FENG JIANZHU v. HO SZE YEE AND OTHERS

CACV 567/2021, [2023] HKCA 1273

On Appeal From [2021] HKDC 1355

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 567 OF 2021

(ON APPEAL FROM DCEC NO 2613 OF 2018)

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J U D G M E N T

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

A.  INTRODUCTION

1.  This is an appeal brought by the 1^st Respondent (“R1”) against the Order of Deputy District Judge Charles Wong (“the Judge”) dated 15 November 2021 (“the Order”). 

2.  By way of the Order, the Judge after trial gave judgment in favour of the applicant in his Employee Compensation claim made against R1, but dismissed the said claim against the 2^nd Respondent (“R2”).  The Judge awarded the applicant the sum of $141,368.80 with interest, and ordered R1 to pay costs of the applicant and R2.  He made no order as to costs in relation to the 3^rd Respondent (“R3”).  The Judge set out his reasons for making the Order in his written judgment of the same date (“the Judgment”)[1].

B.  BACKGROUND

3.  The factual background and the parties’ respective cases have been set out at [1] ‑ [40] of the Judgment and need not be repeated here.  For the present purpose, we only need to highlight the following, which are largely undisputed.

4.  The applicant and R1 are experienced plasterers aged 46 and 65 respectively at the material time.  Since 2017, they had worked together in various projects.  This claim relates to an injury suffered by the applicant when he and R1 were working at a flat in Kennedy Town (“the Flat”) on 19 August 2017.  The Flat is owned by Mr Cheung Wang Yip (“Cheung”).

5.  R2 is the uncle of Cheung, and is himself a painter.  At the material time, Cheung wanted some plastering work to be carried out at the Flat and he asked R2 to help find someone to take it up.  R2 then approached R1, as they had previously worked together in other jobs.  R1 agreed and in turn asked the applicant to work with him at the Flat.  At that time, the applicant and R1 were working together in another project at a flat in MacDonnell Road (“the MacDonnell Road Job”) under the head contractor “Hung Gor” (雄哥).

6.  The applicant and R1 started the plastering work at the Flat on about 11 August 2017.

7.  On the morning of 19 August 2017, while the applicant was working in the toilet of the Flat, a piece of tile fell causing him to sustain a tendon cut over his left wrist (“the Accident”).  He later attended the Accident & Emergency Department of Kwong Wah Hospital and was hospitalized and had a surgery.  He was discharged on 20 August 2017.  Upon his discharge or soon thereafter, R1 gave the applicant $11,000.  It was the applicant’s case that this was partly for his wages and partly as “tea money”[2].  R1 said this was a loan made to the applicant upon his request.

8.  On 24 August 2017, the applicant filed a Notification of Accident with the Labour Department, naming Cheung as his employer.  On 30 August 2017, Cheung wrote to the Labour Department acknowledging the receipt of the Notice of Accident but denying that he was the applicant’s employer.

9.  On 10 September 2017, upon R1’s request, the applicant, R1, R2, Cheung and “Hung Gor” met at a coffee shop in Wan Chai to discuss possible settlement of the matter (“the Meeting”).  At the end of the Meeting, the applicant was given a proposed draft settlement agreement (“the Draft Settlement Agreement”) for his consideration and signing.  In it, it was stated that Cheung and R1 would together pay the applicant a sum of $128,000, but it was also stated that Cheung and R1 and the applicant did not have any employer and employee relationship and that the applicant was self-employed.  The applicant took it home and later decided not to sign it.  It is the applicant’s case that he refused to sign it as it stated that he was self-employed.

10.  On 21 December 2017, the applicant filed a Request for Compensation, this time naming only R1 as the employer.  By the answer dated 20 May 2019, R1 denied that he was the applicant’s employer and stated that all work instructions came from R2.

11.  The applicant later brought a claim in the District Court seeking against R1 and / or R2 for compensation under section 9 (permanent partial incapacity), section 10 (temporary incapacity) and section 10A (medical expenses) of the Employees’ Compensation Ordinance (Cap 282) (“the ECO”).  It is his case that R1 and / or R2 were his employer at the time of the Accident.

12.  The Employees Compensation Assistance Fund Board later joined the proceedings as R3 to fulfil its statutory duty as there was no relevant employee compensation insurance taken out in this case.

C.  THE JUDGMENT

13.  The matter was tried before the Judge.  The applicant, R2 and R3 were legally represented while R1 acted in person.

14.  Essentially before the Judge, the applicant’s case that he was an employee under the employ of R1 and / or R2 was premised on his assertions that (a) it was R1 who provided all the work instructions to him and supplied all the major tools and equipment required for the plastering work, and (b) R1 paid him his wages.

15.  On the other hand, it is R1’s case that the applicant’s employer was not him but R2.  In particular, R1 asserted that R2 was the person who gave work instructions to him and the applicant, and had been monitoring their works at the Flat from time to time.  As mentioned above, it is also R1’s case that he paid the applicant $11,000 as a loan but not as wages as the applicant called him to ask for help as he was short in cash.

16.  It is R2’s case that he was neither the principal contractor nor employer of the applicant.  As to the Meeting and the Draft Settlement Agreement, he said although he was there, he did not participate in the discussions and was not aware of the content of the draft agreement.

17.  All the applicant, R1, R2 and Cheung gave evidence at the trial in support of the version of events of the parties’ respective cases.  The evidence also related to the past dealings between the applicant and R1 in other jobs, including the MacDonnell Road Job.

18.  The Judge identified at [17] of the Judgment the issues at trial as (a) whether the applicant was an employee at the time of accident, (b) if so, was any of the Rs his employer(s), (c) if yes, was it R1 or R2 or both, and (d) quantum.

19.  The Judge further noted at [41] of the Judgment the principles laid down in Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156 at [9] ‑ [18] that, in determining the question of whether a person is an employee, the court should examine all the features of their relationship against the background of the indicia of employment with a view to deciding whether, as a matter of overall impression, the relationship was one of employment.

20.  Although the Judge did not find the applicant to be a credible witness, he went on to consider the parties’ respective cases on the basis of the corroborated evidence, assessed together with the undisputed or indisputable evidence, including objective evidence[3], and made the factual findings that the applicant was an employee and R1 was the employer.

21.  In these respects, he found materially and essentially from the evidence that:

(1)  R1 had himself paid the applicant’s wages (at a daily rate of $1,500) directly and on a bi-monthly basis before R1 had actually received any corresponding payments from Hung Gor (in relation to the MacDonnell Road Job) and Cheung (in relation to the job at the Flat)[4].

(2)  The applicant received all the work instructions from R1[5].

(3)  R1 had provided all the major tools and equipment for use by the applicant and himself for carrying out the plastering work at the Flat as well as at the MacDonnell Road Job[6].

(4)  R1 had assumed financial risk and made a profit on taking up the job at the Flat, in that (a) it was R1 who controlled the total sum to be charged for the entire work at the Flat, (b) he charged for the supply of the tools and equipment, (c) R1 directly communicated and dealt with R2 and Cheung on work instructions and discussions on the sums to be charged for the project[7].

22.  The Judge further explained why he did not find R2 as the employer of the applicant at [77] of the Judgment as follows:

“77. R2 did not know the applicant. He did not engage the applicant to work at the Flat. He had no agreement with the applicant. The applicant confirmed that R2 did not give him direct instructions and R2 had no control over him. R2 was not responsible for paying the applicant’s wages. There is no evidence that R2 was the direct employer of the applicant.”

D.  THIS APPEAL

D1.  Grounds of appeal and the Respondent’s Notices

23.  R1, now legally represented, appealed against the judgment against him.  He raises essentially three grounds of appeal in his Amended Notice of Appeal (“ANOA”), namely:

(1)  The Judge erroneously relied on factors which were factually mistaken and / or contrary to the evidence adduced in determining whether a person was an employee.  In particular, the Judge erred in finding that R1 had the practice of pre-paying the applicant wages on a bi-monthly basis and that such was more consistent with the practice of an employer.  The Judge also erred in taking the view that R1 would make a profit (“Ground 1”);

(2)  The Judge failed to appreciate the factors which allegedly pointed to the existence of employment were minor and marginal in nature which can be explained by the commercial reality and nature of the work in question (“Ground 2”);

(3)  In finding who was the direct employer of the applicant, the Judge erred and failed to look into all the circumstances, and in particular, failed to deal with and analyse the significance of the Draft Settlement Agreement with was in fact initiated by Cheung and R2 (“Ground 3”).

24.  R1 therefore asks this court to set aside the Order and dismiss the applicant’s claim against R1, and hold that R2 was the employer of the applicant.  He also asks the applicant to pay his costs below and R2 to pay his costs of the appeal.  Alternatively, he asks for a retrial of the claim.

25.  At the same time, both the applicant and R2 have respectively filed their respondent’s notices[8], seeking to affirm and support the Order on various alternative or additional bases.  We will deal with these additional grounds if and when necessary when we consider the merits of the grounds of appeal below.

D2.  Relevant principles

26.  The following principles are relevant to this appeal.

27.  First, as the Judge rightly adopted, the undisputed modern approach to the question of whether a person is an employee is as laid down by the Court of Final Appeal in Poon Chau Nam, supra, per Ribeiro PJ at [18]:

“18. The modern approach to the question whether one person is another’s employee is therefore to examine all the features of their relationship against the background of the indicia developed in the abovementioned case-law with a view to deciding whether, as a matter of overall impression, the relationship is one of employment, bearing in mind the purpose for which the question is asked. It involves a nuanced and not a mechanical approach, as Mummery J emphasised in Hall v Lorimer[9] (in a passage approved by the English Court of Appeal[10]):

‘In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.’” (emphases added)

28.  The indicia which will be examined by the court holistically include, but are not limited to, the degree of control exercised by the “employer”; whether the person performing the services provided his own equipment; whether he hired his own helpers; what degree of financial risk he took; what degree of responsibility for investment and management he had; and whether and how far he had an opportunity of profiting from sound management in the performance of his task.  See Poon Chau Nam, supra, at [9] ‑ [18].  See also Tang Chao Nong v Ng Pui Shan Stella, the Administratrix of the Estate of 吳貴忠,deceased (unreported, CACV 217/2012, 31 May 2017) at [12].

29.  Second, the principles governing an appeal against findings of fact are also trite and in summary these[11]:

(1)  Findings of fact may be categorised as (a) findings of primary fact; (b) findings based on evaluation of facts; (c) findings based on inferences.

(2)  For (a), the Court of Appeal will not disturb a finding of primary facts unless it is “plainly wrong”.  The Court of Appeal must be satisfied that the judge had fallen into “palpable error” in his finding of primary fact, such as where the conclusion was one (i) which there was no evidence to support; (ii) which was based on a misunderstanding of the evidence, (iii) which no reasonable judge could have reached.  The greater the advantage is enjoyed by the judge over the appellate court in terms of fact-finding (eg, seeing and hearing the witnesses), the more reluctant the appellate court should interfere.

(3)  For (b), it involves an assessment of a number of factors which have to be weighed against each other.  As in appeals against judges’ exercise of discretion, the Court of Appeal will not interfere so long as it is within the degree upon which different judges can legitimately differ.

(4)  For (c), depending on whether the inference is made from primary facts or after a process of evaluation, the Court of Appeal adopts the same above approach.

30.  Bearing these principles in mind, we will now turn to look at each of the grounds of appeal.

D3.  Grounds 1 and 2

31.  Grounds 1 and 2 can be conveniently considered together as they both seek to challenge the Judge’s fact findings based on his overall assessment of the relevant factors pointing towards finding R1 but not R2 as the applicant’s employer.

32.  In this respect, the Judge has set out at [54] of the Judgment the facts or features (as found by him) to conclude that the applicant was an employee:

“54. Having considered the features below, I find the applicant to be an employee under the definition of S.2 (1) (b) ECO who was employed to work as a casual plastering worker to work at the Flat.

(1) The applicant received wages at a daily rate of $1,500.

(2) There is no evidence that the applicant received the work in the capacity of his company Xin Jun Ya. When R1 engaged the applicant to work in the flat, neither of them made any reference to the applicant’s company Xin Jun Ya. Neither R1, R2 nor Cheung had made contracts with Xin Jun Ya for the applicant’s services at the Flat. In fact, it seems that neither R1, R2 nor Cheung were aware of the existence of Xin Jun Ya. Further, the tax return of Xin Jun Ya shows the company had no income for the fiscal year of 2017 to 2018. I find the applicant in this occasion had accepted work at the Flat in his capacity as a casual worker.

(3) Although the applicant preferred to use his own small tools and brought them to work, he did not charge extra fees for his tools. The applicant relied on R1 to supply major tools and equipment when discharge his plastering duties.

(4) Whilst the applicant was free to refuse work, once accepted, he was subject to standard manual worker’s working hours. For instance, when he was working at the Wong Tai Sin site, he asked R1 to seek consent from the contractor, Yuen Gor before taking up the MacDonnell Road project. Up until the date of accident, during the occasions when he worked with R1, the applicant has not taken any leave. Given his respect and apparent good relationship with R1, I find it more likely that he had asked permission from R1 before leaving the Flat for hospital visit. This shows that the applicant was subject to the usual daily casual worker’s constrains.

(5) The applicant received instructions from R1. All instructions of work came from R1. He had to work in accordance with R1’s instructions.

(6) On day one of the work at the Flat, the applicant assisted R1 in moving R1’s tools and equipment to the Flat. Whilst R1 could charge separately and would profit from the supply of the tools and equipment, the applicant made no financial gains for assisting in the transportation of R1’s tools and equipment. I find this to be more consistent with the applicant being an employee and following instructions and assignments given to him by R1. This act of the applicant assisting R1 in moving R1’s tools and equipment also goes against R1’s allegation that they both were self- employed and enjoyed equal status.

(7) The applicant received his wages in cash from R1.

(8) Apart from bringing his small tools and having to pay for his own travel expenses, the applicant has made no investment in taking up the work at the Flat. His wages depend on the numbers of days and hours he had put into the work.

(9) The applicant’s earnings were not subject to the quality of his services provided. Apart from the agreed daily wages, the applicant does not profit from the sound management of how he conducts his work at the Flat.

(10) Apart from the risk of not receiving his wages, he bears no other financial risk in his work at the Flat.”

33.  On the other hand, the Judge also held that R1 took up the project at the Flat as a plastering contractor and employed the applicant to carry out the work on the basis of the following evidence and facts as accepted and found by him[12]:

(1)  R1 provided all the major tools and equipment for the plastering work for this project as well as the MacDonnell Road Job.  See [55] ‑ [56] of the Judgment.

(2)  R1 assumed a financial risk in taking up the work at the Flat in that, (a) he controlled the total sum to be charged for the work done and he was the only person communicating with Cheung on this, (b) he paid the applicant’s wages in advance before he received any payments from Cheung (which was consistent with what he did with the MacDonnell Road Job), (c) he charged for his own profit the provision of the major tools and equipment.  See [55] ‑ [56], [58] ‑ [59] and [63] ‑ [68] of the Judgment.

(3)  He gave work instructions to the applicant in relation to the work at the Flat, and it was also he alone who communicated with Cheung regarding the works to be carried out at the Flat.  See [57] and [69] ‑ [70] of the Judgment.

(4)  He poached the applicant from another job to work with him at the MacDonnell Road Job.  See [60] ‑ [61] of the Judgment.

34.  As mentioned above, in making the findings, the Judge considered the parties’ respective evidence against the undisputed or indisputable facts and objective evidence.  Insofar as the indisputable facts are concerned, they are set out in the Judgment at [6] ‑ [16] as follows:

“6. The following facts are either not disputed or indisputable.

7. The applicant and R1 were both experienced plasterers, both having reached the sifu grade and have prior to the accident worked together in other sites. Since 2017, when they worked together, the applicant had received payment in cash for his daily wages from R1. R1 has also provided all major tools and equipment for the plastering work.

8. In August 2017, Mr. Cheung Wang Yip (‘Cheung’), the owner of the Flat, decided to carry out renovation work to his apartment. He asked his uncle, R2, who was a painting contractor to assist him in carrying out the painting work. R2 agreed to carry out painting work to the Flat and upon Cheung’s request, he agreed to find for Cheung plasterers to carry out plastering work at the Flat. Since R2 had worked with R1 in the past, he approached R1 for the job. R1 agreed, subject to his diary, to take up plastering work for the Flat. There were no discussions between R2 and R1 in relation to the fees, wages, number of workers required or duration of R1’s work.

9. In the meantime, R1 and the applicant worked together in a site at MacDonnell Road under the head contractor Hung Gor (雄哥), R1 contacted the applicant and asked him to do plastering work at the Flat. At the MacDonnell Road site, the applicant earned a daily wage of $1,500 and received payment of his daily wages from R1 in cash.

10. On the morning of 11 August 2017, the applicant and R1 finished work at the MacDonnell Road site and moved R1’s tools and equipment by van to the Flat in the afternoon. They then commenced work at the Flat.

11. On 19 August 2017, at about 11:40 am, when the applicant had finished laying tiles on the walls and ceiling in the toilet of the Flat and was tidying up tools and equipment on the floor, a tile fell and cut his left wrist. The applicant immediately used his right hand to press the wound on the left wrist to stop the bleeding. R1, who was working in another room of the Flat, heard the applicant shout and went over to treat his wound. The applicant did not think his injury was serious and deferred medical treatment. The applicant returned to work after lunch. Eventually, at around 4 pm, the applicant informed R1 that he needed to leave early. The applicant then went to the AED.

12. Whilst the applicant was waiting for the repair operation in KWH, he called R1 and asked if R1 had taken out employees’ compensation insurance. R1 answered in the negative.

13. The applicant was discharged on 20 August 2017 after the repair operation with sick leave. He informed R1 of his discharge and sent the sick leave certificate to R1 by WhatsApp message. Later, R1 visited the applicant and handed him $11,000 in cash.

14. On 24 August 2017, the applicant submitted a notification of accident to the Labour Department. Based on the information provided by R1, the applicant named Cheung as his employer in the notification.

15. On 10 September 2017, at R1’s request, the applicant visited a coffee shop in Wan Chai to meet Cheung, R1, R2 and others. At the meeting, it was proposed that a sum of $128,000 be paid to the applicant in full and final settlement of his claim in respect of the Accident. A draft settlement agreement was handed over to the applicant. The applicant did not sign the draft agreement as it stated that he was self-employed.

16. Subsequently, the applicant submitted an amended notification of accident on 14 October 2017 naming R1 as his employer.”

35.  When asked by Cheung JA at the hearing, Mr Lim has fairly accepted that, on the bases of the above many features as found by the Judge, it was reasonably open to him to hold that R1 was the applicant’s employer.

36.  However, under these grounds of appeal, Mr Lim now seeks to contend that it was not open to the Judge to find from the evidence the following two essential features which he relied upon, namely (a) that R1 had the practice of paying the applicant wages in advance in the MacDonnell Road Job and the job at the Flat, and (b) that R1 had assumed his own financial risks in taking up this work at the Flat.

37.  In relation to the challenge against the finding of payment of wages, Mr Lim’s contentions that the Judge had erred on this are essentially as follows[13].

38.  First, the Judge had found the applicant to be an untruthful witness and therefore attached little weight to his uncorroborated evidence[14].  Despite this, the Judge still found that R1 had a practice of paying the applicant’s wages bi-monthly before R1 received the corresponding payments from the head contractors for the job at the Flat and the MacDonnell Road Job.  This is wrong as this is inconsistent with R1’s evidence and the Judge had failed to deal with that or had not explained why he did not accept that.

39.  In this respect, insofar as the payment of $11,000 to the applicant is concerned, Mr Lim has pointed out that R1’s case was that it was a loan made to the applicant at his request but not a payment of his wages[15]. However, the Judge did not identify in the Judgment any reasons to explain why he (presumably) rejected R1’s evidence.

40.  Insofar as the MacDonnell Road Job is concerned, the Judge held at [63] of the Judgment that “[o]n 16 August 2017, R1 paid the applicant $14,000 as wages for his work at MacDonnell Road and for the first three and a half days’ work at the Flat.  The wages were paid bi‑monthly and paid to the applicant before R1 received payment from Hung Gor or Cheung.”  Mr Lim says the Judge again erred in this holding in the following ways[16]:

(1)  The above was a misunderstanding of the evidence.  At trial, it was the applicant’s evidence that R1 paid him $19,500 on that day by obtaining $19,000 from an ATM and then added to it $500 which R1 took out from his wallet.  The amount of $19,500 represented 9.5 days’ work at MacDonnell Road ($1,500 × 9.5 = $14,250) and 3.5 days’ work at the Flat ($1,500 ×3.5 = $5,250).

(2)  On the other hand, R1’s evidence was that he obtained $19,000 from an ATM, retained $5,000 for his own use and passed to the applicant $14,250 by adding $250 taken out from his own wallet.  The amount was in respect of 9.5 days of work in respect of the MacDonnell Road Job ($1,500 × 9.5 = $14,250) and not in relation to the Flat.  He did not intend to pre-pay the applicant but merely thought that Hung Gor had already paid him when in fact Hung Gor only paid him $30,000 on the next day.

(3)  The Judge therefore erred in coming to a conclusion which differed from both parties’ cases without explaining why he rejected R1’s explanation that he did not intend to prepay the applicant but thought that he was already paid by Hung Gor.

41.  Second and in any event, Mr Lim submits that even if there was pre-payment of wages, that is not indicative that R1 was the applicant’s employer, as the risk of not being paid by the contractor employing R1 and the applicant is the same as R1 not getting paid his own wages.

42.  In relation to the challenge against the finding that R1 had assumed financial risk in taking up the project, Mr Lim’s submissions as elaborated at the hearing are in summary these[17]:

(1)  The Judge was wrong to look at R1’s income derived from the supply of the tools and equipment together with his income from wages to say R1 had made a profit and assumed a financial risk in taking up the work at the Flat.

(2)  Counsel has emphasized that the present case did not involve a fixed price contract whereby R1 charged a fix sum for the plastering work and supply of materials.  If it was such a contact, he could stand to make a profit if the work was finished ahead of schedule, or make a loss if the work was behind schedule.  But this was not what it was in the present case.

(3)  In the present case, as demonstrated by the WhatsApp messages between R1 and Cheung after the Accident concerning payment, R1 was charging Cheung (a) his wages, calculated by multiplying his daily rate of $1,500 (which is the same as that of the applicant) by the number of days R1 had worked, and (b) the charges for the supply of the tools and equipment ($2,500).

(4)  In the premises, R1 would earn wages and separately the charges for the tools and equipment until the work finished or terminated.  He therefore did not and would not take up any risk of running a loss like carrying on a business as found (wrongly) by the Judge. His position is just the same as or similar to that of the applicant, except that he would also earn the extra rental charges for the tools.

(5)  Moreover, the Judge had failed to take note that R2 in overseeing the project could amount to R2 deriving gain or was a risk of making a loss so that he assumed the role of a person carrying on business on his own account.

43.  In our view, there is nothing in these contentions.

44.  In relation to the submissions against the Judge’s finding of R1’s payment of the applicant’s wages, the essential and material element of this finding is the fact that R1 had paid the applicant’s wages before he received the respective payments from the head contractor (in relation to the MacDonnell Road Job) and Cheung (in relation to the present case).  It has nothing to do with the accuracy of the actual amount paid.  In the premises, R1’s evidence on the dispute of which part of the payment was made in relation to the applicant’s actual wages and which part was not is irrelevant.

45.  In relation to the finding that the payments were made by R1 out of his own pocket first, this is at least reasonably (if not plainly) supported by the following indisputable facts:

(1)  In relation to the work at the Flat:

(a)  it is a fact and R1’s own case that R1 paid $11,000 to the applicant on or soon after the applicant was discharged from hospital on 20 August 2017, which was well before he sent WhatsApp messages to R2 (to be relayed to Cheung) on 26 and 27 August respectively to set out, among others, the calculation of the wages for the applicant and ask for the payments;

(b)  in relation to R1’s evidence that it was a loan made to the applicant at his request, this is inconsistent with the fact that R1 did not make any claim against the applicant for the repayment of this loan, and there is no evidence that he had received and accepted such payment from Cheung[18]; and

(c)  in the premises, it is at least reasonably open to the Judge to find that R1 paid the applicant’s wages before he received any payment from Cheung.

(2)  In relation to the MacDonnell Road Job, again it is R1’s evidence that it is a fact that he paid the applicant his wages before he actually received the payments from the head contractor “Hung Gor”.  In making the relevant finding on this payment, the Judge must have impliedly rejected R1’s purported explanation that he thought he had already received the payment from “Hung Gor”.  It is reasonably open to the Judge to reject this explanation[19] as it is against common sense (a) that R1 would have made the payment without having first checked whether “Hung Gor” had in fact already transferred the sum to him, and (b) as to why Hung Gor did not pay the wages to the applicant directly.

46.  For these reasons, we do not accept that the Judge had failed to take into account relevant evidence in finding that R1 had paid the applicant’s respective wages before he received the same from Hung Gor and Cheung, nor could it be said that the finding is plainly wrong or not supported by the evidence.  This finding is also clearly relevant to the assessment as to whether R1 was the applicant’s employer.

47.  In relation to the submissions made against the finding that R1 had assumed financial risk in taking up the project, the Judge’s treatment of R1’s receipt of his wages and charges for the supply of equipment together is plainly open to him to make when it was considered against the undisputed factual contexts that (a) it was only R1 who had communicated with R2 and Cheung regarding the taking up of the work, (b) it was R1 who had asked the applicant to work with him at the Flat, (c) it was R1 who quoted a project price (工程費) of $31,000 to R2 (to be conveyed to Cheung).[20]  These contexts are consistent with R1 taking up the plastering work at the Flat as a contractor.

48.  The Judge therefore has also not erred in this finding as contended by Mr Lim.

49.  Finally, Mr Lim’s submissions that the Judge ought to have found R2 to be the employer as R2 had been overseeing the works and thus carrying on business on his own are unsubstantiated as there is simply no evidence that R2 had suggested to receive or in fact received any payment from Cheung in relation to the plastering work at the Flat.  The Judge is entitled to make the finding that R2 was not the employer of the applicant on the basis that he has set out at [77] of the Judgment (as quoted at [22] above).

50.  For all the above reasons, we reject Grounds 1 and 2.

D4.  Ground 3

51.  Under this ground, Mr Lim says it is plain that the Judge had wholly and singularly failed to take into account the evidence of the Draft Settlement Agreement, which is relevant to the issues of trial before him.  Had he done so, counsel says, this evidence would have pointed to the fact that it was R2 but not R1 who was the employer of the applicant.  Alternatively, this evidence would have at least reasonably “tipped” the Judge’s assessment of all the relevant features based upon which he had found R1 to be the employer of the applicant.  Mr Lim’s submissions in support are these.

52.  First, he says as found by the Judge[21], it was not disputed or indisputable that R2 attended the Meeting to discuss settlement with the applicant together with Cheung and R1.  At the Meeting, it was proposed that a sum of $128,000 be paid to the applicant, and as set out in the Draft Settlement Agreement, it was Cheung and R2 who were to pay this sum.

53.  Second, Cheung’s denial of any knowledge of the Draft Settlement Agreement (which he later accepted to be drafted by a lawyer) is clearly unbelievable.  This is so as Cheung in his letter to the Labour Department dated 30 August 2017 (in which he denied that he was the employer of the applicant), he had written the incorrect name of the applicant as “何在仪”.  This incorrect name was repeated in the Draft Settlement Agreement, which must have been provided to the drafting lawyer by Cheung himself.

54.  Third, at the same time, by the time of the Meeting and the Draft Settlement Agreement, there was no indication whatsoever that the applicant had made or was contemplating to make a claim against R2.  By then, the applicant had only indicated in his Accident Notification Form to the Labour Department that Cheung was his employer.  In these circumstances, there was no apparent reason whatsoever for R2 to agree to pay compensation to the applicant.

55.  Fourth, in this respect, R2’s denial of any knowledge of the content of the Draft Settlement Agreement in his witness statement, and Cheung’s purported confirmation in his witness statement that R2 (his uncle) was not involved in the negotiation with the applicant at the Meeting and did not know the content of that draft agreement are unbelievable.  This is so since the Draft Settlement Agreement was (as found by the Judge) in fact given to the applicant for him to sign at the end of the Meeting.  It would thus be absurd to suggest that R2 was not aware of its terms beforehand when the agreement was intended to be given to the applicant for signing.  If the applicant had signed it, R2 would be bound by it to pay the compensation.

56.  Once considered in the above context, Mr Lim argues that it must be obvious that R2 had only agreed to jointly bear the responsibility to pay the compensation because he was the applicant’s employer.  The Draft Settlement Agreement is thus clear evidence to show that R2 was the applicant’s employer.  It also shows that R1 was not, as it was not stated in it that R1 was also liable to pay the compensation.

57.  However, the Judge failed to take this important relevant evidence or factor into account when considering the question of who was the applicant’s employer.

58.  On this basis and for the above reasons, the Order should be set aside, and the Court of Appeal is in as good the position as the trial judge to instead hold that R2 but not R1 was the applicant’s employer.

59.  We are unable to accept Mr Lim’s submissions.

60.  The fundamental underlying plank of Mr Lim’s above contentions is that the only or the more probable inference that can be drawn from the Draft Settlement Agreement is that R2 agreed to pay the compensation because he was the employer of the applicant.

61.  We are not persuaded that is the case.

62.  It is important to note that the Draft Settlement Agreement was drafted expressly on a without admission of liability basis.  For the present purposes, the relevant clauses are as follows:

「本和解契據由下列各方於2017年9月10日共同簽訂：

(1) 張宏業先生，香港身份證號碼Z990420(5)，住址為香港士美菲路77號嘉輝花園21樓A2室 (『張先生』)

(2) 陳運年先生，香港身份證號碼[●]，住址為[●] (『陳先生』)

(3) 何在仪先生，香港身份證號碼[●]，住址為[●] (『何先生』)

(4) 馮劍柱先生，香港身份證號碼R198071(7)，住址為香港九龍灣彩福邨彩樂樓1712室 (『馮先生』)

敍文：

(1) 張先生為香港士美菲路77號嘉輝花園21樓A2室 (以下簡稱『嘉輝花園』) 的業主，於2017年8月10日，張先生透過其舅父陳先生邀約何先生就嘉輝花園的裝修事宜提供泥水工程服務 (以下簡稱『泥水工程服務』)。

(2) 2017年8月11日至8月24日期間，何先生於嘉輝花園提供泥水服務，何先生並邀請馮先生以自僱形式協助其處理於嘉輝花園的泥水工程服務。

(3) 於2017年8月19日，馮先生聲稱在其於嘉輝花園以自僱形式協助何先生提供泥水工程服務期間，馮先生因瓦片跌落而割傷[左手及左前臂] (以下簡稱『受傷事宜』)，並於當天到廣華醫院就醫。

(4) 於2017年8月24日，馮先生向勞工處就受傷事宜申報及提交工傷意外通知書 (以下簡稱『工傷意外通知書』)，並在工傷意外通知書內報稱張先生為其僱主。

(5) 經協商後，各方現確認就泥水工程服務及受傷事宜達成和解，及以下述條款就泥水工程服務及受傷事宜的一切爭議作全面及最終和解。

各方達成以下協議：

(1) ...

(2) 受傷事宜補償

(A) 在各方均不承認任何責任的情況下，張先生及陳先生同意就受傷事宜向馮先生補償 (以下簡稱『受傷事宜補償』) 港幣[●]元。

(B) 受傷事宜補償於簽立本和解契據時支付。

(3) 確認

(A) 何先生確認：

a. 於2017年8月11日至8月24日期間，何先生於嘉輝花園提供泥水工程服務，並邀請馮先生以自僱形式協助其處理於嘉輝花園的泥水工程服務。

b. 張先生及陳先生與何先生的關係及張先生及陳先生與馮先生之關係均非僱傭關係，張先生透過其舅父陳先生邀約何先生就嘉輝花園的裝修事宜提供泥水工程服務。

c. 於2017年8月24日，嘉輝花園的泥水工程服務已經完成。

(B) 馮先生確認：

a. 於2017年8月11日至8月24日期間，何先生於嘉輝花園提供泥水工程服務，並邀請馮先生以自僱形式協助其處理於嘉輝花園的泥水工程服務。

b. 馮先生以自僱形式協助何先生處理於嘉輝花園的泥水工程服務。

c. 張先生、陳先生及何先生與馮先生之關係均非僱傭關係。」(emphasisadded)

63.  It is thus clear that Cheung and R2 only agreed to pay the compensation under the Draft Settlement Agreement on the express bases that:

(1)  there was no admission of liability and that they were not the applicant’s employer; and

(2)  the applicant carried out the work at the Flat as a self‑employed contractor.

64.  Once so considered, we do not think the draft agreement has any material evidential value on the question of whether R2 was the employer of the applicant.

65.  In this respect, it is pertinent to note that it is not unusual that people enter into without prejudice settlement agreements for many different reasons, such as simply to avoid the troubles of litigation and incurring costs.  It therefore does not follow nor is it more likely than not, as Mr Lim seeks to contend, that R2 could only have agreed to pay the compensation because he was indeed the employer of the applicant.

66.  In the premises, the Judge did not err in not taking into account the Draft Settlement Agreement in considering whether R1 and / or R2 was the applicant’s employer.

67.  Ground 3 therefore also fails.

E.  DISPOSITION

68.  R1 has failed in all his grounds of appeal.  We dismiss this appeal.  It is therefore unnecessary for us to consider the alternative grounds raised in the respective Respondent’s Notices.

69.  There is no reason why costs should not follow the event.  We therefore further order on a nisi basis that R1 shall pay the costs of this appeal to the applicant and R2, to be taxed if not agreed.  The applicant and R1’s own costs should also be taxed in accordance with legal aid regulations.