WONG CHI WO AND OTHERS v. CHENG MUK YUNG t/a CHENG MUK YUNG STEEL BINDING ENGINEERING

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

LABOUR TRIBUNAL APPEAL NO. 55 OF 1995

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J U D G M E N T

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1. This is an appeal by the Appellant Cheng Muk Yung trading as Cheng Muk Yung Steel Binding Engineering Co. against the decision of the Presiding Officer in the Labour Tribunal granting wages in lieu of notice in favour of the four Respondents.

2. The Appellant was a building sub-contractor in the field of steel binding. The four Respondents were all steel binders having worked for the Appellant in various construction sites, the last of which was the Pak Tin Site.

3. The awards of wages in lieu of notice in favour of the Respondents were made on the basis that the First Respondent was an employee of the Appellant. The Appellant contended that the First Respondent was in fact an independent contractor and not his employee. If such contention was correct, the Second, Third and Fourth Respondents were the employees of the First Respondent and not that of the Appellant and they were not entitled to be paid the wages in lieu of notice.

4. The issue for the court to resolve was indeed a narrow one.

5. Mr. Lam, on behalf of the Appellant argued that the evidence suggested that the First Respondent decided how many workers to engage and how much to pay them. The Appellant had no say in the matter. Further, payment for the works was made by the Appellant to the First Respondent directly based on the quantity of work completed on a per floor basis or per Dam (CWT) basis. Mr. Lam argued that the First Respondent was in a position to make a profit and ran the risk of suffering a loss. He was therefore carrying on a business of his own and was therefore an independent contractor.

6. The suggested arrangement between the Appellant and the First Respondent was by no means uncommon in the building industry in Hong Kong. The Appellant, having obtained a job, seek the assistance of the First Respondent who was basically a worker himself. Perhaps he had been in the trade for a longer period and was able to obtain the service of other workers in the same field. He would then arrange for other workers to work on the job as well. The Appellant would pay the First Respondent for the job based the number of workers working on the job or on the quantity of works completed. The First Respondent would then pay the workers whom he had recruited, based on the prevailing daily wage of the workers as the Union of the particular trade decided from time to time. There was indications that at the material time, the daily wage set by the Union of the steel binders in Hong Kong was $750 a day.

7. The aforesaid suggested arrangement speaks loudly of a sub-contract situation. But to better understand the situation, it is important to have regard to the following:

(1) The First Respondent was also a worker himself, working with the other workers everyday. It was not a situation where he sat in an office, making arrangement for various workers to work on different sites. He would be working on one site at a time, together with other workers, doing the same work as the other workers.

(2) The First Respondent had no discretion in deciding how much to pay each worker. The Union had fixed a daily rate which everyone in the field had to be abided by.

(3) The First Respondent as well as all other workers were manual labour only. They did nothing but binding steel in construction sites. The nature of the First Respondent's work was identical with that of the other workers. He was also a manual labour doing the same work as other workers did. All the materials were supplied by the owner or contractor of the sites. They worked from site to site in accordance with the instruction of the Appellant.

(4) Even if the First Respondent was to be paid by the Appellant based on the quantity of works completed, the fact that 'works' only referred to the manual labour provided by the workers and that there was a fixed union rate for the remuneration of the workers, meant it would not be difficult for the Appellant and the First Respondent to work on a proper basis for the calculation of the amount to pay to the First Respondent. Irrespective of the basis of the calculation, it would no doubt reflect the value of the manual labour involved, having regarded to the fixed union rate. That being the case, the chance of the First Respondent making any significant profit or suffering any significant loss, even on the Appellant's case, was negligible. In fact, there was suggestion that the amount payable to the First Respondent was sometimes based on the number of workers per day in the site.

(5) It was wrong to suggest that the Appellant had no control over the amount of wages payable to the other workers as if the First Respondent alone had an absolute discretion in the matter. The fact was there was a fixed union rate which was known to everyone in the trade and was binding on everyone in the trade. The Appellant, being in the same trade, must be aware of such union rate and would no doubt conduct his business with reference to such union rate.

8. Mr. Lam, on behalf of the Appellant, relied heavily on certain admission of the First Respondent in the following terms:

"I admit if the money due to me (on unit rate of money per storey and money per CWT) exceeded the minimum wage (according to total work unit at $750 each), I would pocket the difference as my personal profits. I suffered a loss at the Pak Tin site. However it appears that I did not make any profit from previous projects."

9. Mr. Lam argued that such admission clearly constituted profit and loss to show that the First Respondent was carrying on business of his own and hence he was an independent contractor.

10. On the other hand, the First Respondent did say that the Appellant had promised all of them a daily wage of $750 for working in different sites. He also agreed that apart from daily wage of $750, there was an agreement for the Pak Tin site that it was $70 per CWT. At some other sites it was a certain amount of money per storey. They were however guaranteed a minimum wage of $750 per person per day. He said, "But if there were not sufficient work, daily wages would be paid."

11. It was therefore clear from the evidence of the First Respondent that whatever the mode of calculating the amount of payment due from the Appellant, the workers had been guaranteed a minimum wage of $750 per person per day, $750 being the rate fixed by the union. The First Respondent also said that he was always able to achieve the minimum wage target for all previous work sites.

12. The First Respondent did say that he had suffered a loss at the Pak Tin site. On the evidence, the loss was clearly due to the fact that the Appellant had not kept to the promise of paying the minimum guaranteed of $750 per worker per day.

13. That being the case, while the First Respondent might be able to make more than $750 a day, due to the guarantee made by the Appellant, he would never suffer any loss if the Appellant were to keep to his promise. The Appellant denied such promise on his part. However, there was evidence that the Appellant had been supplied with the particulars of the workers on the site which was clearly consistent with the First Respondent's evidence on the guaranteed daily payment. At some stage, the Appellant tried to withhold such evidence by omitting the names of the workers from copies of those documents. Such attempt on his part clearly affected his credibility to a significant extent.

14. On the question of making more than the fixed daily wage of $750, the First Respondent further elaborated in the following exchange with the Presiding officer:

Court: The workers you employed received a certain wages a day. Were you paid more by D1 for your own work?

CW1: Several tens of dollars.

Court: Each day?

CW1: Yes, $20 or $30.

15. The clear picture that emerged from the evidence in its totality was that the First Respondent would look for workers in the sites of the Appellant. Each of the workers, including the First Respondent would be guaranteed a minimum wage of $750 a day, which was the rate fixed by the relevant union. There was a separate agreement between the Appellant and the First Respondent that payment by the Appellant would be based on either the number of workers working or on the quantity of work completed. But the effect of the guarantee and perhaps the parties' ability to use an accurate method to calculate the number of worker-day for a particular job and the rate fixed by the union, the First Respondent would not suffer any loss and his reward on top of the daily wage of $750 was minimal.

16. In the light of such evidence, was the First Respondent carrying on a business of his own or was what he did an integral part of the Appellant's business?

17. In my view, even the First Respondent stood the chance of making a few ten dollars more than the other workers a day, the situation fell far short of demonstrating that the First Respondent was carrying on a business of his own.

18. I agreed with Mr. Hui's observation that the factual situation was not dissimilar with what happened in the case of Lee Ting Sang v. Chung Chi-Keung [1990] A.C. 374. Lord Griffiths states at P. 381

"Upon these findings of fact their Lordships would have had no hesitation, if sitting as a court of first instance, in concluding that the applicant was working for the first respondent as an employee and not as an independent contractor. All the tests, or perhaps, it is better to call them indicia, mentioned by Cooke J. in Market Investigations Ltd. v. Minister of Social Security [1969] 2 Q.B. 173, 184-185, point towards the status of an employee rather than an independent contractor. The applicant did not provide his own equipment, the equipment was provided by his employer. He did not hire his own helpers; this emerged with clarity in his evidence when he explained that he gave priority to the first respondent's work and if asked by the first respondent to do an urgent job he would tell those he was working for that they would have to employ someone else: if he was an independent contractor in business on his own account, one would expect that he would attempt to keep both contracts by hiring others to fulfil the contract he had to leave. He had no responsibility for investment in, or management of, the work on the construction site, he simply turned up for work and chipped off concrete to the required depth upon the beams indicated to him on a plan by the first respondent. There is no suggestion in the evidence that he priced the job which is normally a feature of the business approach of a subcontractor; he was paid either a piece-work rate of a daily rate according to the nature of the wok he was doing. It is true that he was not supervised in his work, but this is not surprising, he was a skilled man and he had been told the beams upon which he was to work and the depth to which they were to be cut and his work was measured to see that he achieved that result. There was no question of his being called upon to exercise any skill or judgment as to which beams required chipping or as to the depths that they were to be cut. He was simply told what to do and left to get on with it as, for example, would a skilled turner on a lathe who was required to cut a piece of metal to certain dimensions."

19. Much of what was said above was equally applicable to the present case.

20. The First Respondent was just a worker doing steel binding work for the Appellant on various sites as directed by the Appellant. He was asked by the Appellant to obtain the service of other workers and they were all promised a daily wage of $750, a rate fixed by the union of steel binders. He might some times be able to earn $20 or $30 extra a day. That extra earning, in the light of the background of the case should not be considered as profit. It was more appropriate to treat such extra earning as extra award from the Appellant for the First Respondent's effort in recruiting other workers and supervising them on behalf of the Appellant. The First Respondent should be regarded as a head-worker of a foreman. He was not a sub-contractor as he was not carrying on a business of his own.

21. I readily accept that it had not been a easy nor straightforward case. It can be described as one of many borderline cases in which similarly instructed minds may come to different conclusions. There were many relevant facts in the case and a decision would depend on the examination and evaluation of such facts. As an appellate court, my duty is to examine those facts with a decent respect for the Presiding Officer whose decision is being appealed against and to decide if the only reasonable conclusion on the facts is inconsistent with his decision.

22. I have considered the evidence as well as counsel's submission carefully. I am of the view that the evidence as a whole was consistent with the decision of the Presiding Officer of the Labour Tribunal that the First Respondent was an employee of the Appellant and not an independent contractor. The Presiding Officer was entitled to come to the conclusion as he did no the evidence before him.

23. The appeal is therefore dismissed. The Appellant is to bear the costs of the First and Second Respondents to be taxed if not agreed. The Third and Fourth Respondents were not legally represented and I make no order as to costs between them and the Appellant. For the legally aided parties, their own costs are to be taxed in accordance with the Legal Aid Regulations. The order on costs is an order nisi to be made absolute 14 days after the handing down of the judgment.

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