CHEUNG WAI YICK v. LAU KIN WING

DCEC 1164/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 1164 OF 2007

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JUDGMENT

Background

1. On 11 June 2007, Mr. Cheung, a decoration worker, was working within residential premises at House K17, Stage IV Marina Cove at Hebe Haven in Sai Kung ("Site"), when a gas explosion caused by a broken LPG gas pipe at the Site occurred, causing him to sustain burns on both his lower limbs.  Mr. Cheung claims that at the material time of the accident, he was employed by Mr. Lau as a casual worker at a daily wage of $700.  Both Mr. Cheung and Mr. Lau were working at the Site, and both were injured in the gas explosion.  These proceedings are commenced by Mr. Cheung against Mr. Lau for compensation under the Employees' Compensation Ordinance. 

2. Mr. Lau denies that he was Mr. Cheung's employer.  He claims that both Mr. Cheung and he were working as independent contractors of the owner of the Site.  Alternatively, if Mr. Cheung was an employee, Mr. Lau denies that Mr. Cheung had sustained injuries by accident arising out of and in the course of his employment. 

Issues

3. The issues which arose for determination at trial are :

(1)         Was Mr. Cheung an employee of Mr. Lau?

(2)         If Mr. Cheung was an employee, did he sustain injuries by accident arising out of and in the course of his employment?

(3)         What is the amount of compensation payable to Mr. Cheung?

(1) Was Mr. Cheung an employee of Mr. Lau?

Legal principles

4. The modern approach to the question whether a person is an employee, as adopted in the case ofPoon Chau Nam v. Yim Siu Cheung (2007) 10 HKCFAR 156, is to 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, bearing in mind the purpose for which the question is asked. 

5. The indicia of employment developed in case law include control, whether the person performing the services provides his own equipment, whether he hires his own helpers, the degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has the opportunity to profit from sound management in the performance of his task.  Obviously, this is not an exhaustive list.

Factual evidence on relationship

6. It is Mr. Lau's case that he had been assisting the owners of the residential property at the Site to carry out refurbishment and renovation works at the Site for a period of time since about 2004.  At the material time in about May 2007, Mr. Lau had been asked by Mrs. Wong, the owner, to carry out pipe improvement works at the Site, after water leakage had been discovered in the bathroom to the master bedroom at the Site.  According to Mr. Lau, he had referred Mrs. Wong to Mr. Cheung and one Mr. Ng ("Ming Kee"), but Mrs. Wong had asked Mr. Lau to arrange for the necessary works to be carried out at the Site to identify the cause of leakage, and to replace the pipe system.  According to Mr. Lau, the work in question involved the dismantling and restoration of the false ceiling and shelves in the bathroom, including the incidental carpentry and woodwork; removing and the reinstatement of the tiles on the walls in the bathroom; and the demolition of the existing pipe system and the reinstatement of the new pipe system in the bathroom.

7. Mr. Lau's evidence is that he had informed Mr. Cheung of the project, and had asked Mr. Cheung if he was interested in participating in the work.  He said that Mr. Cheung had set up his own business in the name of "Welltec Engineering Limited" ("Welltec") for some time, and in the course of their oral discussions in May 2007, Mr. Cheung had agreed, in the name of Welltec, to undertake the dismantling and restoration of the false ceiling, the shelves and the incidental woodwork. 

8. According to Mr. Lau, in accordance with Mr. Cheung's usual and past practice, Mr. Cheung had undertaken the woodwork part of the job at a price inclusive of the cost of labor and materials (包工料), and that in respect of the false ceiling, the price was to be an overall price for the labor involved in the job (包工).  However, Mr. Lau's evidence is that he had not discussed with Mr. Cheung the number of days Mr. Cheung would be required to work on the job.  According to Mr. Lau, the price for the false ceiling job was to be an overall price, irrespective of the actual number of days Mr. Cheung would be working.  Mr. Lau's evidence is that there would be a market price, without the need for prior agreement.  Likewise, in respect of the woodwork part of the job undertaken by Mr. Cheung, Mr. Lau's evidence is that there had been no prior discussion or agreement with Mr. Cheung as to the contract price for the job.  According to Mr. Lau, this was because he had not agreed on the price for the job with Mrs. Wong either.  He had been working for Mrs. Wong at the Site on various assignments, and the understanding was that the price would be the reasonable market price.

9. According to Mr. Lau's evidence, the work involving the removal and reinstatement of tiles had been assigned to Ming Kee.  The work involving the demolition and reinstatement of the pipe system had, in turn, been assigned to another contractor.

10. According to Mr. Lau, both he and Welltec represented by Mr. Cheung were working for and liable to Mrs. Wong, and he did not have any contract or relationship with Mr. Cheung, save that they were both working at the Site.  Mr. Lau's evidence is that he made arrangements for the purchase of materials, allocated the work to be done at the Site and made arrangements for progress of the project.  According to Mr. Lau, he was also responsible for cleaning and clearing the Site every day.

11. Mr. Cheung's evidence is that both he and Mr. Lau had learnt carpentry from the same master, and that ever since 2004, he had been employed by Mr. Lau from time to time as a casual worker on various projects, including on different jobs at the Site.  According to Mr. Cheung, he was employed by Mr. Lau as a casual worker from May to June 2007, doing wall-papering work at a site in Wong Tai Sin.  Before that, he had also worked at the Site as a casual worker for Mr. Lau in October 2004.  Further, it is not in dispute that in February 2007, Mr. Lau had employed Mr. Cheung as a casual worker to work at the Site for one day.

12. According to Mr. Cheung, Mr. Lau had undertaken the renovation work at the Site from the owners in August 2004, when the owners had been required to dismantle some unauthorized structures at the Site and to renovate the Site.  Mr. Cheung's evidence is that since 2004, he had agreed with Mr. Lau that when he was employed by Mr. Lau, he would be paid $700 a day.  Mr. Cheung had set up Welltec in about 2005 to undertake work, but when Welltec had no jobs, Mr. Cheung would work on a casual basis for others.  His evidence is that when he worked as a casual worker for parties other than Mr. Lau, he would be paid $700 to $750 per day.

13. According to Mr. Cheung's evidence, Mr. Lau had undertaken a project in June 2007 to renovate the Site for the owner who had discovered water leakage in the master bathroom, which leakage had damaged the furniture and decorations, and required the pipes to be replaced.  According to Mr. Cheung, Mr. Lau engaged him as a casual worker to carry out works at the Site, including the dismantling of the damaged decorations, the false ceiling, wooden cabinets and the wallpaper.  He had to work at fixed hours between 9:30 a.m. to 6 p.m., carrying out such tasks as may be assigned to him by Mr. Lau, who provided all the tools and equipment for the job.  According to Mr. Cheung, Mr. Lau had initially asked him to go to the Site to ascertain the cause of leakage, and to measure the wooden cabinets.  Mr. Cheung had not known how many days' work would be required, nor the contract value of the work.  He only knew that as agreed with Mr. Lau before, he would be paid $700 a day for the total number of days he would be engaged at the Site.

14. Having heard the parties, I reject Mr. Lau's evidence that Mr. Cheung had, on behalf of Welltec, undertaken work at the Site as an independent contractor of Mrs. Wong.  My reasons are as follows.

15. Mr. Lau accepts that it was he, and not Mr. Cheung, who was familiar with Mrs. Wong, and that Mrs. Wong had entrusted the project to him and asked him to arrange for workers to do the necessary work.  According to Mrs. Wong's Statement to the Labor Department, she had contracted the project relating to the water leakage works to Mr. Lau, and it was his job to find workers to do the necessary work.  She had only dealt with Mr. Lau, whom she regarded as the main contractor responsible for the entire project, including its management. 

16. I accept Mr. Cheung's evidence that he had agreed with Mr. Lau that he would be paid at $700 a day.  This is supported by the evidence adduced by Mr. Cheung as to how he was paid by Mr. Lau in the past, including how he was paid for his one day's work at the Site in February 2007, his 5 days' work at another site in Tuen Mun in January 2007, as well as other projects in October 2004, July and August 2005, January 2006, and May 2007.  Mr. Lau disputed some of the payments he made to Mr. Cheung for these projects as being wages on the basis of the number of days worked by Mr. Cheung, and claims that the payments were the contract sums agreed for work undertaken by Mr. Cheung.  However, Mr. Lau was not able to explain the projects to which the payments related, nor the work involved.  He only claims that the payments were not wages because they were not multiples of $700, although Mr. Cheung's evidence is that the payments included reimbursement of the price of materials paid by Mr. Cheung and purchased on Mr. Lau’s behalf, or for half days or extra time worked.

17. Mr. Lau's evidence, that Mr. Cheung was to carry out carpentry work in relation to the shelves and other woodwork at a lump sum inclusive of labor and materials, and work in relation to the false ceiling at a lump sum inclusive of labor and irrespective of the number of days worked, without any prior agreement having been reached between Mr. Cheung and Mr. Lau as to the lump sums, is in my judgment not credible.  Mr. Lau accepts that Mr. Cheung was to be paid at market rate for his work, and on the evidence the only market rate agreed between Mr. Cheung and Mr. Lau was the rate of $700 a day.  On such evidence, I find that the agreement between Mr. Cheung and Mr. Lau, as evidenced by their established practice since 2004, was that Mr. Lau would be paid at $700 a day for the number of days for which he was engaged by Mr. Cheung.

18. Mr. Lau claims that Mr. Cheung had, on behalf of Welltec, agreed to carry out the work.  I reject his evidence in this regard.  The suggestion that Mr. Cheung had worked with Mr. Lau through Welltec is inconsistent with Mr. Lau's evidence that he had referred Ming Kee and Mr. Cheung personally, and not Welltec, to Mrs. Wong when she had asked if Mr. Lau knew anyone who could do the work required at the Site.  The claim is also inconsistent with Mr. Cheung’s manner of payment to Mr. Cheung in relation to the projects on which Mr. Cheung had worked in the past, when cheques were issued by Mr. Lau to Mr. Cheung personally.  The only time when Mr. Lau had made payment to Welltec in respect of the Wong Tai Sin project was after the accident, and after he had denied liability in respect of Mr. Cheung's claim for compensation.  Even in respect of the Wong Tai Sin project which Mr. Lau claims was a project which both he and Mr. Cheung had undertaken as separate independent contractors, he accepts that he had received the payment for the job directly from the employer, and had in turn made payment to Welltec, which is not entirely consistent with his contention of Mr. Cheung being independently engaged by the employer, and not by Mr. Lau.

19. Having rejected Mr. Lau's evidence that Welltec had undertaken work at the Site as an independent contractor of Mrs. Wong, the owner, the other features of the working relationship between Mr. Lau and Mr. Cheung are not seriously in dispute.  The tools and equipment were provided by Mr. Lau at the Site.  Mr. Lau himself accepts that he was in contact with Mrs. Wong, he gave instructions to the workers in Mrs. Wong's absence, he arranged for all the workers to carry out the necessary work, he allocated the work, he purchased materials, and Mr. Lau himself did work at the Site, including cleaning the site, clearing debris left by the workers, and on the day in question, working with Mr. Cheung in putting wooden boards on the glass ceiling outside the master bedroom.  The only dispute between Mr. Cheung and Mr. Lau relates to the latter's control over Mr. Cheung's hours of work at the Site, and when Mr. Cheung could leave for lunch.

20. According to Mr. Cheung, he could only leave for lunch when Mr. Lau released him, when they would have lunch together.  According to Mr. Lau, he had no control or dictate over Mr. Cheung's hours of work, the only requirement being that he had to complete the day's work before 6 p.m..

21. On the question of control, the courts now recognize that this can no longer be regarded as the sole determining factor of a contract of employment, particularly in the case of a person who possesses and is engaged to exercise some qualification or skill, so that his method of working cannot be said to be under his employer's control.  This is so in the present case, where the evidence is that Mr. Cheung was an experienced worker, who was engaged for the work in question because of his experience and skills.  For this reason, even if Mr. Lau did not exercise control over Mr. Cheung's work procedure or working hours, this cannot, in my judgment, be regarded as determinative of the fact that Mr. Cheung was not employed by Mr. Lau as a casual worker.

22. According to the evidence of Mr. Lau, he was working at the Site every day, despite his contention that the work relating to the dismantling of the false ceiling and the wooden shelves had been contracted out to Welltec, the dismantling of the tiles had been contracted out to Ming Kee, and the replacement of the pipe system had also been contracted out to a third party.  Mr. Cheung's evidence is that on the day in question, he and Mr. Lau were both working on placing wooden boards on the glass ceiling.  Mr. Lau does not dispute that he was helping Mr. Cheung to put the wooden boards on the glass ceiling, although he sought to minimize his role to simply giving assistance to Mr. Cheung by handing him the wooden boards.  Mr. Lau's evidence is that he would also charge on the basis of the number of days he worked at the Site.  When cross-examined as to why he should let Mr. Cheung undertake the carpentry work which Mr. Lau himself could do, Mr. Lau's evidence was that he had to do the cleaning work at the Site, but this does not explain why he would help Mr. Cheung in the woodwork as well.  If it is true that Mr. Lau only undertook the site cleaning work from Mrs. Wong, then I see no justification for his presence at the Site every day from 9:30 a.m. to 6 p.m., if his work was only to clean the Site by 6 p.m..  In my judgment, the evidence of Mr. Lau's close involvement and participation in the work which Mr. Cheung was doing can only mean that Mr. Lau had undertaken the work at the Site as the main contractor and had employed Mr. Cheung to assist in the work as a casual worker.

23. On the evidence available as to the working relationship between Mr. Cheung and Mr. Lau, I find that, as a matter of overall impression, their relationship was one of employment.

(2) If Mr. Cheung was an employee, did he sustain injuries arising out of and in the course of his employment?

24. Mr. Lau claims that at the time just before the accident occurred, Mr. Cheung had already finished his work of putting wooden boards on the glass ceiling outside the master bedroom.  It was about 11:30 a.m., and on Mr. Lau’s case, Mr. Cheung had completed his work for the day, and was chatting with Mr. Lau in the master bedroom at the Site before going off for lunch, when the explosion occurred. 

25. According to Mr. Cheung, when he and Mr. Lau had finished placing the wooden boards on the glass ceiling, Mr. Lau instructed him to take the tools they had used back to the master bedroom.  He was also asked by Mr. Lau to return to the master bedroom to see how Ming Kee's worker, Siu, was doing, and then they would have lunch.  Mr. Cheung returned to the master bedroom with the tools, as instructed, and at about 11:30 a.m., he had not been immediately assigned any further task by Mr. Lau.  According to Mr. Cheung, he and Mr. Lau had to clean up the Site in the afternoon, and thereafter, they would have to go to Mr. Lau's workplace.  Just before the accident, Mr. Cheung was chatting with Mr. Lau outside the bathroom in the master bedroom.  On cross-examination, Mr. Cheung explained that when he gave evidence before the Magistrate in relation to proceedings instituted against Mr. Lau, his reference to his having completed his work and having nothing further to do was only in relation to the work for the rest of the morning.

26. I accept Mr. Cheung’s evidence as to what took place just before the accident.  The accident occurred when there was a break in the late morning, before lunch, at a time when Mr. Cheung and Mr. Lau had completed their work of putting boards on the glass ceiling.  They may have been having a chat during the break, even on matters not entirely related to work, but in my Judgment, this does not mean that the accident had not arisen out of and in the course of Mr. Cheung’s employment, as I accept that Mr. Cheung was to return after lunch to complete his work for the day at the Site.  Just before the accident, Mr. Cheung had returned to the master bedroom the tools which were used when the wooden boards were placed on the glass ceiling, and he was waiting for the lunch break or for further duties to be assigned to him by Mr. Lau.  I am satisfied that at the time of the accident, he was doing what someone employed in his position "may reasonably do within the time during which he was employed, at a place where he may reasonably be during that time" (Moore v. Manchester Liners Ltd. [1910] AC 498).  The phrase from Moore was construed in a liberal manner in Low (or Jackson) v. General Steam Fishing Co. Ltd. [1909] AC 523 at 532.  I accept that an employee is not usually expected to be at work unceasingly, without either rest or pause, and allowance should be made for the ordinary habits of human nature and the ordinary way in which those employees in such an occupation may be expected to act.

27. Mr. Cheung was initially at the Site to do the work for which he was engaged to do.  He had not completed his work for the day, and had not left his work place at the Site.  On the evidence, I am satisfied that as the gas explosion apparently occurred because of the presence of the gas pipe in the bathroom to the master bedroom and because the dismantling work carried out by Mr. Cheung and Siu on behalf of Ming Kee triggered the gas leakage and explosion, the accident resulted from a risk which was necessarily incidental to the performance of Mr. Cheung's work at the Site.  His employment brought him to the bathroom where the gas pipe was, and to the master bedroom at the Site where the accident occurred and which turned out to be a dangerous spot (United Ford Development Ltd. (t.a. King Ford Mahjong Club) v. Fung Yin Yee Shirley [1993] 2 HKLR 290, approving Lawrence v. George Matthews (1924) Ltd. [1929] 1 KB 1).  I am satisfied that the injury is incidental to Mr. Cheung’s work, and that the accident arose in the course of Mr. Cheung's employment at the Site.

What is the amount of compensation payable to Mr. Cheung?

Section 9

28. I accept Mr. Cheung’s evidence that a carpenter like himself would be paid at the market rate of $700 per day, and that he can work 24 days a month. Mr. Cheung was 47 years old at the time of the accident.

29. According to the Certificate of Assessment issued by the Employees' Compensation (Ordinary Assessment) Board dated 8 August 2008, against which there is no appeal, Mr. Cheung was assessed to have suffered 5% permanent loss of earning capacity in respect of the scarring in both his lower limbs as a result of the burns he received from the accident.  He was granted sick leave from 11 June 2007 to 14 December 2007.

30. The amount payable under s.9 of the Ordinance is accordingly $16,800 x  72 x 5% = $60,480.

Section 10

31. There is a total period of 187 days of sick leave.  The compensation payable under s. 10 is: $16,800 x 187/365 x 12 x 4/5 =   $82,628.40.

Section 10A

32. I allow the sum of $4,262 as medical expenses, as they are not challenged.

Summary

33. The total compensation payable to Mr. Cheung is :

34. Mr. Cheung is entitled to interest from the date of the accident to the date of payment.  I will make an order nisi that Mr. Cheung's costs of the action are to be paid by Mr. Lau, to be taxed if not agreed, with certificate for Counsel.