TING KIM FUNG v. HOLDER TRANSPORTATION CO LTD

DCEC736/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES' COMPENSATION CASE NO. 736 OF 2002

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JUDGMENT

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1 ． This is an application for employee's compensation in respect of personal injury by an accident arising out of and in the course of employment on the 25th February 2001. The application is in respect of sections 9, 10 and 10A of the Employees Compensation Ordinance Cap 282 (hereinafter referred to as "the Ordinance").

2 ． The issues of this case are: -

1. Whether the Applicant was an employee of the Respondent.

2. Whether the accident that happened was in the course of employment.

3. Whether the accident was self-induced.

The 1st Issue

3 ． The fundamental test for deciding whether a worker is an employee or a sub-contractor is that found in the statement of Cook J. in Market Investigations v Minister of Social Security [1969] 2 QB 173, at pages 184G-5B endorsed and applied in Lee Ting-sang v Chung Chi-keung [1990] 1 HKLR 764, PC p.766G-767B. The test is,

"... the fundamental test to be applied is this : Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is 'Yes', then the contract is a contract for services. If the answer is 'No', then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibilities for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task".

Financial Risk

4 ． Is there evidence of the Applicant venturing into business on his own account as an independent contractor with all its attendant risk? In the evidence of the Applicant and the Respondent, the Respondent provided the Applicant with orders of work. The Respondent would pay the Applicant a percentage of the income from the orders undertaken for the month. For the first month of work, the percentage of such given to the Applicant would be 26%. For the second month it would be 27% and for the third month it would be 28% of monthly income from the orders undertaken by the Applicant.

5 ． Lee stated that the Applicant and himself split the income from the orders undertaken by the Applicant whilst the Applicant stated that the portion of the income from the orders undertaken by him paid to him was paid as wages. I do not accept Lee's evidence that the Applicant and himself agreed to split the income from the orders undertaken. In his witness statement Lee had not mentioned this. There Lee stated that all the income from orders taken by the Applicant belonged to the Applicant but the Applicant paid him hire of 74% of the monthly income to 72% of the monthly income on the 3rd month of hire. Lee simply changed his version of facts when giving evidence on this. I prefer the Applicant's version of facts in relation to this dispute of fact.

6 ． There is no dispute that the Respondent would pay all expenses including petrol, toll fees and vehicle maintenance expenses. Lee stated that the Applicant would have to pay a share of the damages that would be suffered if owing to the Applicant's fault, the customer laid a damages claim on the Respondent.

7 ． Although Lee stated that the Applicant could take orders from his own customers and use the Respondent's lorry to do so. The Applicant stated that Lee had never stated that to him. When Lee was cross-examined how many times the Applicant used the Respondent's lorry for the Applicant's own business, it seemed that the Respondent's answer of "about five times" was most unnatural. It seemed to me that he was put on the spot and it seemed to me that he was making up his evidence as he went along. I do not believe Lee's evidence on this disputed fact. As Lee admitted there would be no way in which he could check how much the Applicant had earned on his own orders. Lee stated that this was left to the conscience of the Applicant although he had some idea as to how much the order would be worth. In my view it is highly unlikely that Lee would permit the Applicant to do this as this would mean that the Applicant could use the Applicant's lorry to do business of his own and there is little way to check how much the Applicant is making in his own business. This was also not stated in Lee's witness statement. It seemed to me that it was another piece of evidence made up in the hearing.

8. Other factors that are highly relevant are firstly, there was no venture capital and no other financial risk of loss incurred by him apart from that arising from his fault. There is no evidence of his being able to price jobs or orders which is normally a feature of the business approach of a sub-contractor. Secondly the Applicant undertook no degree of responsibility for investment and management. He had no opportunity of profiting from sound management in the performance of his tasks as a businessman would.

9. Having weighed the facts accepted by me, I find that the evidence does not point to the finding that the Applicant was venturing into business on his own account. I do not believe the Lee's evidence on this.

10 ． Chitty on Contract Vol II pages 530 to 536 paragraphs 35.08 to 35.23 sets out 10 factors which should be considered in determining whether there was an employer employee relationship. I shall refer to them hereunder.

Control and Superintendence

11 ． The Applicant was given work orders by Ng Lai Wah (hereinafter referred to as "Ng"), the wife of Lee Ah Yung (hereinafter referred to as "Lee"). He had to follow instructions from Lee and Ng. He could not be late. He had to have his mobile phone switched on at all times to answer the calls of Lee and Ng. He had to be on call.

12 ． The Applicant stated that when he went for the job interview with Lee, Lee taught him the ropes, including the information and instructions needed for driving a transportation van across the boarder into Mainland China. Lee taught him the slangs in the trade and explained to him how to make customs declarations in Mainland China. Lee also told him to observe company rules such as punctuality and instructed him not to turn his pager off. Lee however disputed that he did not have any company rules. However he stated that drivers were required to answer calls and switch on their mobile phones and to be on call. The Applicant stated that he would be paid between the 1st and 15th day of every month for the salary of the previous month. The Respondent also arranged for the Applicant to have the necessary license for driving the lorry across the border to the Mainland.

13 ． I prefer the evidence of the Applicant regarding the existence of company rules. There must be rules such as being on call and letting the Respondent know where the lorry was kept and where the vehicle is being driven and other rules to cover other situations. Without these, the Respondent who has 11 lorries and 11 drivers would not be able to manage the drivers. I therefore accept the Applicant's evidence on this and do not accept Lee's evidence. It seems to me that there is an element of control and supervision over the Applicant by the Respondent.

The Organization Test

14 ． Lee acknowledged that the Applicant was a part of the organization of the Respondent and he carried out the work of the Respondent. It is clear that the Applicant's work was part of the main business of the Respondent. The Respondent ran a transportation business and required drivers to drive the Respondent's lorries in order to fulfill transportation orders.

15 ． The Respondent had to apply for a license, on the Applicant's behalf, for driving the lorry across the border to the Mainland and only the Applicant could drive that container lorry across the border to the Mainland. In my view all the evidence supports the contention that the Applicant is a part of the organization of the Respondent's business.

Power of Appointment and Dismissal

16 ． The Applicant was selected and appointed by Lee. There was an oral agreement made between the Applicant and the Respondent through Lee.

17 ． The Respondent had the power to dismiss the Applicant.

Payment of wages

18 ． The Respondent paid the Applicant a percentage of the income from the orders undertaken by the Applicant as referred to. The Respondent was responsible for all other expenses. Although Lee stated that the Applicant and him split the incomes, it seemed more in the nature of payment of wages as the Applicant was not responsible for any of the expenses. Further, the evidence related to splitting the income between the Applicant and the Respondent was not in Lee's witness statements and was a recent invention. In his witness statements he referred to rental hire of the lorry paid by the Applicant. Although it was agreed that if the Applicant through his fault caused damages and loss to a customer of the Respondent who then claimed against the Respondent, this is not a sharing in respect of business loss rather than payment of damages caused by the Applicant's fault. I find from the facts accepted by me that the Respondent paid wages to the Applicant for his work.

Supply of Equipment and ownership of assets

19 ． The Respondent supplied the Applicant with the lorry. In his oral evidence Lee did not mention that the lorry was hired to the Applicant. Lee stated that the Applicant and the Respondent split the income from the orders undertaken by the Applicant. As referred to earlier I do not believe this evidence of Lee.

20 ． The Respondent also supplied the mobile phone and pager and paid for the license fee in relation to the license and other documentation required for the Applicant to drive the lorry into the Mainland. The Applicant did not provide any equipment nor owned any asset.

Fixing of Times and Places of Work

21 ． Although Lee stated that the Applicant had the choice to accept or reject an order, yet the Applicant had to be available and on call to the Respondent. Otherwise there was no fixed time and place of work because of the nature of the work involved.

Personal Performance

22 ． The work had to be performed personally by the Applicant.

23 ． Having considered the aforesaid and weighed the evidence related to the aforesaid factors, I am of the view that the Applicant was an employee of the Respondent. In fact, in the Form 2 at pages 13 to 16, the Respondent admitted that the Applicant was the employee of the Respondent. Further Lee had assisted the Applicant to apply for employees' compensation insurance from the employees' compensation insurance policy, which the Respondent had obtained for its employees. This application for insurance failed.

The 2nd Issue and 3rd Issue

24 ． It is best to consider the 2nd and the 3rd issues together in order to find where the truth lie. The undisputed evidence is that on the evening of the 24th February 2001, the Applicant returned from the Mainland with a container of clothing in the vehicle for delivery to the factory of G2000, the customer. He crossed the border into Hong Kong at 18:08 hours. He telephoned Ng to ask her for instructions related to delivery to the destination and for her to arrange workers to unpack the lorry at the destination. It took him some hours for the clothing to be unpacked. After that he telephoned Ng. At that point it was between 8:00 p.m. and 9:00 p.m.

25 ． The issue is whether the Applicant had returned to the Mainland on the evening of the 24th February and in the early morning of 25th February because of a work order given to him by Ng on behalf of the Respondent. According to the Applicant, Ng told him of an order which required that he be in Dongguan to clear customs early at 7:00 a.m. on the morning of the 25th February. Ng gave him pressure that he had to be punctual or else he would have to pay damages for any loss suffered. He did not intend to drive back to the Mainland that evening. However Ng said if you do not drive to the Mainland that evening he would not make it the next morning. So Ng asked him to drive to the Mainland to spend the night on the Mainland so that he could be punctual the next morning. The Applicant's wife was in Huidong in the Mainland and her home is there.

26 ． The Respondent's witnesses, Lee and Ng gave evidence to state that Ng did not give an order to the Applicant to ask him to be in Dongguan to clear customs early at 7:00 a.m. on the morning of the 25th February. Both said that at the time when the Applicant telephoned Ng to inform her that he had returned from the Mainland on the 24th February, it was late and there were no orders for the next day. Lee said that all the orders were distributed by noon on Saturday the 24th February. Ng stated upon cross-examination that at about 6 something p.m. the Applicant telephoned her and told her to arrange for the goods to be unpacked by workers. Ng then told him that she did not have orders for him the next day, as he was so late. She stated that the Applicant did not have to telephone her after he had unloaded the goods at about 9 p.m. She said that the client's transportation workers Ah Hung telephoned her about that time to inform her that the goods had been unloaded. She did not telephone the Applicant after Ah Hung telephoned her that the goods had been unloaded.

27 ． There is no dispute that the Applicant passed through Hong Kong Immigration on 9:24 p.m. on the evening of the 24th February on way to the Mainland. According to the Applicant, the accident happened at about sometime past 2:00 a.m. in the morning on the 25th February. In his Application he stated the time of the accident to be about 2:15 a.m. He stated that he was taken to the hospital in a tricycle. He stated that he arrived in the hospital sometime past 3 a.m. His family members went to the hospital to see him and told him the time about which he was brought to the hospital near to the scene of the accident at Pak Fa Road in Huidong. However whilst under cross-examination, his evidence was at times confused as regards the time when he left the Chinese Customs Area, at Wong Gang. At times he stated he left the Chinese Customs area at 2:00 a.m. and the accident occurred at 3:00 a.m. He also stated that he telephoned Ng at about 10 p.m. whilst at customs before it was pointed out to him that he crossed Hong Kong Immigration at 9:24 p.m. At times he stated that it took 1.5 hours to drive from Wong Gang to Huidong whilst at other times he stated that it took 1 hour to do so.

28 ． It is undisputed evidence that on the 16th February, the Applicant informed Lee that he would not work for the Respondent any more as Lee had blamed him over an engine fault of the lorry. According to the Applicant, Lee asked him to work for the Respondent until Lee found a driver to take his place as the lorry could not be driven by another driver in the Mainland until a new licence and other administrative procedures are carried out for the new driver and that takes time. According to Lee, he said that the Applicant informed him that he would not drive the vehicle at any event commencing on 1 March 2001.

29 ． According to Lee, he said that the Applicant notified him by telephone on 25th February that the Applicant would be going to visit his family in Mainland China. During the conversation, the Applicant said that by reason of this, he would not be renting the vehicle any more with immediate effect.

30 ． The Applicant stated that on the 24th February 2001, he reported to Lee that he would go back to his family in the Mainland and stay overnight because he had an order from Ng. The Applicant denied that he said that he would not be renting the vehicle any more with immediate effect. The Applicant stated that the practice is that once you say you quit the driver has to surrender immediately the vehicle, the key to the vehicle, the driver's yellow book, the driver's blue book, the China driving permit, the re-entry permit to China to the vehicle owner in Hong Kong. Therefore, it would not have been possible that Lee would have allowed him to drive the vehicle back to the Mainland when the Applicant said that he quit working for the Respondent.

31 ． However upon cross-examination, when Lee was told that the Applicant had amended his witness statement to state that he telephoned Lee on the 24th February not the 25th February, Lee was asked whether he insisted that the Applicant telephoned him on the 25th February, Lee said that the Applicant actually telephoned him on two days. The Applicant telephoned him to say that he would not work the next day. Lee said that he told him the Applicant that its just a few more days from the end of the month, if you do not continue to work, don't continue to work but put the vehicle in Sheung Shui at a named car park and told the Applicant to put all the documentation with the Auntie who cared for the car park. This is again new evidence not in Lee's witness statement. It seemed to me that he changed and invented this evidence as he gave his evidence.

32 ． Lee stated that sometime in the early hours of the morning on the 26th February 2001, the Applicant telephoned that he drove the vehicle to the Mainland on the evening of the 25th February without authorization. The Applicant apologized to him about this. The Applicant also told him that after arriving in Shenzhen City, instead of going to visit his family in Huidong, he went to Xia Sha karaoke in Shenzhen City and drank beer until the early hours of the morning. The Applicant stated that after drinking beer, he drove the vehicle to Huidong and that the accident took place on his way to Huidong.

33 ． The Applicant's explanation as to the time of the accident at Pak Fa Road on the way to Huidong was because he was stuck in traffic immediately after having passed Hong Kong immigration. He stated that he did not pass out of the Mainland Customs area until sometime past midnight. However under cross- examination he stated that he did not pass out of the Mainland Customs area until 2:00 a.m. on the 25th February. And under cross-examination he stated that the accident happened at 3:00 a.m. The time for him to get to Huidong from the border area was one and a half hours. If the accident happened at 2:15 a.m. on the 25th February as stated in the Application, the Applicant would not have left the Mainland Customs area until 12:45 a.m. That means that he would have spent from 9:24 p.m. on 24th February when he passed Hong Kong immigration to 12:45 a.m. on the 25th February going from the Hong Kong Immigration checkpoint to the end of the Mainland Customs area. That would have been 3 hours 21 minutes. However if he left Chinese Customs area at 2:00 a.m. then the time that he took whilst going through the Mainland Customs area would have been much longer.

34 ． The Applicant stated that vehicles queue to enter Hong Kong Immigration Department checkpoint. The checkpoint was about three meters. Then the vehicle enters into Hong Kong Customs area. If there is no inspection the vehicle crosses into the Chung Ying Bridge, which is about 1 km. in length. If there are not too many vehicles, vehicles take turns to go onto the bridge. If there are many vehicles, they fight to get onto the bridge. After passing over the bridge, the vehicle enters into the Mainland border checkpoint. They enter through the smart card check and finger print reading check. How long this takes depends on the number of vehicles. The Customs officials watch through television cameras. After this they pass through a 200 to 300 meters area before they enter into the Mainland Customs. Going through in an empty vehicle, computerized cameras would be targeting at the vehicles. If the Customs do not pick the vehicle for inspection, the vehicle passes through Customs. Customs inspectors may spot check vehicles that pass. If there is no spot-checking of the vehicle, the vehicle passes this area, which is a distance of 300 meters. Effectively one version of the Applicant's evidence amounts to saying that he took about 3 hours 21 minutes to go through this process namely from 9.24 p.m. to 12.45 a.m. because the vehicles got stuck in traffic because they were fighting to pass through. However, his evidence about the time when he left Chinese Customs was not consistent. Under cross-examination, he stated that he left the Chinese Customs area at Wong Gang at 2:00 a.m. If he left Chinese Customs at Wong Gang at 2:00 a.m., then he would have spent 41/2 hours going though the Mainland Customs area and the time of the accident would have been past 3:00 a.m.

Credibility of Witnesses

35 ． I found Lee not to be a truthful witness. In relation to his evidence of employment of the Applicant, I had found parts of his evidence unbelievable for the reasons stated therein. Further, what is more revealing is, he stated that he obtained information from the Immigration Authority at Shenzhen related to the travel record of the Applicant. This is at pages 4 and 5 of the Bundle of Documents. He admitted openly that he obtained this with great difficulty from a friend who was not supposed to pass this information to him. The information was in the nature of state secret. He obtained this information illegally.

36 ． Further, when cross-examined on his allegation that the Applicant used the Respondent to execute orders from the Applicant's own customers, Lee was asked whether he took the money he received in respect of this back to his Company. He stated that he would take the amount back to the Company but in relation to records of company accounts of this he stated with words to the effect "if we do not even know how to cheat the Hong Kong Government in this, we would be stupid."

37 ． Another aspect of Lee's lack of integrity is in his evidence that even though he was of the view that the Applicant was not an employee, he arranged for the Applicant to make a claim on the Respondent's employees' compensation insurance policy. His explanation was that he did so out of compassion.

38. Further I found that when cross-examined, Lee readily made up his evidence as he went along. Instances of this are referred to above. I am of the view that Lee was not a truthful or reliable witness. His evidence could not be relied on.

39 ． In relation to Ng, I found that she was very much under the influence of Lee and I am of the view that she would give the evidence that she was asked to say by Lee. I do not believe Ng to be a truthful witness.

40 ． In relation to the time that the Applicant took to cross from Hong Kong immigration checkpoint to pass the Mainland Customs area, I have great reservation to accept his evidence at face value. He had not been consistent in relation to the time that it took him to go through Chinese Customs. In examination-in-chief, he stated that he left the Chinese Customs area having passed through it at sometime past 12:00 midnight. Under cross-examination he stated that he left Wong Gang at 2:00 a.m. As the onus of proof rests on the Applicant, were he not able to state a consistent case as to the time when he left the Mainland Customs area, his evidence cannot be substantiated. Secondly, it seemed that there was little congestion going from the warehouse of G2000 at Kwai Chung to Hong Kong Immigration checkpoint at Lok Ma Chau. He stated that he finished unloading the goods at G2000 between 8-9 p.m. Yet it seemed that when he passed the Hong Kong Immigration checkpoint, the congestion there became phenomenal. It took him at least 3 hours or more to pass through this area depending which version of his evidence is true. In the light of the inconsistency of the Applicant's evidence, and the fact that the onus of proof rests on him, I find that I cannot accept the Applicant's evidence in relation to this. That being the case, I cannot accept the Applicant's evidence and explanation as to why he was where he was at the time of the accident. I therefore find that the Applicant has not been able to establish that he was at the time of the accident in the course of employment and that his accident arose out of employment. That being the case, I have to dismiss the claim.

41 ． Application be dismissed. I grant an order nisi for costs of the Action to the Respondent to be taxed if not agreed. The Applicant's own costs be taxed in accordance with the Legal Aid Regulations.