CHAN KWOK KIN v. MOK KWAN HING AND ANOTHER

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JUDGMENT

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Clough, J.A.:

1. This is the judgment of the Court.

2. The applicant, Mr. Chan Kwok Kin, appeals against the order of Her Honour Judge Chua made on the 10th April 1990 dismissing his application for compensation against the respondents Mok Kwan Hing (or Mok Hing) and Concorde Construction Co. Limited under the Employees' Compensation Ordinance (Cap. 282). The applicant's claim was brought against the first respondent under sections 9, 10 and 10A of the Ordinance on the basis that the applicant had suffered personal injury by accident on the 29th October 1987 arising out of and in the course of his employment by the first respondent under a contract of service as a scaffolding worker on the second respondent's building site in Tsuen Wan. The claim against the second respondent was made against it as a principal contractor under section 24 of the Ordinance on the basis that at the time of the accident the first respondent had been employed as the sub-contractor of the second respondent.

3. The first respondent did not appear below or on appeal. Throughout the proceedings have been contested between the applicant and the second respondent. The sole issue arising on the appeal is whether at the time of the accident the applicant was an employee, for the purposes of section 2(1) of the Ordinance, working under a contract of service with the first respondent, or whether, as the judge held, he was an independent contractor working in partnership with another person, Mr. Law Kin Man in a partnership with whom the first respondent had entered into a contract for services.

4. At the hearing of the claim the only witness called was the applicant. The judge was left to decide the issue of liability on his evidence together with certain documents. Included in a bundle of documents before the judge, the authenticity of which had been agreed, were a number of cheques drawn by the second respondent and receipts signed by the applicant relating to interim payments of compensation amounting to a total of $21,000 paid to the applicant by the second respondent between the 24th December 1987 and the 15th June 1988.   Mr. Pritchard (who did not appear below) for the applicant contended, when opening the appeal, that the judge had wrongly disregarcded these cheques and receipts which constituted material admissions against interest by the second respondent.  However Mr. Benjamin Yu (who did not appear below) pointed out that the documents in question had not been relied on by  counsel for the applicant below and had not been seen by the judge.  Accordingly the judge is not to be faulted for not having regard to these documents.

5. We may pause here to observe that there is another document in the bundle which was perhaps relevant to the applicant's status to which the judge's attention was not drawn, namely the contract between the first and second respondents. No reference was wade to this document by either counsel at the hearing of the appeal.

6. Another preliminary matter concerns the copy of a Form 2 notice dated the 24th November 1987 which the second respondent sent to the Commissioner of Labour giving notice of the applicant's accident. Section 15 of the Ordinance requires a Form 2 notice to be given by the employer of an injured employee. Although the second respondent was the principal contractor and not the applicant's employer, the notice in question named the second respondent as the applicant's employer and not the first respondent. The space for the particulars of any principal contractor was left blank.

7. The Form 2 notice had been the subject of a hearsay notice by the applicant under Order 38 rule 21 and a counter notice under rule 26 (requiring the maker of the notice to be called as a witness) by the second respondent which had not been complied with by the applicant. At the conclusion of the applicant's evidence the judge refused his counsel's application to admit the form in evidence under rule 29 after the second respondent's counsel had opposed the application because by the time of the application his witnesses had been released.

8. On appeal it was contended on the applicant's behalf that the judge should have applied rule 29(2) and admitted the notice in evidence.  However in our opinion the real point is that the notice is not relevant to the pleaded case of the applicant which has not been departed from at any stage below or on appeal. That case has always been that the first respondent was the applicant's employer and that the second respondent was the principal contractor employing the first respondent as its sub-contractor.  It cannot therefore be relevant to the applicant's case that the second respondent sent a Form 2 notice to the Commissioner asserting that it was the applicant's employer.   Accordingly, Mr. Pritchard having informed the court at the opening of his reply that he would not apply to amend his pleading or notice of appeal, we can see no basis for admitting the Form 2 notice in evidence.

9. The judge, who was troubled by the paucity of the evidence, summarised it as follows:

10. The judge mentioned the decision of the Privy Council in Lee Ting Sang v. Chung Chi-keung [1990] 2 WLR 1173 and concluded her judgment by saying:

11. In view of her comments when summarising the evidence and the absence of any further evaluation before her decision of the inferences to be drawn from any of the facts, we apprehend that the judge must have concluded that all the facts gave rise to only one inference namely that reflected in her decision.

12. There having been no written contract made between the applicant and the first respondent, their relationship has, as Lord Griffiths indicated in Lee Ting Sang's case at p.1178 C-D, ".... to be determined by an investigation and evaluation of the factual circumstances in which the work is performed" and ".... the question of whether or not the work was performed in the capacity of an employee or as an independent contractor is to be regarded by an appellate court as a question of fact to be determined by the trial court."

13. In accordance with well settled principles this court must not interfere with the judge's evaluation of the facts and impose a second opinion if the case is a borderline one where it would be reasonable for similarly instructed minds to come to different different conclusions. On the other hand this court is obliged to interfere if it concludes that, as Lord Radcliffe observed in Edwards v. Bairstow [1956] AC 14 (H. L.) at p.39 (cited in Lee Ting Sang at p.1179 E-F) ".... the only reasonable conclusion on the facts found is inconsistent with the determination come to....."

14. The facts of this case are of course different from the facts in Lee Ting Sang's case but it is another case involving casual labour employed upon a job-by-job basis in Hong Kong.  We are therefore mindful of the indication given by the Privy Council and expressed by Lord Griffiths at p.1175H that the decision in Lee Ting Sang ".... may set a precedent against which the status of many of those employed in the building industry may be judged in the future."

15. Included in the fundamental criticisms by the Privy Council of the Court of Appeal's approach in Lee Ting Sang's case was our failure to refer to the provisions in the Ordinance (see proviso (b) to section 2(1) and section 11(2) and (7 )) indicating that it is intended to cover employees who are casual workers and those who work for more than one employer: see per Lord Griffiths at p. 1181H. We bear this in mind now.

16. In the absence of any single conclusive test for the distinction between a contract of service and a contract of services the Privy Council has accepted in Lee Ting Sang at p. 1176B that the matter has never been better put than by Cooke J. in Market Investigations Ltd. v. Minister of Social Security [1969]2 Q.B. 173, l84-185 where he said:

17. Adopting this approach to the facts of the present case and bearing in mind what was said about casual workers in Lee Ting Sang we are of the opinion that the only reasonable conclusion on a proper evaluation of those facts is that the applicant was employed by the first respondent under a contract of service.

18. In our judgment no appreciable weight should be given to the fact that the applicant said under cross-examination that he and Law were partners or to his admission that he and Law were sub-contractors to the first respondent.

19. In the context in which he said that he and Law were partners we think it is far more likely that he meant that they were working as a team in erecting the scaffolding than that they were jointly operating a business enterprise.  Moreover, his admission that he and Law were sub-contractors to the first respondent was made in response to an assertion by counsel that because a receipt signed by Law, but prepared by the first respondent, stated that payment was made to them as sub-contractors they therefore were sub-contractors. We do not think that it is at all clear from that exchange that the applicant was accepting that this was his own understanding of the nature of his relationship with the first applicant. It is entirely possible that he merely concluded from counsel's assertion that the wording on the receipt was determinative of the nature of that relationship.

20. It was for the court and not the applicant to evaluate the facts and determine the legal relationship of the applicant to the first respondent. The applicant no doubt knew who he was working for, namely the first respondent, but in all the circumstances we think his classification of their legal relationship and of his legal relationship with Law can have no significant evidential value. Furthermore it seems to us that the fact that the applicant and Law worked together on the basis that Law was the middleman between them and those for whom they worked was a neutral factor as consistent with the applicant and Law being employees as with their being sub-contractors.

21. The mere fact that the first respondent had issued receipts to Law, many (but not all) of which described the applicant and Law as sub-contractors cannot be determinative of the relationship of the applicant with the first respondent. Mr. Yu pressed us with the fact that it was when confronted with one of these receipts under cross-examination that the applicant had admitted that he and Law were sub-contractors to the first respondent. He contended that the applicant had thereby "adopted" the receipt signed by Law as an ordinary person within the contemplation of the question originally put by Buckley L.J. in Simmons v. Heath Laundry Company [1910] 1 KB 543 at p.553 (and adopted by Somervell, L.J. in Cassidy v. Ministry of Health [1951]2 KB 343 at pp. 352-3 and by Sir John Donaldson (President of N.I.R.C.) in Challinor v. Taylor [1972] I.C.R. 129), namely:

22. In our judgment this ingenious argument is not sound because it fails to distinguish the test from the actual application of the test which must be by the court putting itself in the position of the hypothetical ordinary person and not by the applicant or any other party.

23. A further matter which should not be held to be adverse to the applicant is the fact that during the period when he worked on the first respondent's site he also worked on other sites. Concurrent contracts of service are contemplated by section 11(7) of the Ordinance (which was not drawn to the attention of the judge below or to this court) which provides:

24. Although the question of control is an important matter which always has to be considered in these cases the evident absence of supervision of the applicant's work and his freedom to keep his own hours should not, in our opinion, be a determining factor in the present case.  The applicant and Law were skilled scaffolders.  They knew that as each floor of the building was completed they had to set up scaffolding for the next floor.   It is therefore hardly surprising that that they did not receive directions from the first respondent. Having regard to the nature of their work and the manner in which they were required to do it, their freedom to keep their own hours seems to us to be again hardly surprising.

25. All the other indicia seem to us to be indicative of a contract of service. The applicant (and Law) were paid in cash at the daily rate of $400. There was thus no question of any pricing of the job as one would expect in the case of a sub-contractor.  The fact that payments were generally every two weeks in varying amounts seems to us to be explained by the nature of the work done and consistent with a contract of service. Likewise the fact that Law received payment for both of them (who were named in the receipts) is consistent with two artisans being engaged to work together as a team on the basis that Law was their spokesman and was to pass on the applicant's pay to him. Any arrangement between the applicant and Law to this end is not, in our opinion, to be regarded as necessarily, indicative that they were partners sub-contracting with the first respondent.

26. In the absence of any appearance by the first respondent who issued the receipts to Law we do not draw any adverse inference against the applicant in respect of the receipt dated August 1987 which refers to a payment of $3,000 to the applicant and Law for "15 jobs for this month". The judge has accepted that the applicant was paid at a daily rate of $400 and we can discern no evidential basis for concluding that the $3,000 referred to in the receipt was not based pro rata on a daily rate of $400 in respect of casual work by casual employees. The fact that there was no double pay for Sundays or holidays seems to us to be of no decisive importance.

27. Although the minimal tools required for the work, namely a knife and scissors were provided by the applicant the scaffolding equipment, namely the bamboo and the bindings were provided by the first respondent. Hiring of helpers, when needed was not by the applicant or Law but by the first respondent. This is highly material as indicative that the applicant and Law had not sub-contracted with the first respondent.

28. We mention that whilst, as the judge found, the applicant's evidence was to the effect that if they required assistants he would approach Law, the applicant is also recorded as saying under cross-examination that if they needed an assistant Law would pay him.   However it seems clear that the applicant was here not meaning to say that Law would pay the assistant out of his own pocket because the first respondent's receipts show that on the 16th July 1987 Law received a payment of $4,000 on behalf of the applicant and himself and a third man, Lee Wah.  Also receipt 0869 which is dated only "1987" (but appears to have been issued in September or early October 1987) refers to a payment of $2592 by the first respondent to the applicant and Law, and also refers to a payment of $500 being "Additional payment to daily workers for two days".

29. There was thus no financial risk taken by the applicant and Law other than that inherently faced by casual employees and they undertook no degree of responsibility for investment and management. They simply employed their artisans' skill in erecting scaffolding from floor to floor as and when it was required.  Likewise they had no opportunity of profiting from sound management in the performance of their tasks save perhaps in completing them more quickly than others might. If we had been required to evaluate the relevant indicia at first instance we would therefore have held (as the Privy Council did in Lee Ting Sang at p.1177 H albeit on different facts) that:

30. In our judgment this is the only reasonable conclusion on the facts found by the judge. With respect to the judge, who does not seem to have received the benefit of full argument, we consider that she formed a view of the facts which could not reasonably be entertained: see Lee Ting Sang at p.1182 A.

31. Furthermore, Whilst purporting to apply Lee Ting Sang the judge seems to have given adverse weight to the fact that the applicant worked on other sites during the period that he worked for the first respondent, whereas the provisions of the Ordinance to which the Privy Council referred in Lee Ting Sang (to which the judge was not referred below) make it clear that in this respect the applicant's conduct was consistent with that of a casual employee' who is within the ambit of the Ordinance. Moreover the judge gave no indication in her judgment that she had had had any regard to material indicia such as degree of financial risk and the remaining indicia set out by Cooke J. in his dictum cited above.

32. We therefore allow this appeal and direct that the matter be remitted to the judge for assessment of the amount of compensation payable. We make an order nisi awarding the costs of the appeal and below to the applicant whose own costs are to be taxed in accordance with the Legal Aid Regulations.