WONG KIT YEE for herself and on behalf of other dependants of YEUNG CHUN HO, deceased v. CAPITAL GLOBE LTD (In Liquidation) AND OTHERS

CACV 63/20 16

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 63 OF 2016

(ON APPEAL FROM DCEC NO 704 OF 2012)

________________________

________________________

________________________

J U D G M E N T

________________________

Hon Lam VP:

1.  I respectfully agree with the judgment of Kwan JA and for the reasons given by Her Ladyship the appeal is dismissed with costs. A major plank of the submissions of Mr Chan (counsel for the 4^th Respondent) was that as the deceased acted in the course of employment at the time of murder by providing services to the 1^st Respondent, this would point to him being an employee of the 1^st Respondent at the material time.

2.  With respect, this line of argument is fallacious.  As noted by Kwan JA, the judge did not find that services were provided by the deceased to the 1^st Respondent as opposed to the 3^rd Respondent at the material time.  Apart from that, in my view the mere fact that the deceased was providing services or conducting business relating to the affairs of the 1^st Respondent would not necessarily lead to the conclusion that he was the employee of the 1^st Respondent.  The deceased could well be providing his services in relation to the affairs of the 1^st Respondent in his capacity as the employee of the 3^rd Respondent by virtue of his duties as the Group Accountant.  There is nothing in law which prevents the 3^rd Respondent from prescribing in the terms of its employment of the deceased as Group Accountant for the latter to provide his services to all the companies within the group.

3.  I also reject Mr Chan’s submission that the deceased would be treated in the eyes of the law as employees of all the companies within the group so long as he provided services to these other companies on a regular basis.  As I said above, the deceased could be providing such services purely in the capacity as the employee of the 3^rd Respondent as he was bound by his contractual duty under the terms of his employment to do so. He acted in the course of his employment with the 3^rd Respondent in so doing though the other companies within the group also benefitted from his services.

4.  In so saying, I do not exclude the possibility that on the special facts of a particular case, the arrangement between the companies involved and the employee in question is such that, in light of the other surrounding circumstances, the court can properly come to a conclusion that there is in law a joint employment: both the company which enters into a written contract of employment and the company which actually uses the services of the employee are employers.  I only hold the mere fact that services were provided to an associate company within a group is, without other cogent indicia of joint employment, not sufficient to lead to that conclusion.

5.  In Wong Wing Cheung v Interlite (Asia) Ltd [2003] 3 HKLRD 473, Judge Muttrie concluded that there was a joint employment.  However, the learned judge focused on considering whether the employer who lent the services of an employee to another person could still be regarded as employer.  In light of the provision in the definition of “employer” in Section 3(1) of the Employees’ Compensation Ordinance Cap 282, he was plainly correct in holding that the original employer remained liable as employer.  The position regarding the company which used the services of that employee was apparently conceded and there was no discussion in the judgment as to why that company should be regarded a joint employer.

6.  Like Kwan JA, I have some reservations on the latter aspect of that decision.  However, as the point was not germane in this appeal and we did not hear full arguments on the same, I am content to leave it open for future debate.

Hon Kwan JA:

7.  This appeal is brought by the Employees Compensation Assistance Fund Board (“R4”) against the judgment of Deputy District Judge Eric Tam on 19 February 2016, after a three-day trial in September and December 2015.  The applicant, Madam Wong Kit Yee (“the applicant”), who is the widow of Yeung Chun Ho (“Yeung”), claimed employees’ compensation against Capital Globe Limited (“R1”) and CG Shipping Limited (“R3”), in respect of personal injuries causing death to Yeung arising out of and in the course of his employment as an employee of R1 and R3.  Yeung was murdered on or around 30 April 2010 inside a hotel room in Islamabad, Pakistan.  Also killed in the same location was Shaquil Haque (“Haque”), the superviser of Yeung and a director of both R1 and R3.

8.  R1 was compulsorily wound up by the court on 8 July 2011.  It had taken out insurance for employees’ compensation with China Taiping Insurance (HK) Company Limited (“R2”).

9.  R3 was a wholly owned subsidiary of R1 and was put under creditors’ voluntary liquidation on 17 October 2014.  It shared the same registered office as R1 and they had common directors at the material time, being Haque and Choon Hung Brian Lee (“Lee”).  R3 was not insured against employees’ compensation[1]. As the judge has held that R3 was the sole employer of Yeung and it has no assets to pay compensation, R4 would be required to make payment under the Employees Compensation Assistance Ordinance, Cap 365.

10.  The amount of compensation ($1,733,000) was not disputed below.  The judge held that the accident happened in the course of Yeung’s employment and arose out of his employment.  These findings are not challenged on appeal, except in relation to the employment of which employer.  The dispute on appeal relates to whether Yeung was an employee of R1 or R3 at the time of his death; alternatively, if Yeung was R3’s employee, whether he was lent by R3 to R1 at the material time to make both R1 and R3 jointly and severally liable.

11.  The applicant took the stance before the judge that R1 and R3 were joint employers.  On appeal, she has not sought to reverse the finding that R3 was the sole employer and merely sought an order she should have the costs of this appeal.

12.  R4 brought this appeal as of right by virtue of section 23(1) of the Employees’ Compensation Ordinance, Cap 282.  The contest on appeal is between R2 and R4, as the party who would ultimately have to pay compensation depending on whether R1 or R3 was the employer.

The evidence

13.  The only witnesses to give oral evidence at the trial were the applicant and Lee.

14.  The applicant’s evidence was that Yeung told her he was an accountant and was responsible for the accounting records and matters of R1 and there were two partners in R1, namely Haque and Lee; that he worked under the supervision of Haque and part of his work included travelling overseas with Haque to attend conferences with clients.  That was all she knew about Yeung’s employment as he seldom told her about his work.

15.  Lee had issued a letter to R3’s former solicitors dated 28 November 2014 stating that he was generally not involved in the day to day running of the administrative matters.  He could not recall which entity employed Yeung, nor could he recall the precise contractual arrangements regarding Yeung’s employment.  He said the keeping of the books of R3 and R1 was carried out by Yeung and his team of subordinates, and he often signed documents prepared by Yeung’s team and was not intimately familiar with the details of every document he signed.  The judge was of the view that the documents signed by Lee must be treated with caution and could not be taken at their face value[2].

16.  As neither witness was familiar with the contractual arrangements concerning Yeung’s employment, the judge’s findings and conclusions would have to be based on the documentary evidence, which was conflicting as to who the employer was.  The documents were considered, analysed and weighed in §§8 to 21 and 33 to 47 of the judgment.

17.  The salient findings of the judge arising from the documents may be summarised as follows:

(1)   Yeung was at first employed by R1 in 2005 as Accounting Executive (employment contract dated 21 July 2005 signed by Haque on behalf of R1 and Yeung)[3].

(2)   Until 15 September 2008, R1 had made salary payments and MPF contributions for Yeung[4].

(3)   R1 also applied on Yeung’s behalf for a multi-entry business visa to Pakistan on 8 January 2007 and a five-year multi-entry business visa was granted from 9 January 2007 to 8 January 2012[5].

(4)   Yeung resigned his employment with R1 on 15 September 2008 (statement of MPF scheme with R1 as employer dated 13 January 2009 stating his last date of employment was 15 September 2008 and the termination reason was resignation)[6].

(5)   The applicant and Yeung moved to Australia in July or August 2008 and the applicant gave birth there in December 2008.  They stayed there for a year and the whole family left Australia for Hong Kong in July 2009[7].

(6)   During Yeung’s stay in Australia, he did not sever his relationship with the group of companies to which R1 and its subsidiaries belonged.  He continued working for the group in an informal way.  On 19 May 2009, he was appointed the secretary of an Australian company in the group called CG International Development Pty Ltd[8].

(7)   When Yeung was in Australia, sometimes his wages were paid by Haque in cash.  For the salary of August 2009, R1 paid Yeung HK$22,000 by a cheque dated 31 August 2009[9].

(8)   On 6 August 2009, Yeung was made an authorised signatory of the bank account of R3[10].

(9)   From September 2009 onwards, Yeung’s wages were paid by cheques drawn by R3 in his favour (cheques of R3 and the ledger entries report of R3 stating they were wages as from October 2009)[11].

(10)   R3 paid contribution to Yeung’s MPF from 1 October 2009, the date he joined the new MPF scheme taken out by R3 for him as his employer (the opening of the new MPF account was arranged by Yeung), until his demise (statement of MPF scheme dated 13 August 2010 and the ledger entries report of R3)[12].

(11)   Yeung was the group accountant and responsible for the accounting and administrative work of the companies.  His duty comprised providing service to R1 and the subsidiaries, in other words serving the whole group (letter issued by Haque dated 6 October 2009 and the evidence of Lee)[13].

(12)   However, on 6 October 2009, R1 issued a letter headed “To Whom It May Concern” and signed by Haque, confirming that Yeung had been employed by R1 since 15 July 2005 on a full time basis, the amount of his gross annual salary, and that Yeung headed the accounting department of R1 as his official title was Group Accountant.  The purpose of this letter was not clear[14].

(13)   On 7 May 2010, Lee signed the employer’s return with the Inland Revenue Department for the year from 1 April 2009 to 31 March 2010 stating that R3 was Yeung’s employer from 1 October 2009[15].  The applicant filed the tax return for Yeung on 31 August 2010 stating that his employer was R3[16].

(14)   On 11 May 2010, Lee signed the Form 2 for employees’ compensation stating that Yeung was employed by R1.  R1 made three monthly payments of HK$22,000 to the applicant.  But Lee did not know who the employer of Yeung was and he could also easily operate R1’s account[17].

18.  The judge considered the totality of the documentary evidence and the submissions of the parties.  He decided to give more weight to the MPF document and to the fact that the wages at the material time were paid by R3[18]. He did not find the letter issued by Haque on 6 October 2009 conclusive or decisive[19].  The businesses of R1 and R3 were not intermingled.  R3 was not a sham company and it employed two other staff at the material time.  It is only that the documents signed by Lee are confusing and misleading.  The business relationship was clear.  The judge found it is clear that Yeung was the employee of R3 and rejected the applicant’s contention Yeung was jointly employed by R1 and R3[20].

19.  The judge found there was no evidence of any lending or seconding arrangement and rejected R4’s fallback position that Yeung had been lent by R3 to R1 at the material time[21].

This appeal

20.  Mr Daniel Chan, who appeared for R4 here and below, contended that this court should overturn the primary finding of fact by the judge that R3 was Yeung’s employer on the basis that the judge should have found R1 was the employer on the totality of the evidence.  He repeated his submissions before the judge.  He submitted that the high threshold an appellant would have to meet in seeking to overturn a finding of fact can be somewhat relaxed here as the credibility of witnesses was not crucial in the evaluation of evidence, the judge’s findings of fact were reached more on the basis of the available documentary evidence, and the appeal court is in just as good a position as the trial judge to make findings.

21.  The first five grounds of appeal were premised on the submission that the judge should have given more weight to certain aspects of the evidence (such as the letter issued by Haque on 6 October 2009) and less weight to other aspects of the evidence (such as the MPF document of the new scheme with R3 as the employer, the payment of wages by R3, the tax return filed by the applicant on 31 August 2010).

22.  Mr Chan further submitted for these grounds and in respect of the seventh ground of appeal that the judge should have had regard to his earlier findings in relation to the issues whether the accident happened in the course of and arose out of employment that Yeung’s death was business related[22], and the likely cause was the litigation between R1 and its joint venture partners in Pakistan[23]. R3 was not involved in that business dispute.  He prayed in aid the judgments in HCMP 1937/2010[24] and HCCW 422/2010[25] in which R1 was involved, and pointed out the mention in the latter judgment of Yeung being the Chief Financial Officer of R1.  Had the judge borne in mind the causal connection between the employer’s identity and the accident was in the course of and arose out of which employment, he should have found that the death by accident was in the course of and arose out of Yeung’s employment with R1, not with R3.

23.  I am not persuaded that R4 has met the required threshold for the appeal court to interfere with the finding of primary fact by the judge, notwithstanding that the credibility of witnesses was not crucial to the evaluation of evidence and we are at the other end of the spectrum where inference is drawn largely from documentary evidence and the appeal court is in just as good a position as the trial judge to make the decision (Singh Harjit v Determination Business Limited, CACV 68/2015, 24 November 2015, at §8(2)).

24.  It is apparent from the judgment that the judge had considered carefully the totality of the evidence.  He had noted the inconsistencies and explained why he attached greater weight to some documents and lesser or no weight to others.  The question of weight is a matter for the trial judge.  As this court has repeatedly emphasised, judges can reasonably reach different conclusions from each other in making findings of fact.  That another judge may have reached a different decision is not sufficient.  The appeal court can only intervene when it is satisfied that the finding of the trial judge is plainly wrong.  On no basis could the judge be said to be plainly wrong.  This is not the situation in which the finding was not supported by evidence, or was based on a misunderstanding of the evidence, or was one which no reasonable judge could have reached.

25.  To the contrary, as submitted by Mr John Bleach, SC, who appeared for R2 on appeal with the trial counsel Mr Victor Gidwani, the documents to which the judge attached significant weight were documents that came into existence with Yeung’s knowledge and/or were prepared by Yeung’s administrative team.  It is important to bear in mind that Yeung was the accountant of the group, that the new MPF account could not have been opened without his signature, and that the books of R3 and R1 were kept by Yeung and his subordinates.  There was a one-year gap after Yeung resigned his employment in Hong Kong and went to live in Australia.  A deliberate decision was made as to which company in the group should employ Yeung when he resumed working for the group on his return to Hong Kong.

26.  The starting point of an appeal to challenge a finding of fact is to identify a palpable error that is sufficiently material to undermine the conclusions of the judge.  Repeating submissions made before the judge, asserting that his finding is against the weight of the evidence, or asserting that the judge had overlooked certain evidence because it was not mentioned in the judgment are not errors within that category.

27.  Of all the matters complained of in the grounds mentioned above, it is necessary to deal with only the point about the finding concerning the accident in the course of and arising out of employment.  One must first be clear what the judge’s findings were in that regard.  The judge found that Yeung was the group accountant and needed to undertake such duties as assigned by Haque.  Yeung was on a business trip with Haque.  There were business dealings of R1 possibly R3 in Pakistan[26].  Yeung could have been performing the business of R1 or R3 when he was murdered[27].  It was not necessary to decide which entity it was.  As the group accountant, Yeung’s duty comprised providing service to the parent and subsidiary companies.  He was paid by R3, not by R1.  It was part of his duty to serve R1.  It cannot be said when he served R1, he was seconded or lent to R1 or vice versa[28].

28.  The above findings do not provide a basis for Mr Chan to argue that the judge should have found that Yeung’s death by accident was in the course of and arose out of his employment with R1, or that R1 and not R3 should be his employer at the material time.  On the judge’s findings, it is not open to Mr Chan to contend that R3 had no business in Pakistan.

29.  Even if R3 had no business in Pakistan, as the accountant of the group, Yeung would have been and was involved in the business and affairs of the companies in the group, including R1.  Assuming that the business trip to Pakistan was in the context of the affairs of R1, this did not make Yeung an employee of R1.  As submitted by Mr Bleach, in respect of an employee engaged to provide services to companies within a group, there would not be a change of identity of the employer on each occasion when service is rendered to a different company within the group.  Yeung carried out his duty to serve R1 not as its employee.  He was employed by R3 to carry out the duties of the accountant of the group and in that capacity rendered his service to R1.

30.  I am not satisfied any palpable error was identified to warrant the intervention of this court.

31.  The sixth and remaining ground of appeal relates to the judge’s finding that there was no lending or seconding arrangement.  There is a distinction between the situation where a person is employed by a company to carry out duties that extended to companies within the same group and the situation where the services of an employee are temporarily lent or let on hire to another person or entity.  R4 contended the judge should have found the latter situation applied if it should be upheld on appeal that Yeung was R3’s employee.

32.  The short answer to this is that the judge found no lending or seconding arrangement.  There is no basis to interfere with his finding.

33.  Mr Chan argued before the judge that if Yeung was lent to R1 by R3 and met with death by accident in the course of and arising out of the performance of his services to R1, R1 and R3 should be jointly and severally liable.  In support of this proposition, he cited to the judge the decision of Judge Muttrie in Wong Wing Cheung v Interlite (Asia) Ltd & Ors [2003] 3 HKLRD 473.  It was held at §§49 and 50 that the deeming provision in section 3(1) of the Employees’ Compensation Ordinance[29] is not rebuttable.  At §§51 to 55, it was held that the deeming provision in section 5(4)[30] is not rebutted in the situation where section 3(1) applies, as to hold otherwise would nullify the effect of section 3(1).  The outcome is that both the employer and the borrower are jointly and severally liable for employees’ compensation.

34.  The judge did not find it necessary to consider Wong Wing Cheung v Interlite (Asia) Ltd, as he found no lending or seconding arrangement.  Likewise, I do not need to deal with this.  This case was not even cited on appeal.  Despite my reservations about its correctness, as neither party had addressed us on it, I do not propose to say anything further.

Conclusion and costs

35.  I would dismiss the appeal of R4.  There is no reason why costs should not follow the event.  I would make an order nisi that R4 should pay the costs of R2 and the applicant.  I would grant a certificate for two counsel for R2.

Hon McWalters JA:

36.  I agree with the judgment of Kwan JA.