WONG KIT YEE FOR HERSELF AND ON BEHALF OF OTHER DEPENDANTS OF YEUNG CHUN HO, DECEASED v. CAPITAL GLOBE LTD (IN LIQUIDATION) AND OTHERS

DCEC 704/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 704 OF 2012

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JUDGMENT

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Background

1. This is an application under the Employees’ Compensation Ordinance (Cap 282) (“ECO”).  The applicant is the widow of Mr Yeung Chun Ho, Charles (“Yeung”).  They were married in 2007; their son was born in 2008.

2. Yeung was born on 14 December 1978. He was murdered on or around 30 April 2010 inside a hotel room in Pakistan at the age of 31.  Also killed in the same location was his employer’s director/supervisor Mr Shaquil Haque (“Haque”).

3. The 1^st respondent (“R1”) is a limited company and has been in liquidation since 8 July 2011.  At the material time, it had two directors, Haque and Choon Hung Brian Lee (‘Lee”).

4. The 2^nd respondent (“R2”) is the insurer of R1 under the ECO.

5. The 3^rd respondent (“R3”) is a limited company incorporated in Hong Kong on 7 September 2007.  At the material time, R3 was a wholly-owned subsidiary of R1 and shared the same registered office and with the same directors as R1.  R3 was not insured in respect of the liability herein and has no assets.

6. The 4^th respondent is the Employees Compensation Assistance Fund Board (“R4”).  If R3 is held to be liable, R4 may have to provide payment.

Issues in dispute

7. The issues in dispute are:-

(a) Whether the accident happened in the course of employment;

(b) Whether the accident was arising out of employment; and

(c) Whether Yeung was an employee of R1 and/or R3 at the time of his death.

Yeung’s employment

8. Yeung entered into an employment contract with R1 on 21 July 2005, which stated, inter alia, that Yeung was required to:-

“7.1 report to and undertake such duties as may be assigned by Haque;

7.2 devote the whole of his time and attention to the performance of his duties;

7.3 work beyond official working hours, from Monday to Friday (9:00 am to 6:00 pm) when necessary without additional allowance.”

9. Until 15 September 2008, R1 had made salary payments and MPF contributions for Yeung.  R1 also applied on Yeung’s behalf for a multiple-entry business visa to Pakistan on 8 January 2007. A 5-year multiple-entry business visa was granted from 9 January 2007 to 8 January 2012.

10. In the statement issued by the trustee under the MPF scheme dated 13 January 2009, it was stated that Yeung’s last date of employment was 15 September 2008 and the termination reason was resignation.

11. The applicant was pregnant from March 2008 to December 2008.  The couple wanted to give birth in Australia.  The family moved to Australia for several months.  It is the evidence of the applicant that Yeung was still under employed and Haque paid cash to her as salary for Yeung.

12. On 19 May 2009, Yeung was appointed as secretary for CG International Development PTY Limited, which was an Australian company associated with R1 and R3.

13. By a cheque dated 31 August 2009, R1 paid a sum of HK$22,000 to Yeung which seemed to be the salary for August 2009.

14. At the Directors’ meeting held on 6 August 2009, Yeung was authorized to be one of the signatory for the bank account of R3.

15. As from September 2009 onwards, wages of Yeung were paid by cheques drawn by R3 in favour of Yeung. 

16. There was MPF statement showing the employment of Yeung with R3 started on 1 October 2009 and MPF contributions were made accordingly.

17. However, on 6 October 2009, R1 issued a letter confirming that Yeung had been employed by R1 since 15 July 2005 on a full time basis.  He headed the Accounting Department of the company as his official title was Group Accountant.  The letter was signed by Haque.

18. On 7 May 2010, Lee signed the Annual Return with the Inland Revenue Department stating that R3 was the employer of Yeung.

19. On 11 May 2010, Lee signed the Form 2 stating that Yeung was employed by R1 at the time of his death.  R1 made 3 monthly payments in the sum of HK$22,000 to the applicant.

20. The applicant filed the tax return on 31 August 2010 stating that Yeung was employed by R3.

21. By a letter dated 28 November 2014, Lee stated that the keeping of the books of R3 and R1 was carried out by Yeung and his team of subordinates; he was generally not involved in the day to day running of the administrative matters.  He often signed documents (particularly ones of like nature to the Return) prepared by Yeung’s administrative team, and so he might not know in details every document he signed.  He could not recall which entity employed Yeung.

Whether the accident happened in the course of employment

22. In paragraph 35 of Li Hoi Shuen v Man Ming Engineering Trading Co Ltd [2006] 1HKLRD 84 Deputy Judge A To (as he then was) stated that:-

“The test is simply whether at the material time the employment continues to run its course. Prima facie, an employee is in the course of employment during his duty hours and ceases to be in the course of employment when his duty hours are over or when he clocks off work until he resumes duty on the following day. The situation may be more complicated in the case of an employee on overseas duty or a cross-border employee. But, the test whether such an employee is in the course of employment after his duty hours is the same. This question may be answered by considering whether the employee has the freedom to go where he pleases and do what he pleases, whether the employer is concerned with how the employee disported himself during the off-duty hours or whether he was required to go and stay at a particular place in the interim period for the employer’s purpose such as standby duty or on call. Resting and sleeping is a necessary and natural physiological activity of the body in a 24-hour cycle. Thus, prima facie, resting and sleeping at the end of the day creates a natural break in the continuity of employment unless the employee is required by his employer to sleep and rest at a particular place so as to make himself available for the employer’s purpose as and when required.”

23. In the present case, Yeung was the group accountant and needed to undertake such duties as assigned by Haque.  He needed to work beyond official working hours.  There were business dealings of R1 and possibly R3 at Pakistan.  Yeung was on a business trip with his boss.  According to the police investigation, Mr Ehtsham Meer (“Meer”), a close friend of Haque who identified both bodies, told the local police that “initially the deceased (ie Haque) was in Marriott Hotel but upon his request he hired this room for him”.  I find that Yeung died with his boss in the hotel arranged and designated by his boss.

24. There was dispute between one Abdul Aziz Essa (“Abdul”), the Managing Director of Titan Cement, a Pakistan company, with R1.  The said company supported Yeung’s application for the business visa to Pakistan.  According to the background in Abdul Aziz Essa v Capital Globe Limited, HCCW 422/2010, on 31 May 2010, that is within the same month of the death of Yeung and Haque, Abdul’s solicitors issued a demand letter to R1 and Lee and subsequently initiated the legal proceedings.  There was an e-mail purported to be sent by Yeung to Lee before he died stating his plight and said, “I try and did everything he said for cg.  (cg should be referring to R1) and now worry me …... u try and continue cg bcoz shaquil last conversation with me is to fight him”, “he say to me at end, u fight gul”.  (There is a person called Gul Muhammad Hannai, who was the Chairman of Titan Cement.  Meer told the police that there was litigation between Gul Muhammad Hanani and Haque).

25. I accept that the e-mail was sent by Yeung at his last moment as Lee gave evidence in court confirming that he received the e-mail at the material time and forwarded it to his lawyer for consultation.  I cannot think of anybody who would fabricate such e-mail or has the motive to do so.  The content can only be written by someone who was fully aware of the background of Yeung.  I find that before he died, he indicated that his predicament was work related.

26. Taking into consideration the above, I have no hesitation to find that the accident happened in the course of employment.

Whether the accident was arising out of employment

27. S 5(4) (a) of the ECO provides that an accident arising in the course of an employee’s employment shall be deemed, in the absence of evidence to the contrary, also to have arisen out of that employment.

28. Mr Gidwani, counsel for R2, submitted that there was evidence to the contrary that the deceased’s death did not arise out of his employment.  He stated that:-

“(a) The Form 2 filed by Lee, one of the bosses, stated that he was completely unclear of the accident.

(b) The deceased was found dead along with Haque in room 21 Capital Inn Guest House. The police also found a 30 bore pistol attached with a silencer near the right leg of the body of Haque. The deceased was an accountant. His job nature should not carry a risk of being murdered – be it in Hong Kong or Pakistan.

(c) The minutes of the police investigation shows that the deceased and Haque originally stayed in Marriot Hotel. There is evidence to suggest that the deceased had stayed in Marriot Hotel in Karachi during the Joint Business Venture with Titan Cement and expenses to be paid for by Titan Cement. In this occasion, the deceased did not stay at Marriot Hotel in Karachi. Karachi and Islamabad are two different places in the province of Sindh, Pakistan.

(d) The police investigation revealed that upon Haque’s request, Meer hired the room at the Guest House for them. There is no evidence that Meer had any business dealings with Haque or the deceased. What is more important is that there is no evidence that the deceased was working at the Guest House for R1.

(e) Meer told the police that there was litigation between Gul and Haque.

(f) Thus, even though the deceased’s business visa was still valid at the time of the accident, and even if R1 had a fall out in the Joint Venture with Titan Cement, it does not prove that his death happened in the course of and arose out of his employment.  The court is not required to look into espionage which bordered into conjecture.  The police investigation in Pakistan is still in progress.”

29. I find that instead of there “was” evidence to the contrary, Mr Gidwani solely submitted that there was “no” evidence.

30. I believe Lee did not know about the incident because he did not participate in the day to day operation of the business.  If there was business dispute in Pakistan, it is not surprising that the accountant was also murdered as collateral damage.  I fail to appreciate Mr Gidwandi’s argument as to the importance of the different locations.

31. The litigation between Gul and Haque referred to by Meer was likely the litigation between R1, Titan Cement and/or Abdul.

32. On the other hand, in view of the content of the e-mail sent by the deceased before he died, on the balance of probability, I find that there was some evidence that his death was business related.  Even if, as submitted by Mr Gidwani, there is no evidence, I find that the applicant may rely on the presumption of s 5(4)(a) of the ECO.

Whether Yeung was an employee of R1 and/or R3 at the time of his death

33. From the chronology of events hereinabove described, it can be seen that Yeung was at first employed by R1 in 2005.  According to the MPF statement, he resigned on 15 September 2008.  However, the relationship of Yeung and the group of companies did not sever.  He continued working for the group in an informal way, for example, he was appointed the secretary on 19 May 2009 for the CG International Development PTY Ltd.  The applicant gave evidence that sometimes the wages of Yeung were paid by Hague by cash during the period.  There was also evidence that for the month of August 2009, R1 paid the sum of HK$ 22,000 by cheque to Yeung.

34. It can be seen from the Ledger Entries Report of R3 and copies of cheques, Yeung was on the payroll of R3 and paid by R3 on 30 September 2009 a sum of HK$ 23,000.  But in the said Ledger Report, unlike other wages items paid to Yeung, this entry was not labeled as wages.  On 30 August 2009, he was paid HK$23,000 again and the Ledger Report dated 2 November 2009 labeled the payment as wages.  From December 2009 onwards, he was paid HK$22,000 and in the Ledger Report, those items were all called wages.

35. According to the MPF statement, Yeung started his employment with R3 on 1 October 2009 onwards and R3 paid his MPF payment until his demised.  In the tax return filed on 7 May 2010 signed by Lee, Yeung was reported to be the employee of R3 starting form 1 October 2009.  Yeung was paid $23,000 twice and thereafter, all the payments were in the sum of $22.000.  It seems to be consistent with the rule that an employee is not required to contribute to the MPF payments for the first two months of a new employment, although there was a one month time gap.

36. Mr Cheung, counsel for the applicant, submitted that Yeung was jointly employed by R1 and R3.  Mr Chan, counsel for R4, submitted that Yeung was employed by R1 solely.  Mr Chan submitted the evidence as follows:-

(a) According to the letter issued by Hague dated 6 October 2009, Yeung had been employed by R1 since 15 July 2005 as the Group Accountant;

(b) the Form 2 signed by Lee reported to the Labour Department that R1 was the employer; and

(c) R1 gave 3 monthly payments to the applicant.

37. Despite the conflicting evidences as to who the employer was, different pieces of evidence should carry different weight.  In terms of the employment relationship, I give more weight to the MPF document and to the fact that the wages at the material time were paid by R3.

38. Yeung was the group accountant.  According to Lee, he was responsible for the accounting and administrative work of the companies.  It is easy to impute that it was the arrangement of Yeung that he was put under the employment of R3, and R3 paid his monthly wages accordingly.  He also arranged a new MPF account to be opened.  Such account could not be opened without his signature.  R3 was not a sham company.  Two other staff were employed by R3 at the material time.

39. According to the MPF statement issued on 13 August 2010, the termination reason of Yeung was stated as resignation.  It is not true as Yeung was murdered.  However, I find that such mis-information does not affect the veracity of the employment particulars of Yeung with R3.  Given the background of this case, concealing the real reason was understandable.

40. It is also noted that in the tax return filed by the applicant, R3 was stated as the employer.

41. I accept the evidence of Lee that he did not know who the employer of Yeung was.  When he filled in the Form 2, he might believe that Yeung was under the employment of R1.  After all, R1 was the parent company, the holder of assets and insurance policy.  Lee could also easily operate the account of R1.  That is the reason given by Lee that cheques of R1 were given to the applicant as the monthly payments.

42. In Lee’s letter dated 28 November 2014, Lee stated that he could not recall which entity employed Yeung.  At the trial, he did not confirm that R1 was the employer despite being pressed by Mr Chan. His evidence was not seriously challenged and I accept his evidence.  I am of the view that the documents signed by him must be treated with caution and could not be taken on the face value.  He signed documents stating different employers of Yeung within a short period of time.

43. Haque issued a letter dated 6 October 2009 stating that Yeung had been employed by R1 since 15 July 2005 as the Group Accountant.  I find that such letter is neither conclusive nor decisive.  Firstly, it is not clear as to the purpose of the letter.  If it was for visa application, such representation was consistent with the previous application.  Secondly, the date of the letter was very close to 1 October 2009, the fresh employment of Yeung with R3.  Consider that on 31 August 2009, a cheque drawn by R1 in the sum of HK $22,000 was given to Yeung, it was possible that Yeung was arranged as the employee of R3 only around October 2009.

44. Mr Cheung submitted that R1 and R3 were the joint employers as the business of R1 and R3 were intermingled.  I do not find that their businesses were intermingled.  It is only that the documents signed by Lee are confusing and misleading.  Yeung was the employee of R3 and his duty comprised serving the whole group.  The business relationship was clear.  If Lee’s evidence was disregarded, although there was no written employment agreement, it is clear that Yeung was the employee of R3. Notwithstanding that I am tempted to rule R1 liable, in view of the evidence, R3 should be solely liable.

45. There are some similarities between this case and the case Chan Sik Pan v Wylam’s  Service Limited, HCPI 648/1995, in which the first defendant Wylam’s Service Limited (“Wylam”) also reported to the Labour Department in the Form 2 that he was the employer and had paid several periodical payments to the applicant in that case.  It was subsequently held Wylam was not the employer.

46. Mr Chan sought to rely on Wong Wing Cheung v Interlite (Asia ) Ltd & Others [2003] 3 HKLRD 473 in which it is held that where an employee had been lent to another employer (the borrower) and the employee sustained an injury arising out of and in the course of employment with the borrower, under s 3 of the Ordinance.  The employer and the borrower were jointly and severally liable.

47. In this case, I could not find any lending or seconding arrangement.  Yeung was the Group Accountant.  His duty comprised providing service to the parent and the subsidiary companies.  He was paid by R3, not by R1.  It was part of his duty to serve R1.  It cannot be said the when he served R1, he was seconded or lent to R1 or vice versa.  Yeung could be performing the business of R1 or R3 when he was murdered.

48. The quantum is not in dispute, that is:-

Compensation	$1,764,000.00
Funeral Expenses	$35,000.00
	$1,799,000.00
Less : R1’s payment	$66,000.00
Total	$1,733,000.00

Conclusion

49. I granted judgment against R3 in the sum of HK$1,733,000 together with interest at the rate of 2% per annum from the date of filing the application to the date of judgment and thereafter at judgment rate until payment.

50. The claim against R1 be dismissed.

51. Costs follow event.  R3 should pay the costs of the applicant, including any reserved costs, with certificate for counsel, to be taxed, if not agreed.  The applicant’s own costs to be taxed in accordance with Legal Aid Regulations.

52. As for the costs orders for R1, R2 and R4, the case Chan Sik Pan (supra) can be of reference.  I make an order nisi that R1 and R2 should bear their own costs.  R4 did not oppose relating to issues 1 and 2, therefore, I make an order nisi that R4 should pay half of the costs of this action to the applicant, including any reserved costs, jointly and severally with R3, with certificate for counsel, to be taxed, if not agreed.

53. It remains of me to thank counsel for their assistance.