LEE BON YET WILLIAM v. UNCLE RESTAURANT MANAGEMENT LTD

HCPI 1006/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 1006 OF 2003

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J U D G M E N T

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Introduction

1.  The plaintiff was injured at work on 19 September 2000.  The 1st defendant was his employer when the accident took place.  The 1st defendant had not taken out any employee compensation insurance or accident insurance.  It had become defunct.  It seems that the Registrar of Companies has already struck it off from the register.  Thus, the plaintiff has filed a notice of discontinuance on 1 November 2004 in respect of his claim against the 1st defendant.  The action is now against the 2nd defendant only.

Background

2.  The plaintiff used to work for a cake shop called the Staunton Street Patisserie up in Staunton Street.  It was then operated by the 1st defendant.  One Glenn Kerrigan was the main investor behind the 1st defendant.  Mr Kerrigan and his partners also controlled several other restaurants through other limited companies.  Mr Kerrigan’s partners included Miss Rosemary Lee and Mr Peter Kwan.  Miss Lee is the plaintiff’s younger sister and was the head chef of the restaurants.  Mr Peter Kwan was one of the directors of the companies.  Mr Kwan’s brother, Michael Kwan, had also invested into these establishments through him, and Michael Kwan was regarded as a silent partner.

3.  Sometime in July 2000, Mr Kerrigan left for Thailand.  Previously, he had been to Thailand many times, but this time he did not come back.  Even the group manager, Mr Desmond Ma, could not establish contact with him.  He had thus abandoned his business in Hong Kong.  There is some hearsay evidence that he was in grave financial difficulty.

4.  After the departure of Mr Kerrigan, Miss Rosemary Lee also returned to Canada sometime in August 2000 and she likewise did not return.

5.  From the documents filed with the Companies Registry in mid-July 2000, it appears that Peter Kwan had also resigned from his directorship of the 1st defendant on 5 July 2000.  The group manager, Mr Desmond Ma (“Ma”), then turned to Mr Peter Kwan for help.  Peter Kwan (“Kwan”) and his brother Michael then set up their own companies to run these restaurants and the cake shop. 

6.  The evidence of Ma is that Kwan did not want to take over the businesses that had been managed by Kerrigan.  He simply wanted to employ the staff of the businesses if they were willing to leave the businesses to join him.  However, the fact of the matter was that Kwan used the newly incorporated companies to take over all the businesses that had been run by Kerrigan and continued them with the same staff at the same locations.  To the employees, save the identity of the employer and the disappearance of Mr Kerrigan and Miss Rosemary Lee, there was no change at all.  They remained in the same positions, did the same work and got the same wages. 

The incorporation of the 2nd defendant

7.  For the cake shop, it was taken over by the 2nd defendant.  The 2nd defendant was incorporated on 22 September 2000 which was three days after the accident.  Ma said that the 2nd defendant commenced running the cake shop on 1 October 2000, but some documents suggest that it was one Uncle Tony’s Bakery Limited that operated the cake shop from 1 October 2000 to 31 March 2001, and the 2nd defendant only came in on 1 April 2001.  (Uncle Tony’s Bakery Limited was also one of the companies set up by the Kwan brothers.)

The cake shop

8.  Before the plaintiff’s accident, there were four full-time staff and one part-time staff in the cake shop.  The plaintiff was the manager and his duty was to sell the cakes, bread and drinks.  Behind the sales area was a door leading to a bakery.  Working in the bakery during daytime were an English lady called Louise and a Nepalese girl called Rai.  They would go off duty at about 5 pm.  A French gentleman called Sean Pierre would come back at 5 pm and make the bread for sale on the next day.  The plaintiff would go off duty at 7 pm.  The plaintiff worked five days a week.  For his two rest days in the week, his work would be assumed by the part-time staff member.

9.  I have referred to the bakery which was behind the sales area and separated from it by a door.  Behind the bakery was a staircase leading to the mezzanine floor.  There was an open storage area in the mezzanine floor where bags of flour for making cakes and bread were stored.

The accident

10.  I now deal with the happening of the accident.  On 19 September 2000, sometime after 6 pm, a provisions store delivered some goods and drinks to the cake shop.  The workers, however, just left the goods slumped at the bottom of the staircase behind the bakery.  For the sake of convenience of employees coming to work in the next morning, the plaintiff moved the goods up to the mezzanine floor for storage.

11.  At about 6.30 pm when he was carrying some soft drinks upstairs, he suffered a slip on the staircase because there was some flour on it which made it slippery.  The flour was left on the staircase when Sean Pierre rolled a bag of flour from the mezzanine floor down the staircase to the bakery.  The sound of the plaintiff’s fall alerted Pierre.  He called an ambulance and sent the plaintiff to the Queen Mary Hospital. 

The injuries

12.  Diagnosis revealed that the plaintiff had suffered spinal fractures to his left tibia and fibula.  An external fixation device was fixed on his left leg on 26 September 2000.  The medical report from Queen Mary Hospital said that this operation was uneventful.  He was discharged and sent to the Maclehose Medical Rehabilitation Centre on 5 October 2000 for rehabilitation.  The fracture healed and the external fixator was removed on 10 February 2001.  He attended ten and a half month’s physiotherapy as an in-patient in the Maclehose Centre and a further one and a half month’s physiotherapy as an outpatient.  He could assume full weight-bearing walking.  His last follow-up was on 16 August 2001 which was the last day of his sick leave.

Medical assessment

13.  Dr Au Ka-kow has prepared a medical assessment report dated 6 July 2002 on the plaintiff.  The 2nd defendant does not dispute the findings and opinions in this report.  The report recorded the plaintiff’s complaint of pain over his left lower leg as caused by weather change.  The plaintiff said he also had episodes of stabbing pain occasionally, especially at night and during bad weather, which pain might wake him up.  He also complained of left leg weakness.  He said he could not run or jump and had to take extra care when climbing stairs and walking on slopes.  He can walk and stoop.  He can also squat but not for a prolonged period because of his left leg’s weakness.  He can carry objects up to 10 pounds.

14.  Dr Au’s examination showed that there was no deformity of the legs.  There were, however, 10 circular scars on the left lower leg which resulted from the insertion of the external fixator.  There was also tenderness on percussion on the medial aspect of his left shin at the distal one-third of the left tibia.  The circumference of the left thigh girth measured 82 cm which was 1 cm less than the right, and the circumference of the left calf girth measured 33.5 cm which was 1.5 cm less than the right.  The difference indicates some slight muscle wasting of the left leg.  The movement of the ankle joint was also relatively limited because of stiffness.

15.  The x-ray negative showed the healed fracture with callus formation and residual deformity at the distal shaft of the left tibia and proximal shaft of the left fibula.  The bone union was satisfactory with bony alignment at the fractured sites.  Dr Au opined that since the fracture healed in acceptable alignment, the plaintiff did not have a higher chance to develop osteoarthritis in his left leg.  Dr Au also opined that the plaintiff had received appropriate treatment for his injury and his impairment would be permanent.  According to the AMA Guide for Evaluation of Permanent Impairment (5th edition), the plaintiff had 3 per cent total body impairment.

16.  Dr Au also took the view that the plaintiff could return to his previous job as a manager but with reduced efficiency and he probably needed another person to assist him in lifting heavy objects.

The plaintiff’s case against the 2nd defendant

17.  I now deal with the cause why the plaintiff is suing the 2nd defendant despite the fact that the 2nd defendant was only incorporated three days after the accident.  The plaintiff said that the group manager, Ma, together with the accountant, Miss Christine Lee, and the plaintiff’s younger brother, Mr Johnson Lee, had paid him a visit after his hospitalisation.  He said that Ma had told him that due to administration problems, the company had not purchased any accident insurance to cover the period when he was injured.  Ma, however, consoled him and told him that the company would pay his medical expenses and his salary during his sick leave.  Ma also promised that the company would take full responsibility of all monetary compensation in respect of the accident for which the company as the employer would be liable.  The plaintiff’s amended statement of claim makes it clear that Ma was referring to the 1st defendant when he referred to “the employer” or “the company” in this conversation.  The plaintiff was then given full pay for the sick leave.  His salary for September 2000 was paid by the 1st defendant.  From 1 October 2000 onwards, all payments came from the 2nd defendant.

18.  The plaintiff resumed duty on 17 August 2001.  He alleged that he met Ma in Ma’s office a few days later.  He further alleged that Ma had told him that the bakery was run by the Kwan brothers through the 2nd defendant and they would continue to employ him in the same terms and recognise his previous years of service.  He also alleged that Ma had promised him verbally that the 2nd defendant would continue to fulfil the legal responsibilities for his accident as an employer would. 

19.  He continued to work in the bakery until 28 February 2001 when he received a one-month notice of termination of employment.  He worked until 31 March 2002 when the bakery was closed down for poor business.  He was given severance payment for his service since November 1997 (in accordance with section 31J of the Employment Ordinance, Cap. 57) and a recommendation letter for his service since the same date.

20.  On the change of employer, he also said in his witness statement that the group always held the restaurants and bakery under different names.  Every time when there was a change, the senior management would inform the staff that the contractual relationship between the employer and the staff would not be affected.  The staff in the company, the salary, the working environment would all remain unchanged.  Thus, the employees were never concerned about changes of names of the group.  For him, he would invariably only discover the change when he received the pay cheque from the accounts department.

21.  On the 2nd defendant’s liability to pay him compensation, he added in cross-examination that two weeks after resuming work, he also talked to the accountant, Miss Christine Lee.  Lee told him that the company had not purchased any insurance, and if compensation needed to be paid, the company had to pay from its own funds.  He then replied that if there was no insurance, he would talk to Ma and asked Ma to talk to Kwan for some compensation for his injuries.  However, after talking to Lee, he never raised this matter with Ma.

22.  In re-examination, he tried to explain this by saying that if he wanted to see Ma, he had to go to Ma’s office in Wyndham Street at lunchtime and he was busy then. 

Ma’s evidence

23.  Ma denied of having given any promise of compensation for the plaintiff’s accident and injury.  He said he visited the plaintiff in the company of Christine Lee and Johnson Lee.  He did that on the day following the accident or the day thereafter.

24.  In his witness statement, he said after having obtained approval from Kwan, he assured the plaintiff that his employment with the 2nd defendant was still open and the 2nd defendant would make monthly payment to him from October 2000 as if he was working for the 2nd defendant so that he did not have to worry about his finance.  However, he had not mentioned about compensation as the plaintiff knew that Kerrigan had disappeared and there was no one to claim from.  He also denied of having given any undertaking on behalf of the 2nd defendant to the plaintiff after the plaintiff’s resumption of duty that the 2nd defendant would compensate the plaintiff for the accident and his injuries.

25.  The plaintiff’s counsel submitted that Ma would not have referred to the 2nd defendant when he visited the plaintiff in the hospital.  This was conceded by Ma.  Ma agreed that the Kwan brothers at that time had still not decided to use which company to run the cake shop; hence, he would not have mentioned the 2nd defendant.  He said he told the plaintiff about the terms of employment because the plaintiff had previously been told that upon the Kwans taking over the restaurants and the cake shop on 1 October 2000, the plaintiff would be given a salary increase.  The plaintiff, when in the hospital, was concerned if he would still be given the increase as he had been injured.  Ma thus assured him that the increase would still apply.  In fact, the salary given to the plaintiff was at $16,000 since September 2000 and not $15,300 as he had been earning.  From 1 January 2001, his salary was further raised to $17,100 per month.

26.  On the insurance policy, what Ma said in cross-examination was different from his witness statement.  He said in cross-examination that he thought that there was insurance in place as the company had just bought the insurance a few days before the accident.  However, unbeknown to him, the policy would only take effect one week after purchase and the accident was thus not covered. 

Analysis and finding

27.  The plaintiff’s claim was only intimated on paper for the first time on 17 April when the Labour Department wrote to the 2nd defendant, asking it to file a Form 2 to report the plaintiff’s accident.  Obviously, the department had received information from the plaintiff about his accident at work shortly before 17 April 2000.  The 2nd defendant in reply to the Labour Department denied that the plaintiff was its employee at the time of the accident.

28.  Though the evidence of Ma had some inconsistency on whether he had mentioned the name of the 2nd defendant to the plaintiff in the hospital and on why he had not discussed with the plaintiff about the compensation for the accident, I on the whole find that he is a trustworthy witness.  I do not accept the plaintiff’s case on the undertaking by Ma for the 2nd defendant to compensate his injury.

29.  Ma said that the plaintiff would be given full pay during his sick leave and the plaintiff would also enjoy the salary increase despite his injury.  The plaintiff had indeed received full pay at the increased rate.  If Ma had also promised the plaintiff to compensate his injury but did not pay the compensation to him, the plaintiff would certainly have asked Ma for it as Ma had lived up to his words on the salary payment during sick leave.  This is particularly so when the plaintiff had allegedly been told by Christine Lee which indicated a reluctance on the part of the 2nd defendant to pay the compensation. 

30.  If the plaintiff was telling the truth, I see no reason why he would not have talked to Ma about it after he had talked to Lee.  He might have been busy, but a phone call would not have taken much of his time.  Furthermore, business at the bakery did not appear to be good.  Otherwise, it would not have been closed.  I do not believe the plaintiff’s allegation that Ma had told him that the 2nd defendant would assume liability for his accident as if the 2nd defendant were his employer at the time of the accident.  Such allegation was inconsistent with the plaintiff’s conduct in not taking the matter up with Ma for the following six months when he was still working in the bakery.

31.  On this finding, I should dismiss the plaintiff’s claim as the 2nd defendant had not been incorporated at the time of the accident and was not the plaintiff’s employer.  There is also no other reason why the 2nd defendant should be liable.  However, in case I am wrong, I would also deal with the other issues on the assumption that the 2nd defendant is liable. 

Consideration

32.  At the start of the trial, I raised the question of whether there was any consideration moving from the plaintiff for the alleged undertaking as the plaintiff had been on the payroll of the 2nd defendant for over nine months when the alleged undertaking was given by Ma.  This is a vexed question and has not been pleaded by the 2nd defendant as a ground of defence.  I would therefore refrain from making any finding on it.  I would, however, point out that the performance of existing obligation can also be sufficient consideration, and I refer to the cases of Williams v Raffey Brothers & Nicholls (Contractors) Limited [1990] 2 WLR 1153 at 1165C to H and UBC (Construction) Limited v Sung Foo Kee Limited [1993] 2 HKLR 207.

Contributory negligence

33.  On contributory negligence, it was Ma’s evidence that the plaintiff was only responsible for the sales work.  Production was the duty of Louise and Sean Pierre.  Rai was the assistant of Louise.  For fear of action by the Food and Environmental Hygiene Department, Ma had told the plaintiff and Louise to keep the bakery clean.  Such direction could easily be understood to mean that the plaintiff should keep the front of the shop clean and Louise should be responsible for the rear.  Indeed, Louise and Rai would every day, before going off duty, clean up the place.  There was thus no clear direction that the plaintiff should also be responsible for the cleaning of the whole shop and not just his area of work.  This is particularly so when the plaintiff did not appear to have any authority over Louise and Sean despite being the only manager of the shop.

34.  There was also no standard direction on how the shop or the staircase in question should be cleaned regularly.  Indeed, the defendant’s pleaded case on the plaintiff’s duty to keep the shop clean was an implied duty rather than an express duty arising from Ma’s instructions.  I therefore do not find any breach of duty on the plaintiff’s part when the staircase was made slippery by the presence of flour.  I therefore find that there was no contributory negligence on the part of the plaintiff.

Quantum

35.  On quantum, I would award $240,000 for PSLA, having considered the cases of Wong Ka Pang and Wong Chun Wang HCPI No. 664 of 1998, Chan Ming v Way Fine Investment Limited HCPINo. 148 of 1997, and Lam Sau Ying v Shiu Yat Sang& Anor HCPI No. 892 of 2002. 

36.  I make no award for pre-trial and post-trial loss of earnings as the plaintiff had resumed work without any problem.  There is no evidence that the residual effect of his injury had prevented him from getting a new job.  There is also no evidence on his attempt to find a new job save one bare and general assertion that he had tried but failed.  He had not said what effort he had made, whether he had attended any interview and whether he had registered himself with the placement service of the Labour Department.  I also repeat the observation of Dr Au that he could resume his job though with reduced efficiency.  He is now living in Canada and is working in a restaurant called On the Rock as a part-time waiter. 

37.  I now come to loss of earning capacity.  I do not have to consider the risk that he may lose his job as he has already lost it.  He was 54 years old when he was laid off by the 2nd defendant.  He was earning $15,300 at the time of the accident and $17,100 when laid off.  He is now earning CAD$600 per month at the rate of CAD$10 per hour as a part-time waiter in Toronto.

38.  Counsel for the 2nd defendant suggested that I should use the plaintiff’s income in Canada as a reference for assessing the award under this head.  There is good sense in this argument as this award is to compensate the loss in competitiveness in the labour market that the plaintiff is working.  However, the plaintiff has never been asked in cross-examination whether he intends to stay in Toronto permanently and there is also no evidence on the general level of income of a patisserie manager there.  I therefore would not take up the suggestion of the defendant’s counsel.

39.  Doing the best I can, I would award $50,000 to the plaintiff for his loss of earning capacity. 

40.  On special damages, I would award a total sum of $16,500.  There is no dispute on $10,500.  The dispute is on the $12,000 claimed for tonic food.  The plaintiff has produced no receipt or evidence on the need for such food.  Bearing in mind that he had to carry the external fixator for nearly five months and there are still 12 circular scars on his left leg, I would award him $6,000 under this head.

41.  The total award would thus be $306,500.  However, as I have found against the plaintiff on liability, I can only dismiss the action and order the plaintiff to pay the 2nd defendant the costs of this action.