OR WING MING v. HO BING CHI t/a TIN KEI DECORATION ENGINEERING CO

[English Translation – 英譯本]
CACV 319/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 319 OF 2007

(ON APPEAL FROM DCEC NO. 248 OF 2006)

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J U D G M E N T

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Hon Yeung JA:

1. The purpose of enacting the Employees’ Compensation Ordinance, Cap. 282 of the Laws of Hong Kong, is to ensure that an employee who has suffered injuries at work is given appropriate and reasonable pecuniary compensation.

2. In my judgment, a more flexible approach should be adopted in interpreting the provisions of the Ordinance.  An overly rigid approach would lead to limitation or restriction, rendering it difficult for the court to give effect to the legislation.

3. Section 11(1) of the Ordinance provides:

(1)        Subject to this section, for the purposes of this Ordinance the monthly earnings of an employee at the time of the accident shall be the earnings ―

(a)     for the month immediately preceding the date of the accident; or

(b)     computed in such manner as is best calculated to give the rates per month at which the employee was being remunerated during the previous 12 months if he has been so long employed by the same employer, but, if not, then for any lesser period during which he has been employed by the same employer.

4. The term “lesser period” in section 11(1)(b) refers to a period of less than 12 months, but whether it also refers to a period of less than one month is open to question since the provision itself is not clear about it.

5. Yuen JA points out that “lesser period” cannot possibly refer to a period of less than one month.  Her analysis rests upon a sound logical basis.

6. In my view, however, that analysis, being overly rigid, would give rise to unnecessary limitation or restriction. 

7. I have also considered Chung J’s analysis on the same issue.  In my view, apart from being workable, Chung J’s approach accords more flexibility to the courts so that they can ensure that employees who have suffered injuries at work will, as far as possible, be given reasonable pecuniary compensation.  The approach suggested by Chung J is in my view more appropriate and should be adopted.

8. As a matter of fact, in Lai Cheung Kwong v Lo King Sum and Another CACV 202/2007, the Court of Appeal was by a majority inclined to interpret the relevant provisions of the Ordinance in a more flexible manner.

9. In any event, it is correct and reasonable in the present case to adopt a monthly earning of $14,000 as the basis for calculating the compensation payable to the Applicant. I agree with the approach of Yuen JA on that matter.

10. This Court shall make the orders set out in paragraph 30 herein below.

Hon Yuen JA:

Background

11. On 4 February 2004, Or Wing Ming (the Applicant) started to be employed by Ho Bing Chi (the Respondent) trading as Tin Kei Decoration Engineering Co. as a woodworker, earning a daily wage of $700.    

12. The Applicant sustained injuries at work on 23 February 2004, when he had not yet been working for the Respondent for one full month.

13. Subsequently, the Respondent paid $14,000 to the Applicant per month from March to October 2004.  (At the appeal hearing, the Respondent asserted that he had made payment up to November; however, although this Court had given him time to respond to his failure to appeal against the relevant finding of fact by the trial judge, he eventually notified this Court by fax on 15 May 2008 that he withdrew the above assertion.)

DCEC 248/2006

14. In February 2006 the Applicant made an application in the District Court (DCEC 248/2006), claiming against the Respondent for employees’ compensation.  The Respondent, who was not legally represented, filed a written Answer on 22 June 2006.  I will discuss the contents of the Application and the Answer in a moment.             

15. The case was heard before Deputy District Judge Wahab on 4, 7 and 10 May 2007.  A number of issues fell to be determined.  The Applicant testified and called 3 witnesses including a medical practitioner.  The Respondent also testified but did not call any witness.

The Judge’s decision

16. After trial, the Judge handed down the judgment on 11 July 2007.  He held that the Applicant was an employee of the Respondent and accepted the Applicant’s evidence on the occurrence of the accident.  As regard to the Applicant’s earnings, the Judge considered sections 11(1) and 11(2) of the Employees’ Compensation Ordinance, Cap. 282 of the Laws of Hong Kong, and took the view that there was no evidence adduced at trial that enabled him to calculate the Applicant’s monthly earnings pursuant to sections 11(1) and/or 11(2).  Nevertheless, the Judge considered and applied section 11(5), and assumed the Applicant’s monthly earnings to be the amount specified in the Sixth Schedule, i.e. $3,490 per month.

17. On the basis of the monthly earnings of $3,490, the Judge determined the compensation payable to the Applicant at $194,696.25.  He also held that the Respondent had paid $116,200 to the Applicant and, after deducting that sum, ordered the Respondent to pay to the Applicant $78,496.25 plus interest.

Appeal

18. The Applicant lodged an appeal against the above award and order.  The Respondent did not file any Notice of Respondent.  He was adjudged bankrupt on 18 September 2007, but on 22 April 2008 the Master allowed this appeal to proceed.  The Official Receiver’s Office has notified the Court that it will not take part in the appeal.

19. The sole issue arising in this appeal is: whether the Judge was correct in applying section 11(5) and the Sixth Schedule and assuming the Applicant’s monthly earnings to be $3,490, on the ground that there was no evidence that allowed him to calculate the Applicant’s monthly earnings in accordance with sections 11(1) and/or 11(2).

20. Section 11(1) of the Employees’ Compensation Ordinance provides as follows:

(1)        Subject to this section, for the purposes of this Ordinance the monthly earnings of an employee at the time of the accident shall be the earnings ―

(a)     for the month immediately preceding the date of the accident; or

(b)     computed in such manner as is best calculated to give the rates per month at which the employee was being remunerated during the previous 12 months if he has been so long employed by the same employer, but, if not, then for any lesser period during which he has been employed by the same employer,

whichever calculation is more favourable to the employee.

21. Section 11(2) provides as follows:

(2)        Where by reason of the shortness of the time during which an employee has been in the employment of his employer or of the casual nature of the employment, or of the terms of employment, it is impracticable to compute the rate of remuneration of such employee at the date of the accident, regard may be had to the average monthly amount which, during the 12 months previous to the accident, was being earned by a person of similar earning capacity in the same grade employed at the same work by the same employer, or, if there is no person so employed, by a person of similar earning capacity in the same grade employed in the same class of employment and in the same district.

In my view, section 11(2) has been enacted because Cap. 282 makes it clear that the basic temporal unit for the calculation of an injured employee’s earnings is one month.  As the Ordinance is applicable to all salaried employees whether their wages are paid monthly, weekly or daily, the purpose and effect of sections 11(1) and 11(2) are to standardize the method of calculating employees’ compensation (i.e. based on earnings for one month) for all employees, regardless of how their wages are paid.  The application of sections 11(1) and 11(2) is discussed below.    

22. Section 11(5), which the Judge applied, provides as follows:

Where the earnings of an employee calculated under any of the provisions of this section amount to less than the amount specified in the second column of the Sixth Schedule shown opposite section 11(5) specified in the first column of that Schedule per month, the earnings of such employee shall, for the purposes of this Ordinance, be deemed to be the amount specified in the second column of the Sixth Schedule shown opposite section 11(5) specified in the first column of that Schedule per month.

23. The applicability and interpretation of sections 11(1), 11(2) and 11(5) were discussed by the Court of Appeal (Cheung and Yeung JJA and Yam J) in judgments delivered on 3 March 2008 in the case of Lai Cheung Kwong v Lo King Sum and Wing Shun Interior Decoration Co. Ltd. CACV 202/2007.  The Court unanimously held that section 11(5) was not applicable in that case, but it appears that Cheung JA considered section 11(2) applicable, Yeung JA considered section 11(1)(a) applicable, whereas Yam J considered section 11(1)(b) applicable.

24. I respectfully agree with Cheung JA that section 11(1)(a) applies only to an applicant who has been employed by the same employer for at least one month before the date of accident.  I agree with, and do not intend to repeat, Cheung JA’s analysis of section 11(1) as set out in paragraphs 6 to 15 of his judgment in Lai Cheung Kwong.  In other words, where an applicant was employed by the same employer during the one month preceding the date of the accident, section 11(1)(a) applies.

25. In the present case, however, the Applicant sustained injuries at work when he had been employed by the Respondent for less than one month.  Ms. Tsang, Counsel for the Applicant, submits that where section 11(1)(a) does not apply as the Applicant was not employed by the same employer in the month preceding the date of the accident, the Applicant’s monthly earnings can be calculated by reference to the “lesser period” under section 11(1)(b).  With respect, I do not agree.  These are the reasons:

(1) On a literal interpretation, it must be noted that (a) and (b) are merely two alternative methods of calculation under the same section, i.e. section 11(1).  When section 11(1)(a) does not apply, there cannot possibly be more than one method of calculation and hence “whichever calculation is more favourable to the employee” under section 11(1) cannot possibly come into play.  Section 11(1)(b) refers to “12 months” but never mentions “one month”; therefore, the term “lesser period” under section 11(1)(b) should in my view be construed in the context of “12 months” expressed in the same section as opposed to “one month”.  In my view, the legislative intent is that, where an employee sustained injuries at work when he had not been employed by the existing employer for more than one month, section 11(1) will not apply.

(2) On a purposive interpretation, the term “lesser period” in section 11(1)(b) aims to safeguard the rights and interests of workers.  If, during “the month preceding the date of the accident” under section 11(1)(a) (e.g. the Chinese New Year), a worker earns far less than what he previously earned in the same employment, then he should be protected by enjoying the more favourable of the two methods of calculation under section 11(1)(a) and section 11(1)(b) and should therefore receive more employees’ compensation.

(3) For the above reasons, I am of the view that even where an injured worker who has been employed for less than one month is paid a monthly salary, section 11(1)(b) still does not apply by reason of the express wording of the provision.   

26. (1)     As pointed out above, an employee can be remunerated on a monthly, weekly or daily basis.  The amount of work that an employer assigns to an employee within one month, in particular an employee who is paid wages on a weekly or daily basis, is by no means fixed.  Employer A may merely give his employee 20 days’ work in a month, whereas Employer B may give 24 or 25 days’ work.  The amount of work that Employer A assigns to an employee in a particular month may also differ from that in the preceding or following month.  When a worker who is paid a daily wage has been employed for less than one month, there is simply no basis for ascertaining the amount of work that his employer assigns to him, and sheer speculation on this will lead to unfairness.  In such a case, there is simply no basis for calculating the employee’s earnings within one month.

(2)     Section 11(2) is designed to overcome the very difficulty stated above.  As in the present case, the method of calculation under section 11(1) does not apply as the Applicant had been employed by the Respondent for less than one month.  Section 11(2) should apply to the present case, which falls squarely within the scenario covered by that section, namely “[w]here by reason of the shortness of the time during which an employee has been in the employment of his employer … it is impracticable to compute the rate of remuneration of such employee at the date of the accident”.  In my view, the Judge should have applied section 11(2) and calculated, on all the evidence before him, the Applicant’s earnings in one month, and then proceeded to work out the compensation payable to him.

(3)     With respect, the Judge erred in applying section 11(5).  For reasons that the Court of Appeal has canvassed in Lai Cheung Kwong, the legislative intent of section 11(5) is not to provide a notional earnings figure that the court may adopt in the absence of the evidence required under section 11(2). 

27. As far as the present case is concerned, the Applicant asserted in paragraph 2(6)(a) of the Application that: his monthly earnings in the employ of the Respondent, based on what he earned in the month immediately preceding the date of the accident, were a daily wage of $700 x 28 working days per month = $19,600.  The Applicant also asserted in paragraph 2(6)(b) that his average monthly earnings in the 12 months preceding the accident (or in the lesser period during which he was employed by the same employer) were $19,600.  The calculation, which is plainly done in accordance with section 11(1), is wrong because at the time of the accident the Applicant had not been employed by the Respondent for one month.  That said, the Respondent did not take issue with this point in his Answer (possibly because he was not legally represented).

28. As a result, the Applicant did not submit any evidence at trial that enabled the Judge to calculate the monthly earnings in accordance with section 11(2).  However, the Respondent has conceded before this Court that during the 12 months preceding the date of the accident, he had paid a daily wage of $700 to workers doing similar jobs, although there were only 20 working days per month.  This means the monthly earnings would be $14,000.  This daily wage of $700 is the same as that at the time of the accident.  As for the number of working days, a worker is entitled under the Employment Ordinance to at least 4 rest days per month, and it is not surprising for workers to be given insufficient work in the remaining 26 days.  This lends support to the Respondent’s version.  Counsel for the Applicant has not challenged this point or made any application in that connection.  

29. For the above reasons and in light of the concession made by the Respondent before this Court, I am of the view that, applying the method of calculation under section 11(2),  $14,000 should be taken as the Applicant’s monthly earnings.  On this basis, I hold that the compensation payable to the Applicant is as follows:

- The compensation under section 9 is $252,000 ($14,000 x 72 x 25%);

- The compensation under section 10 is $400,990.68 ($14,000 x 4/5 x 1089/365 x 12);

- The compensation under section 10A is $31,915;

- Total = $252,000 + $400,990.68 + $31,915 = $684,905.68;

- Less $116,200 that the Respondent has already paid, the sum now payable by the Respondent is $568,705.68.

Orders

30. I allow the Applicant’s appeal and substitute an award of compensation of $568,705.68 for the original award of $78,496.25.  Although the Applicant’s appeal succeeds, it is not on the basis of the case advanced by him.  Accordingly, I make the following order nisi: that there be no order as to costs and the Applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

Postscript

31. I wish to take this opportunity to remind practitioners acting for applicants who are employed on a short-term basis that they should be aware of the evidence required under section 11(2) when they are preparing their cases for trial.

Hon Chung J:

32. I do not propose to set out the background to this appeal and the legal proceedings before and the judgment of the District Court, all of which have been summarized by Yuen JA in her judgment from paragraphs 11-12, 14-17 and 27-28.

33. As the Appellant had been employed for less than one month when he sustained injuries at work, the outcome of the present appeal hinges on the applicability of section 11 of Cap. 282.

34. It is not necessary for me to quote the text of sections 11(1), 11(2) and 11(5) of Cap. 282 as they are set out in paragraphs 20 to 22 hereinabove.

35. The legislative intent of Cap. 282 is declared in the Long Title of the Ordinance:

To provide for the payment of compensation to employees who are injured in the course of their employment.

This shows that Cap. 282 aims to obviate the need for injured employees to institute a common law claim based on contract and/or tort, which may well involve time-consuming and costly legal proceedings, in order to successfully make a civil claim against their employers.

36. In my view, the above legislative intent has to be taken into account in ascertaining the true meaning of section 11 (in particular section 11(1)(a) and (b)).  Furthermore, since 1980 the provisions of Cap. 282 have applied to the vast majority of employees in Hong Kong regardless of their job nature and/or earnings (see section 2 of Cap. 282).

37. In Hong Kong, the most common forms of payment of employees’ salaries are:

(a) salaries calculated on a monthly basis; 

(b) salaries calculated on a weekly or daily basis;

(c) salaries calculated on the basis of the amount of work.

38. In my judgment, for the reasons to be set out below, section 11(1)(b) is plainly applicable to the Applicant’s claim herein.

39. Whether section 11(1)(b) is applicable to the present appeal depends on whether the term:

… for any lesser period … 

in that section:

(1)     refers to any lesser period other than

the month immediately preceding the date of the accident

as provided in section 11(1)(a) (in other words, any period which is more than one month but less than 12 months); or

(2)     may also include a period which is even shorter than the one-month period under section 11(1)(a).

40. In order to make the following discussion more lucid, I will first take an injured employee whose salary is calculated on a monthly basis as an example to illustrate why I conclude that paragraph 39(2) above should represent the correct interpretation of section 11(1)(b).

41. Generally speaking, for an employee who is paid a monthly salary, the salary should have been agreed in writing or orally between the employer and the employee from the moment the period of employment commences (or, in some cases, even before that period commences).  In practice, therefore, from that moment onwards the situation should not arise in which:

“… [it is not possible to] give the rates per month at which [the employee] was being remunerated” (to quote from section 11(1)(b))

or

“… it is impracticable to compute the rate of remuneration of such employee at the date of the accident …” (to quote from section 11(2))

42. On the above basis, neither:

          (a)      the legislative intent of Cap. 282; nor

(b)     the content and/or wording of the various provisions in section 11, whether individually or as a whole,

substantiates the proposition that, for the purposes of Cap. 282, section 11(1)(b) cannot (or should not) be relied on in calculating the “earnings” of an injured employee who has been employed for less than one month and whose salary is calculated on a monthly basis.  And for such an employee, the “earnings” calculated in accordance with section 11(1)(b) are no different from the remuneration already agreed between the employer and the employee.

43. On the other hand, if the true meaning of the term

… lesser period … 

in section 11(1)(b) is as described in paragraph 39(1) above, then the only reasonable inference would be that the phrase

… it is impracticable to compute the rate of remuneration of such employee at the date of the accident …

in section 11(2) is also applicable to the abovementioned injured employee whose salary is calculated on a monthly basis.  This is tantamount to drawing an extremely unreasonable and unrealistic conclusion on the interpretation of section 11(2).

44. Given that section 11(1)(b) is applicable to the abovementioned injured employee whose salary is calculated on a monthly basis, it should equally be applicable to injured employees whose salaries are calculated on other bases, unless there are compelling reasons for concluding that Cap. 282 intends to treat those employees differently.

45. I conclude that neither the legislative intent of Cap. 282 nor the content of the provisions therein provides a basis for the differential treatment mentioned in the preceding paragraph.

46. In reaching the above conclusion in respect of section 11(1)(b), I am not suggesting that all injured employees who have been employed for less than one month will as a rule be able to rely on that section in calculating their “earnings” for the purposes of Cap. 282.  Whether those employees may rely on section 11(1)(b) must still depend on whether their remuneration during the pre-injury “lesser” period is such as to render it “practicable” to compute their “monthly remuneration”.

47. If the evidence submitted by the employees does not enable this to be done, their “monthly remuneration” will have to be computed in accordance with section 11(2) (or even section 11(5)).

48. On the basis of the discussion set out in paragraphs 32 to 45 above, Yeung JA’s discussion set out in paragraphs 1 to 9 of his judgment and the facts set out by Yuen JA in paragraphs 13 and 27 to 29 of her judgment, I agree that the figure of $14,000 should be taken as the Applicant’s monthly earnings. 

49. I also agree with the amount of the compensation as stated in paragraph 30 hereinabove.