CHUNG YUEN YEE v. SAM WOO BORE PILE FOUNDATION LTD AND OTHERS

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Press Summary (Chinese)

FACV No. 7 of 2012

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 7 OF 2012 (CIVIL)

(ON APPEAL FROM CACV NO. 145 OF 2010)

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J U D G M E N T

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Chief Justice Ma:

1.  I agree with the judgment of Lord Hoffmann NPJ. 

Mr Justice Chan PJ:

2.  I agree with the judgment of Lord Hoffmann NPJ.

Mr Justice Ribeiro PJ:

3.  I agree with the judgment of Lord Hoffmann NPJ. 

Mr Justice Bokhary NPJ :

4.  I agree with the judgment of Lord Hoffmann NPJ.

Lord Hoffmann NPJ :

5.  The plaintiff is the widow and administratrix of Lai Wing Kee (“Mr Lai”), who was killed in an industrial accident on 27 July 2004.  He was engaged in helping a crane driver to lift a heavy forklift truck onto the back of a lorry. The truck was suspended from the crane hook by two chains when one of them snapped.  Mr Lai was crushed under the weight of the falling truck.

6.  There is no doubt that the method used to lift the truck onto the lorry was unsafe.  First, the chains ought not to have been used to lift a heavy weight like the truck.  They were intended only for lashing objects down to prevent them from moving.  Secondly, the one which snapped had been improperly fastened.  Thirdly, Mr Lai should not have had to guide and steady the dangling truck on his own.  There should have been another person to help take the load.

7.  Mr Lai was employed by the second defendant, Sam Woo Engineering Equipment Limited (“D2”). He was employed as a crane operator under a written contract of employment dated 15 September 2000, having been similarly employed under an oral agreement for the previous seven years.  An employer owes a non-delegable common law duty to provide a safe system of work for his employees and a statutory duty to insure against liability for breach of that duty.  There is no dispute that D2 was in breach of its duty to Mr Lai.  That was sufficient to enable his widow’s claim to be paid in full.  But D2, which was separately represented (no doubt at the instance of the insurers), has claimed that three other companies (not covered by the policy) are liable for the same damage and ought to contribute to the loss.

8.  The three other companies are the first defendant Sam Woo Bore Pile Foundation Limited (“D1”), the third defendant Sam Woo Construction Limited (“D3”) and Sam Woo Ship Building Limited (“D4”).  As their names suggest, they and D2 are associated companies. They have common directors and shareholders and appear to a large extent to have been operated as a single economic unit. D1 had no connection with the accident but paid the salaries of group employees, including Mr Lai.  It filed Employer’s Returns to the Inland Revenue in which it described itself as Mr Lai’s employer.  There were other documents such as wages reports in which he was similarly described.

9.  The other two companies, D3 and D4, each had some involvement in the events which led to the accident.  According to the evidence of Mr Lau Chun Kwok, who was a director of all four companies, D4 had been engaged to do maintenance dredging work on the Tuen Mun River and had subcontracted the work to D3.  On the day of the accident, D3 urgently required a forklift truck for use on the site.  D2 had one available but it needed a minor repair.  Ordinarily D2 would have had it repaired and delivered it to D3, but its drivers were engaged elsewhere.  It therefore requested D3 to collect the truck, take it to Tsing Yi workshop for repair and then to the site in Tuen Mun.  D3 sent a crane lorry driven by its employee Mr Lam Siu Mo (“Mr Lam”) to the premises where the truck was kept and Mr Lai was working.  Mr Wan Piu Yuen (“Mr Wan”), an employee of D4, was also at the premises and received a message from D3 that the truck would be collected.  He passed this on to Mr Lai, asking him to assist Mr Lam in loading the truck.  It was Mr Lai who attached the chains, which appear to have been part of the lorry’s equipment.

10.  The Amended Statement of Claim alleged in various alternative formulations that Mr Lai was employed, either generally or “pro hac vice”, by each of the defendants and that each owed him a duty to provide a safe system of work.  It also pleaded, among other things, “against [D2] and/or D4”, breaches of statutory duty under the Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) Regulations (“the Regulations”).  These impose duties in relation to chains “used for raising or lowering or as a means of suspension”.

11.  The judge (Yam J) found that although the crane lorry driven by Mr Lam belonged to D2, the chains probably belonged to D3.  He also found that Mr Wan, an employee of D4, was the person who had ordered Mr Lai to help load the truck onto the lorry. Based on these findings and the evidence of the returns by D1 to the Inland Revenue, he found that Mr Lai had been at the relevant time an employee of D1 and D2 (as general employers) and of D4 (as employer pro hac vice).  D3 was also liable because it had “provided the metal chains which are proven to be defective”.  The judge did not specify whether D3 was liable for common law negligence or breach of statutory duty under the Regulations, although he did say in general terms that there had been breaches of statutory duty.

12.  The Court of Appeal (Cheung CJHC, Tang VP and Cheung JA) affirmed the judge’s decision. Cheung JA, who gave a judgment with which the other members of the Court agreed, said that D1 was liable because the Inland Revenue returns were “extremely strong evidence” of an employment relationship.  D3 was liable because the lorry was under the control of D3 and “in the absence of evidence to the contrary, the chains on the lorry must have been intended to be used for the lifting operations of the crane”.  D3 “must have been negligent in allowing the deceased to make use of the defective chains”.  D4 was liable because Mr Wan had “directed the deceased to assist in the loading operation”.  Mr Wan was negligent because he “merely directed the deceased to assist Lam without telling them how the operation should be handled”.

13.  In my opinion none of these conclusions was correct.  First, the position of D1.  I quite agree that, if there had been no other evidence, the Inland Revenue returns would have been extremely strong evidence of an employment relationship.  But there was other evidence. There was a written contract of employment between Mr Lai and D2.  On the basis of this evidence, it was accepted by all parties that Mr Lai was employed by D2.  The natural conclusion is not that he was employed by D1 as well, but that the Inland Revenue returns were wrong.  Given the way in which the group was run as a single economic entity, such a mistake is perhaps not so surprising.  Neither the judge nor the Court of Appeal seems to have been willing to entertain this possibility.  Even if it was not a mistake but done for some tax or accounting purpose, it could not have created an employment relationship between D1 and Mr Lai.  Employment is a bilateral relationship and there is nothing to show that Mr Lai was party to these tax or accounting arrangements.  But the judge and the Court of Appeal concluded that Mr Lai had been the servant of (at least) two masters.  No doubt a person may be simultaneously employed by more than one employer in respect of different services, but I know of no case in which anyone has been held to have two independent employers in respect of the same services.

14.  Next there is the liability of D3.  That rests entirely upon the fact that the chains which were used were on the lorry and that the lorry had been used “for a while” by D3. One might have assumed that the chains came with the lorry, which was owned by D2.  However the judge said that as D3 was controlling the lorry through its employee Mr Lam, it was “more likely than not” that the chains belonged to D3.  It is extremely doubtful that there was any basis for such a finding.  In any event, the evidence was that the chains were suitable for lashing objects to the lorry but not for lifting.  I therefore find it difficult to see how Cheung JA could have concluded that they “must have been intended [by D3] to be used for the lifting operations”.  Mr Lai was a skilled crane operator of many years experience.  He should have been able to tell which kind of chain was suitable for a particular purpose.  One cannot construe the mere fact that they were on the lorry as a representation by D3 that they were suitable for lifting a heavy forklift truck.  And if they were not intended for use as lifting gear, there cannot have been a breach of the regulations either.

15.  Finally, D4.  The finding of the judge, upheld by the Court of Appeal, was that Mr Wan, by telling Mr Lai to help load the truck, constituted D4 his employer pro hac vice.  This is a doctrine which operates in the following circumstances: where a person (A) is in the general employment of another person (B) but works under the control of a third person (C) who directs not merely what A is to do but how he should do it, then if A negligently causes injury to someone, C will be vicariously liable as A’s employer pro hac vice: Mersey Docks and Harbour Board v Coggins & Griffith (Liverpool) Limited and Another [1947] AC 1, 10.  This doctrine, however, applies only to vicarious liability for an employee’s negligence.  As Kennedy LJ said in Nelhams v Sandells Maintenance Ltd and Another [1996] PIQR 52, 55: “…there is an important distinction to be drawn between cases where damage has been caused by an employee in the general employment of one employer who is working under the directions of a second employer and cases where it is the employee himself who sustains the damage”.  Or as Diplock LJ said in Savory v Holland & Hannen & Cubitts (Southern) Ltd [1964] 1 WLR 1158, 1165, “the doctrine of master and servant pro hac vice today seems to me to be relevant only to a question of vicarious liability”.  It has no application to the question of what duty is owed to the employee himself.  For that purpose, the duty of anyone other than the actual employer is simply to take reasonable care in all the circumstances. 

16.  In the present case, D4 (through Mr Wan) is said to have been negligent in not supervising the work of loading the lorry.  Mr Wan, on the other hand, said that working cranes was not within his field of expertise.  He merely passed on the message that Mr Lai should help with the loading and went back to his office, leaving the experts to get on with it.  That seems to me entirely reasonable.  In my view there was nothing to impose upon D4 any duty in relation to the way the loading took place.

17.  I would therefore allow the appeals of D1, D3 and D4, dismiss the claims against them and direct that the costs be dealt with on written submissions, as to which the parties should seek procedural directions from the Registrar.

Chief Justice Ma:

18.  For the above reasons, the appeals of the 1^st, 3^rd and 4^th defendants are allowed, and the claims against them dismissed.  Costs will be dealt with as stated in para 17 above.