WONG SAI YEE v. KONG KWAN t/a HOP HING SAW MILL

IN THE COURT OF APPEAL

Civil Appeal
No. 97 of 1987

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JUDGMENT

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Barker, J.A.:

1. This is the judgment of the Court on an appeal from the dismissal by Judge Fung on 16^th June 1987 of an application for compensation under the Employees’ Compensation Ordinance Cap.282 made in Tsuen Wan District Court. In his careful and analytical judgment the Judge found that at all material times the appellant was an independent contractor and therefore did not fall within the ambit of the Ordinance.

2. The respondent traded as Hop Hing Saw Mill. In that mill there were two electric circular saw departments. In one department, where the rough cutting of logs was performed, the workers were employed by the respondent, they were paid fixed wages, they had fixed hours of work, they had work cards, and they had the statutory holidays.

3. The appellant was in charge of the other department. He it was who recruited the workers. They did not receive fixed wages. What happened was that they, like the respondent himself, were on piece work. At the end of each accounting period, the appellant would submit an account to the respondent, and would receive a cheque. He then paid the workers according to their respective output allowing himself an extra $10 per day for his own technical skill. Not only did he have the power to recruit workers, he also had the power to dismiss them, although the evidence was that if the senior foreman of the respondent thought a potential recruit was not satisfactory he would not be engaged.

4. The appellant had no holiday and his recruited workers took leave in turn without any fixed dates. They would be given leave by the appellant whenever there was insufficient work.

5. The work that the appellant personally performed was that of finishing the sawing of rough cut logs, sharpening saws, repairing work of machinery and cutting pointed edges after sawing before piling them up.

6. The respondent did not tell the appellant how the work was to be done. He merely told him what work was to be done. The appellant was not required himself to work any set hours. Nevertheless the undisputed evidence was that he did work regular working hours for 28 or 29 days each month. Thus the position was that he was working full time, at the respondent’s premises, on material provided by the respondent, and on the respondent’s machinery. He had virtually no outgoings save for the remuneration of the workers.

7. The accident occurred on the 19^th March 1985 when the appellant fell some 10 feet when he was trying to release some wire binding. As a result the existing degenerative condition of his spine was exacerbated.

8. The accident was reported to the authorities, as required by law when an employee suffers injury in the course of his employment, and on Form 2 under Cap. 282 the appellant was said to be an employee of the respondent receiving a basic salary and additional allowance or bonus of a constant nature. The evidence was that the information on this form was given to the signatory by the now deceased proprietor of the respondent.

9. There was no evidence that the appellant paid his own tax, but equally there was no evidence that the respondent paid his tax, if any, either.

10. Such then were the facts as found by the Judge, and there is no challenge to his findings.

11. In his judgment, the Judge said:

“… it is clear that the element of control is the essential factor to determine whether a contract is one for services or one of service.”

12. In our judgment, that view is wrong. The element of control is without doubt an important factor but it is not “the essential factor”. Further, “control includes the power of deciding the thing to be done, the way it shall be done, the means to be employed in doing it, the time when and the place where it shall be done,” per MacKenna J. in Ready Mixed Concrete v. Minister of Pensions(1) at p.515.

13. As Denning L.J. (as he then was) said in Bank voor Handel en Scheepvarrt N.V. v. Slatford(2) at 295:

“In this connection I would observe that the test of being a servant does not rest nowadays on submission to orders. It depends on whether the person is part and parcel of the organization.”

14. An obvious example of this proposition is the captain of a ship, who has total authority as to how the ship is navigated, and total authority over his crew but is none the less employed under a contract of service.

15. The appellant was part of the respondent’s organization.

16. But that is by no means the end of the case. One has to consider whether the appellant’s interest in the relationship involved any prospect of profit or risk of loss. It is submitted on behalf of the respondent that the appellant could by careful and skilful management reduce the number of workers needed to carry out the requisite tasks and therefore the profit to him would have increased. This is sheer speculation, unsupported by evidence. Furthermore we can see no risk of loss.

17. Another helpful approach is that postulated by Cooke J. in Market Investigations v. Minister of Social Security(3) at p.184: “Was the appellant carrying on business on his own account?” In our opinion he was not. He was working exclusively for the respondent, on the respondent’s premises, using the respondent’s machinery to work on the respondent’s materials. True it is that he had wide powers of engaging and dismissing workers, but so do senior officials in companies who are clearly employees. The reality of the situation appears to be that, as the leader of a gang, he was a foreman and that he and the workers were all employed by the respondent.

18. For these reasons, we would allow the appeal and invite counsel’s assistance as to the way the appellant’s entitlement to compensation should now be quantified.