YIP LAI HEUNG v. 伍炳榮 AND OTHERS

CAMP 293/2022 , [2023] HKCA 986

On Appeal From [2022] HKDC 639

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 293 OF 2022

(ON AN INTENDED APPEAL FROM DCEC NO 1252 OF 2016)

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J U D G M E N T

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Hon Yuen JA (giving the Judgment of the Court):

1.  This is an application by Tse Chung Fai (“R3”) for an extension of time to appeal the Judgment of HH Judge KC Chan (“the Judge”) given on 29 June 2022 (“the Judgment”) in DCEC No.1252/2016 (“the EC claim”), a claim made under the Employees’ Compensation Ordinance Cap. 262 (“ECO”).

2.  The application for extension of time, filed on 9 August 2022, is made under s.23(1) and (4) ECO which provide, where material:

“(1) Subject to the provisions of this section ..., an appeal shall lie to the Court of Appeal from any order of the Court¹.

...

(4) No appeal shall lie after the expiration of 30 days from the date of the order of the Court:

Provided that the Court of Appeal may, if it thinks fit, extend the time within which to appeal under this section notwithstanding that that time has elapsed”.

As the 30 days stipulated in s.23(4) ECO expired on 29 July 2022, the applicant was out of time by 11 days.  R3’s reasons for delay are set out later in this Judgment. 

Background

3.1.  In the EC claim, Yip Lai Heung (“the applicant”) sought compensation as his foot was injured in the course of demolishing a 10 feet by 8 feet, sand brick wall (“the wall”) between two units (“the premises”) on the 3^rd floor of a walk-up building in Mongkok.

3.2.  By the time the EC claim came before the Judge, there were 4 respondents, all legally represented². 

(1)  Land Builder Ltd (“R4”) was a hitherto dormant company which had no financial resources.  In late November 2014, it rented the premises which were intended to be used as a shop, showroom and storage facility for a business dealing in water-proofing materials which R3 was minded to start³.

(2)  R3 was the sole shareholder and director of R4.

(3)  Ng Bing Wing (“R1”) was a friend of R3.  He had previously been a casual worker at construction sites and was then an odd job worker.  On 3 December 2014, R3 approached him to undertake the job of demolishing the wall.

(4)  R1 in turn approached Chan Yu Man (“R2”), who had worked in construction sites, and who was “more experienced and knowledgeable in demolishing walls”⁴.  As R2 told R1 that the job would require three workers, R1 asked him to find a third workman.

(5)  R2 then approached the applicant who, whether before or on the day of the accident (4 December 2014), agreed to take part in the job of demolishing the wall⁵.

The Judge’s findings of fact

4.  The Judge found the following facts:

(1)  R3 did not tell R1 that he (R1) was being engaged by R4 for the job⁶.

(2)  R1, R2 and the applicant (who the Judge called “the Trio”) went to the premises on 4 December 2014.  R3 had arranged for a key to be left for R1 to enter the premises.  After R2 checked the construction material of the wall, the Trio agreed to ask for $2,100 for the job, with each getting $700 which was the going rate of daily wages for a casual worker in the construction field⁷.  R1 called R3 on the telephone proposing the sum of $2,100, explaining how that sum was arrived at, and R3 agreed to it⁸.

(3)  The job was simple and straightforward, so the “degree of control”⁹ was not a material indicium¹⁰.

(4)  The equipment¹¹ for the job (a hammer, a shovel and a broom) were placed in the premises, but it was not known (and there was no evidence) who had placed them there¹².  Therefore, this was also not a helpful indicium¹³.  As for the debris from the demolition of the wall, the Judge found that R2 told R1 to buy some baskets for disposal of the debris, and there was an understanding that R3 would reimburse R1 for the cost of the baskets, although there was no direct evidence of actual reimbursement¹⁴.

(5)  After the accident to the applicant, R1 and R2 carried on with the job.  The Judge found, after considering conflicting evidence, that they left the debris (20 basketfuls) on the side of the pavement¹⁵, and R3 made arrangements for their disposal¹⁶.

The Judge’s Judgment

5.  The Judge held the following.

(1)  The aspects of “financial risk” and “opportunity of profit”¹⁷ were “particularly indicative in the present case”¹⁸.  As R1 made no profit, and had no financial risk, he was not carrying on business on his own account, but was an employee¹⁹.  

(2)  R1 was a ganger who referred the work to R2 and the applicant.  The Trio were working as a gang²⁰.  They were not contractors but employees²¹.

(3)  R3 was the employer as he had not mentioned R4 in his conversations with R1, and he was the person or entity with whom the employees entered into the contract of service²².  The Judge held R3 was solely liable to pay compensation²³.

(4)  In respect of the holding at (3) above, the following would be noted:

(a)  R3 had submitted to the Judge that as he was a director of R4, he was only R4’s agent and therefore was not personally liable²⁴;

(b)  R1 had submitted that under principles of agency law, an agent of an undisclosed principal was also personally liable together with the undisclosed principal²⁵;

(c)  in respect of the above submissions, the Judge said:

“106. As the liability to pay employees’ compensation is a liability created by statute, I for one have reservation as to whether the general law of agency could automatically apply unless the same is provided by the provisions in the Ordinance. However, I think the matter is straight forward and there is no need to consider that matter” (emphasis added);

(d)  after finding R3 liable for the reasons summarized in (3) above, the Judge said:

“108. ... If there were an agency relationship between R3 and R4, it would be up to R3 to take steps to seek redress from R4.

109. I do not find that the fact that R4 was the tenant of the Premises or that the waterproofing product business was intended to be operated by R4 of relevance as I find that at the time of the formation of the contract of service R1 (or the applicant) simply has not been informed of these matters, and R1 was dealing with R3 personally. Moreover, it is trite that the contracting parties are respectively the one who has made the offer and the one who has accepted it unconditionally in the process of the formation of contract, which parties may or may not be the person receiving the benefit under the contract”.

(5) Moreover, the Judge held that the proviso in s.2(1)(b) ECO (“the Proviso”) did not apply to except the applicant from the definition of “employee”. The material parts of this section read as follows:

“(1) In this Ordinance, unless the context otherwise requires, the expression “employee”, subject to ... the proviso to this subsection, means any person who has ... entered into or works under a contract of service ... with an employer in any employment, whether by way of manual labour, clerical work, or otherwise, and whether the contract is expressed or implied, is oral or in writing:

Provided that the following persons are excepted from the definition of employee –

(b) any person whose employment is of a casual nature, and who is employed otherwise than for the purposes of the employer’s trade or business, not being a person employed for the purposes of any game or recreation and engaged or paid through a club and not being a part-time domestic helper; ...”.

(a) R3 and R4 had submitted that the demolition of the wall “was the work that the applicant was employed to do, which was different from trading of water proofing products” and therefore the employment was not for the purposes of R4’s trade or business²⁶. Their counsel relied on Lee Yui Kai v TD Co Ltd & Others²⁷, a decision of HHJ KW Wong in a DCEC case. This case (and the appeal therefrom) are referred to later in this Judgment.

(b) R1, on the other hand, had referred to Manton v Cantwell²⁸. In that case, a farmer who lived and carried on business in a farmhouse on the farm, employed a casual labourer to thatch the roof of the farmhouse. The labourer fell and eventually died.

The county court found that the labourer was employed for the purposes of the farmer’s trade or business.

The Irish Court of Appeal reversed the county court judge.

On further appeal, the House of Lords held that there was evidence upon which the county court judge could find that the labourer was employed for the purposes of the farmer’s trade or business. It held that the question whether a casual labourer was so employed depends on the facts of each case, and does not turn on the question whether the premises in respect of which the work was done were used solely for business purposes or were used for domestic purposes also.

(c) In the Judgment, the Judge referred to the following facts from R3’s evidence²⁹:

“(1) The Premises were intended to be used by R3/R4 exclusively for the business purpose of R3/R4, namely to use it as R4’s office, showroom and storage facilities.

(2) The Demolition Work was part of the renovation of the Premises meant to improve it aesthetically, to use Unit A and Unit B as one larger unit to facilitate the business of R3/R4, and to make room for placing cabinets for display and storage purposes.

(3) R4 was wholly owned by R3 who was R4’s only shareholder and director”.

(d) The Judge held that a purposive approach should be taken to the construction of the ECO, the purpose of which was to provide for compensation to be paid by employers to afford protection to employees from the misfortune of work accidents. He also took into consideration the fact that in the construction and renovation fields, it was very common that many employees are engaged as casual workers³⁰. He said³¹:

“On the facts as found, especially that the Premises would be used exclusively for the business purposes of R3/R4, and bearing in mind the considerations I mentioned above, I take the view that the Demolition Work was incidental to, necessary, closely connected to, and within the business of R3/R4 such that I find that it was for the purposes of R3/R4 and therefore the Proviso is not applicable”.

6.1.  In the result, the Judge ordered R3 to pay the applicant employees’ compensation in the total sum of $256,465 with interest, and made certain costs orders nisi.

6.2.  As a matter of completeness, we would mention that on 2 December 2022, the Judge made an additional order nisi³², and on 11 May 2023, gave two decisions ordering that the two costs orders nisi be varied.  These orders are not material to the application before us.  

R3’s application for extension of time to appeal

7.  In the meantime, the 30-day period for an appeal (which was as of right) to this Court expired on 29 July 2022.  On 9 August 2022, R3 issued a summons in this Court for extension of time to appeal. 

Principles

8.  It is well established that in considering whether to grant an extension of time to appeal, the Court will take into account (1) the period of delay, (2) reasons given for the delay, (3) the prospects of success of the proposed appeal and (4) any prejudice to other parties.

Discussion

(1)  Period of delay

9.  In the present case, R3 was late by 11 days.  In the context of the 30-day period for lodging an appeal, the delay here was certainly not short, although it would not be classified as substantial.

(2)  Reasons given for the delay

10.  In R3’s affirmation in support of the summons, he said his delay was due to the following reasons.

(1)  He was indecisive as to whether to lodge an appeal because the amount at stake was only $256,465, but an appeal would involve 4 different sets of legal teams and significant legal costs.

(2)  He sought advice from “different counsel/different lawyers”.

11.  These are not satisfactory reasons for the delay.  (1)  The proportionality of costs to the attainment of a desired result is a factor in legal proceedings that has to be considered by all but the wealthiest litigants.  R3’s personal indecisiveness does not justify a delay especially when the legislature has already provided a relatively lengthy period in the ECO for litigants to consider if they would lodge an appeal.  (2) No details have been given as to the dates when R3 approached different counsel or different lawyers, or the time taken for them to render advice.  As R3 was legally represented in the EC case, one would expect him to have been aware, right after the Judge’s Judgment was given, of the appeal deadline, and indeed he has not alleged otherwise.

(3)  Prospects of success of the proposed appeal  

12.  As the reasons given for the delay are not satisfactory, the applicant must show real prospects of success on the merits for this Court to exercise its discretion to grant an extension of time³³.

13.  There are 3 grounds of appeal in the draft Notice of Appeal, viz:

(1)  in the event that the applicant was R3’s (or R4’s) employee, the Proviso should apply;

(2)  in the event that the applicant was an employee, he was an employee of R1, R2 or R4, but not R3;

(3)  the applicant was an independent contractor, either by himself, or in partnership with R1 and R2, or a sub-contractor, but he was not an employee.

It would be convenient to discuss these grounds in reverse order.

Ground (3)

14.  As far as Ground (3) is concerned, we have considered paras. (5) to (8) of the draft Notice of Appeal. 

15.  The complaint in para. (5) regarding the Judge’s finding of an understanding between R3 and R1 regarding reimbursement of the cost of the baskets (for disposal of the debris) is not a substantial one.  Even if there was no understanding for reimbursement, the cost of the baskets was “minimal and relatively cheap”³⁴, and would hardly have meant that R1 had thereby undertaken a contractor’s or sub-contractor’s financial risk. 

16.  As for the complaint in para. (6) regarding the Judge’s inference in respect of the disposal of the debris by R3, it is submitted that there were “other reasonable, if not even more probable, inference(s)”.  It is suggested that it might have been cleared by public authorities which either did not bother to, or failed to, find out who was responsible.  There is nothing in this complaint.  The Judge had analysed the evidence of R1, R2 and R3 in detail in §§55 - 59, and in light of the Construction Waste Disposal Charging Scheme, he was entitled to reject the suggestion that 20 basketfuls of debris were blatantly left for clearing by the public authorities.

17.  As for the complaint in para. (7), the suggestion that the Judge “entered the arena” is not supported by evidence or a transcript, and has not been developed in the written submissions, so it is not necessary to deal with it.

18.1.  Finally, we shall deal briefly with para. (8) which are mainly complaints of the Judge’s findings of fact.

18.2.  The complaint in para. (8)(a) ignores the fact that the job (the ambit of which was the demolition of the wall) was a simple one.  Further, the Judge was entitled to ignore R3’s speculative and subjective evidence as to whether he could have asked the Trio to do some other jobs.

18.3.  The complaint in para. (8)(b) is in respect of the equipment.  The Judge accepted that R3 did not tell R1 that he did not need to bring equipment³⁵, but accepted the evidence of R1 and R2 that they found the equipment inside the premises³⁶.  On the evidence before him, the Judge found that it was not known who had provided the equipment³⁷.  The complaint is that the Judge should have found positively that R3/R4 had not provided the equipment.  However, as the Judge found that R2 was a reliable witness, coupled with the fact that R3 had access to the premises, one cannot fault the Judge for not finding positively that it was not R3/R4 who supplied the equipment.

18.4.  The complaint in para. (8)(c) is that the Trio did have financial risk and opportunity of profit in accepting $2,100 for the job, in that the job could have taken less than, or more than, 1 day.  There is nothing in this complaint.  It was not disputed that $700 was the going rate for a casual worker in the construction field for 1 day.  The evidence was that the sum of $2,100 ($700 per worker) was quoted to R3 after R2 had examined the wall to be demolished, and as R2 had experience in demolishing walls, he would have had a reasonable idea how long the job would take.  The job was in fact finished in 1 day.  The evidence did not justify the assumption that the job could have taken more than 1 day. 

18.5.  The complaint in para. (8)(d) is in respect of whether the employees bore any responsibility for investment and management etc.  As this was “not really explored by the parties in evidence”,³⁸ this new point would not in any event have been considered on an appeal.

18.6.  The complaint in para. (8)(e) refers to “traditional structure and practice of the trade of ganger” and suggests that the nature of work of the Trio was “clearly different”.  The Judge had referred to gangers in his analysis of the relationship between R1, R2 and the applicant.  We do not see any flaws in the analysis or in his application of that relationship to the evidence in this case.  There is no development in R3's written submissions of the “clear difference” referred to in para. (8)(e).

19.  For the above reasons, there is no real prospect of success in Ground (3).

Ground (2)

20.  Para. (2) of this ground asserts:

“In particular, the learned judge plainly erred in applying the industrial practice of ‘ganger’ by failing to consider that in construction site ganger’s case, it is normally a company (4^th Respondent in this case) which should be the employer and liable, instead of the person or foreman (3^rd Respondent in this case) who looks for the head gangers”. (Emphasis added).

21.  It is clear simply from the above assertion of what is the “normal” situation in respect of construction sites that it is not a valid ground of appeal.  First, it is not asserted that the “normal” situation is mandatory for a finding of a gang relationship to be made.  Secondly, it is not explained how the fact that an employer is a company has a bearing on liability.

22.  Paras (3) and (4) are based on the same point, which is that R4 is a separate legal entity from R3, its sole shareholder and director.  As a legal principle, that is of course correct, but it does not assist R3.  R3 had submitted to the Judge that he was only R4’s agent, but it is clear that under agency law (as submitted by R1 below³⁹), R3 as an agent of R4 (the undisclosed principal) was also personally liable together with the undisclosed principal⁴⁰.  The Judge did not give any reasons for his reservation⁴¹ whether agency law applied to liability under the ECO.  He did not make a determination against the applicant on the issue.

23.  For the above reasons, there is no real prospect of success in Ground (2).

Ground (1)

24.1.  In Ground (1), it is argued that the Judge had either misunderstood Manton or had just paid lip service to this sentence in his Judgment⁴²:

“Three of the four law lords [in Manton] who had delivered a separate judgment were emphatic that, in considering ‘for the purposes of the employer’s trade or business’, there should be no general rules or general propositions of law, and the question should be decided on the particular circumstances of each case”. (Emphasis added).

24.2.  R3’s argument is that, notwithstanding the above sentence, the Judge had carried on in §97 of the Judgment to refer to passages in Manton⁴³ and applied some of the words in those passages in his discussion at §102 of the Judgment.  In §98 of the Judgment, the Judge said “Manton had clearly decided that the phrase ‘for the purposes of the employer’s trade or business’ was not to be construed in the narrow and rigid way now advocated by [counsel for R3]”.  R3 submitted that the Judge had thereby “elevated the observations” in the passages in Manton to “a wider principle” by adopting a purposive approach so that fewer casual workers would be excepted by the Proviso.     

25.  It is clear from the first sentence in §97 of his Judgment (emphasised in § 24.1 above) that the Judge did not misunderstand Manton.  Nor, having said that there should be no general principles, did the Judge proceed to do the opposite and seek to extract any from that case.  The Judge’s use of words found in Manton is not equivalent to holding that he was bound by it to arrive at a particular result on the facts of this case.

26.  It is precisely because no general principles should be extracted that we do not consider it helpful to discuss passages in Manton, Alderman v Warren⁴⁴ or Lee Yui Kai. 

27.  We would only observe the following.

(1)  In Alderman, the English Court of Appeal found (overruling the county court) that a casual labourer injured taking down a stove in a pub was not employed “for the purposes of the employer’s trade or business”, but a law lord in Manton was reported to have said⁴⁵ that in Alderman, “the job was held to be ‘for the purposes of the employer’s trade or business’ ” (emphasis added).  Be that as it may, all the law lords in Manton were emphatic that there should be no general principles in the construction of the above words and that each case should be decided on its own facts,  

(2)  Neither Alderman nor Manton was discussed in Lee Yui Kai, whether in the EC case or in the Court of Appeal, where the relevant issue was whether the judge below was wrong in the exercise of discretion in refusing to make a Sanderson or Bullock order. 

(3)  In Lee Yui Kai, the district judge found, after stating that each case has to depend on its own facts,  

“In my judgment, a person employed to renovate a premises for use as a dog hotel cannot be regarded as employed for the purpose of dog hotel operator’s trade or business”⁴⁶.

(4)  On appeal in the Court of Appeal on costs, Kwan VP mentioned⁴⁷ the question that R1 “might not be [the applicant’s] employer” (emphasis added).  Importantly, the applicant’s counsel conceded in his opening before the district judge that the Proviso applied.  Thus, in any event, there was no holding in Lee Yui Kai that was binding on the Judge in the present case.  

28.  We consider that it was open to the Judge on the evidence to find that the applicant was employed “for the purposes” of R4’s business.  He was employed to demolish the wall to enhance the premises so that R4 could operate its business there with a better layout.  As such, the improvement was for the purposes of R4’s business.  It was not for the landlord’s business, nor was it for R3’s personal purposes.  As such, the Proviso did not apply, R4 would be liable, and as R4 was R3’s undisclosed principal, R3 was also liable.

29.  For the above reasons, there is no real prospect of success in Ground (1).

(4)  Prejudice

30.  Since there is no real prospect of success in any of the intended grounds of appeal, it is not necessary for us to deal with the issue of prejudice.  It is well-established that the absence of prejudice does not mean that an extension of time should be given.

Order

31.  The applicant’s summons for extension of time is accordingly dismissed with costs. We would summarily assess the applicant’s costs and R1’s costs at $100,000 each. As R2 did not provide a statement of costs for summary assessment, his costs would be taxed if not agreed.  The own costs of the applicant, R1 and R2 should also be taxed in accordance with Legal Aid Regulations. 

32.  Pursuant to Order 59 rule 2A(8), we also order that as the application is wholly without merit, no party may request this determination to be reconsidered at an oral hearing inter partes.