CHAN LOK SUM v. WAN FOOK

DCEC 192/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 192 OF 2010

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BETWEEN

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JUDGMENT

Background

1.  Mr. Chan, the Applicant, was at the material time a plasterer. He claims that on 8 April 2009, whilst he was carrying out construction work at 184 Ha Wo Che in Shatin ("Site"), he injured his left forearm. The Site was the property of the Respondent, Mr. Wan. Mr. Chan claims that at the time of the accident, he was employed by Mr. Wan to carry out plastering and construction work, and that his injuries were sustained in the course of his employment by Mr. Wan. He claims compensation pursuant to the Employees' Compensation Ordinance ("Ordinance").

2.  Mr. Wan denies that Mr. Chan was his employee. He claims that he had engaged Mr. Chan as an independent contractor to carry out works at the Site, at a fixed sum of $6,000. Mr. Wan further denies that Mr. Chan had been injured in the manner he claimed.

Issues

3.  The issues which arose for determination at trial are :

(1)   Was Mr. Chan an employee of Mr. Wan, or an independent contractor carrying on business on his own account?

(2)   Did Mr. Chan sustain injuries in the manner he claimed, in the course of his employment?

(3)   If Mr. Chan had sustained injuries in the course of his employment, the amount of compensation payable.

Was Mr. Chan an employee of Mr. Wan, or an independent contractor carrying on business on his own account?

Legal principles

4.  There is no dispute between the parties that the proper approach to the question of whether a person is an employee, as adopted in the case of Poon Chau Nam v. Yim Siu Cheung [2007] 1 HKLRD 951, is to examine all the features of their relationship against the background of the indicia of employment 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 is asked.  The passage of Mummery J’s judgment in Hall v. Lorimer [1992] 1 WLR 939 at 944, cited in the judgment of Ribeiro PJ in Poon Chau Nam, provides the most useful guidance in the task which the court undertakes :

"In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person's work activity. This is not a mechanical exercise of running through items on a checklist to see whether they are present in, or absent from, a given situation.  The object of the exercise is to paint a picture from the accumulation of detail.  The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole.  It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details.  Not all details are of equal weight or importance in any given situation.  The details may also vary in importance from one situation to another.”

Factual evidence on relationship

5.  Adopting the approach described above, it is essential to find first the features of the working relationship between Mr. Chan and Mr. Wan.

6.  Save for the fact that there was no written contract made between the parties, all other aspects of the working relationship between Mr. Chan and Mr. Wan are disputed in this case.  These include the scope of the work which Mr. Chan was to do, where the work was carried out, the time during which Mr. Chan had worked for Mr. Wan, the terms of payment agreed, whether the work tools were provided by Mr. Wan, and the amount of payment which Mr. Chan had received from Mr. Wan.

7.  According to Mr. Chan, Mr. Wan had approached him in January 2009, expressing the desire to engage him to do plastering work. Mr. Chan was working for another employer at that time, and informed Mr. Wan that he would have to wait until he finished his current project. According to Mr. Chan, Mr. Wan had called him again at the end of February 2009, but he was still not free and it was only on 11 March 2009 that Mr. Chan telephoned Mr. Wan to say that he had completed his project and was available to work. At a meeting at the Site on 12 March 2009, Mr. Chan learned from Mr. Wan that he required a plasterer for some construction work and would like to engage Mr. Chan to do such work.

8.  Mr. Chan's evidence is that he orally agreed with Mr. Wan to carry out work at the Site and at Mr. Wan's residence at 139/140 Ha Wo Che (which was adjacent to the Site), which work included the erection of a structure to be used as a kitchen and a washroom on the Site ("Structure"). The work involved putting up brick walls, laying tiles, plastering and painting the walls and ceiling, and the completion of the flooring referred to as the "floor platform". According to Mr. Chan, he agreed to carry out such works at a daily wage of $850, which he claims was the usual salary of a plasterer. It was agreed that Mr. Wan would provide all the construction materials required, and that Mr. Chan would provide his own work tools. According to Mr. Chan, he had fixed working hours from 9 AM to 6 PM, and he commenced work at the Site on 15 March 2009, working until the accident on 8 April 2009.

9.  Mr. Chan claims that he had agreed with Mr. Wan that he was to be paid once every 15 days, and that between 15 March 2009 and April 2009, he had received 2 payments of his wages, once on 2 April 2009 when he received a sum of $12,750, and once during the period of his hospitalization after the accident, when he received a further sum of $5,100 from Mr. Wan.

10.  According to Mr. Wan, Mr. Chan had worked for him before in 2008 when he refurbished his residence at the Site ("Refurbishing Work"), and Mr. Chan had carried out plastering work as an independent contractor, charging  by a formula of $860 for each 100 square feet of work carried out ("Formula"). The Refurbishing Work was, according to Mr. Wan, completed in January 2009. Mr. Wan claims that he paid Mr. Chan a sum of $1,700 in respect of the 200 square feet of Refurbishing Work carried out by Mr. Chan. Mr. Wan's evidence is that it was at the end of March 2009 that he engaged Mr. Chan to build the Structure, which had an area of 5 feet x 12 feet x 7 feet, at the contract price of "about $6,000". According to Mr. Wan, the agreement reached was that Mr. Chan would be paid on the basis of the Formula agreed in 2008, and that the area of the work to be carried out for the Structure was 650 square feet. According to Mr. Wan, there were no fixed hours of work, and no fixed time for completion of the work. Mr. Chan was to supply his own tools and Mr. Wan was to supply the building materials.

11.  Although Mr. Wan claims in his witness statement filed in these proceedings in February 2011 that he had verbally agreed with Mr. Chan that payment for the work to be carried out by Mr. Chan was to be based on the total area of the work involved, of approximately 650 square feet, that Mr. Chan was to be paid in accordance with the Formula, that Mr. Chan was to be responsible for purchasing labour insurance, and that Mr. Chan would be free to employ his own workers to do the work, his evidence was entirely changed when he testified in Court. He accepted that labour insurance and the fact that Mr. Chan could employ his own workers were in fact never discussed. He further accepted that the Formula of charging by each 100 square feet was never mentioned. Although he also claimed that charging by the day was not mentioned, when Mr. Wan was asked in his examination-in-chief how the price of the work was to be charged, he did say that he had asked Mr. Chan how much he would charge a day, and that Mr. Chan had replied that he would charge "$800-something". Mr. Wan also admitted that as to how the Formula would apply in detail, and how the works were to be measured, he had only thought that they would be adopting the same manner of payment and calculation as was applicable when Mr. Chan had carried out the Refurbishing Work from 2008.

12.  According to Mr. Chan, it was in about 1997 that he had first done plastering work for Mr. Wan. That was a larger project, for which a written agreement had been signed, whereby he had agreed to work as an independent contractor, employing 3 other workers to carry out the job, the price of which project was charged in accordance with the area of the work carried out. Mr. Chan claims that that was an entirely separate project, long since completed.

13.  Mr. Chan claims that he commenced work at the Site on 15 March 2009, and produced a sheet whereby his work days are recorded as evidence. It is Mr. Wan's case that Mr. Chan only commenced work on 1 April 2009, as evidenced by Mr. Wan's entries in his diary for the month of April. Mr. Wan's diary entries for April 2009 are consistent with Mr. Chan's claim of having worked from 1 April to 8 April 2009, and  Mr. Wan has not produced his diary for March 2009 to contradict Mr. Chan's claim of his having worked 15 days for Mr. Wan in March, from 15 March  to 31 March 2009.

14.  It was suggested to Mr. Chan at trial that by the time he commenced work at the Site, he had completed all of the work at Mr. Wan’s residence adjacent to the Structure as long ago as a few months earlier, but Mr. Wan himself claims in his testimony in Court that Mr. Chan had been doing work at his residence 10 to 20 days prior to April 2009. This in fact tallies with Mr. Chan's claim that he had commenced works at the Site from 15 March 2009.

15.  Mr. Chan identified Mr. Wan as his employer in the Notice of Accident (Form 2) which he filed with the Labour Department on 30 November 2009. When Mr. Wan filed his Form 2 on 16 December 2009, he likewise described himself as Mr. Chan’s employer. Significantly, he stated in Form 2 that Mr. Chan had worked 15 days prior to the accident on 8 April 2009, which contradicts his claim that Mr. Chan only commenced to work at the Site on 1 April 2009. Mr. Wan further states in Form 2 that Mr. Chan's monthly wage was $1,270, which does not tally in any way with his claim in these proceedings that Mr. Chan was an independent contractor who had undertaken the works at the Site for $6,000.  I accept the submission made by Counsel for Mr. Chan that the reference to $1,270 is, in all probabilities, a mistaken reference to $12,750 ($850 daily wage x 15 days of work). I do not accept Mr. Wan's allegation that he had made these statements in Form 2 out of fear or nervousness since the Labour Department had claimed that he might face 5 years' imprisonment for an offence which he might have committed, and that he did not understand the meaning of "employer" and "employee".

16.  By reason of all the inconsistencies and contradictions to which I have referred above, I find Mr. Wan's evidence in relation to the terms of the oral agreement for the works to be carried out including the terms of payment, the date of commencement of work, and the period during which work was carried out by Mr. Chan at the Site to be totally unreliable. I prefer Mr. Chan's evidence in all these respects.

17.  On the evidence, Mr. Chan carried out work at the Site and, on Mr. Wan's instructions, in his residence adjacent to the Site for a daily wage of $850. He was paid $12,750 on 2 April 2009 in respect of the 15 days he worked from 15 March to 31 March 2009. He worked with his own tools, and all construction material was supplied by Mr. Wan. According to Mr. Chan, Mr. Wan was frequently at the Site and would give him instructions on the work to be carried out. Mr. Wan kept a record of the attendance of Mr. Chan and of another worker doing carpentry work at the Site. According to Mr. Chan, Mr. Wan also instructed a lady, Ah Lan, to assist Mr. Chan in some minor aspects of the plastering work, at least for a period of time during which Mr. Chan had worked at the Site. This was, eventually, not disputed by Mr. Wan. There is dispute as to the specific item of machinery which Mr. Chan was using at the time of the accident: Mr. Chan claims that the machinery was supplied by Mr. Wan, but Mr. Wan denies this. I do not regard this to be material to the determination of the nature of the contract between Mr. Wan and Mr. Chan.

18.  Adopting the approach used by Mummery J in Hall v. Lorimer [1992] 1 WLR 939 at 944, which was cited in the judgment of Ribeiro PJ in Poon Chau Nam,the features of the parties' working relationship should be examined against the background of the indicia of employment to determine whether, as a matter of overall impression, the relationship was one of employment.  Not all the details in the picture are of equal weight or importance in any given situation, and the details may vary in importance from one situation to another.

19.  Even if I should accept that Mr. Wan left Mr. Chan to do his work on his own, without any control from him, it is now recognized that the absence of control in the manner of doing the work does not, in itself, determine the absence of a contract of employment.  Mr. Chan is obviously an experienced plasterer, and it would not be necessary for Mr. Wan to instruct Mr. Chan on how and when to do his work. Despite the fact that Mr. Chan had to bring his own tools to do work on the Site, his profit and income derived entirely from his daily wage. I can find no other financial risk, investment or management obligations undertaken by Mr. Chan. I am satisfied that the overall impression of Mr. Chan's work activity under his arrangement with Mr. Wan is that Mr. Chan was working for Mr. Wan  under a contract of service. 

20.  Mr. Wong who appeared for Mr. Wan sought to argue that as Mr. Wan was not carrying on any form of trade or business, Mr. Chan's employment is a casual employment which is excepted under proviso (b) to  s.2(1) of the Ordinance. Since this was never pleaded and was only raised in the course of closing submissions, I accept on the authority of On Hang Chu v. Chan Ngun CACV 3780/2001, unreported 9 July 2003 that Mr. Wan is not entitled to rely on proviso (b) as his defence.

Did Mr. Chan sustain injuries in the manner he claimed, in the course of his employment?

21.  Having heard the parties' evidence and reviewed the hospital reports relating to the injuries sustained by Mr. Chan, I accept Mr. Chan's evidence, that the injury to his forearm was sustained when he was using a hand-held electric saw cutter to cut a wooden pole used to support a canopy which extended over the top of the Structure. The canopy was not built by Mr. Chan and had been in place before the Structure was put up. According to Mr. Chan, Mr. Wan asked him to use a cutter to cut short 3 wooden poles supporting the canopy, so that the canopy could be lowered over the Structure. Mr. Chan claims that the hand-held cutter in question was not his, and was not normally used by him for his plastering work. He had in fact asked Mr. Wan to get the carpenter to do the task of cutting the wooden poles in question, but Mr. Wan had insisted that Mr. Chan should do it.

22.  Mr. Chan claims that Mr. Wan was present at the Site when he met with the accident on 8 April 2009. This is denied by Mr. Wan who claims that he was at home at the material time, and was only informed by his neighbour, Mdm. Law, that Mr. Chan had met with an accident. Mdm. Law gave evidence to confirm that she had gone to the Site on 8 April 2009, had seen Mr. Chan bandaging his left forearm, and had thereafter gone to Mr. Wan's home to inform him of the accident.

23.  On the issue of whether an accident arose out of and in the course of an employee's employment for the purpose of seeking compensation,  the test in Kavanagh v. Commonwealth (1960) 103 CLR 547 was applied in Lam Sik v. Sen International Ventures Corp (HK) Ltd.[1994] 3 HKC 405:

"… anything at all that happens to a man while he is at work happens in the course of his employment and if it happens unexpectedly, it is an accident in the course of the employment."

24.  Even if I were to accept Mr. Wan's version of events as to his being at home when Mr. Chan met with his accident, I believe that Mr. Chan had cut his forearm in the course of doing work which he was instructed by Mr. Wan to carry out at the Site, and that the accident had arisen out of and in the course of his employment by Mr. Wan, for the purpose of seeking compensation under the Ordinance.

If Mr. Chan had sustained injuries in the course of his employment, the amount of compensation payable

Section 9

25.  Mr. Chan was 58 years old at the time of the accident. I accept his evidence that at the time of the injury, his daily wage was $850, and that he worked for 26 days a month on the average.

26.  According to the Certificate of Assessment issued by the Employees' Compensation (Ordinary Assessment) Board dated 15 September 2010 ("Form 7"), Mr. Chan was assessed to have suffered 8% permanent loss of earning capacity. 

27.  The amount payable under s.9 of the Ordinance is accordingly $22,100  x 48  x 8% = $84,864.

Section 10

28.  Form 7 certifies 8 April 2009 to 1 September 2010 as the period of sick leave for which Mr. Chan is entitled to claim compensation.  The compensation payable under s. 10 is: $22,100/30 x 512 days x 4/5 =   $301,739.

Section 10A

29.  I accept that Mr. Chan incurred medical expenses in the total sum of $5,360, which is recoverable under s.10A.

Summary

30.  The total compensation payable to Mr. Chan is :

(1)   loss of earning capacity	$  84,864
(2)   sick leave payment	$301,739
(3)   medical expenses	$    5,360
	$391,963

31.  Mr. Chan is entitled to interest at half judgment rate from the date of the accident to the date of judgment and thereafter at judgment rate until payment. I will also make an order nisi that the costs of the action are to be paid by Mr. Wan to Mr. Chan, with certificate for Counsel, to be taxed if not agreed. Mr. Chan's own costs are to be taxed in accordance with the Legal Aid Regulations.