KWONG KIN YIN v. SHUN LEE COPPER & DECORATION LTD AND ANOTHER

HCPI 285/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 285 OF 2008

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BETWEEN

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J U D G M E N T

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Introduction

1.  On 30 March 2004 the second defendant (D2) contracted with Kerry Warehouse (Hong Kong) Limited to construct advertising signage at the Kerry Cargo Centre at 55 Wing Kei Road Kwai Chung.  D2 claims it sub-contracted the work to the third party, Shun Fat Metal Works Co. (Shun Fat).  The plaintiff was injured whilst performing work on this construction project but claims that he was employed by the first defendant (D1) and that it was D1 and not Shun Fat who was the sub-contractor responsible for the construction of the advertising signs.  The first defendant did not appear at trial.

The Pleadings

2.  The plaintiff’s actions are for damages for personal injuries arising from:

(i)  breach of the duty of care owed to him by D1 and D2;

(ii)  breach of the common duty of care owed by D1 and D2 under the Occupiers Liability Ordinance, Cap 314;

(iii)  breach of contract by D1 in failing to provide a safe system of work; and

(iv)  breach of statutory duty by D1 and D2 under the Occupational Safety and Health Ordinance, Cap 509 (OSHO).

3.  In the course of the trial the plaintiff sought leave to amend his Statement of Claim to add a claim for damages for breach of statutory duty by D2 in respect of alleged breaches of Section 6A of the Factories and Industrial Undertakings Ordinance, Cap 59 and Regulations 38A and 38B of the Construction Sites (Safety) Regulation made under that ordinance.  This application was not opposed and subsequently an amended Statement of Claim, a Re‑Re‑Amended Defence of the 2^nd defendant, a 2^nd defendant’s Re‑Amended Third Party Notice and a Re-Re-Amended Defence of Third Party to 2^nd Defendant’s Re-Amended Third Party Notice were all filed.

The Trial

4.  As D1 did not appear at trial evidence was called only by the plaintiff, D2 and the Shun Fat.  The plaintiff gave evidence but called no other witnesses.  D2 called Mr. Lam Tak-hing, a director of the company and Ms. Connie TSUI Pong-wing who was employed by D2 as the project manager for the Kerry Cargo Centre Project in its early stages.  Shun Fat called its proprietor Mr. Wong Cheung-keung and two other witnesses as part of its case, namely Mr. Lee Siu-fai, an employee of D1 and work partner of the plaintiff, and Mr. Andy SO Chuen-fai, a former employee of D2 who succeeded Ms. Tsui as D2’s project manager for the Kerry Cargo Centre Project.

The Parties

5.  The plaintiff is a casual construction worker who was employed by D1, but not exclusively so.  As a casual worker he worked from time to time for other employers but at the time he suffered his accident he was working mostly for D1 on the Kerry Cargo Centre Project.

6.  D1 is a joint venture that was the creation of Mr. Wong Cheung-keung, the third party (the TP) and a company known as Shun Lee Decoration Engineering Limited (Shun Lee Eng.) that was owned by a Mr. and Mrs. Wong. Because the TP has two capacities in this case, one as part owner of the joint venture company, D1, and the other as sole proprietor of Shun Fat, it is necessary to distinguish between himself and his firm.  I shall refer to Mr. Wong Cheung-keung as the TP and I shall refer to his firm as just Shun Fat. Mr. and Mrs. Wong have had a falling out with the TP and as a result D1 is no longer an operating concern.

7.  D2 is more a property company than anything else.  It identifies spaces, premises or places that can be used for advertising purposes and leases them out.  What it is not, is a construction company.  Consequently whenever it enters into contracts such as the one that underlies this litigation it sub-contracts out the whole of the work.

8.  Shun Fat is a sole proprietorship that was engaged in small scale projects of signage construction.  It had performed work for D2 prior to the contract during the performance of which this plaintiff was injured.  According to the TP, Shun Lee Eng., in contrast to Shun Fat, was capable of performing larger scale signage construction works.

The Plaintiff

9.  The plaintiff was born on 28 December 1975 and so is now 35 years old. He only received form 4 education.  He can read and write Chinese and lives with his father.  He worked as a kitchen attendant and vehicle attendant for a short while before working as a salesman of audio‑video products.  This latter job he performed for four to five years after which he worked in the construction industry.  By the time of his accident he had been working in the construction industry for four to five years.

10.  At the time of his accident, he says he was working 26 days a month for a salary of about $10,400.  As a result of his injuries from the accident he was granted sick leave of 28 months and 13 days.  He started looking for alternative employment in February 2007 but did not obtain work until April 2007 when he found a position with a company called Golden Sector Limited as a warehouse worker.  His starting salary was $7,000 per month and this was increased to $7,500 per month in January 2008.  He left this company in March 2009 and then obtained work as a warehouse assistant for EGR Mart at a monthly salary of $8,000.  Then, on 2 July 2010 he changed jobs again and commenced employment with Power Hub Ltd, his present employer, as a warehouse assistant earning an average monthly income of $8,000.

11.  The plaintiff says that he would prefer to work in the construction industry but the residual disabilities from which he still suffers as a result of his accident prevents him from doing so.  Had he stayed in the construction industry he claims he would by now have been promoted to master grade, earning at least $650/day or $16,900/month.

The Accident

12.  On the day of the accident the plaintiff was working together with his acquaintance and co-worker Mr. Lee Siu-fai.  They were installing galvanized iron plates in order to cover an open space that was part of the wall on which advertising signs were erected and which was behind one of the signs.  In order to hold the metal plate in place they had affix a number of angle irons and this required them to work above ground; not at great height but higher than a normal sized ladder could accommodate.

13.  There are special platforms that can be used for just such a purpose and the TP said that these platforms were available on other floors of the building.  They are modular and can be assembled to the height needed.  However near to where they were working the plaintiff and Mr. Lee Siu-fai found a platform belonging to Kerry Cargo Centre and which might have been used by painters.  The plaintiff said that Mr. Lee Siu-fai, who was more experienced than he and who was his work supervisor instructed him to make use of this other platform.  This other platform was insufficiently high to enable the plaintiff and Mr. Lee to reach the top-most part of the metal plate.  They then placed a ladder on the top of this platform and rested the ladder against the wall on which they were working.  For a particular piece of work they found it was necessary to have two ladders on the platform with the plaintiff on one and Mr. Lee on the other.  Not surprisingly when the weight of their bodies was on the two ladders it caused the ladders to push the platform backwards and topple over.  Both the plaintiff and Mr. Lee fell to the ground and suffered injuries.

14.  On the plaintiff’s story he was simply following the instructions of a more senior and experienced supervisor.  In his statement he describes his position as follows:

“Without any choice. I could only follow Lee Siu-fai’s instruction.”

15.  After the accident they were both taken by ambulance to Princess Margaret Hospital for treatment.

The Plaintiff’s Injuries

16.  On admission to hospital the plaintiff complained of injuries to his left wrist and right knee and pain in his right elbow.  An X-ray showed a fracture of the left distal radius with minimal displacement.  He was treated by placing his left arm in a short arm plaster of Paris slab and by his right knee being supported by a hinged brace.  He asked that he be referred to United Christian Hospital for follow up treatment and this was done.  In simple terms he was diagnosed with a broken left wrist, sprained right knee and bruised right elbow.  No surgery was needed.  However, the knee injury turned out to be more complex than was first realized.

17.  At United Christian Hospital he was provided with analgesics for his pain and given physiotherapy and occupational therapy to assist him recover full use of his limbs.

18.  However the plaintiff found that he was experiencing recurring nightmares, and episodes of flashback memory of his accident and on 26 November 2004 he started receiving psychiatric treatment from United Christian Hospital.  He also experienced mood changes, becoming depressive and irritable at times.  He was clinically diagnosed as suffering from post-traumatic stress disorder.  He was treated with anti-depressive drugs and supportive psychotherapy.  He responded to treatment and his nightmares and flashbacks became less frequent and less severe.  But he continued to experience depressive and irritable moods.  His psychiatrist provided the following prognosis:

“Residual mood symptoms will likely be persisting into considerable time in future. They will probably to some extent impair his power of attention and concentration if he is to be engaged in any sorts of open employment.”

19.  After 15 sessions of physiotherapy the plaintiff reported 50% subjective overall improvement for his right knee and 70% overall improvement for his left wrist.  A functional capacity evaluation was performed on 29 June 2005 and the plaintiff demonstrated only a medium level of functional capacity which was below the heavy level of that which his previous job demanded.

20.  The plaintiff continued to experience problems with his right knee and he was diagnosed as having suffered tears of the anterior cruciate ligament, the lateral meniscus and medial collateral ligament. On 24 February 2006 arthroscopic surgery on his right knee took place and an anterior cruciate ligament reconstruction and a partial lateral menisectomy were performed.

21.  From 16 March to 30 August 2006 the plaintiff underwent a further 30 sessions of physiotherapy consequent upon the arthroscopy surgery.  At the end of his treatment he reported 60% subjective overall improvement.

22.  In respect of his physical injuries the prognosis that was given was:

“Residual pain may be persisted on his left wrist and right knee, and also mild laxity will be left on his right knee after anterior cruciate reconstruction in future. 4.5% of permanent disability was granted for his limb’s injury in the medical assessment board.”

23.  The joint medical report on the plaintiff was completed in August 2007.  At his examination for this report he complained of left wrist pain which increased on movement and on carrying heavy weights; right knee pain, especially after walking for more than 30 minutes, and intermittent numbness; numbness of the medial aspect of the right leg and nightmares and disturbed sleep.  On examination it was noted that the plaintiff’s power in his left wrist was slightly less than normal; there was wasting of the muscles of the right lower limb and a slight decrease of sensation of the upper half of the right leg.

24.  In respect of his disabilities the doctors thought the plaintiff had made a good recovery but would benefit from more training of the quadriceps muscles.  As the plaintiff had undergone an anterior cruciate ligament reconstruction there was the qualification that, in the future, elongation or disintegration of the reconstructed ligament could occur.

25.  One of the doctors thought that the plaintiff, with a slightly weakened left wrist and right knee would be rather slow and unsteady with climbing but otherwise expressed no positive opinion on the plaintiff’s continued employment as a decoration worker.  The most that could be said of this doctor’s opinion is that it contained, more by what was not said, a slight hint that the plaintiff might be more suited to his current employment.  The other doctor expressed the following, more positive, opinion:

“Dr. Lee opines that while the slightly stiff wrist and the mild weakness of the right knee may produce impaired work efficiency, they should still allow Mr. Kwong to return to his pre-accident job as a decoration worker.”

26.  He was also examined by an independent psychiatrist, Dr. Singer, on 26 November 2007.  This doctor concluded:

“On balance his complaints are genuine and the diagnosis of PTSD is reliable but its symptoms are not as severe as claimed. The PTSD is mild in degree.

         The PTSD is caused by the accident and consistent with the accident.”

27.  The doctor was of the view that when he saw the plaintiff, the plaintiff’s present condition rendered him unable to cope with his pre‑accident work because of his fear of heights.  How well he would progress in overcoming this fear would depend on whether he had further intensive psychiatric treatment in the form of medication and 16 psychotherapy sessions.  With such treatment the doctor said the plaintiff had a good chance of his symptoms becoming mild or residual at the end of the treatment period.  If that happened, the plaintiff would be able to return to his former work.

The Relationships Between the Parties

28.  There are a number of issues that need to be considered. They are:

(i)  for whom did the plaintiff work;

(ii)  who did D2 engage as its main sub-contractor; and

(iii)  what was the role of the third party,

29.  I must say that I find it extraordinary that these three matters were contested issues in the trial.  This was a reasonably substantial contract and for D2 to be in so much uncertainty as to who it was contracting with and the roles of the various parties in its project reflects a somewhat alarming way of running a business.

For whom did the plaintiff work?

30.  This issue only arose because D2 challenged that the plaintiff worked for D1, challenged that D1 was a sub-contractor and asserted that Shun Fat was the company it contracted with to erect the sign. Although there was no evidence from D1 there was evidence from the plaintiff, Mr. Lee Siu-fai and the TP.  The evidence was all one way and, not surprisingly, could not be contradicted by D2 as D2 had no knowledge of the background matters impacting on this issue.

31.  I describe the evidence in greater detail when dealing with the next issue but essentially the evidence is that the TP entered into a joint venture with the husband and wife owners of Shun Lee Eng.  They agreed to set up a company vehicle to which they would channel work.  This company vehicle became D1.  When this happened staff that previously worked for Shun Lee Eng. became employees of D1.  One such staff was Mr. Lee Siu-fai.  This was the position when the plaintiff was recruited and so when he commenced work it was as an employee of D1.  D1 paid the plaintiff’s salary and MPF contribution, completed the Form 2 after the accident and paid him his sick leave.

32.  I have no difficulty whatsoever in accepting the evidence of the witnesses on this issue and I find that the plaintiff was the employee of D1.

Who did D2 engage as its main sub-contractor?

33.  On its face this should have been a straightforward matter for D2 to prove, after all it was the principal contractor.  A witness statement for D2 was provided by Ms. Yiu Pui-man, its General Manager.  She positively asserted that D2 contracted with the TP.  But since she did not join D2 until after the completion of the Kerry Cargo Centre Project she cannot have had any personal knowledge of this contract and clearly her statement is based only on information “obtained from perusing the records or documents in the possession of the 2^nd defendant”.  She said that even though D2 was not a construction company it did appoint one of its staff as project manager to oversee the progress of the work and to render assistance if it was sought.  This person did not testify in the trial.  Instead D2 called Mr. Lam Tak-hing, a director and shareholder of the company.

34.  Mr. Lam explained in his statement that D2’s primary business is “outdoor advertising media, through which we acquire or develop the media sites and then lease out to advertisers to display their advertisements”. Most of the time their sites do not need any construction work but when such work is needed the practice of D2 is to sub-contract the whole of the construction work to a single contractor.  But D2 did not prohibit sub-sub-contracts.

35.  In respect of the Kerry Cargo Centre Project Mr. Lam maintained that D2 contracted with Shun Fat but his assertion of this fact appeared to be based on what he was told by colleagues or what he gleaned from company records.  At one stage in his evidence he said:

“I have no knowledge of this contract. I was not involved in its negotiation or processing, I remember it was Shun Fat because I queried my colleagues when I saw the name.”

36.  The lack of direct knowledge possessed by Mr. Lam makes it important to look to the evidence of those within D2 who were more closely involved with this project and to the company records.  Two witnesses were called who were employees of D2 at the time of this project.  One was Ms. Connie Tsui Pong-wing who worked for D2 from September 2001 to 31 March 2004 at which time she left D2 to work for its competitor JC Decaux Pearl & Dean Limited. She rejoined D2 on or about 26 April 2011 and so when she testified in this trial for D2 she was an employee of it.

37.  Whilst still in the employ of D2 in 2004 Ms. Tsui occupied the position of Senior Project Executive, and was responsible for the Kerry Cargo Centre Project.  In fact D2’s fee proposal for this contract, which is dated 30 March 2004, bears her signature for and on behalf of the company. Kerry accepted this fee proposal on 26 April 2004, by which time Ms. Tsui had left the employ of D2.  It is her evidence that she dealt only with the TP in respect of this project and though she has heard of D1 and Shun Lee Eng. she is not aware of the TP ever having sub-contracted to them.  She was careful to emphasize that she had a supervisor and that her responsibilities were limited to monitoring the project on site.  She denied knowing Mr. Wong, the proprietor of Shun Lee Eng. and of knowing her successor at D2, Mr. Andy So Chuen-fai.

38.  Mr. So was the only other witness who was an employee of D2 with direct knowledge of this contract.  He was called by the TP. Mr. So joined D2 on or about 1 June 2004, one month after Ms. Tsui left D2’s employment.  He says that after joining D2 he was told he would be responsible for the Kerry Cargo Centre Project and that the person he should contact in respect of it was the TP.  But of course the TP had two capacities.  In one capacity he was the proprietor of Shun Fat and in his other capacity he was a director of D1.  In his witness statement Mr. So says that he came to know that the sub-contractor was called Shun Lee Eng.  He believed that there were two sub-contractors for this project with Shun Lee Eng. being the sub-contractor for the metal work framework and Shun Fat being the sub-contractor for the scaffolding and electrical works.  Mr. So said he had several conversations with Ms. Tsui, both over the phone and at meetings with her.  He said he contacted her in order to obtain information about the project and in one of the phone conversations with her she told him that the sub-contractor was Shun Lee Eng. and that the contact person of this company was the TP.  He says he learnt about Shun Fat’s involvement from the invoices submitted through him to D2 by the TP.

39.  In terms of the documentation the key documents are:

(i)  the Employees Compensation Insurance Policy issued by Bank of China Group Insurance Company Ltd to Shun Lee Eng. for the Kerry Cargo Centre Project;

(ii)  an invoice tendered by Shun Fat dated 15 June 2004;

(iii)  two invoices tendered by Shun Fat both dated 19 September 2004;

(iv)  an invoice tendered by Shun Lee Eng. dated 4 August 2004; and

(v)  a Letter of Completion signed by Shun Fat dated 11 May 2005.

40.  Of course the person who claimed to have most knowledge of the background and to be able to explain the relationships between the parties was the TP.  He explained how in the late 1990’s he became acquainted with Mr. and Mrs. Wong of Shun Lee Eng. whose main business was the construction of stainless steel advertising signage and signboards, including construction of the framework and its installation.  Around 2001 Mr. Wong suggested to the TP that they jointly form a company in which he and Mr. & Mrs. Wong (as a couple) would become equal shareholders.  The idea was that the new company, which became D1, would be an associated company of Shun Lee Eng. and would engage in the same work as that company and Shun Fat.  The rationale behind the idea was that both Shun Lee Eng. and Shun Fat would combine their resources and by so doing reduce operational costs and increase profitability.  In order to provide work for the joint venture company it was agreed that any contracts for the construction or manufacture of stainless steel advertising signage procured by Mrs. Wong and the TP would be channelled through Shun Lee Eng. to D1.  Vis-à-vis each other, Shun Lee Eng. would be in the position of principal contractor and D1 of sub‑contractor.

41.  The financial arrangement was that Shun Lee Eng. would take a management fee calculated at 10% of the contract price and the remaining 90% would be paid to D1 which would deduct all disbursements and operational costs and then the net profit would be divided between the Wongs and the TP.

42.  Pursuant to this agreement works procured by the TP would be contracted in the name of Shun Lee Eng. which would then sub-contract to D1.  As part of the implementation of this agreement Mr. Wong transferred the staff of Shun Lee Eng. to become the employees of D1.

43.  The TP says that in respect of the Kerry Cargo Centre Project he dealt with Ms. Tsui and the project was sub-contracted to Shun Lee Eng. which in turn sub-contracted it to D1.  The TP asserted in his statement:

“At no time did I in my personal capacity or my Firm have any contractual relationship with the 2^nd Defendant in relation to the said works.”

44.  But not all the work was sub-contracted to Shun Lee Eng.  Some work remained with the TP in his capacity as proprietor of Shun Fat.  The scaffolding and electrical work remained with Shun Fat and invoices for the cost of this work were rendered direct to D2 by Shun Fat.  The TP said that Ms. Tsui knew of this arrangement.

45.  Though cross-examined heavily by D2 when he gave evidence, his testimony in chief and in the early part of his cross-examination essentially reflected what he had said in his witness statements.  What did become clearer from his testimony is that he was saying that D2, through Ms. Tsui, was aware that Shun Fat would only be doing the scaffolding work.  He said that the way that contracts were negotiated, the clients were aware that the contract was to be with Shun Lee Eng.  He said that when he, the TP, attended these negotiations it was in his capacity as a director of D1, not the proprietor of Shun Fat.  He further said that Shun Fat had a separate contractual relationship with Shun Lee Eng. and was a sub‑contractor of Shun Lee Eng.  The effect of this evidence was that in respect of those projects that were channelled to Shun Lee Eng., it was Shun Lee Eng. that became the principal contractor and if any work was to be performed by Shun Fat, as opposed to D1, then Shun Fat would become a sub-contractor of Shun Lee Eng.

46.  Hence it was his evidence that in respect of the Kerry Cargo Centre Project though he became aware of the work through his contacts with D2, the project was channelled to Shun Lee Eng. and D2 was aware of this as Ms. Tsui of D2 was in negotiations with Mr. Wong of Shun Lee Eng.  Shun Lee Eng. then became the main sub-contractor and the work was then divided between D1 and Shun Fat with them both becoming sub‑sub‑contractors on the project.  Shun Fat’s sub-sub-contract was in respect of scaffolding and electrical work.

47.  This claim by the TP that it was Shun Lee Eng. and not Shun Fat who was the main sub-contractor was contradicted by him later in his cross-examination by D2.  When asked whether Shun Fat was a sub‑contractor of Shun Lee Eng. the TP said:

“No. Shun Lee Eng. would pick up the large scale work. There was no sub-contracting relationship between the parties.”

48.  I then reminded him of his earlier contrary testimony and he replied:

“It was a separate contract with D2.”

He went on to confirm that were two sub-contracts with D2, one was between D2 and Shun Lee Eng. and the other was between D2 and Shun Fat.  The contract between D2 and Shun Fat just covered scaffolding and electrical work.  This evidence was not only a complete reversal of his earlier evidence, it also contradicted his evidence as to how Shun Fat and Shun Lee Eng. should work together pursuant to the agreement to channel work to D1.

49.  The only other witness who gave relevant evidence on this issue was Mr. Lee Siu-fai.  He confirmed that in mid-2003 all employees of Shun Lee Eng. were transferred to D1 but that Mr. Wong of Shun Lee Eng. required that all matters relating to contracted works had to be reported to him.  But the person from whom he received instructions in relation to his work was the TP.  However he believed Mr. Wong of Shun Lee Eng. was the boss and the TP only a supervisor and that the TP was taking his instructions from Mr. Wong.  Mr. Lee regarded Mr. Wong as the boss of D1 and the TP as his subordinate.

50.  The evidence of the TP that Shun Fat was not the main sub‑contractor of this project is contradicted by two documents.  One is an invoice which the TP issued in the name of Shun Fat and which encompassed work which, on his account, had been performed by D1 and for which payment would have been due to Shun Lee Eng.  The second document is a letter of completion addressed to D2 and signed by the TP as proprietor of Shun Fat.  This document would normally only be signed by the main sub-contractor.  In respect of the first document the TP says that he created this false invoice as a means of obtaining monies which he says were owed to him by the Wongs under their joint venture agreement.  In respect of the second document he says his signature to it was extorted from him by D2 who refused to pay his fees unless he signed the document.  Also as he cannot read English he did not know what the document contained.  He signed it simply as a means to get the monies owed to him by D2.

51.  D2 argues that these documents are evidence that Shun Fat was the main sub‑contractor and that D1 was just a sub-sub-contractor. In respect of the invoice issued in the name of Shun Lee Eng. the only evidence of it comes from the TP who claimed it was given to him by an employee of D2 when he sought that employee’s assistance in having outstanding monies paid to Shun Fat.  The TP also explains that the existence of this invoice was the reason he had to back-date the Shun Fat invoice so that D2 could pay it.  D2 disputes the genuiness of this invoice and put to the TP in cross-examination that it had not in fact been given to him by a staff of D2.  However the TP denied what was put to him and D2 did not call any evidence to contradict his testimony.  There are two other invoices that are produced as part of D2’s case.  Both are dated 19 September 2004.  D2 did not produce any witness with direct knowledge of these invoices to speak to them and the TP denied that either invoice related to the Kerry Cargo Centre Project.  Andy So had no knowledge of one of the invoices but in respect of the other said it did not relate to Kerry Cargo Centre Project.

52.  There is no doubt in my mind that D1 was a sub-contractor of Shun Lee Eng.  The question is whether Shun Lee Eng. was:

(i)  the main sub-contractor; or

(ii)  a co-sub-contractor with Shun Fat; or

(iii)  a sub-contractor of Shun Fat

53.  The evidence from D2 on this issue is far from satisfactory.  Mr. Lam Tak-hing’s evidence was composed entirely of hearsay. His belief that Shun Fat was the main sub-contractor was based either on what people told him or from his perusal of company records.  He had no direct personal knowledge of this matter himself.  In this situation what cries out for an answer is why the people in the company with this knowledge were not called and why the documents recording the dealings with Shun Fat were not produced.

54.  D2’s two project managers were called and they contradicted each other.  Ms. Tsui was quite at odds with Andy So.  Ms. Tsui left D2’s employment at the time the fee proposal was finalized which is how Andy So came to be involved.  However by the time of trial Ms. Tsui had returned to D2 and Mr. So had left.  As Ms. Tsui gave evidence I could not help but feel she was very conscious of who her current employer was.  Mr. So had no such concerns and nothing was put to him to suggest that he had any reason to lie or to harbour any hostility towards D2.  Mr. So impressed me as an honest witness doing his best to recollect events that, by the time he testified, were rather dated.  Ms. Tsui, on the other hand, gave the impression of wanting to keep her evidence to a minimum and say as little as possible.  At times I felt she was being deliberately evasive and feigning ignorance.

55.  More surprisingly, D2 was not able to advance any explanation for its inability to produce any significant documents evidencing its relationship with Shun Fat.  By significant documents I mean documents such as a quotation, a contract or even a record of a meeting or telephone call with Shun Fat in which the cost of the project was discussed.  There is no explanation from D2 for the absence of any such evidence when it is clear that D2 must have had conversations with its proposed sub-contractor in order for it to put together its fee proposal to Kerry Logistics.  This fee proposal contains a complete costing of the project with a detailed breakdown of each of the core elements of preliminary matters (which included scaffolding, insurance and drawings), steelwork, electrical works and sign face banners.  I cannot believe that a property leasing company that eschews anything to do with construction work could put together such a document without the input of its proposed contractor/s.  The only documents D2 has produced are peripheral and inconclusive.  They are the invoice prepared by Shun Fat and the letter of completion signed by Shun Fat.  Both documents have been explained away by the TP and though I am wary of his evidence, his testimony in respect of these documents does have the ring of truth to it.

56.  I say I am wary of the TP because he did change his evidence in the course of cross-examination and he did invoke his right not to answer some questions on the ground that to do so might incriminate him. Generally I accept his evidence only if it is in relation to non-contentious matters or it is supported by other evidence – oral or documentary.

57.  It was Andy So’s evidence that Shun Lee Eng. was the main sub-contractor but that Shun Fat was a separate sub-contractor for the scaffolding and electrical works.  The only document that contradicts this arrangement is the insurance form which is in the name of Shun Lee Eng.  Being in the name of Shun Lee Eng. suggests that Shun Lee Eng. was the main sub-contractor and Shun Fat a sub-contractor of it.  However the TP did testify that he took out his own insurance cover in respect of his separate sub-contracted work.

58.  But the core issue is whether Shun Fat was the main sub‑contractor and Shun Lee Eng. just a sub-contractor of Shun Fat.  On this I am quite clearly of the view that Shun Fat was not the main sub‑contractor.  I reach this conclusion on the basis of the evidence of Andy So and the TP and the document of insurance.

59.  Having decided that Shun Fat was not the main sub-contractor it is irrelevant to this trial whether Shun Fat was in the position of a co‑sub-contractor, with Shun Lee Eng., of D2, or a sub-contractor of Shun Lee Eng. and so I make no finding in this regard.

The role of the TP

60.  It is clear from my findings that the TP was not, in his capacity of proprietor of Shun Fat, the employer of the plaintiff and was not the main sub-contractor of D2.  The TP had two roles at the Kerry Cargo Centre site.  As a director of D1 he performed a supervisory role of the work at the site and gave instructions to Mr. Lee Siu-fai.  As the proprietor of Shun Fat he was the contractor responsible for the scaffolding and the electrical work.

Who was Occupying or in Control of the Site?

61.  For the purposes of the Occupiers Liability Ordinance, Cap 314 a person cannot be liable unless he is an occupier of the premises where the accident happened.  The OSHO also refers to the employers being or not being in control of premises.  Even the Factories and Industrial Undertakings Ordinance, Cap 59 includes reference to control of sites.

62.  But of course the question of whether any of the parties were occupiers of the site and what, if any, control they had over the site is not to be decided without reference to the plaintiff and the accident in which he was involved.  For example Shun Fat was clearly an occupier of the site because it was a contractor engaged on scaffolding and electrical work. But as I have found that the plaintiff was not its employee and as the accident did not arise from any aspect of its occupancy of the site it is not liable for the plaintiff’s injuries under any of these ordinances.  Shun Fat’s status as an occupier is simply irrelevant to the plaintiff and the accident in which he was involved.

63.  D1, on the other hand, was the employer of the plaintiff, was clearly in occupancy of the site and as the accident occurred in the course of the plaintiff carrying out duties on behalf of D1, then D1 is subject to the liabilities created by these ordinances.

64.  D2’s position is not so clear.  D2 maintains that it was not an occupier of the site and did not have any control over it and is therefore not subject to the liabilities created by these ordinances.  The evidence is that the plaintiff was the principal contractor but because it was not a construction company it sub-contracted the whole of the project out.  Its only involvement in the project was to provide staff to oversee the project in the role of a project manager.  The duty of this person was to ensure that insurance was taken out, that passes were provided to the workers to enable them to access the site and to regularly monitor the progress of the work. They were the persons who liaised with the sub-contractors and to whom the sub-contractors reported any accident or other incident serious enough to warrant being brought to D2’s attention.  Importantly they were D2’s Safety Officer for the site.  It is clear that more than one person of D2 is involved as both Ms. Tsui and Mr. So reported to someone more senior.  It appears that, at their rank, Ms. Tsui and Mr. So had a more hands-on responsibility for the project and were the ones that visited the site and were the first point of contact for the sub-contractors within D2.

65.  I accept that D2 had no involvement in the actual construction.  However that does not necessarily mean that they were not in occupation of the site.  Given that they had the responsibilities of principal contractor and performed a monitoring and supervisory role over the project, including being responsible for the safety of the site, and given that D2’s project manager was required to stay in touch with the sub-contractors and regularly visit the site, I cannot see how it can be said that D2 was not in occupation of the site.  It is quite clear that D2’s involvement in the project was not simply limited to clerks and accountants processing payments and arranging purchases of materials.  To try and portray D2’s involvement as purely an administrative/accounting one is simply not borne out by the evidence.  D2 had a section within its organisation that had project management responsibilities.  A person actually attended the site and this person reported back to a supervisor within D2.  The project manager had hands-on duties which closely involved him in the work the sub-contractors were carrying out on D2’s behalf.  I have no doubt that D2 was in occupation of the site.

Liability for the Accident

66.  I have described how the accident occurred already.  There is no doubt that the accident occurred because an unsafe system of work was employed to perform duties that D1 required of P in fulfilling its sub‑contract at the site.  The TP, in his capacity as a director of D1, said that there was an aerial platform on another floor that could have been used by the plaintiff and Mr. Lee Siu-fai and that had they used it they could have safely carried out the work on which they were engaged when the accident happened. For the plaintiff and Mr. Lee Siu-fai to make use of this platform they would have had to first locate it, and it could have been on a number of floors, disassemble it, carry it to where they were working and then reassemble it to the height they required.  It is hardly any wonder that they took the short cut of making use of a platform that was readily available.  I do not believe that in these circumstances D1 has discharged its duty of providing a safe system of work.  In terms of common law negligence there was a duty of care owed by D1 to its employees, of which the plaintiff was one, to provide a safe system of work and a clear breach of that duty.  D1, as an employer of the plaintiff would also attract liability under the OSHO.  D1 is also a proprietor of an industrial undertaking for the purposes of the Factories and Industrial Undertakings Ordinance, Cap 59 and is in breach of his proprietor’s duty under section 6A(1) of that ordinance by its failure to provide a safe system of work (see section 6(2)(a)) and under regulations 38A and 38B of the Construction Sites (Safety) Regulations made under the ordinance.

67.  For D2 I wish to first deal with its liability under the Factories and Industrial Undertakings Ordinance.  An industrial undertaking is defined to include any construction site and so the Kerry Cargo Centre was an industrial undertaking for the purpose of the ordinance.  A proprietor is defined as including “the person for the time being having the management or control of the business carried on in such industrial undertaking …. and includes …. also the occupier of any industrial undertaking .…”.

68.  When the term “industrial undertaking” is replaced with “construction site” it is, in my view, quite clear that D2 comes within the definition.  D2 is within both limbs that I have quoted in that it is the person for the time being having at least the management, if not also the control (depending on whether control is broadly or narrowly construed) of the business carried on in the construction site and the occupier of the construction site.  But section 6 of the ordinance deals with persons employed by the proprietor and in the context in which it appears I take it to be used in the narrow sense of persons who are the employees of the proprietor.  The plaintiff was not the employee of D2 and so the duties in section 6A do not apply to it.

69.  I now turn to the Construction Sites (Safety) Regulations.  Part VA of these regulations deals with “Scaffolds, Working Platforms and Ladders, etc” and in its Regulations 38A – 38G distinguishes between “the contractor responsible for a construction site” and “any contractor who has direct control over any construction work”.  The meaning of the former term is made clear by Regulation 2(2)(a) which provides:

“For the purposes of these regulations:

(a)  A contractor is responsible for a construction site if he is undertaking construction work there or, where there is more than one contractor undertaking construction work at the site, if he is the principal contractor undertaking work there.”

70.  The phrase “direct control” is also defined and it means “in relation to any construction work …. control over the way the construction work …. is carried out.”  In the circumstances of the case before me D1 is clearly the contractor having “direct control over any construction work” and D2, as the principal contractor, is “the contractor responsible for a construction site”.

71.  Regulation 38A imposes obligations upon the contractor responsible for a construction site to, so far as reasonably practical, identify and rectify any hazardous conditions of persons working at a height and safeguard such persons against all hazardous conditions. Regulation 38B requires the same contractor to “take adequate steps to prevent any person on the site from falling from a height of 2 metres or more”.  “Adequate steps” is defined to include “the provision, use and maintenance” of working platforms.

72.  In discharge of these statutory duties D2 says that he is required to do no more than engage a competent contractor in whom he has no reason not to have confidence and to leave it to that person to attend to these statutory obligations.  But that cannot be right.  The whole purpose of the regulations distinguishing between the principal contractor and sub‑contractor must be to impose on the principal contractor a non‑delegable responsibility. However I do accept that when it comes to determining under Regulation 38A whether D2 has done all that it is reasonably practicable for it to do, it is relevant to consider whether D2’s failure to comply with its duties under Regulation 38A(1) was because there were present circumstances which made compliance with the regulation not reasonably practicable.  Mere inconvenience will clearly not be such a circumstance.  Nor can lack of expertise for all that is being addressed by the regulation is recognizing what aspects of the project involve workers working at height, identifying what hazards to their safety the workers working at height will be at risk of and taking necessary measures to safeguard them from these hazards.  There is no evidence from D2 of any action that it took in order to comply with the regulation.  Indeed the evidence would suggest that either D2 was unaware of its responsibilities or was of the belief that these responsibilities did not apply to it.

73.  Regulations 38B is even stronger in its drafting in that it does not contain any words such as “reasonably practicable” to ameliorate the obligation on the principal contractor.  Furthermore adequate steps is defined to include not just the provision of a working platform but the use of it.  This does not mean that D2 has to closely supervise every worker on the construction site but it does mean, it seems to me, that where it knows that workers are working from a height of 2 metres or more that it acts positively to ensure that the worker is not at risk of falling from that height.  The words “shall take” clearly indicate that the principal contractor cannot passively leave this responsibility to the sub-contractor.  Rather he must proactively do something which a reasonable person would regard as “adequate” in the circumstances.  All Regulation 38B(2) does is to list some of the steps which should be taken in order for the principal contractor to discharge his responsibility.

74.  In this case, in respect of this statutory duty, there has been no evidence from D2 at all.  The position is very much the same as with Regulation 38A; i.e. D2 appears not to have realized it had this duty or, if it did, thought it could discharge it by reliance on the actions of the sub‑contractor.

75.  D2 has failed to discharge the duties imposed on it by Regulations 38A and 38B and in consequence is liable for the injuries caused to this plaintiff.

76.  Having found D2 liable for breach of its statutory duties under these regulations it is not necessary for me to refer to the other heads of liability on which the plaintiff relied.  However out of deference to the arguments of the parties I make the following observations.

77.  In respect of the OSHO I am of the view that its provisions in section 6 do not apply to D2 as that section only imposes duties on employers and D2 is not the employer of the plaintiff.  Employer is defined by the ordinance as:

‘“employer” means a person who employs natural persons under contracts of employment or apprenticeship”

The person who employed the plaintiff was D1.

78.  In respect of the Occupiers Liability Ordinance, Cap 314 the issue was raised by D2 that this accident arose not from anything to do with the premises but from the way an activity was carried out on the premises.  This distinction is clearly  expressed by Mr. Rick Glofcheski in his book Tort Law in Hong Kong, 2^nd edition at page 268, paragraph 7.1 where he says:

“ A person injured or whose property is damaged on premises will have an action in either occupiers’ liability or negligence depending on how the injury or damage came about. Did the injury occur because of the defendant’s breach of his/her duty as an occupier, or as a result of a general negligence duty to take reasonable care in the conduct of some activity he or she has carrying on? Occupiers’ liability is only concerned with the occupancy duty, that is, injuries arising from the defective state of the premises (OLO section, 3(2)), and not with the activity duty. ….

         In the case of workers’ injuries, a common area of occupiers’ liability in Hong Kong, the issue often presents itself thus: did the injury arise from a use of the premises, or from an unsafe system of work?  Hence, an occupier who had subcontracted demolition work to a contractor was not liable for the injury of a workman resulting from dangerous demolition techniques (Ferguson v Welsh [1987] 1 WLR 1553).”

79.  It is my view that because of the circumstances of the accident that befell the plaintiff the Occupiers Liability Ordinance, Cap 314 does not apply.

80.  As to the claim in negligence, counsel for the plaintiff simply asserted that D2, as principal contractor, had a duty of care to all persons working on the construction site.  But even if that broad statement is true, it begs the question of what the scope of the duty is and what must be done by a principal contractor who is not a construction company in fulfilment of it.  As the issues were not fully argued before me I shall refrain from expressing any definite views on them.

81.  For the TP in his capacity as proprietor of Shun Fat I can find no basis on which he would be liable.  Shun Fat was not the plaintiff’s employer and Shun Fat was not the main sub-contractor.  Shun Fat was a sub-contractor working on the site and was therefore in occupancy of it but it had no involvement with the plaintiff and the accident which befell the plaintiff was not related to anything that Shun Fat was doing on the site.

82.  In view of my finding that Shun Fat was not the main sub‑contractor the issue of collateral warranty falls away.  Indeed D2 has specifically conceded that it has not proven this aspect of its defence.

Contributory Negligence

83.  The onus is on D2 to establish this defence. There is no doubt that Mr. Lee Siu-fai and the plaintiff embarked upon a method of carrying out their employer’s duties that would have been obvious to any reasonable person was inherently dangerous.  Nevertheless the evidence is clear that the relationship between the plaintiff and Mr. Lee Siu-fai was that of subordinate to supervisor.  The plaintiff was instructed by the TP to follow the instructions of Mr. Lee.

84.  Given that relationship to what extent was Mr. Lee responsible for the plaintiff participating in this unsafe system of work?  On the plaintiff’s evidence he is wholly responsible.  The plaintiff says that it was Mr. Lee Siu-fai who suggested placing a ladder on the platform that was nearby and that he, the plaintiff, objected to this.  His evidence from his statement is as follows:”

“At that time, I complained to Lee Siu Fai by saying, “How can we do this? It’s so high!” But he replied, “But still we have to do this.” I requested to use the aluminium frame of Kerry Cargo Centre as the aluminium frame was higher and so we did not have to use another ladder before reaching the installation position. But Lee Siu Fai said the use of the aluminium frame required application a few days in advance. Therefore, it was too late for us to request to use the aluminium frame. Without any choice, I could only follow Lee Siu Fai’s instruction.”

85.  In cross-examination Mr. Lee Siu-fai agreed that the plaintiff was his subordinate and took instructions from him.  He also agreed that the plaintiff wanted to get a better working platform but that he rejected this request because he wanted to get on with the job.  He also accepted that use of the ladders on this platform was his idea.

86.  In these circumstances I am not persuaded that the plaintiff is guilty of contributory negligence.  He was in a position where felt obliged to carry out the instructions of his supervisor notwithstanding that he had reservations about them.  He was placed in an invidious position where he had little choice but to obey his supervisor.

Quantum

(i) PSLA

87.  I have already set out the plaintiff’s injuries, treatment and residual disabilities and will not repeat what I have previously said.  In his trial testimony the plaintiff mentioned that he could not return to his previous work as he still had a fear of heights, could not kneel down and could not lift heavy objects.  He also said that he could no longer enjoy the social activities in which he engaged before the accident such as cycling, hiking, playing badminton and ping pong.  His reason for avoiding these activities is not because of physical reasons but rather a psychological one. He is afraid of getting injured again.

88.  Overall the prognosis in respect of both his physical and psychological disabilities were quite favourable.  I do not doubt that he has these disabilities but I also accept that with some effort by the plaintiff it is possible that the extent of these disabilities might be reduced.  Some self‑help is appropriate and perhaps once this litigation is concluded the plaintiff can be motivated to do more to address his psychological condition.

89.  I agree that the plaintiff is in the serious injury category of Lee Ting Lam v Leung Kam Ming [1980]  HKLR 657 but I do not think he is towards the upper end of that range.  I have had regard to the comparable cases to which I have been referred by both the plaintiff and D2 and I assess the amount that should be awarded to the plaintiff for PSLA at $400,000.

(ii)  Loss of Earnings

90.  The issues that have to be resolved here are twofold. The first is what the plaintiff was earning prior to the accident.  The second is whether the plaintiff has been deprived of a career as a decoration worker and, if so, whether he would have progressed to the rank of a master worker thereby being able to earn $16,900 per month.

91.  The plaintiff asks me to calculate his loss of earnings on the basis that he was earning $10,400/month as set out in the Form 2.  However D2 argues that the records of salary paid by D1 do not substantiate the plaintiff’s claim.  They show that he worked for fewer days and earned far less money than he claimed.  These records, for example, show that the most days the plaintiff worked for D1 was 12.5 days in July 2004 for $4,845.  This seems to be contradicted by the Form 2 which was completed by D1 after the accident and in which it is claimed that the plaintiff worked 22 days per month for a salary of $10,400/month.  But as D2 points out 22 days at $100/day is only $8,800.

92.  The plaintiff claims he was a casual construction/decoration worker who sought work from whoever would offer it.  He did not limit himself to one employer and at any one time could be receiving income from a multiple of sources from which he says he did not necessarily receive salary slips.  According to the plaintiff there were occasions when he was paid by D1 in cash without being given salary slips.  Also the plaintiff says that the Form 2 amount was calculated on the basis of working 26 days/month with the extra days being worked for other employers

93.  The Inland Revenue Department records show that between 1 April 2002 and 27 July 2004 he earned an average monthly income of $13,254.82.  They also support his claim that there were months when he worked for more than one employer.

94.  Looking at the evidence as a whole I accept that the plaintiff was capable of earning the amount of money claimed on the Form 2 though I also recognize that there might be months where he earned less as the income of workers in his type of employment must inevitably fluctuate. Because of the nature of his work his actual income is not susceptible to proof by documentary records and any finding I make must involve a reliance upon the claims of the plaintiff.  I accept that the average monthly income of the plaintiff at the time of the accident was $10,400.  I further accept that he currently earns an average of $8,000/month.  Using these figures as the basis of my assessment I adopt the calculations of the plaintiff that his pre-trial loss of earnings amount to $529,947.

(iii)  Future Loss of Earnings

95.  This claim is based upon the plaintiff’s inability to pursue his career as a decoration worker with his loss being compounded by the increase in income that he would have received had he been promoted to master grade.

96.  I accept that it is impractical for him to return to a career in the construction industry.  This is an industry which puts a premium on physical fitness.  As a result of the accident the Employees’ Compensation (Ordinary Assessment) Board Certificate of Assessment determined that the plaintiff had suffered a 19% loss of earning capacity on the basis of the residual disabilities from which he was then suffering and from which he continues to suffer.  Even if he tried to return to the industry it seems to me he would inevitably have difficulty persuading prospective employers to give him a chance.  He would be competing with fully able-bodied rivals who did not suffer from any fear of heights.

97.  The plaintiff has made an attempt to overcome this fear but had to discontinue with the psychological treatment when it clashed with his employment.  I do not think that with this fear and the residual physical disabilities from which he suffers it is realistic to assume that, with time and perhaps some further improvement in his residual disabilities, the plaintiff could return to his former employment.  In my view the plaintiff has established, on the balance of probabilities, that as a result of the accident he has been deprived of pursuing a career in the construction industry

98.  The plaintiff submits that his future loss of earnings claims should be calculated on the assumption he would have been promoted to master grade.  The only evidence before me on his promotion prospects is a paragraph in his witness statement which is as follows:

“At the time of the accident, I was employed as a decoration/ construction worker at junior grade. Had it not been for the accident, I would have continued with my pre-accident employment and my daily wage would have increased with my experience. I believe that if I had continued to work as a decoration/construction worker, I would have been promoted to master grade by now. Master grade decoration/construction workers are now demanding at least HK$650 per day or HK$16,900 per month.”

99.  I have no other evidence to inform me of what it takes to be appointed to a master grade.  Even though this evidence was unchallenged, this one paragraph by the plaintiff is nevertheless insufficient for me to determine that the plaintiff would have been promoted to master grade.  It says nothing about how such a promotion is earned – whether by qualification examinations, experience, assessment by employers etc.  I have no knowledge of these matters myself and no evidence of them has been placed before me.  Consequently for the purpose of calculating future loss of income I must use the same figure that I used for pre-trial loss of income, namely $10,400/month.

100.  The parties agree that, given the plaintiff’s age of 35 the appropriate multiplier is 13.  The multiplicand will be $30,240 [($10,400 - $8,000 = monthly loss) x 12 months x 1.05 (MPF)].  Future loss of earnings amount to $393,120.

(iv)  Loss of earning capacity

101.  This is an award to compensate the plaintiff for the disadvantage he will now suffer when seeking employment in the labour market and the limitations that his injuries impose on his prospects for employment.  The plaintiff is still relatively young and clearly would prefer to be working in the construction industry.  Even though that is now denied him he will be hampered by his physical disabilities and his fear of heights in obtaining employment and may not have as wide a range of employment opportunities even outside of the construction industry.

102.  I believe an appropriate amount under this head is an amount that is approximately equivalent to one year’s salary.  I allow him an amount of $100,000.

(v)  Future Medical Expenses

103.  These are agreed at $40,000.

(vi)  Special Damages

104.  D2 agrees that $11,490 for medical and travelling expenses should be awarded to the plaintiff but disputes a claim of $5,000 for tonic food, submitting that only an amount of $1,000 should be allowed.  Given the period of time the plaintiff was on sick leave and the various medical treatments and operations be had to undergo, I am minded to allow this claim.

105.  I enter judgment for the plaintiff against the 1^st and 2^nd defendants in the sum of $1,429,707 made up as follows:

(i)	PSLA	$400,000
(ii)	Pre-trial loss of income	$529,947
(iii)	Future loss of income	$393,120
(iv)	Loss of earning capacity	$100,000
(v)	Future medical expenses	$40,000
(vi)	Special damages	$16,490
(vii)	Less employees’ compensation received ($49,850)	$1,429,707

Interest

106.  Interest on the award for PSLA will be at 2% per annum from the date of service of the writ to the date of judgment.  Interest on special damages and pre-trial loss of earnings will be at half the judgment rate, i.e. 4% per annum, from the date of accident to the date of judgment.

Cost

107.  I make an order nisi that D2 pay the plaintiff’s costs and the costs of the TP.  The plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations.