed the Applicant.[5]  

(4)  Fourth, the employment relationship between the Applicant and the 1^st Respondent was supported by the written employment contract between the said parties dated 29 May 2021.

(5)  Fifth, by a letter dated 30 April 2021, Wetherall Investments Limited informed the 3^rd Respondent that the 4^th Respondent had been appointed by direct contract to carry out the erection and operation of slipform, tableform and related formworks for the Hopewell Centre II Development with effect from 30 April 2021.

(6)  Sixth, the insurance policy shows that the 4^th Respondent and/or its sub-contractors are the insured parties under the Employees’ Compensation Insurance for the slipform works at Hopewell Centre II Development from 23 June 2021 to 8 January 2022.

24.  As I find that the 4^th Respondent was a principal contractor within the meaning of section 24(1) of the ECO, it is therefore liable to pay employees’ compensation to the Applicant.

COMPENSATION UNDER THE ECO

(A)  Compensation under sections 10 and 10A of the ECO

25.  The Applicant received periodical payments in the total sum of HK$429,916.18 from the 2^nd Respondent from August 2021 to July 2023. This is also confirmed by the 2^nd Respondent in the Declaration.

26.  As this sum exceeds the compensation sought by the Applicant under sections 10 and 10A of the ECO (being HK$414,215.47 in total), Mr Leung submits that it becomes unnecessary for the Court to assess compensation under those heads.

(B)  Compensation under section 9 of the ECO

27.  Pursuant to section 10(4) of the ECO, an employer is not allowed to deduct periodical payments from any amount of compensation payable under sections 6, 7, 8 or 9. Therefore, even though credit should be given to the periodical payments received by the Applicant with respect to the compensation payable under sections 10 and 10A, the award under section 9 is not affected: Kan Wai Ming v Hong Kong Airport Services Limited [2011] 3 HKLRD 497 (CA) at §32.

28.  The Applicant does not dispute that his monthly income at the time of the Accident was HK$20,422.50,[6] as stated in Form 2 filed by the 1^st Respondent.

29.  In the Certificate of Review of Assessment (“Form 9”) dated 24 August 2023, the Employees’ Compensation (Ordinary Assessment) Board assessed the Applicant’s permanent loss of earning capacity at 5%.

30.  There is no appeal against Form 9. Therefore, I accept the matters stated in Form 9 as conclusive evidence for the purpose of assessing compensation: Ng Ming Cheong v Mass Transit Railway Corp [1997] HKLRD 1231 (CA) at 1236G-1237B.

31.  The Applicant was aged 48 at the time of the Accident. Pursuant to section 7(1)(b) of the ECO, the appropriate multiplier is 72. Adopting a loss of earning capacity of 5%, the compensation under section 9 of the ECO shall be:-

HK$20,422.5 x 72 x 5% = HK$73,521

SUMMARY

32.  For the reasons set out above, I assess the net compensation payable by the Respondents to the Applicant at HK$73,521. Interest shall accrue on this sum at half judgment rate from the date of the Accident (i.e. 2 August 2021) to the date of judgment, and thereafter at judgment rate until payment in full.

COSTS

33.  During closing submissions, Mr Leung handed up a 5-page submissions on costs, together with 4 annexes totaling 15 pages. Mr Leung also informed the Court that the Respondents had not been provided with the costs submissions. His explanation was that costs are part of litigation and the Respondents had given up their right to attend the trial.

34.  As the Respondents have not been provided with the Applicant’s costs submissions in advance, they are unable to respond thereto. The following observations are accordingly made without hearing the said Respondents. In such circumstances, I am only prepared to make a costs order nisi.

35.  In respect of the Respondents (except the 3^rd Respondent against whom this action has been discontinued), Mr Leung submits that they should bear the costs of the Applicant.

36.  Regarding the 3^rd Respondent, the action against it has been discontinued. Mr Leung does not dispute that the 3^rd Respondent is entitled to its costs, but submits that those costs should be borne by the 4^th Respondent for the following reasons:-

(1)  At the time of the Accident, the Applicant did not know who the main contractor was. A letter from the Buildings Department dated 13 July 2022 (“Buildings Department Letter”) identified the 3^rd Respondent as the Registered General Building Contractor (“RGBC”) (i.e. main contractor) of the Site, so it was joined as a respondent.

(2)  In the course of the action, the 3^rd Respondent disclosed materials showing that the 4^th Respondent was the principal contractor of the 2^nd Respondent and the main contractor for the slipform works to which the Applicant’s injury was related.

(3)  On 19 April 2024, the Applicant’s solicitors wrote to the 4^th Respondent about the Applicant’s injuries, but received no response.

(4)  On 20 November 2024, the Applicant’s solicitors again wrote to the 4^th Respondent, inviting it to admit that it was the principal contractor so that the action against the 3^rd Respondent could be discontinued. The 4^th Respondent refused to make any admission.

(5)  The 4^th Respondent was therefore joined into the action by an order dated 26 November 2024. It made no admission in its Answer, adduced no evidence, and filed no witness statement.

37.  Therefore, it is Mr Leung’s submissions that had the 3^rd Respondent not been joined, the Applicant would not have discovered that the 4^th Respondent was the principal contractor. Owing to the 4^th Respondent’s uncooperative conduct, the costs of the 3^rd Respondent were incurred. Mr Leung’s primary position is that the Court should make a Sanderson order, or alternatively, a Bullock order.

38.  The general rule is that the applicant should pay the costs of the discontinued respondent unless he can satisfy the Court that there are circumstances that clearly justify departure from the general principles. In each case, the question is whether it was reasonable for the plaintiff to proceed against the successful defendant. The Court has an unfettered discretion in such matters, provided such discretion is exercised judicially with good reasons: Kwong Chi Wa v Chan Kwong Cheung Jack [2019] 5 HKLRD 154 at §19 (per HHJ Andrew Li).

39.  In my view, the circumstances of the present case justify a departure from the general rule. At the time of the Accident, the Applicant could not ascertain who the principal contractor was. The basis for joining the 3^rd Respondent was the Buildings Department Letter, which identified the 3^rd Respondent as the RGBC of the Site.

40.  At trial, I expressed concerns that the Buildings Department Letter is actually related to another injured worker at the Site, but not the Applicant. Although the Applicant’s solicitors could have been more prudent by writing to the Buildings Department to confirm whether the 3^rd Respondent was also the RGBC for the Applicant’s case, I accept that it is unlikely that the RGBC of the same construction site would differ. Accordingly, I find that the Buildings Department Letter provided a reasonable basis for the Applicant to proceed against the 3^rd Respondent as the alleged principal contractor.

41.  As to whether the Court should make a Sanderson or Bullock order, the Court has a broad discretion and would take into account the practical consequences of the costs order: Kwong Chi Wa (supra) at §31.

42.  In Chong Ngan Seng v China Harbour Engineering Company Limited & Ors (CACV 54/2012, unreported, 25 September 2013), the Court ordered a Sanderson order instead of a Bullock order for the following reasons:

“33. In the present case, there is no certainty that the 2^nd to 4^th defendants will all be impecunious so that the 1^st defendant would not be able to recover its costs from one or other of them. On the other hand, the amount of damages awarded to the plaintiff in the present case was the sum of HK$305,115.55 with interest and these damages would be very likely significantly eroded if the plaintiff were to be liable for the 1^st defendant’s costs but unable to recover them from the other defendants.” (Emphasis added)

43.  I am of the view that similar considerations should apply in the present case. The financial status of the 4^th Respondent is unknown to the Applicant. The compensation of HK$73,521 would likely be significantly eroded if the Applicant were to be liable for the 3^rd Respondent’s costs. I therefore consider that a Sanderson order would be a fair order to make in the circumstances of this case.

44.  By reason of the aforesaid, I make the following costs order nisi:

(1)  The 1^st and 2^nd Respondents do pay the Applicant’s costs of assessment of compensation on a party and party basis, such costs to be taxed if not agreed;

(2)  The 4^th Respondent do pay the Applicant’s costs of the action (including costs of liability and assessment of compensation) on a party and party basis, such costs to be taxed if not agreed;

(3)  The 4^th Respondent do pay the 3^rd Respondent’s costs of the action, to be taxed on a party and party basis if not agreed; and

(4)  There be certificate for counsel of the Applicant.

45.  In the absence of any application by summons for variation within 14 days from the date of this judgment, the above costs order nisi shall become absolute.