KWONG KIN YIN v. SHUN LEE COPPER & DECORATION LTD AND ANOTHER

HCPI 285/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 285 OF 2008

----------------------

----------------------

----------------------------------------

REASONS FOR DECISION

-------------------------------------

I.  Background

1.  The 2^nd Defendant was/is carrying on the business of inter alia an advertising media.  By an agreement between Kerry Warehouse (Hong Kong) Limited (“Kerry”) as employer and the 2^nd Defendant as contractor, the 2^nd Defendant agreed to construct advertising signage (“Signage”) for Kerry at Kerry Cargo Centre (“Site”), No.55 Wong Kei Road, Kwai Chung, Hong Kong (“Works”).

2.  The Plaintiff claimed that on 27 July 2004 whilst carrying out the Works at the Site by climbing up a wooden ladder on which a raised platform was placed, the raised platform tumbled backwards and he lost balance, fell to the floor and suffered multiple injuries (“Accident”).

3.  The Plaintiff commenced the present action in the District Court against the 1^st and 2^nd Defendants for their negligence, breach of contract, breach of statutory duties and/or breach of occupier’s duty of care in causing him personal injuries, loss and damages.  The present action was subsequently transferred to the Court of First Instance.

4.  The Plaintiff claimed (a) he was employed as a technician by the 1^st Defendant, (b) the 2^nd Defendant was the principal contractor of the Works, and (c) the 1^st and 2^nd Defendants were in occupation and control of the Site.

5.  By a homemade Defence signed by its director Madam Mok Lin Ying (“Madam Mok”) on its behalf, the 1^st Defendant (a) claimed that the Plaintiff was employed by the Third Party and (b) denied it had subcontracted the Works to and/or received any payment in respect of the Works from the 2^nd Defendant.

6.  By its Re-Amended Defence, the 2^nd Defendant claimed (a) the Plaintiff was employed by and the Works were subcontracted to the Third Party, and (b) it had acted reasonably in subcontracting and entrusting the Works to the Third Party as independent contractor and in checking/supervising that the Works had been properly carried out.  The 2^nd Defendant further claimed that any injuries arising from the Accident were caused or contributed by the Plaintiff’s own negligence.  Further, even if the 2^nd Defendant were in occupation and control of the Site (which it denied), the Accident and the cause thereof were special risks ordinarily incident to the Plaintiff’s calling, so he should have appreciated and guarded against such risks.

7.  By a Third Party Notice (which was ordered to stand as Third Party Statement of Claim (“TP Claim”)), an Answer to the Request for Further and Better Particulars of the TP Claim (“1^st Answer”) and an Answer to the Request for Further and Better Particulars of the 1^st Answer (“2^nd Answer”), the 2^nd Defendant claimed that the Plaintiff’s injuries were caused by the Third Party’s negligence, breach of contract, breach of statutory duties and breach of occupier’s duty of care so that the Third Party was liable to indemnify and contribute to the 2^nd Defendant’s loss and damages in respect of (a) the Plaintiff’s claim against the 2^nd Defendant and (b) the 2^nd Defendant’s own costs in defending such claim.

8.  By his Amended Defence, the Third Party opposed the 2^nd Defendant’s claim.  On 15 June 2009, the Third Party applied to strike out parts of the TP Claim and the 1^st and 2^nd Answers more particularised in paragraph 1 of the summons (“Offending Parts”) on the grounds set out below, and then consequentially to strike out the TP Claim:

(a)   the 1^st and 2^nd Answers were inadequate/unsatisfactory and did not disclose any or any contractual employer-employee relationship between the Third Party and the Plaintiff or any alleged capacity of the Third Party as occupier of any portion or part of the Site where the Works were carried out;

(b)  the TP Claim did not disclose any reasonable cause(s) of action by the 2^nd Defendant and/or the Plaintiff for negligence against the Third Party in any capacity; or

(c)   the TP Claim might prejudice, embarrass or delay the fair trial of the present action between the Plaintiff and the 1^st and 2^nd Defendants.

9.  When such summons came before Master S Kwang on 16 September 2009, the learned Master granted leave to the Third Party to amend the summons, ie to add the alternative relief of setting aside the TP Claim, and directed that the amended summons, the hearing bundle and the written submissions of the 2^nd Defendant and Third Party be served on the Plaintiff and the 1^st Defendant with liberty for the parties to apply for further directions.  But neither the Plaintiff nor the 1^st Defendant took any further steps in relation to the amended summons and they did not appear at the adjourned hearing of the amended summons before me on 16 December 2009.

10.  At the adjourned hearing before me, without objection from Mr Wong, counsel for the 2^nd Defendant, I granted leave for the Third Party to re-amend the amended aummons by adding a further ground for striking out the TP Claim, ie that the TP Claim was “frivolous or vexatious” (“Re-Amended Summons”).

11.  The Third Party filed the 2^nd and 3^rd affirmations of Mr Wong Cheng Keung (“Mr CK Wong”) on 7 July and 10 August 2009 in support of the Re-Amended Summons, and the 2^nd Defendant filed the affirmation of Chan Pak Shing (“Mr Chan”), solicitor for the 2^nd Defendant, on 28 July 2009 in opposition.

12.  At the hearing, Mr Leung, counsel for the Third Party, confirmed that the Third Party would not rely on the ground that the TP Claim disclosed no reasonable cause of action, but reserved the right to rely on such ground on appeal (if any).  After hearing arguments at the hearing, I dismissed the Re-Amended Summons, but reserved my reasons for decision which I now hand down.

II.  Law on striking out application

13.  Hong Kong Civil Procedure 2010 Vol.1 para.18/19/4 at pp.394-395 provides as follows:

“It is only in plain and obvious cases that the court should exercise its summary powers to strike out …… any pleading under this rule.  There should be no trial upon affidavit.  Disputed facts were to be taken in favour of the party sought to be struck out.  Nor should the court decide difficult points of law in striking out proceedings.  The claim must be obviously unsustainable, the pleadings unarguably bad and it must be possible, not just improbable, for the claim to succeed before the court will strike it out ……  Where the legal viability of a cause of action is sensitive to the facts, an order to strike out should not be made ……  The mere fact that the case is weak and not likely to succeed is no ground for striking it out ……  It is for the party seeking to strike out …… pleading to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail. ……” (my emphasis)

14.  Hong Kong Civil Procedure 2010 Vol.1 para.18/19/8 at p.397 provides as follows:

“The object of the rule is to stop cases which ought not to be launched – cases which are obviously frivolous or vexatious, or obviously unsustainable. ……  The expression “frivolous or vexatious” includes proceedings which are an abuse of process ……  A proceeding is frivolous when it is not capable of reasoned argument, without foundation or where it cannot possibly succeed.  A proceeding is vexatious when it is oppressive and/or lacks bona fides. ……”

15.  Mr Leung reminded that even in a striking out application the court would not blindly accept affidavit evidence put forward by the respondent, but would consider such evidence against contemporaneous documents, inherent implausibility and other compelling evidence.  Chu J in Infinity Development (Holdings) Company Limited & anor v Bank of China & ors HCA 3202/2001 (unreported, 19 July 2003) said as follows:

“27.   In Microsoft Corporation v. Electro-Wide Ltd [1997] FSR 580 at 593, Laddie LJ observed:

‘So here the court has to ask whether there is a fair or reasonable probability of the defendants having a real or bona fide defence in relation to these issues.  In answering that question it is not sufficient just to look at each factual issue one by one and to consider whether it is possible that the defendant's story in relation to that issue is credible.  The court must look at the complete account of events put forward by both the plaintiff and the defendants and, to use Ackner LJ’s words, look at the whole situation.  The mere fact that the defendants support their defence by sworn evidence does not mean that the court is obliged to suspend its critical faculties and accept that evidence as if it was probably accurate.  If, having regard to the inconsistency with contemporaneous documents, inherent implausibility and other compelling evidence, the defence is incredible, the court must say so.  It should not let the filing of evidence which surpasses belief deprive a plaintiff of its entitlement to relief. ...’

28.    These observations are equally applicable when the credibility and probability of the claim are called in to question on a striking out application.  In the present case, insofar as the defendants’ application is made on the basis that the allegations in the Statement of Claim are incredible and implausible, it is, in my view, important to approach the matter from a commercial and common sense point of view and not to lose sight of the overall picture presented to the court.”

16.  Nevertheless, it is important to remember that in a striking out application it is not the function of the court to conduct a mini-trial to test the weight of the evidence for the court’s power to strike out should only be exercised in plain and obvious cases, ie where the claim has been demonstrated to be plainly unsustainable, unarguably bad and impossible to succeed.

III.  Law on employer’s liability

17.  In Poon Chau Nam v Yim Siu Cheung (t/a Yat Cheung Airconditioning & Electric Co) [2007] 2 HKC 135, 144-145, the Court of Final Appeal held that the modern approach to the question of whether one person was another’s employee was to examine all the features of their relationship against the background of the indicia developed in the case law with a view to deciding whether, as a matter of overall impression, the relationship was one of employment, bearing in mind the purpose for which the question was asked.  It involved a nuanced and not a mechanical approach (see Hall v Lorimer [1992] 1 WLR 939, 944).

18.  Mr Leung reminded that matters such as employers’ liability insurance and notice given to the Labour Department pursuant to the Employees’ Compensation Ordinance Cap.282 were not conclusive of the issue but were relevant factors to be considered (see Chan Sik Pan & anor v Wylam’s Services Ltd & ors (2001) 4 HKCFAR 308 and my ruling in Lau Foon Wing v Cheuk Lau Shek trading as Kamtorry Industrial Co & anor DCEC757/2007 (unreported, 29 September 2008)).

19.  Ultimately, the question as to whether a person is an employee of another is a question of fact to be determined by the court.

IV.  Third Party’s case

20.  Mr Leung submitted that the TP Claim was premised on the 2^nd Defendant’s claim that at the time of the Accident the Third Party was (a) the 2^nd Defendant’s subcontractor in respect of the Works (which went to support inter alia the allegation that the Third Party was an occupier of the Site) and (b) the Plaintiff’s employer.

21.  Mr Leung argued that if such allegations were manifestly bound to fail, the TP Claim would be wholly without basis and liable to be struck out.  He submitted that given (a) the overwhelming evidence showing that the Plaintiff was employed by the 1^st Defendant and not by the Third Party and (b) the paucity of credible evidence to support the 2^nd Defendant’s aforesaid allegations, the TP Claim should be struck out and the 2^nd Defendant’s claim against the Third Party dismissed.

22.  To consider the merits of such arguments, I first turn to the Third Party’s case as set out in (a) his Amended Defence, (b) Mr CK Wong’s 2^nd and 3^rd affirmations and (c) the witness statements of Mr CK Wong, Mr So Chuen Fai Andy (the 2^nd Defendant’s then project manager who oversaw the Works, “Mr So”) and Mr Lee Siu Fai (the Plaintiff’s co-worker, “Mr Lee”).

23.  According to the Third Party, Mr CK Wong was previously an employed technician responsible for and in charge of constructing Signage.  Shortly after his resignation from his employed position in January 2000, he established his own sole proprietorship “Shun Fat Metal Works Co” (“Firm”) to carry on inter alia the business of construction, manufacture and installation of stainless steel Signage and iron framework (collectively, “Signage Works”).  After the Firm commenced business, through the 2^nd Defendant’s marketing manager, the Third Party had business dealings with and subcontracted Signage Works from the 2^nd Defendant. The Third Party carried on business in Signage Works until the Firm closed on 30 September 2005.  

24.  In the late 1990s, Mr CK Wong came to know Mr Wong Wai Fuk (“Mr WF Wong”) and his wife Madam Mok (collectively, “Wongs”), who were directors (and Mr WF Wong was the major shareholder) of Shun Lee Decoration & Engineering Ltd (“Shun Lee Eng”) that carried on similar line of business as the Third Party.  In the early 2000s, Shun Lee Eng had good business relationship with several PRC factories that manufactured large-size Signage.  It also employed a number of technicians and skilled workers (including Mr Lee) on regular/fixed basis for carrying out the Signage Works.

25.  In/about June 2001, due to significant growth in the Firm’s business/customers and in order to enjoy economies of scale, Mr WF Wong orally proposed to Mr CK Wong to form a new limited company as an associated company of Shun Lee Eng (with the Wongs and Mr CK Wong as equal shareholders) to carry out Signage Works.  Eventually Mr CK Wong and Mr WF Wong (on behalf of the Wongs) agreed that:

(a)   any Signage Works contract procured by Madam Mok or Mr CK Wong would be channelled through Shun Lee Eng as the principal contractor or main subcontractor (as the case might be) and in turn be subcontracted or sub-subcontracted (as the case might be) to the 1^st Defendant;

(b)  Shun Lee Eng would charge a management fee of 10% of the contract price of such Signage Works contract, and the remaining 90% of the contract price would be paid to the 1^st Defendant for settling operational costs/expenses including workers’ wages and manufacturing costs, and any net profits would be shared between the Third Party and Madam Mok on behalf of the Wongs in equal shares;

(c)   the 1^st Defendant would be allowed to use the office premises (owned by the Wongs’ family company), office equipment and personnel (including skilled workers, technicians and administrative staff) of Shun Lee Eng for its business operations;

(d)  the Wongs would procure Shun Lee Eng and likewise the Wongs and Mr CK Wong would procure the 1^st Defendant to agree to and implement the above terms of agreement.

26.  Pursuant to such agreement, the Wongs and Mr CK Wong acquired the 1^st Defendant in/about mid-June 2001 with Madam Mok and Mr CK Wong as the only directors and shareholders in equal shares.  Mr WF Wong on behalf of the Wongs and Shun Lee Eng and likewise the Wongs and Mr CK Wong on behalf of themselves and the 1^st Defendant confirmed and implemented the aforesaid agreement so that the Signage Works thereafter procured by Madam Mok and Mr CK Wong were channelled through Shun Lee Eng as the principal contractor or main subcontractor (as the case might be) and in turn subcontracted to the 1^st Defendant as subcontractor or sub-subcontractor (as the case might be).  Insofar as the 1^st Defendant was concerned, Mr CK Wong was responsible for carrying out the Signage Works, and Madam Mok was responsible for administrative matters (eg keeping accounts and making payments).

27.  Prior to 2003, all workers engaged in the Signage Works subcontracted by Shun Lee Eng and then sub-subcontracted to the 1^st Defendant were employees of Shun Lee Eng. In order not to cause confusion to the accounts of Shun Lee Eng and the 1^st Defendant, Mr WF Wong decided that after mid-2003 all workers employed by Shun Lee Eng for carrying out Signage Works would be internally transferred to (and be paid by) the 1^st Defendant for continuous employment.  Such workers were therefore either employed by Shun Lee Eng and/or the 1^st Defendant and never by Mr CK Wong or the Firm.

28.  At/about end of 2003, through the introduction of Mr Lee, who was himself employed by Shun Lee Eng as a skilled worker since 2000, the Plaintiff was first employed by the 1^st Defendant as a relief casual worker at a daily wage of HK$380.00.  In fact, whenever the 1^st Defendant had a shortage of workers for carrying out subcontracted Signage Works, the Plaintiff would be recruited to assist in such works. 

29.  The 1^st Defendant’s employment records showed that the Plaintiff worked for the 1^st Defendant for a short period in December 2003/January 2004, and was again recruited by the 1^st Defendant for 5 days in June 2004 and 15 days in July 2004 due to shortage of workers for carrying out the Works at the Site.

30.  The Third Party claimed that by an oral agreement in/about April 2004, the 2^nd Defendant through its media development executive, Ms Connie Tsui (“Ms Tsui”), subcontracted the Works to Shun Lee Eng through its director Mr WF Wong, and by a further oral agreement between Mr WF Wong on behalf of Shun Lee Eng and Mr CK Wong on behalf of the 1^st Defendant, Shun Lee Eng in turn sub-subcontracted the Works to the 1^st Defendant.  In the circumstances, the Third Party claimed there was no contractual relationship between him and the 2^nd Defendant as alleged or at all.

31.  Thereafter, Shun Lee Eng through Mr WF Wong ordered the Signage and frame from a PRC factory in accordance with the design, drawing and specifications by the 2^nd Defendant.  In/about June 2004, Mr WF Wong informed Mr CK Wong that the Signage and frame were ready for delivery to Hong Kong. Mr CK Wong then arranged with Mr So to take delivery and to commence the Works at the Site.  Mr CK Wong acted as representative on behalf of the 1^st Defendant in carrying out and in instructing the Plaintiff to carry out the Works.

32.  The Third Party claimed that the 1^st Defendant had provided safety equipment for use by its workers, and Mr CK Wong as the responsible person on behalf of the 1^st Defendant for carrying out the Works had briefed all workers of the 1^st Defendant on safety instructions for carrying out the Works at height. However, the Third Party later found out that at the time of the Accident the Plaintiff and/or Mr Lee did not build (and use) any raised platform from equipment provided by the 1^st Defendant for use by its workers, but borrowed a raised platform and wooden ladder from Kerry without the knowledge and consent of the 1^st Defendant and/or its representative Mr CK Wong.

33.  Next, Mr Leung identified what he described as “overwhelming” evidence in support of the Third Party’s contentions.

34.  First, the Third Party produced MPF statements from the Bank of East Asia showing on its face that the 1^st Defendant was named as the Plaintiff’s employer in July 2004 (ie the time of the Accident).

35.  Secondly, the Inland Revenue Department by letter dated 9 January 2009 gave details of the Plaintiff’s income during periods of employment with the 1^st Defendant (a) from 16 December 2003 to 15 January 2004 (also evidenced by the employer’s return for the year of assessment 2003/2004 signed by Madam Mok on behalf of the 1^st Defendant) and (b) from 1 April 2004 to 31 March 2005.  Mr Wong submitted that (b) did not sit well with Mr CK Wong’s claim that the Plaintiff was again recruited by the 1^st Defendant in mid-June and not in April 2004.  In my view, it is unlikely there is anything sinister about (b) as it probably referred to the year of assessment 2004/2005 rather than the actual period of employment.  After all, there is no dispute that the Plaintiff was a causal worker recruited to work for different employers over the years.

36.  Thirdly, the Plaintiff commenced employees’ compensation claim in DCEC1270/2005 against the 1^st Defendant as employer, but these proceedings have been held in abeyance pending progress in the present action. Consequently, the District Court has not made any finding of fact as to the identity of the Plaintiff’s employer at the time of the Accident.

37.  Fourthly, the Plaintiff stated in his witness statement that through Mr Lee’s introduction he was employed as a decoration worker by the 1^st Defendant in December 2003 (until mid-January 2004) and again in mid-June 2004 a daily wage of HK$400.00.

38.  Fifthly, this was echoed in Mr Lee’s witness statement which stated that Mr Lee was first employed by Shun Lee Eng in early 2000 as a technician for Signage installation.  Mr Lee went on to say that in mid-2001 he came to know Mr CK Wong and became aware that the Wongs and Mr CK Wong had set up 1^st Defendant with Mr CK Wong responsible for procuring and supervising Signage Works and Madam Mok responsible for handling internal administrative and financial matters.  Mr Lee knew that Shun Lee Eng and the 1^st Defendant shared the same address and resources including office equipment and staff.  Mr Lee stated that in mid-2003 Mr WF Wong informed the staff of Shun Lee Eng (including Mr Lee) that due to corporate restructuring they would become employees of the 1^st Defendant. Mr Lee claimed that at the end of 2003 he introduced the Plaintiff to join the 1^st Defendant as causal assistant technician at a daily wage of HK$380.00, and that due to shortage of workers for the Works he again recruited the Plaintiff to work for the 1^st Defendant in mid-June 2004 at HK$380.00 per day.

39.  Sixthly, Mr So’s witness statement stated he was informed by the 2^nd Defendant that he should contact Mr CK Wong being the person in charge of the Works, which works the 2^nd Defendant had subcontracted to a company in which Mr CK Wong was a member, so Mr So started to contact Mr CK Wong in relation to the Works.

40.  Seventhly, according to the TP Claim and Mr So’s and Mr CK Wong’s witness statements, before the commencement of the Works at the end of May 2004 or mid-June 2004, Ms Tsui on behalf of the 2^nd Defendant orally requested Mr CK Wong as director of the 1^st Defendant to supply the names of the workers/staff and their employer together with the relevant employees’ compensation insurance policy for the 2^nd Defendant to fill out the requisite application for admission form to enable Kerry or the management company at the Site (“Manager”) to issue worker cards for the workers/staff to enter the Site for carrying out the Works.  Mr CK Wong claimed that on behalf of the 1^st Defendant he submitted to Ms Tsui of the 2^nd Defendant a list of names and identity card numbers of the about 10 workers/staff (including himself) together with a copy of the insurance policy issued by the Bank of China Group Insurance Co Ltd to Shun Lee Eng.  Mr So claimed that upon receipt of such documents he then realised the subcontractor of the Works was Shun Lee Eng.  He filled out the application for admission form and submitted the same together with the copy insurance policy to the Manager.  Upon due registration, Mr So informed Mr CK Wong that the workers/staff could pick up their visiting cards from the management office and commence work, which Mr CK Wong and a group of workers of the 1^st Defendant including Mr Lee (but Mr CK Wong could not recall whether the Plaintiff was amongst the group) did on the following day. 

41.  Eighthly, according to the TP Claim and Mr So’s and Mr CK Wong’s witness statements, after installing the iron framework on the exterior wall of the Site and before hanging the Signage onto the framework, Ms Tsui of the 2^nd Defendant orally requested the 1^st Defendant through Mr CK Wong to submit to Kerry a safety testing report for the iron framework. Mr CK Wong on behalf of the 1^st Defendant submitted to Mr So through Ms Tsui a report dated 16 June 2004 prepared by Stanger Asia Limited, an accredited laboratory and service firm, and issued in the name of the 1^st Defendant. Mr So asked Mr CK Wong why the report was issued in the name of the 1^st Defendant when the insurance policy was issued to Shun Lee Eng, and Mr CK Wong replied by saying they were two separate but associated companies bearing the same prefix “Shun Lee”.

42.  Ninthly, the Plaintiff’s and Mr Lee’s witness statement stated that after the Accident they received some periodical payments and medical expenses from the 1^st Defendant.  The Plaintiff received a total sum of HK$61,712.00 which was partly evidenced by bank transfer slips from the Bank of China showing transfers of monies from the 1^st Defendant to the Plaintiff from August 2004 to April 2005.

V.  2^nd Defendant’s case

43.  The TP Claim and the 1^st and 2^nd Answers averred that the Third Party and not the 1^st Defendant was the subcontractor of the 2^nd Defendant in respect of the Works, and all workers (including the Plaintiff) carrying out the Works were assigned by and arranged to work at the Site with permission from the Manager by Mr CK Wong being the sole proprietor of the Firm.  Although the 2^nd Defendant was unable to give particulars of the Plaintiff’s terms of employment with the Third Party or details of his employment contract or provide copies of the tax returns, worker permit card, worker identification document and wage documents issued by the Third Party, the 2^nd Defendant claimed that the only reasonable inference was that at all material times the Plaintiff was an employee of the Third Party and the Third Party was an occupier of the Site.  According to the 2^nd Defendant, there was clear evidence in support of such contentions.

44.  First, the 2^nd Defendant sought to rely on the homemade Defence of the 1^st Defendant which denied that the Plaintiff was its employee at the material time and which averred that the Plaintiff was employed by the Third Party.  Mr Leung argued that since the 1^st Defendant had not complied with Order 5A rule 2 of the Rules of the District Court or applied for leave to act by its director under Order 5 rule 6 of the Rules of the High Court, such purported Defence could not stand as evidence before this court.  Without deciding the matter but solely for the purpose of the Re-Amended Summons, I am prepared to ignore the 1^st Defendant’s homemade Defence.

45.  Secondly, on 13 October 2005 (ie prior to the homemade Defence by the 1^st Defendant), the 1^st Defendant through its former solicitors wrote to Mr CK Wong claiming that Mr CK Wong in breach of his fiduciary duty as director of the 1^st Defendant entered into a subcontract with the 2^nd Defendant (being the 1^st Defendant’s customer) in respect of the Works, which deliberate and deceitful conduct came to light after the Plaintiff and Mr Lee suffered personal injuries as a result of the Accident.  The 1^st Defendant claimed it suffered loss and damages as a result of supplying materials, paying workers’ wages, and paying additional insurance premium due false reporting of the Accident to the 1^st Defendant’s insurer when such costs and such claim should in fact be borne by the Firm.  The 1^st Defendant demanded the Third Party to assume responsibility for the claims by the Plaintiff and Mr Lee.  Such letter was copied to the Labour Department, the Plaintiff’s solicitors and the Bank of China Group Insurance Co Ltd.

46.  Thirdly, according to the witness statement and supplemental witness statement of Ms Yiu Pui Man (“Ms Yiu”), deputy general manager of the 2^nd Defendant, the 2^nd Defendant never carried out any Signage Works on its own but subcontracted them to experienced and skilled specialists.  According to the 2^nd Defendant’s documentation, it subcontracted the Works to the Firm owned by Mr CK Wong. Ms Yiu stated that the 2^nd Defendant had never contracted with the 1^st Defendant (which was unknown to the 2^nd Defendant) or permitted its employees to enter the Site, so the Plaintiff either worked at the Site as an employee of Firm or he was there without the permission of the 2^nd Defendant or the Manager.

47.  Ms Yiu stated there was no reason for the 2^nd Defendant to query the skill and experience of Mr CK Wong or the Firm in carrying out the Signage Works since (a) Mr CK Wong had been in the business for many years and was a member of the Advertising Sign Production Association, (b) the 2^nd Defendant had two previous dealings with Firm and the Firm completed the relevant Signage Works without mishap, (c) the Firm had been retained by Convey Advertising Company Limited, a leading advertiser in Hong Kong for billboard signage, to construct Signage.

48.  Ms Yiu claimed the 2^nd Defendant had invited and received quotations from various subcontractors including the Firm for the Works, and it eventually chose Mr CK Wong or the Firm as the most competent subcontractor after considering his quotation and his experience/expertise.  Ms Yiu noted that Mr CK Wong himself was in charge of carrying out the Works.  The 2^nd Defendant required the Firm to employ qualified and experienced workers to carry out the Works, and to purchase employees’ compensation and third party liability insurance.  The 2^nd Defendant also purchased contractors’ all risks insurance covering itself as main contractor and all subcontractors for the period from 28 May to 20 July 2004 (both dates inclusive).

49.  Ms Yiu explained that at all the material times the Site was under the full control of the Manager, and permission from the Manager was required before the workers/staff would be allowed access to the Site.  The 2^nd Defendant did not station any representative at the Site, but would from time to time send its representative to the Site to check on progress of the Works and to see if any assistance was required.  If anything went wrong at the Site, Mr CK Wong would forthwith inform the 2^nd Defendant, and the 2^nd Defendant would send a representative to the Site as soon as practicable to deal with the matter.

50.  Ms Yiu stated that at the material time Mr CK Wong did not inform the 2^nd Defendant about the Accident, but in any event, if the Plaintiff suffered injuries as a result of the Accident, it was due to faulty execution of the Works (a) by the Plaintiff as employee of the Firm or (b) by the Firm as an independent contractor to whom the 2^nd Defendant had reasonably entrusted the Works.

51.  Fourthly, in relation to the Works and other Signage Works at the Site, the Firm issued to the 2^nd Defendant an invoice dated 15 June 2004 and two invoices both dated 19 September 2004 under the Firm’s letterhead.  All three invoices on their face stated they were from Mr CK Wong and bore the company chop of the Third Party, and two of them were signed by Mr CK Wong.

52.  Fifthly, the “letter of completion” from the 2^nd Defendant to the Third Party dated 11 May 2005, which certified that the Works “has been totally completed without any accidents, lost and liability involved during the work” and that “[the Third Party] has received the full payment from [the 2^nd Defendant] completely and there is no further claims in the future”, was in fact confirmed and countersigned by Mr CK Wong with the company chop of the Firm affixed thereto.

53.  The 2^nd Defendant claimed that the invoices and the “letter of completion” tended to show that the Third Party subcontracted the Works from the 2^nd Defendant (and hence the Third Party was arguably an occupier of the Site where the Works were carried out) and as such the only reasonable inference was that the Third Party was the employer of the Plaintiff who carried out the Works at the Site.

VI.  Discussion

54.  I agree that the MPF statements, the information from the IRD and post-Accident periodical payments and reimbursement of medical expenses by the 1^st Defendant are contemporaneous documents that tend to show on their face that the 1^st Defendant was the Plaintiff’s employer at the time of the Accident.

55.  But at the same time, there are other contemporaneous documents, eg the invoices issued by the Firm and the “letter of completion”, which point the other way.

56.  In respect of the aforesaid invoices and “letter of completion”, Mr Leung suggested that since Mr CK Wong was the person at the 1^st Defendant who was responsible for carrying out the Works on its behalf and Madam Mok was responsible for administrative matters, “and the informal atmosphere likely to obtain in a construction site, one could expect that there would be occasions when the Third Party performed acts in his own name when, from a legal perspective, he was really doing so as agent for the 1^st Defendant”.

57.  I am unable to accept such submission for there is no affidavit evidence or even witness statement before me to support such contention.  Although Mr Chan’s affirmation specifically referred to the three invoices from the Firm and the “letter of completion”, Mr CK Wong did not offer any explanation save to say that “[the] alleged matters of sub-contracting …… which are disputed by [him], are irrelevant the issue of whether the 2^nd Defendant is liable to the Plaintiff as an “occupier” of [the Site] at the material time of the [Accident]”. I note that apart from disputing generally, he did not specifically deny that he actually signed, issued and/or countersigned the invoices and “letter of confirmation” or specifically deny that he received payment for the subcontracted Works as suggested on the face of the “letter of completion”.

58.  There is no doubt that Mr CK Wong was in charge of the Works for the subcontractor; his own witness statement is testimony to such fact. Mr Leung suggested that Mr CK Wong’s personal involvement in the Works was neutral since he was one of the directors of the 1^st Defendant and involved in the Works on such basis.  The 2^nd Defendant contended that Mr CK Wong was involved as proprietor of the Firm being the true subcontractor of the Works.  Thus, a crucial question in this case is whether Mr CK Wong was personally involved in the Works on behalf of the 1^st Defendant or whether he did so in his own capacity as proprietor of the Firm.  The contemporaneous documents are equivocal on the question, but the answer to such question will have significant impact not only on the identity of the subcontractor but also that of the Plaintiff’s employer.  In my view, it is impossible to say that the evidence for the Third Party is overwhelming or that the 2^nd Defendant’s claim is obviously unsustainable or unarguably bad. Although I am not saying that the 2^nd Defendant’s case is weak, even if it were so, the mere fact that the case is weak and not likely to succeed is no ground for striking out (see paragraph 13 above).

59.  However, Mr Leung argued that the Plaintiff’s claim in the present action and in DCEC 1270/2005 clearly reflected the Plaintiff’s stance that the 1^st Defendant was his employer at the time of the Accident.  He submitted that the court should give weight to the Plaintiff’s witness statement because the Plaintiff was in the best position to know who his employer was and there was no apparent reason for the Plaintiff to help the Third Party.  Mr Leung also urged the court to give similar weight to the witness statement of Mr Lee, which statement described how Mr Lee (himself an employee of the 1^st Defendant at the time) introduced the Plaintiff to work for the 1^st Defendant.  It was said that Mr Lee’s assertions were credible as there was no suggestion that he had anything to gain from the outcome of the third party proceedings.

60.  On the other hand, Mr Wong submitted that it was important to bear in mind that the Plaintiff and Mr Lee had yet to be cross-examined on the disputed factual matters, and that it would be dangerous for the court to rely on their allegations in the witness statements in coming to any definitive view on disputed facts at this stage.

61.  I note that in the 1^st and 2^nd Answers the 2^nd Defendant averred that it would rely on the testimony of the Plaintiff at trial to establish the Plaintiff’s employer-employee relationship but not as to the identity of the employer.  In the circumstances, I see no reason why I should not consider the witness statements served by the parties.  But I also bear in mind that in a striking out application, it is not for the court to conduct a mini-trial to assess the weight or credibility of witnesses, and the burden remains on the applicant to show that the pleaded claim is unsustainable and unarguably bad. It is also plain that where the legal viability of a cause of action is sensitive to the facts, an order to strike out should not be made (see paragraph 13 above).

62.  In respect of the Plaintiff’s and Mr Lee’s witness statements, as Mr Wong pointed out, they were silent as to identity of the person who was in charge of the Works at the Site and who gave instructions to them to carry out the Works.  On the Third Party’s case, this is clarified in Mr So’s witness statement which suggested that the person in charge of the Works and Mr So’s point of contact vis-à-vis the subcontractor was Mr CK Wong.  Although Mr Leung submitted that Mr So’s witness statement was supportive of the Third Party’s case in suggesting that the subcontractor of the 2^nd Defendant was either Shun Lee Eng or the 1^st Defendant, it is arguable that Mr So did not have personal knowledge of the identity of the subcontractor of the Works for he was merely informed that the Works had been subcontracted to a company of which Mr CK Wong was a member.  It still begs the question whether subcontractor was (a) the Firm owned by Mr CK Wong or (b) Shun Lee Eng and/or the 1^st Defendant in which Mr CK Wong was a director/shareholder. Mr So’s surmise from the copy employees’ compensation insurance policy that the subcontractor was Shun Lee Eng and Mr CK Wong’s explanation to him vis-à-vis the safety testing report that the 1^st Defendant and Shun Lee Eng were “associated” companies suggest the possibility that the subcontractor and/or employer might have called upon the assistance of “associated” company(ies) in carrying out the Works, and if that were so, the accuracy of the information on the face of the contemporaneous documents might well have to be assessed in light of witnesses’ credibility and the whole factual matrix in order to determine the identify of the true subcontractor and employer.

63.  Mr Leung criticised Ms Yiu’s witness statement in that unlike Mr So she had no hands on involvement in respect of the Works and that she did not produce any relevant documentation, eg the Third Party’s quotation for the Works and/or the subcontract between the 2^nd Defendant and the Third Party, or give explanation for failure to do so.  Nevertheless, without any explanation forthcoming from the Third Party and pending assessment of witness’ credibility at trial, there is no getting around at this stage the invoices and “letter of completion” by the Third Party which on their face suggest that the Third Party was the subcontractor of the Works.

64.  In my view, to identify the subcontractor of the Works and the Plaintiff’s employer, the court does not just rely on the assertions of the witnesses on the ultimate issue, but adopts a nuanced rather than mechanical approach in assessing their assertions against their overall credibility, the whole factual matrix and the contemporaneous documents as well as the inherent plausibility and/or implausibility of their assertions.  The court at this stage is not well suited to perform such task, and the matter must properly be left to trial.

65.  Finally, Mr Leung submitted that even post-Accident the 1^st Defendant acknowledged its liability as employer by making employees’ compensation payments for the Plaintiff’s injury on duty.

66.  But the letter from the 1^st Defendant’s solicitors dated 13 October 2005 seems to shed a different light.  Such letter suggests that it was some time after the Accident that the 1^st Defendant discovered that in breach of his fiduciary duty as director of the 1^st Defendant Mr CK Wong used the Firm to subcontract the Works, but wrongfully utilised the 1^st Defendant’s resources (including materials and manpower) to carry out the Works.  In short, Mr CK Wong was criticised for having profited from the subcontract whilst the 1^st Defendant was kept in the dark and made to pay for the costs/expenses of the subcontract. Mr CK Wong’s answer was merely that he disputed the allegations in such letter which he claimed were irrelevant to the present action.  In my view, Mr CK Wong’s credibility is clearly in issue and this is a matter that can only be resolved at trial.

67.  I agree with Mr Wong that the issues of who employed the Plaintiff and who subcontracted the Works at the material time are questions of fact to be determined by documentary evidence as well as oral testimony from witnesses at trial.  If the Third Party is found to be the subcontractor of the Works, the court may well go on to find that it was an occupier and/or in control of the Site in respect of the Works and therefore arguably liable under its duty of care as occupier irrespective whether it employed the Plaintiff or not.

68.  In my view, there is at the very least an arguable case that the Third Party was the true employer of the Plaintiff and the true subcontractor of the Works.  I am therefore not persuaded that the TP Claim will prejudice embarrass or delay the fair trial of the action between the Plaintiff and the 1^st and 2^nd Defendants.  This is not an appropriate case for striking out the Offending Parts or the TP Claim, and there is no need for me to consider whether the Third Party was too late in making the striking out application. In the circumstances, I have dismissed the Re-Amended Summons at the hearing before me.

VII.  Costs and consequential directions

69.  There is no reason why costs should not follow event.  At the hearing, I awarded costs of the Re-Amended Summons including all costs reserved in favour of the 2^nd Defendant to be paid by the Third Party with certificate for counsel to be summarily assessed.

70.  The 2^nd Defendant did not prepare any statement of costs pursuant to Practice Direction 14.3, but sought indulgence of time to prepare the same, and in due course a handwritten statement of costs was submitted for my consideration.  The 2^nd Defendant asked for costs in the sum of HK$46,125.00 of which HK$23,000.00 were counsel’s fees. Mr Leung had no quarrel with counsel’s fees which were inclusive of appearances before Master S Kwang and before me as well as two conferences and some drafting work.  Mr Leung reserved his criticisms for the solicitors’ costs which he submitted were excessive in light of counsel’s involvement.  However, although the 2^nd Defendant’s solicitor did not draft the affirmation of Mr Chan, he attended conferences with counsel and client for taking instructions and necessarily had to review the various documents for useful input at such conferences.  He also attended the hearings before Master S Kwang and me.  In all, I found the costs claimed necessary and proper, and I summarily assessed costs under the aforesaid costs order in the sum of HK$46,125.00 to be paid within 14 days.

71.  Coming to the consequential directions, I expressed concern that the Third Party seemed to have taken no step in furthering the Fourth Party proceedings.  However, Mr Leung was unable to inform me whether the Third Party would take the matter further. In the circumstances, I directed that the Third Party do within 14 days from the date thereof write to the PI Master with copies to all other parties in the proceedings on the following:

(a)   to state whether the Third Party intends to take further steps in respect of the Fourth Party proceedings, and if so, what steps it intends to take and the timetable for the same, and if not, what steps it intends to take to dispose of or conclude the Fourth Party proceedings;

(b)  inform the PI Master of the date and time of the adjourned Checklist Review hearing date,

whereupon the PI Master may, if he or she thinks fit, give directions on paper or alternatively direct an oral hearing for such purpose.

72.  The court also reminded the 2^nd Defendant and Third Party that the 1^st Defendant had filed List of Documents (together with copy documents) on 14^th March 2007, and the parties should carefully consider whether they need to inspect such documents or even adduce them as documentary evidence at trial.  Mr Leung informed the court that the Third Party had no access to such documents since his solicitors could not search the court file in relation to documents in the main action.  Since the Plaintiff is a party to the main action but was not present at the hearing before me, it is for the Third Party to take out appropriate application to seek access to those documents.