MUHAMMAD DOST v. HONG KONG YING CHEUNG TRADING (RECYCLING) LTD

CACV 38/2020

[2021] HKCA 486

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 38 OF 2020

(ON APPEAL FROM DCEC NO. 234 OF 2015)

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J U D G M E N T

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Hon Cheung JA (giving the Judgment of the Court) :

I. The appeal

1.1  The applicant sought employees’ compensation under the Employees’ Compensation Ordinance (‘ECO’) (Cap. 282) for injuries sustained by him in an accident in the course of and arising out of the employment.  The respondent’s case is that it was not the employer of the applicant.  Deputy District Judge Elaine Liu found for the applicant and awarded him compensation of $249,600 made up as follows :

Section 9 (permanent partial incapacity)	$ 62,400
Section 10 (temporary incapacity)	$187,200
Total:	$249,600

1.2   The respondent now appeals against the decision. 

II.   The parties’ case

1)   The applicant’s case

2.1  The Judge summarised the applicant’s case as follows :

‘ 11. The applicant is an asylum seeker who arrived in Hong Kong in 2009. He received education up to primary 2. He ran his family farm in Pakistan for 20 years. He is illiterate even in his own language, Pashto. He does not speak or understand Cantonese at all. He knows limited English alphabet but he does not speak or read English. He was allowed to stay in Hong Kong on recognizance pending verification of his claims for asylum.

12.   The applicant’s case is that the government subsidies were inadequate to maintain himself and his young son in Pakistan.  To meet the ends, he was introduced by his friend in about May 2013 to a Chinese man called “Chang Ko” (a transliteration) for work.  Chang Ko offered him a job to work on a night shift in a warehouse for a recycling business, with a salary of HK$500 per day.  He started the work that night.  His main task was to clear the tank and collect all the recyclable and waste plastic materials from the tank. There were other workers, the applicant has mentioned one from Mainland China.

13.   When the applicant was working on or about 10 July 2013, his right foot was injured by a protruding tip of the prong of a large digging fork which pierced through his right foot and shoe (“the Accident”).  Chang Ko asked him to return home for rest.  The applicant applied some antiseptic and other medications bought from pharmacy store.  Chang Ko asked him not to tell anyone about the Accident to avoid any trouble.

14.   The applicant had not sought medical help until his pain became unbearable.  He attended public hospital for treatment on 18 July 2013 and had subsequently received various treatments and surgery.

15.   The applicant admitted that he did not know the name of his employer.  Although he knew how to get to the warehouse where he worked, he could not tell the exact address.

16.   In the afternoon of 20 November 2013, the applicant, with the assistance of his friend, Singh Jagroop, went back to the applicant’s workplace.  They found a company name plate (“Name Plate”) posted in front of the entrance of the warehouse (“Warehouse”).  The Name Plate shows a Chinese and English name: “Hong Kong Ying Cheung Trading Recycling Ltd 香港英昌貿易（環保）有限公司”, which is the name of the respondent. 

17.   They also found a road plate (“Road Plate”) posted near a meter box of the Warehouse, showing the words “DD 125 Lot 1955 Ping Ha Road”.  There were fences erected and enclosed the whole Warehouse.  They could not get in.  They took some photos showing the places where the applicant used to walk past when he went to work from the bus station to the entrance of the Warehouse.  They then left.

18.   The applicant testified that according to his memory, the Name Plate had been posted near the entrance of the Warehouse since he started working there.

19.   The applicant therefore believed that the Name Plate showed the name of his employer and the address on the Road Plate is the address of the Warehouse. The applicant commenced this action against the respondent.

20.   The applicant adduced extracts of the respondent’s website containing photos of a factory with the same facilities of those installed in the place where he had worked, such as shredding machines, the tank and the storeroom with bags filled with small pieces of plastic material for recycling purpose.  The initial “YC” were sprayed outside the bags.  The applicant said that during his employment, he has seen other workers at the Warehouse spraying the characters “YC” on the surface of some linen bags which were used to pack recyclable plastic materials.  He came to know in the course of this application that “YC” was the initial of the respondent’s name “Ying Cheung”.’

2.2   In the Notification of Accident to the Labour Department (‘the Notification’), ‘DD125, Lot 1955, Ping Ha Road, Ha Tsuen’ was written down as the address of the respondent.

2)   The respondent’s case

2.3   The director of the respondent Mr Chan Tse Chun (‘Mr Chan’) gave evidence for the respondent. The Judge summarised his evidence as follows :

‘ 21. The respondent denied that it was the applicant’s employer and contended that it had not employed any worker before June 2014.

22.   According to Mr Chan, the respondent was set up in 2010, initially dealing with paper recycling, then moved to the trading of plastic recycling business. The respondent used to occupy Lots 1922RP (part), 1923, 1926, 1941 SB RP, 1942 SB RP and 1943 (“Old Land”) for storage of waste materials.

23.   The announcement of Green Fence Operation by the Mainland Chinese authorities in early 2013 had significant impact on the respondent’s business because under the Operation, imported plastic materials have to be cleaned and not mixed. Mr Chan said that this created much problem in the trading business. The respondent started to consider setting up a waste plastic repossessing plant by the end of 2013.

24.   In August 2013, the respondent started to discuss with the owners the lease of Lots 1922RP (other part), 1921, 1905 RP and 1903 (“New Land 1”) and Lots 1953, 1954 and 1955 RP (“New Land 2”).  At that time, New Land 2 were occupied by the other tenants.  The respondent could only take over the New Land (both New Land 1 and New Land 2) on 1 March 2014 after the lease was entered into at the end of February 2014.

25.   The respondent said that its warehouse was situated in New Land 1 but not in New Land 2 as the applicant suggested. Machines were equipped in its warehouse since March 2014, which was after the Accident.

26.   The respondent admitted that the Name Plate was put up prior to the commencement of the New Land lease for the purpose of applying for a GAQSIQ licence from the authority in Mainland China which was needed for its export business.  The respondent’s case is that the Name Plate was put in the entrance of the Warehouse in about August or September 2013, and remained to be there at least until March 2014.  The respondent had not provided any documents to support the timing. According to Mr Chan, the Name Plate was put there to “pretend” that he has the respondent company in that location, and a photo of the Name Plate was taken for the purpose of informing the issuer of the licence that the respondent has a “venue” in that location. 

27.   In short, the respondent’s case is that the respondent was not the applicant’s employer, it did not have any business operation in the Warehouse at the time of the Accident, and the Warehouse was not located in the lot number(s) suggested by the applicant.’

III.   The Judge’s assessment of the witnesses

3.  The Judge found the applicant to be a credible witness and accepted his evidence in Court.  On the other hand, the Judge found Mr Chan to be evasive and had avoided answering questions directly when cross‑examined.  She found that the respondent was the employer of the applicant at the time of the accident.  

IV.   The issues

4.1  Two issues arise in this appeal.  The first is the respondent’s challenge to the Judge’s finding that the respondent was the employer of the applicant at the time of his accident (‘the employer issue’).  The second is the Judge’s ruling on section 10(1) of the ECO (‘the section 10(1) issue’).

1)   The employer issue

(1)   The respondent’s arguments

4.2   On this issue, Mr Elvin Chan for the respondent argued that the Judge had erred in her assessment of the applicant’s evidence. He submitted that there were numerous instances where the applicant was inconsistent with his own evidence, including the disavowal of a majority of the crucial content in his own witness statements (all three of which he confirmed at the trial that he agreed with after they were translated to him) and conflicted with the testimony of his own witnesses.  

4.3   Mr Elvin Chan submitted that the inconsistencies appeared in the following seven areas.  He submitted that the Judge placed unduly substantial emphasis on the poor language ability and illiteracy of the applicant in explaining away inconsistencies, even when it was illogical to simply attribute these inconsistencies to language difficulties.  After all, the source of information must have come from the applicant himself.

(2)   Inconsistency as to his previous employment

4.4   In his witness statement, the applicant gave a detailed account of his expenses since coming to Hong Kong and his previous employments prior to his alleged employment by the respondent.  However, in Court he completely disowned what he said concerning his previous employments.  He suggested that the person who took his statement might have ‘mistyped’ it.  He stated that he had never worked anywhere else apart from the respondent.  He, however, confirmed that the expenses given in his witness statement were accurate.  Mr Elvin Chan submitted that given the meagre subsidy provided by the Government to an asylum seeker like the applicant, he would not have been able to pay for the expenses if he had truly not worked in the four years before the accident.

(3)   Conflicting evidence as to who provided the phone number of Chang Ko in the Notification                             

4.5   In the applicant’s first witness statement, he said that he was introduced to his employer by a friend Sajjad who was another asylum seeker.  He was brought to the respondent’s warehouse located at Lau Fau Shan and introduced to a Chinese person called Chang Ko.  Chang Ko told him that he ran a recycling business.  He claimed to be the responsible person of the respondent and he was recruiting some workers for night shifts.  The applicant was offered a salary of $500 per day.  He was asked to work every night.  There was no written employment contract and Chang Ko told him to learn from Sajjad.

4.6   In the Notification, the applicant stated that Chang Ko was the contact person and provided his telephone number.  However, under cross‑examination he said he had not provided the full telephone number of Chang Ko.  He suggested that his friend Brar Haravtar Singh (‘Mr Singh’) who accompanied him to the Labour Department wrote out the full telephone number of Chang Ko.  This was denied by Mr Singh.  He said the telephone number was given by the applicant.

(4)   Inconsistency as to the role of Chang Ko 

4.7   Mr Elvin Chan submitted that the applicant said in his witness statement that Chang Ko claimed to be the responsible person of the respondent is inherently improbable because according to the applicant he did not even know about the respondent until after the site visit on 20 November 2013.  The applicant confirmed at the trial that Chang Ko had not mentioned that he was the responsible person of the respondent.

(5)   Inconsistency as to the location where the applicant first met Chang Ko, where he reported for work and where the accident happened                                

4.8   The applicant said in his witness statement that the respondent had two warehouses.  One warehouse was located at DD125, Lot 1955, Ping Ha Road, Ha Tsuen, Yuen Long, New Territories, Hong Kong and the other one was located at Kai Pak Ling Road, Lau Fau Shan, New Territories, Hong Kong.  The applicant went to the Lau Fau Shan warehouse to report duty to Chang Ko every night and Chang Ko would instruct him which warehouse he was assigned to and what his works were on that night.  On the day of the accident on 10 July 2013, he went to the Lau Fau Shan warehouse to report duty and was instructed by Chang Ko to go to the warehouse in Ping Ha Road to work.

4.9   Notwithstanding what the applicant said in his witness statement, he said at the trial that he reported duty at the Ping Ha Road warehouse.  He said he was not sure whether the respondent even had a warehouse in Lau Fau Shan.  In the Notification, he stated that the accident happened in a warehouse located at Kai Pak Ling Road, Lau Fau Shan. 

4.10   When cross-examined about the address in Kai Pak Ling Road in the Notification, the applicant simply said that he disagreed with it and he did not understand why it was written there.  He suggested Mr Singh might have filled it in himself. 

4.11   When the applicant was referred to the photograph of the road plate displaying the words ‘DD125, Lot 1955, Ping Ha Road’, he stated that he cannot recall where the photo was taken and he was unable to point to the location of the road plate with reference to the other photographs.  He said he did not know if that photo had anything to do with the warehouse where the accident took place.

(6)   Rejection of the diagram annexed to the applicant’s own witness statement                             

4.12   The applicant had exhibited a diagram of the warehouse where he sustained the injury in two of his witness statements. However, at the hearing he said he was not familiar with nor did he understand the diagram.  

(7)   Inconsistency as to the object causing the injury

4.13   In the Notification, he described the object that he stepped on and which caused the injury as ‘something pierced through my shoe and injured my foot’.  In his application for employees’ compensation filed in the District Court, he said that his ‘right foot was pierced by a waste metal bar outside the tank’.  In his first witness statement he said ‘his right foot was pierced by a large waste metal pin’ and in his second supplemental witness statement he said the waste metal pin was, in fact, ‘a tip of the prong of a large digging fork that could be used to collect rubbish’. 

(8)   Inconsistency as to whether the witness statements were translated                             

4.14   Although the applicant initially confirmed that the witness statements he made were interpreted to him, at the end he denied that they were interpreted to him at all.

2)   Our view on the employer issue

4.15   The core issue is really whether, as the respondent alleged, the applicant had concocted a story that he was injured in the respondent’s Ping Ha Road warehouse at a time when the respondent’s business was not even in operation.  The applicant was rigorously cross‑examined by the then counsel for the respondent in the Court below for nearly one and a half days.  Every aspect of his evidence was explored in cross‑examination.  The Judge clearly had the benefit of observing the applicant being cross-examined and his response, she was clearly aware of the inconsistencies which were already highlighted by the respondent’s counsel in her 31‑page closing submission.   

4.16   In respect of the applicant’s evidence, the Judge observed :

‘ 28. There is no serious dispute on the poor language ability and illiteracy of the applicant, which affected his expression and accounts of events. Although his witness statements contained statements of translation, the translations were not done by lawyers. There was no evidence on the language used in the translation nor the language ability and standard of the translator. These are not satisfactory. Nonetheless, these cast doubt on the quality of the translations of the witness statements made to the applicant.

29.   I noticed that on many occasions during the applicant’s oral testimony at trial, the court interpreter had to repeat or further explain the questions to the applicant.  When the applicant understood the questions, he gave his answers directly and clearly.’ 

4.17   On the location of the respondent’s warehouse, the Judge was well aware of the mistake of the location of the accident in the Notification.  Mr Singh’s evidence was that when filling out the Notification, he asked the applicant for the location of the accident.  The applicant replied it was somewhere in Lau Fau Shan and pointed to an approximate location of an area on the Google Maps.  Mr Singh then wrote down the road name of that approximate location.  The road was Kai Pak Ling Road, Lau Fau Shan. 

4.18   As for the name ‘Lau Fau Shan’, the Judge noted that the respondent itself had reported an address in Lau Fau Shan as its business address for business registration purposes.  The address that was reported was DD125, Lot 1903, 1954 and 1955 RP, Ping Ha Road, Lau Fau Shan, New Territories.

4.19   The Judge herself asked the applicant how did he go from his home to the Ping Ha Road warehouse and the applicant was able to tell her the route he took to go to that warehouse.  As Mr Yip for the applicant submitted to the Judge if the applicant was not working at the Ping Ha Road warehouse at the time of the accident, but some other warehouse at Lau Fau Shan, the chance that he would be able to randomly locate a warehouse in Ping Ha Road which happened to have plastic recycling facilities (bearing in mind the applicant was not able to get inside during the site visit) was next to impossible.  In our view, the Judge was clearly entitled to accept the evidence adduced by the applicant regarding how the Kai Pak Ling Road address came into being and it was at the Ping Ha Road warehouse where the applicant worked.  It was to the Ping Ha Road warehouse that he led his friend to take the photographs.

4.20   As to the diagram, it is of note that the applicant said that he had the layout of the warehouse in his mind but because the diagram was not prepared by him, he did not understand the diagram.  The applicant was, however, able to confirm the area he worked by reference to the screen capture of the photos of the interior of the Ping Ha Road warehouse posted on the respondent’s website. 

4.21   The accident happened in July 2013.  Mr Chan said the operation of the respondent only started in March 2014 but as the Judge pointed out, the respondent already had a website posted in early December 2013. The post on the respondent’s website in early December 2013 contained statements that the respondent had a factory, owned machines and a system that cleaned and broke up plastic wastes for recycling purposes, and had a track record of handling about 1500 to 2000 tonnes of waste plastic processing every month.  The Judge held that these statements on the webpage directly contradicted Mr Chan’s evidence that the waste processing business was only commenced in March 2014.  The Judge commented on Mr Chan’s explanation that the statements in the website were exaggerations for the purposes of attracting customers.  The Judge held :

‘ 38. ... All these shed light on Mr Chan’s overall credibility, or the lack of it.’

4.22   The Judge was entitled to assess the applicant’s case that he was employed by the respondent and working at the Ping Ha Road warehouse in July 2013 when the accident occurred by reference to all the evidence including that of Mr Chan on where the respondent carried on its business, when did the business commence and whether the respondent had employed casual workers for its recycling work.  The Judge said Mr Chan was very careful in distancing the respondent from having any business operation in the Ping Ha Road warehouse at the time or prior to the accident.  Mr Chan claimed that he asked the owner of the land on which the warehouse stands for permission to hang the respondent’s name plate, which the respondent had not taken possession and was still occupied by other tenants.  The Judge held that Mr Chan’s evidence regarding the hanging of the name plate outside the Ping Ha Road warehouse was unconvincing and not credible and defied common sense.  The Judge held :

‘ 33. In addition to hanging the Name Plate at New Land 2, the respondent also named the New Land as its business address for business registration purposes in September 2013.

34.   Viewing these together, the inference that could be drawn was that the respondent had a business operation at the Warehouse much earlier than the date suggested by Mr Chan.  The respondent hung the Name Plate and named the New Land as its business address as proof of its business operation there.’ 

4.23   The respondent had two directors, namely Mr Chan and his sister Chan Kwok Lam (‘Ms Chan’).  Mr Chan in his witness statement adopted and endorsed the contents of the witness statement of Ms Chan who eventually did not give evidence.  Ms Chan had stated that the respondent had no employees other than its two directors.  Mr Chan, however, admitted that in June 2014 after the plastic recycling machines were delivered and installed, the respondent procured various temporary workers, who were paid on a daily wage of $500 by cash, to help sort the bales of plastic wastes and to carry out other simple tasks on a need basis.  This lent support to the applicant’s case that he was hired as a casual worker at the Ping Ha Road warehouse and there were other workers working there.

4.24   The respondent also contended that the Judge failed to consider the possibility that Chang Ko or Chuen Kee was the employer.  With respect to Chuen Kee, the Judge held :

‘ 42. The respondent contended that the applicant’s employer was not the respondent because the employer’s telephone number reported in the Notification of Accident belonged to a Mr Wong of Chuen Kee Environmental Resources Recycle Limited (“Chuen Kee”). Chuen Kee was incorporated after the Accident on 25 November 2013. The waste materials collected by it were metal and paper, not plastic. Chuen Kee could not be the employer as it was not even incorporated at the time of the Accident. ...’

4.25   Mr Elvin Chan submitted that the Judge was mistaken to the type of work carried by Chuen Kee.  We are of the view that this is irrelevant.  What is important is the commencement day of the business of Chuen Kee.

4.26   In respect of Chang Ko, counsel for the respondent had made the following submissions to the Judge :

‘ 12. The reality of the situation was that, not only did Chang Ko recruit and hire him, it was also Chang Ko who:

(1)   paid the Applicant’s salary every week, in cash;

(2)   gave the Applicant (and other workers) work instructions and which location (of the two alleged warehouses of the Respondent) to go for work;

(3)   on occasion, would drop into the Warehouse to check on the workers’ work at 1 or 2 am;

(4)   was the person the Applicant called to seek approval if he needed to be absent from work;

(5)   the Applicant called if he had some errands to do;

(6)   the Applicant treated as his boss.

13.   Ultimately, the following aspects of employment were crucially admitted by the Applicant:

(1)   he worked for Chang Ko despite not knowing his exact name or whether he was employee of the Respondent;

(2)   so long as he was paid when he was working, the identity of his employer was not important to him;

(3)   he had no clue who his employer was when he worked at the Warehouse;

(4) when presented with a directory of recycling companies and challenged as to the fact that the mobile phone number (starting with “6644”) that he used to contact Chang Ko before the Accident actually belonged to a person by the surname of Wong (who was connected to an entity other than the Respondent (i.e. Chuen Kee Environmental Resources Recycle Limited), the Applicant indirectly admitted when asked if he could have mistaken the identity of his employer, by conceding that he was not sure who his real boss is.’

4.27   The Judge had not addressed the issue raised on Chang Ko.  This is a matter that caused us some concern.  But ultimately we have to look at the matter in the way that was presented to the Judge.  The respondent’s approach below was a complete denial that it had anything to do with the applicant.  In an attempt to distance itself from any involvement with the applicant, it went as far as to say that its business was not even in operation at the time of the accident and the warehouse which had its name plate on was at that time not even in its possession.  The respondent had not raised any alternative case that if the applicant was working there he was hired by someone else or that the warehouse was let to another contractor to do the recycling work at night and the respondent had no responsibility towards the workers hired by these people.

4.28   Once the respondent’s primary (and only) case was disbelieved and the Judge found that the applicant was indeed working at the respondent’s Ping Ha Road warehouse when he was injured, we are of the view that the Judge was entitled to draw the inference that it was indeed the respondent who was the employer of the applicant notwithstanding Chang Ko paid the applicant and gave him instructions.  It would be most strange, in the absence of other evidence, that the respondent would permit a stranger to work at its warehouse if he was not its employee.

4.29   The grounds of appeal raised by the respondent are really challenges to the findings of fact by a trial judge.  This Court in China Gold Finance Ltd v CIL Holdings Limited (unrep., CACV 11/2015, 27 November 2015) reviewed the authorities in this area.  The well‑established principle is that this Court will only intervene when we are satisfied that the finding is plainly wrong.  As repeatedly said, the findings in a judgment is an inherently incomplete statement of the impression upon the trial judge, see Piglowska v Piglowski [1999] 1 WLR 1360 at 1372.  The trial judge is assigned the task of determining the facts after listening to the evidence and not the appeal court.  It is likely that the trial judge who has heard the evidence over an extended period of time will have a greater familiarity with the evidence and a deeper insight in reaching conclusions of fact rather than an appellate court whose perception may be narrowed or even distorted by the focus of challenge to particular parts of the evidence : Carlyle v Royal Bank of Scotland [2015] UKSC 13.  The last observation is most apposite to this case.  The approach adopted by the respondent in this appeal in respect of the areas of discrepancy of the applicant’s case is to invite us to focus on some particular areas of the evidence rather than to see how the Judge had assessed the parties’ case in the round.  The Judge was well aware of the criticism by the respondent of the applicant’s evidence in relation to his own statements in which he said he had the accident at the warehouse in Lau Fau Shan, about the layout of the warehouse, about the telephone number reported in the Notification and the different description of the injuries in the medical report and the discrepancies between the evidence of the applicant and his witnesses.  Some of these discrepancies can be properly explained once the whole of the evidence is fully considered and some of the inconsistencies are clearly not germane to the core issue whether the applicant was employed by the respondent at the time of the accident.  In our view the respondent has clearly not been able to show that the findings by the Judge are plainly wrong.  

3)   Section 10(1) issue

(1)  Section 2(2) discretion and section 10(1)

4.30   The applicant as an asylum seeker holding a recognizance pending the result of the application for asylum had not obtained prior approval from the Director of Immigration authorising him to take up employment with pay in Hong Kong.  In other words, the applicant was engaged in work for which he was not lawfully employable or working under an illegal contract. 

4.31   Section 2(2) of the ECO confers a discretion on the Court in respect of illegal contracts.  It may deal with the matter as if the injured worker had been working under a valid contract of service.

‘ (2) If, in any proceedings for the recovery of compensation under this Ordinance, it appears to the Court that the contract of service or apprenticeship under which the injured person was working, at the time when the accident causing the injury happened, was illegal, the Court may, if having regard to all the circumstances of the case it thinks proper so to do, deal with the matter as if the injured person had at the time aforesaid been a person working under a valid contract of service or apprenticeship.’

4.32   In Yu Nongxian v Ng Ka Wing & Anor [2007] 4 HKC 551, this Court drawing principles from cases such as Chung Man Yau & Anor v Sihon Co Ltd [1997] HKLRD 1221 and Chan Cheuk‑ting & Anor v Analogue Engineering Co Ltd & Anor [1986] HKLR 935, held that there is no public policy of such weight that it would require the Court to refuse to exercise its discretion under section 2(2) of ECO in favour of a worker who is not lawfully employable in Hong Kong.  This Court held that public policy would not be served by disallowing claims by illegal employees.  In this case, the Judge had exercised her discretion under section 2(2) of the ECO in favour of the applicant and no appeal was raised in respect of her decision on this issue. 

4.33   However, what was argued below was that the wording of section 10(1) of the ECO which deals with compensation for temporary incapacity prohibited the Court from awarding a compensation to the applicant because he was an illegal worker.  Section 10(1) is as follows :

‘ (1) Where temporary incapacity whether total or partial results from the injury, the compensation shall be the periodical payments hereinafter mentioned, or a lump sum calculated accordingly, having regard to the probable duration, and probable changes in the degree, of the incapacity. Such periodical payments shall be, or shall be at the rate proportionate to, a monthly payment of four-fifths of the difference between the monthly earnings which the employee was earning at the time of the accident and the monthly earnings which he is earning, or is capable of earning, in some suitable employment or business during the period of the temporary incapacity after the accident.’ (emphasis added)

(2)  The respondent’s argument

4.34   Mr Elvin Chan argued that section 10(1) is premised on the assumption that had the accident not occurred, the employee would have continued in the same type of employment receiving the same earning: Yu Tat Kam v Chu Tung Shing & Anor [2009] 6 HKC 411, at paragraph 25 per Yuen JA.  He submitted that the legislature must have sought to impose a temporal limit on the discretion exercised under section 2(2) of the ECO such that the Court is not to treat the person as one working under a valid contract even during the post‑accident period as a way of balancing the policy interest to give compensation to injured persons while preventing the recognition or even endorsement of future illegal employment activity.  Technically, the Court is not required to consider once again whether the injured person was legally employable under section 10 once it has decided to exercise discretion under section 2(2).  However, in contrast with sections 6, 7 and 9 of the ECO, section 10(1) introduces an exercise of examining the state of affairs of the injured person post‑accident.  As the employer bears the burden to rebut the presumption of temporary incapacity and to prevent overpayment: Kan Wai Ming v Hong Kong Airport Services Ltd [2011] 3 HKLRD 497, at paragraph 33 per Fok JA, in discharging such burden the employer must be allowed to point to post‑accident matters to rebut the presumption of temporary incapacity and to prevent overpayment.  Thus, it is open to the employer to state that the injured person is not legally employable, even if previously treated as having been validly employed as a matter of statutory operation.  Once raised, the issue as to legal employability and thus capacity to work for the period after the accident must be considered.  At this stage, there is no discretion to treat the injured person as capable of working under a valid contract as a matter of discretion.

(3)  The Judge’s decision

4.35   The Judge rejected the respondent’s arguments.  She observed that section 10(1) is a formulation for calculating the amount of compensation.  The first sentence of section 10(1) provides that the compensation shall be the periodical payments or a lump sum, having regard to ‘the probable duration, and probable changes in the degree of the incapacity’.  The second sentence in section 10(1) provides the formula for calculating the periodical payments referred to in the first sentence: that is four-fifths of the differences between two parameters, (1) the applicant’s monthly earnings at the time of the accident (‘Parameter A’); and (2) the monthly earnings which the applicant was earning (‘Parameter B1’) or was capable of earning (‘Parameter B2’), in some suitable employment or business during the period of temporary incapacity after the accident.  Parameters B1 and B2 are factors in the formula that give a reduction to the actual amount of compensation an injured employee may obtain under section 10.

4.36   The Judge was of the view that the issue of illegal employment has no place in the section 10(1) assessment.  She held that :

‘ 80. Given the objective of the Ordinance, the proper construction of section 10(1) and the underlying policy considerations for illegal workers’ claims, section 10(1) is not to be construed as a section to introduce once again a hurdle for obtaining compensation by reason of the applicant’s legal incapability to work.

  81.   Let me test the proposition derived from the Shiddik case by comparing the position of an asylum seeker like the applicant and the position of a hypothetical asylum seeker who is not legally employable in Hong Kong, but for whatever reason, he did get employed after the accident to do works that he was physically capable to do and obtained actual monthly earnings.  This hypothetical worker who continued to make an earning “illegally” after the accident could obtain section 10 compensation by applying Parameter B1 (“the monthly earnings which he is earning”) and does not need to rely on Parameter B2 (capability of earning).  However, an illegal worker, like the applicant, who stopped to make earnings “illegally” after the accident could not get the compensation at all.  This, in my view, would not be the intended effect of section 10.’

4.37   This approach was followed by H H Judge H Au‑yeung in Hossain Mohammed Sajib v. Chuen Kee Environmental Resources Recycle (Hong Kong) Limited (in Liquidation) & Anor. [2020] HKDC 1200.

(4)  Our view on section 10(1)

4.38   We disagree with Mr Elvin Chan.  His argument has not properly distinguished the difference between legal capacity and physical capacity for the purpose of calculating the section 10(1) compensation.  We are of the view that the approach of the Judge and Judge H Au‑yeung is the correct approach.  As Judge H Au‑yeung said the word ‘suitable’ in section 10(1) of the ECO has nothing to do with the legality of the applicant’s employment, or whether he could be employed again legally after his recovery.  The adjective ‘suitable’ is only describing the kind of work which can be done by him in the light of his physical condition.  Yuen JA’s view in Yu Tat Kam at [25] where she held, amongst other things, that ‘It is assumed that had the accident not occurred, the employee would have continued in the same type of employment receiving the same earnings’ was said in the context of who bears the burden of proof.  It does not support the argument now being advanced by the respondent.  On the contrary, Judge H Au‑yeung’s view is fully supported by Yuen JA in the following paragraphs of her judgment :

‘ 26.  Accordingly in our judgment, the burden is on the employer to prove that circumstances existed for a reduction in compensation.  If the employer can prove that the employee was actually earning money during the certified period (as in this appeal), those earnings would be put into the s 10(1) calculation.  Also if the employer can prove that despite the certified incapacity, the employee was still capable of earning money in a ‘suitable’ employment, those potential earnings would also be put into the s 10(1) calculation.

27.  Having said that, we think it would only be in rare circumstances where an employer could prove potential earnings where total incapacity has been certified, because (a) it is not only physical disability that incapacitates an employee from working – an employee may be incapacitated by discomfort or pain preventing him from concentrating, and (b) an employee is expected only to undertake employment which is suitable for him.’

4.39   The last phrase of section 10(1) ‘or is capable of earning, in some suitable employment or business during the period of the temporary incapacity after the accident’ is dealing with a hypothetical situation where the employee was not actually earning money but was said to be capable of earning money in an employment which is either physically suitable for him or the nature of which is suitable for him.  Such potential earnings would need to be considered in the section 10(1) calculation.  But the hypothetical situation has nothing to do with the status of the employee as an illegal worker.  In our view cases which expressed a contrary view such as Abu Bakkr Shiddik v M M & Co Auto Parts, Dismantling and General (A Firm) (DCEC 903/2009, unreported, 12 January 2011); Qadir Sher v Siddiqui Muhammad Faisal & Others (DCEC 404/2011, unreported, 13 August 2012); and Shahzad Ajmal v Chakwal Auto Traders (HK) Limited & Another [2019] HKDC 876 (5 July 2019) were wrongly decided and should not be followed. 

4.40   Mr Richard Yip for the applicant had referred us to the case of Sing v Taj (Sydney) Pty Ltd (2006) DDCR 557 of the Court of Appeal of New South Wales.  This case deals with an interpretation of the Workers’ Compensation Act 1987 of its jurisdiction with its own particular wordings.  It is not necessary for us to rely on this case to assist us in the interpretation of section 10(1).

V.   Conclusion

5.1  Accordingly, the appeal is dismissed with costs to the applicant.

5.2   The applicant’s own costs are to be taxed according to the Legal Aid Regulations.