MO SUI CHUN v. 田心石油氣爐具工程公司 o/b EASTERN CREATOR LTD AND ANOTHER

DCEC897/2003

 IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES COMPENSATION CASE NO. 897 OF 2003

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J U D G M E N T

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1. The claimant’s evidence that she was asked to work for the respondent in a business held by a limited company called Fung To LPG Engineering Company Limited, with three shareholders, namely, the 2nd Respondent, Mr Yang Kwok-keung, a Mr Chow and a Mr Yau.  The business runs a shop at Shop number 15A, Ground Floor, Carado Gardens in Sha Tin, and the name of the business was “田心石油氣爐具工程公司”.

2. This is evident in the claimant’s own statement which she adopted as her evidence in court and this is found in paragraph 4 and paragraph 5 relating to her employment history.  This is on page 2 of tab B in the bundle.  No employment contract was signed.  The business registration of Fung To LPG Engineering Company Limited filed on 19 October 2002 showed that Fung To ceased to operate  “田心石油氣爐具工程公司” on 15/6/2002, I will call in short, Tin Sum hereafter. 

3. So Fung To ceased to operate Tin Sum on 15 June 2002.  This is on page 19 of tab D, and the business registration papers of Eastern Creator Limited, the 1st Respondent here showed that they commenced trading on 15 June 2002, using the same business name of Tin Sum, and at the same business address as before, or as mentioned.   

4. The claimant says she was not aware of the change of the limited company operating and holding Tin Sum.  The 2nd Respondent says otherwise.  The claimant was not terminated in her employment, and she was not given notice of termination, nor was she paid any wages in lieu of notice or in lieu of termination.  Under the Employment Ordinance, her contract of employment could be treated as terminated by her last employer, that is Fung To, and she was entitled to one month’s wages as termination pay.  

5. The claimant says because the 2nd Respondent, Mr Yang, withheld this information from her, that she had a change of employer and she was not paid one month’s wages for the termination, Mr Yang, who she says also paid her wages over the months she was working for Tin Sum, should also be regarded as her employer, and therefore, should be personally liable for her compensation under the present claim for employee’s compensation for injuries she suffered in an accident on 10 July 2002, and her claim pursuant to section 9, 10 and 10(a) of the Employees Compensation Ordinance, Cap.282.

6. I pause here to deal with the accident itself.  No issue appeared to have cropped up in the course of this trial in this hearing today that the claimant was injured in the course of her employment.  The event leading to her injury was detailed in the claimant’s statement in paragraphs 10 to 14 - that is tab B of the bundle on pages 4 and 5.  I accept Miss Mo’s evidence that she was required to go and collect an LPG gas bottle on the said date after Mr Cheng, the technician, had left the employ of Tin Sum.  And in the course of lifting the LPG bottle, she fell and injured her back. 

7. I accept that this was work done in the course of her work and was injury sustained in the course of her employment.  Well, I have dealt with this issue:  I will go to the live issue.  I revert back to who was her employer.  Notice of admission of liability was filed by the 1st Respondent on 15 September this year.  However, the 1st Respondent denies the plaintiff’s claim as set out in her amended application.  In other words, liability was admitted by the 1st Respondent, but the 1st Respondent denies the quantum.    

8. All the evidence and documents in these proceedings showed that Tin Sum was operated by a limited company or two limited companies at two relevant periods.  That is, before and after 15 June 2002.  At the time of the accident, the 1st Respondent was the holding company of Tin Sum.  They admitted liability.  The 2nd Respondent denies liability as employer of the claimant.  The evidence shows the claimant, Miss Mo, knew that Fung To Engineering Company was the employer.  She knew as seen in her statement filed with this court that Tin Sum was a business operated by a limited company, and she knew as per her statement that Fung To was a partnership between three persons, namely, Mr Yang, Mr Chow and Mr Yau. 

9.  She dealt with Mr Yang in the course of Tin Sum’s business and Mr Yang paid her wages from the proceeds received from the business of Tin Sum.  Having considered all the evidence, I fail to see the merits of claimant’s argument that because of Mr Yang’s role in the running of Tin Sum that Mr Yang could personally incur liability as an employer when there is a change of partners in running Tin Sum, the limited company is a machine used to hold Tin Sum.  It is actually a partnership.  The machinery or the machine used to hold Tin Sum is in the form of limited companies or in the form of a limited company, and when there was a change of partnership, there was a change of limited company holding Tin Sum.

10. Mr Yang was a director of both limited companies, and he was also the person who seemed to oversee the running of Tin Sum.  I fail to see the claimant’s merits in her argument that Mr Yang should be made personally liable as an employer too, because he was a director in both limited companies, he had taken part in the running of Tin Sum.  He oversee the running of Tin Sum’s business in collecting the proceeds from the sale in Tin Sum and paid the claimant her wages.

11. Mr Yang might have neglected to take out employees’ insurance or even file the company’s business registration in time or as early as March 2002.  The paper in the file which I could see was that the business registration was filed in May 2002.  But nevertheless, the claimant knew from the very start, as can be seen from her own statement, that Fung To was actually the limited company running Tin Sum and was her employer.

12. I cannot see how her argument that Mr Yang was her employer and incurs personal liability as an employer could be sustained in this way.  Mr Yang failed to inform the claimant of the change of employer from Fung To to Eastern Creator, according to the claim.  Be that as it may, I still do not see how Mr Yang could and would incur personal liability.  His failure to perform or to inform would not render him liability as an employer and would definitely would not create an employer/employee relationship as argued by the claimant.

13. The claim against the 2nd Respondent, Mr Yang, as an employer therefore cannot be sustained.  I dismiss the claimant’s claim as against Mr Yang, the 2nd Respondent in this action. 

14. I now come to the quantum of claimant’s claim against the 1st Respondent.  The claimant’s case was that she had appealed against the assessment of the Employees Compensation Board by virtue of her statement of claim and her amended claim filed in this action.  I am given to understand the court as in similar circumstances, in similar cases, have accepted this practice. 

15. I admit that I am not familiar with this type of civil action, but I am prepared to accept that the statement of claim which showed the appellant’s appeal against the board’s assessment, it is very clear, it is manifested clearly that she appeals and she will appeal, and in both the claim and in the amended claim, I am satisfied, I accept that this constitute an appeal against the board’s award of one per cent loss of earning capacity.

16. This is a technical thing, but I find for the claimant that this is sufficient to constitute an appeal.  Dr Chan’s medical report in pages 12 to 14 of tab C in the bundle is the only medical report available in this case.  Defence says I should follow the assessment of the board in form 9, page 3(a) of tab D in the bundle, and which is one per cent. 

17. Dr Chan’s assessment of five per cent took into account of all factors set out in paragraphs 1 to 3 of his reports, namely, this is very interesting because it is directly relevant to the assessment of five per cent, as opposed to one per cent assessed by the board.  Paragraph 1 of Dr Chan’s report talks of the features of this degeneration, and there is no significant compression of the nerve roots.  And Dr Chan spoke of the claimant’s age group.  Now, 50 per cent of people in the claimant’s age group would have such a manifestation.

18. And Dr Chan’s conclusion was that the degeneration of the disc or this degeneration of the claimant was not caused by the accident.  So this is a very important finding of Dr Chan, and this is, nevertheless, the claimant’s own medical report.  And the second finding of Dr Chan was that Dr Chan was not convinced that there were physical signs of a radiculopathy caused by a prolapsed disc.  So in other words, Dr Chan’s conclusion was there is no evidence of a prolapsed disc and that Madam Mo suffered a sprained back on top of a pre-existing degeneration.

19. So it was basically, an injury of a sprained back.  It is not a terrible accident, if I may use the word “terrible” as to cause any huge incapacity.  So Dr Chan’s saying was that Miss Mo suffered a sprained back, but she had a pre-existing degeneration problem and it is not surprising because 50 per cent of people in her age group probably suffered the same.  So this is the second finding of Dr Chan.  The third one was even more interesting.  Madam Mo demonstrated an abnormal illness behaviour or somatisation.

20. The severity of her complaints cannot be explained on orthopaedic grounds.  I do not have the benefit of Dr Chan in court so that we could ask Dr Chan what he meant by that.  But I also notice that when Madam Mo came to give evidence in my court, she showed great difficulty even walking into the witness-box and out of the witness-box.  She seemed to be in some pain even to walk, and she walked with the assistance, if I remember clearly, of a cane or a stick.

21. My understanding of what Dr Chan was saying was that Madam Mo’s injury should not result in such display of inconvenience or pain, or difficulty.  This is rather abnormal, it is rather unusual, but Dr Chan, being as candid as he is in his report, nevertheless took into account of all these factors and made an assessment of five per cent of disability of Madam Mo and five per cent, in other words, would be five per cent of loss of earning capacity.  This is quite a big jump from one per cent assessed by the board to five per cent assessed by Dr Chan.  I sit back and think about this, back injury is a terrible injury.  I am not sure how many of us had experienced back injury.  I take the example of a slipped disc.  It is a terrible injury, it is a terrible disablement because the back, I mean, peculiar to all humans who were standing erect on their backbones.  Now, back injury can be a very disabling factor.  It affects a person’s sitting posture, standing posture, walking posture, and of course, in working.

22. Although the jump from one per cent assessed by the board to five per cent assessed by Dr Chan seems to be quite a big jump, nevertheless, five per cent disability of the whole person or five per cent loss of earning capacity of the whole person is, in fact, a small percentage of the whole 100 per cent percentage.  And I do not think this is an exaggerated assessment.  Five per cent is nevertheless a small percentage, particularly when I take into account that the back injury is a severe handicap or disablement of the whole person.  Because we are not talking about her finger getting injured or an arm or a leg which do not disable you in your sitting, standing, walking, working ability, but the back, because we are humans, we are, how do you call that, homoerectus.  We stand erect, our back is of the utmost importance.

23. So I accept Dr Chan’s assessment that it is a five per cent disablement.  And Dr Chan had fairly, I think, very objectively took into account all those factors as mentioned in paragraphs 1 to 3 of his report, and also took into account that Madam Mo might have pre-existing back weakness or a pre-existing condition and the sprained back aggravated it. 

24. On quantum, the salary is not a factor in issue here, although Mr Yang had given evidence that he contemplated or have in mind some reduction in salary from 7,000 to 4,000 plus a commission, but this was an idea he was contemplating or toying with, but never really implemented or conveyed to Madam Mo.  So $7,000, as I understood it from Mr Chan for the defence is not a contested issue. 

25. So the claim under section 9, the salary is accepted to be $7,000, that is the quantum of calculation.  So the quantum under the section 9 claim, that would be accepted as per the calculation of the claimant, $7,000 x 72 x five per cent - and that is $25,200.   

26. The  number of days of sick leave assessed by the board was 484 days.  Defence asked me to accept this, draw my attention to Dr Chan’s report, paragraph 5.  The claimant’s own expert report says 484 was adequate and reasonable, although it is not disputed that she actually had taken 741days of sick leave.  I go along with Dr Chan’s paragraph 5 recommendation to say this is adequate and reasonable.  I go along with defence’s contention. 

27. So the calculation for section 10 claim as against the 2nd Respondent would be as per assessment or estimate made by the defence in the first place or made by the claimant in the first place, that would $7,000 x 484 days divided by 30 days in a month x four-fifths.  Four-fifths is the claimant’s entitlement of her wages through her sick period, and that is the same calculation as worked out by the claimant in the first place, that is $90,346. 

28. And there is another claim for medical reimbursement, that is allowed in full as well, $1,988.  So the whole assessment of quantum as against the -- sorry, the 1st Respondent, not the 2nd Respondent.  As against the 1st Respondent would be $117,534.  I also order interest to be awarded to the claimant on the adjudged sum of $117,534 as against the 1st Respondent at half the current judgment rate which is 4 per cent per annum from the date of the accident to the date of judgment today, final judgment today, which is 28 December this year.  And thereafter, at judgment rate until full payment.  Costs is also awarded as against the 1st Respondent to be taxed if not agreed, and the applicant’s own costs to be taxed in accordance with legal aid regulations.  I think that is all I have to deal with in this judgment.