LAI SING PING v. KWONG WAN KAI TRANSPORTATION CO. LTD.

HCPI 1084 of 1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURY CASE NO. 1084 OF 1997

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J U D G M E N T

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1. In this action the Plaintiff sought damages from Defendant for personal injuries, interest and costs in respect of an accident he suffered while he was, according to him, an employee of the Defendant.

2. The Defendant's case was that Plaintiff was never an employee of the Defendant, or, that if he was, he was not working within the scope of his employment at the time of the accident.

3. Overall there was general agreement about the facts relating to the accident and the injuries but, several major issues were in dispute, first, whether or not the Plaintiff was an employee of Defendant as at 3rd November 1994; if he was, whether he was within the scope of his employment at the time of the accident; and lastly, if Defendant was the employer whether he had failed in his duty to provide a safe system of work and whether or not he was able to delegate that duty to another party.

4. The Plaintiff claimed that he was employed by the Defendant company as a truck driver to carry goods to and from China and Hong Kong under an employment contract that was partly oral and partly in writing. Insofar as it was in writing, it was evidenced by an undated document in Chinese executed by the Plaintiff and Mr. Fung Shun Kwan, on behalf of the Defendant company about the beginning of October 1997; the oral part of the contract was allegedly made between Mr. Fung and the Plaintiff at about the same time.

5. The Plaintiff was injured while taking delivery of a 4 metric ton electric generator for carriage. Plaintiff said he was instructed by Mr. Fung to collect the generator and in the course of so doing he assisted another driver to move it from one truck to the Plaintiff's truck. The Plaintiff was injured when the crane crushed his left hand against the generator. The Plaintiff suffered multiple lacerations over his left hand, ring finger, middle finger and index finger; a fracture of the middle finger and the ring finger.

The Accident

6. Evidence about the accident came from the Plaintiff, the Defendant claiming not to know of the accident until some time after it occurred. The Plaintiff had been working for Defendant for about a week and had made a number of trips between China and Hong Kong. He was introduced to Mr. Chan of Kok Tat Transportation Company (K. T.) by Mr. Fung who said he should co-operate with Mr. Chan and take orders from him. On the 2.11.1994, the Plaintiff was told to ring K. T. to see if he had to transport anything for them and was told to go, on 3.11.1994, to a godown at Kwai Chung and liaise with another lorry driver. He was to transport a generator which would be transferred to his vehicle from the other driver's truck. Mr. Fung did not tell him he had to assist with the loading, but when he arrived at the godown, he was asked by the other driver to assist and did so. The Plaintiff when working for the Defendant did not have an assistant; nor did the other driver.

7. The other driver had a crane truck. The two lorries parked tail to tail; the crane would lift the generator to the middle position and push it onto the Plaintiff's truck. The other driver asked the Plaintiff to hold a wooden block against the end of the generator that faced the crane to prevent damage from the arm of the crane. The Plaintiff obtained a block of wood from the other truck and held it against the generator. The other driver was operating the crane and, without giving any warning or checking the Plaintiff's position, used the crane to push the generator, crushing the Plaintiff's fingers against the wooden block. The Plaintiff was injured and ambulance and police were called. He was assisted to hospital by the other driver. Later the same day he told a female employee of Defendant about the accident and asked her to inform Mr. Fung.

8. The Defendant said he did not hear of the accident until sometime later, and denied ever instructing the Plaintiff to assist Mr. Chan of K. T. He said that Plaintiff did not carry out his orders for deliveries, but was required to solicit customers of his own volition, for the purposes of the "cooperation agreement". After the accident a Form 2, as required by Employees' Compensation Ord., Cap. 282 was filed with the Labour Department. This is a Notice by the employer of an accident to an employee resulting in death or incapacity. That Form was completed, by an employee of the Defendant and signed by Mr. Fung on 16th November 1994. The Notice refers to the Plaintiff as the injured "employee" and details the place and type of accident and Plaintiff's injuries. It gives the address of Defendant's insurance company. It states the Plaintiff's average number of working days a month and that his rest day was not fixed. It confirms the Plaintiff's basic salary as $19,140.00 a month. Attached to Form 2 and chopped with Defendant's company chop, was a detailed report about the nature of the accident and how it occurred.

Was Plaintiff an Employee?

9. The true nature of the working relationship was a matter of law and had to be assessed from the written documents and any oral terms and also from inferences of fact drawn from the parties' conduct.

10. Defendant contended that no contract of employment existed but that a profit-sharing arrangement was set out in the Chinese document. The Plaintiff argued that the document with oral additions was a contract of employment. The document did not state unequivocally whether it was a contract of employment, or a document representing a form of partnership, or a profit-sharing venture.

11. The label given to a contract is not necessarily descriptive of its true nature. Whether this was called a partnership contract, or an employment contract, or a "cooperation" contract, the court was obliged to scrutinize the factual situation and see what the reality was.

12. Clauses 1 and 2, both referred to Defendant having the right to terminate the Plaintiff's "employment". Clause 3 referred to the payment of "wages"; wages being 29% of the nett monthly business. Clause 4 hinted at a partnership, as Defendant had to pay 71% and the Plaintiff 29% compensation for injury or damage in accidents. Clause 5 required the Plaintiff, if he didn't obey Defendant's instructions on parking and storage in bad weather, to compensate Defendant for loss of the vehicle or goods. Clause 6 made the Plaintiff responsible for vehicle maintenance and for unusual losses of equipment. Clause 7 stated that Defendant would pay $500.00 per month if no traffic tickets were incurred by the Plaintiff; 3 traffic tickets p.m. within Hong Kong and 300.00 p.m. for penalty expenses in China. Clause 8 required the Plaintiff "jointly with the Defendant" to renew or extend the vehicle licence. Clause 9 prohibited the Plaintiff taking any industrial action. Clause 10 required the Plaintiff to provide truthful personal particulars.

13. The Plaintiff claimed two oral additions to the contract. First, if 29% of the nett takings was less than $10,000.00 per month, Defendant would pay him $5,000.00 a month, to ensure a minimum wage. Secondly, $5,000.00 a month would be given to Plaintiff for repairs, maintenance, road charges, etc. This was given in cash by Mr. Fung.

14. Mr. Fung argued that the document was, what he termed throughout, "a co-operation document", which seemed to contemplate a 29% - 71% partnership, or a profit-sharing venture. Defendant did not agree that any oral additions supplemented the written document.

15. Mr. Fung said he had only taken the Plaintiff and another driver on the basis of "cooperation contract" because two trucks that he owned were not being utilized and consequently he was deprived of profits. He argued that the absence of clauses relating to rest days and bonuses indicated the Plaintiff was not an employee. His evidence about the nature of Plaintiff's work was inconsistent. At one point, he stated the Plaintiff was working entirely by himself and received no orders at all from Defendant as to, when, where and how to deliver goods. He denied that the Plaintiff kept invoices of which he returned copies so he could compute monthly income. Later he said the Plaintiff worked for K. T. only and that K. T. would give him, Mr. Fung, documents and check Plaintiff's note book to see if he was actually recording matters properly.

16. The Plaintiff's evidence showed that Defendant acted as middleman for deliveries and could direct the Plaintiff as required. If Plaintiff ended a delivery in China, he was not allowed to return without checking whether or not there were any deliveries for the return journey.

17. Having considered the contract and written additions, and having heard what the Plaintiff and Mr. Fung said about the way it worked I did not believe Mr. Fung was telling the truth. The Plaintiff had been working as a driver for wages for other people for a substantial period of time, and it was highly unlikely that he had the necessary acumen and ability to generate his own orders, or that he would have agreed to work on the basis Mr. Fung suggested.

18. Here Defendant had overall control under the contract document of how the work was done and the hours of work; the Plaintiff did deliveries at Mr. Fung's bidding. The Plaintiff was employed as part of Defendant's business under a contract of service. The truck and equipment were provided for him and expenses ancillary to the job - tolls, road charges, traffic tickets etc were met by Defendant.

19. The gravamen of the contract showed that Defendant had all the administrative power and the contract was weighted heavily in its favour. The Plaintiff was obliged to deliver goods according to times and routes designated by Defendant, failing which Defendant could recoup economic losses or terminate the Plaintiff's employment. Defendant could take back the vehicle from the Plaintiff and terminate the Plaintiff's employment for almost any infringement. In unfavourable weather conditions, the Plaintiff had to park the vehicle and store goods at Defendant's direction or compensate for loss. The Plaintiff was responsible for losses arising from unusual damage or the loss of vehicle parts.

20. The degree of financial risk faced by the Plaintiff was minimal. He had the expectation of a minimum monthly wage, he had not laid out any capital and although he was responsible for unusual losses and damage to the vehicle, Clauses 4,5, 6 and 7 appear to be the Defendant's means of exercising control by ensuring his driver had a financial interest in avoiding accidents; following instructions to protect the employers' vehicle; safeguarding goods for which Defendant was responsible and avoiding traffic penalties.

21. Apart from the contract document itself, the Form 2 Notice also indicated that the Defendant regarded the Plaintiff as an employee and not a partner or joint venturer.

22. It is very significant that Defendant did not deny immediately at the time of the accident that the Plaintiff was an employee. At the time of the accident and when the Form 2 was submitted the Defendant accepted Plaintiff was an employee and treated him as such. It appears to have been only when the insurance company declined to take responsibility, that Mr. Fung wrote to the Labour Department denying Defendant's earlier position as employer of the Plaintiff.

23. When cross-examined about the Notice, Mr. Fung had a novel, but ultimately unconvincing, explanation. He said the contents were not really true; he had completed the form at the behest of Miss Wong who worked in the office, who felt sorry for the Plaintiff. He too felt sorry for the Plaintiff and wanted to help, so decided to make a claim on the Plaintiff's behalf under their employee's insurance policy. He did not write the letter accompanying the Notice himself, but his staff did. His company had never taken out an insurance policy for drivers; it was unnecessary as all drivers worked on the basis of "co-operation". He had no idea about the document itself and did not understand the Labour Department procedure. He just signed and let Miss Wong handle it. Later Miss Wong told him that she had discovered that the Plaintiff was not an employee and as it might cause problems if Plaintiff was so described, some "alterations" were made afterwards. The alterations in a letter sent to the Labour Department, some 7 months after the Form 2 was filed, were a denial that Plaintiff was ever an employee.

24. I was satisfied on the evidence of the Plaintiff, on the basis of the contract and on the basis of the documents filed with the Labour Department, that the Plaintiff was employed by the Defendant at the time of the accident and was not in any form of partnership, or acting with Defendant as joint venturer.

Was Plaintiff acting in the course of his Employment?

25. Having considered the evidence, I was satisfied that the Plaintiff on the day of the accident was working for K. T. at the specific order of Mr. Fung. I accept that Mr. Fung told the Plaintiff the night before to attend at the godown to collect a generator. The generator was described as being 40 metric tons in the Statement of Claim, but from Plaintiff's evidence it was actually 4 metric tons. The Plaintiff had no assistant and agreed it was not his task to assist with loading and unloading. However, it was not inconceivable, or outside the employer's contemplation that the Plaintiff would be required, of necessity, on occasion, to assist in loading or unloading his own, or another party's, vehicle. The Plaintiff was told by Mr. Fung to liaise with Mr. Chan of K. T. and offer as much assistance to him as possible. In those circumstances, it is unsurprising that the Plaintiff agreed to assist, when asked by the other driver.

26. There was a very short distance between the Plaintiff and the other driver when he operated the crane. Plaintiff agreed that the other driver could have seen him from where he was on the back of the other truck and that he was close enough to hear him. It appears the other driver was precipitate in moving the arm of crane and that the accident occurred through his negligence. However, the transfer of a 4 metric ton object from one truck to another, where the only labour is provided by two men, is a substantial and potentially dangerous undertaking. If either driver had had an assistant, the chances are that this accident might not have occurred.

27. The Defendant as the Plaintiff's employer had a duty of care to devise a safe system of work for him and to see that any such system was operated. That duty was one for which Defendant was personally liable - it was non-delegable and if, as Defendant suggested, it had been delegated to K.T. and had not been properly performed by K.T. the Defendant could not escape liability.

28. Normally the implementation of a safe system relates to work of a regular or uniform kind, but it can be applied to a single operation, such as this delivery. Usually the Plaintiff made deliveries without any additional assistance in the expectation that the customer would be responsible for loading and unloading goods. However it was incumbent on the Defendant to ensure that the Plaintiff was not exposed to danger on occasions such as this where the loading of the goods was potentially dangerous.

29. The case of McDermid v. Nash Dredging Ltd. [1987] W. L. R. 212 examined the question of whether this was a non-delegable duty and concluded that it was. The facts of that case, on which the Plaintiff relied, are similar to those in the present case.

30. I was satisfied on the balance of probabilities that Plaintiff was working under the orders of Mr. Fung in delivering the generator for K.T, that Defendant was responsible for ensuring that he could carry out this task safely and that if Defendant had delegated that duty to K.T. it had not been performed.

31. Accordingly I find the Defendant liable and enter judgment for the Plaintiff in this action.

Quantum

32. At the outset of the case, counsel indicated that they had agreed the quantum of damages at $1.2m. including general damages of $100,000 for pain, suffering and loss of amenities and the balance was agreed to cover pre- and post-trial loss of earnings including minor medical expenses. The court was asked to record that agreement for the purposes of possible future proceedings against the insurers of the Defendant.

33. Interest was agreed to run at judgment rate on the sum of $1.2 million until payment in full.

34. There will be an order nisi for costs of the action in favour of the Plaintiff, such costs to be taxed if not agreed.

35. Plaintiffs own costs to be taxed in accordance with Legal Aid Regulations.