So Ka Chun v. Ho Tai Shing and Others

DCEC 592/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES' COMPENSATION CASE NO. 592 OF 2000

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JUDGMENT

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Background

1. The Applicant claims against the Respondents for injury sustained by accident on 3 April 1999 at 8 p.m. in the course of employment. He claims that he was employed by the 1st Respondent (R1) who was a sub-contractor or agent of the 2nd Respondent (R2) who was a sub-contractor of the main contractor, the 3rd Respondent (R3), at the construction site located at the 15th Floor, Block 8, Hoi Yat Super Court, Hung Hom, Kowloon (hereinafter referred to as "the said site").

The Applicant's Case

2. The Applicant was born on 16 December 1970. He was 28 years old on the date of accident 3 April 1999. He began working for R2 as a carpenter at the R3's construction site at the end of October 1998 at a daily wage of $300. Within two months, his basic daily wage was increased to $350. He claimed he was paid an average of $5,000 every 15 days, making a total of $10,000 per month working 6 days a week, resting on Sundays between October 1998 and February 1999. He was assigned the duty of installing wooden skirting boards at the residential units at the Hoi Yat Super Court site in Hung Hom.

3. He claimed he terminated his employment with R2 voluntarily on 10 February 1999 because he considered the bonuses he received for completing more than the daily quota set to be unfair, for R2 would deduct 10% of the workers' bonuses at the end of each month for a monthly get together meal which he disagreed with.

4. R1 was the Applicant's co-worker between October 1998 and February 1999. His duty was installing wooden door frames on the residential units at the R3's site in Hoi Yat Super Court (hereinafter referred to as "the said construction site").

5. At the end of March 1999, the Applicant received a call from R1 who told him he had some skirting board work at the said construction site from R2. The pay would be $50 per residential unit. The Applicant was told to find a co-worker to work with and to report to R1 daily of the number of units completed. He was told to start work in late afternoon after the day workers left the said construction site. He was told where to find the key of the tool shed and obtain lighting equipments, tools, gloves, goggles and hats before starting work. He was told R1 would obtain payment from R2 and he and his co-worker would be paid. The Applicant found a former colleague Cheng Siu Wai (AW2), they began to work together in early April 1999 at the said construction site. He was told by R1 that he had informed R2 of their working at the said site.

6. On 3 April 1999 at around 8 p.m. the Applicant packed up his tools after completing work on one of the units on the 15th Floor of Block 8 at the said site, he found one of the skirting boards loose. As it was hot, he had put his goggles over his hat, in his attempt to nail back the board, a metal chip became loose and hit his right eye. He alerted AW2 who helped to rinse his right eye with water.

7. Later on that night, he attended the Accident and Emergency Department of Tang Shiu Kin Hospital. He was referred to the eye clinic at Pamela Youde Nethersole Eastern Hospital on 7 April 1999. It was diagnosed that a foreign body had penetrated through the cornea into the lens of the Applicant's right eye. He was discharged after a few days of hospitalisation.

8. The Applicant's doctor decided to delay operating on the Applicant until the cataractous change of the lens became extensive. On 27 May 1999, when the Applicant's vision of the right eye deterioration completed due to opacification of the lens, he was admitted into Tung Wah Hospital for a cataract extraction and implantation of intraocular lens operation.

9. Dr. Kenneth W. H. Ng's medical report of 4 April 2002 certified the Applicant's injury and his right eye medical condition. As a result of the injury to his right eye, Dr. Ng confirmed the Applicant has lost the power of accommodation for focusing at near of his right eye. Dr. Ng assessed that the Applicant suffered from 50% permanent impairment of his right eye. It is 12% permanent impairment of the whole person and 25% loss of earning capacity.

10. After the accident, the Applicant notified R1 of his accident by telephone on the same day. He requested R1 to file an accident report on his behalf.

11. After the accident, he went to see Mr. Lo Chun Wo at R2's office and reported the accident. As a result, a Form 2 under S. 15 of the Employees Compensation Ordinance (Cap. 282) was compiled. This notice by employer of an accident to an employee resulting in incapacity form is exhibited in pages 117 - 111 of the bundle. The Applicant said he had filled in the details in box D of the form while Mr. Lo had filled in the rest of the form. This form was dated 21 May 1999. It was signed by Mr. Lo and it bears the company chop of R2.

12. Subsequently, he went to make an accident report to R3's site Safety Officer. The Safety Officer of R3 told him the report should be filed by R2, and no accident report had hitherto been filed by R2.

13. The Applicant called his co-worker Cheng Siu Wai (AW2) to give evidence at the hearing. His evidence supported the Applicant's evidence giving further details of the work the Applicant and he performed at the said site on 3 April 1999 and details on the events after the Applicant's accident.

The 1st Respondent's Case

14. R1 does not dispute he had hired the Applicant and AW2 to install the skirting board at the said site. He admitted that he was a contractor of the skirting board work from the R2. He further claimed RW2 Kuo Chien Cheng had given him and he had signed a document which set out the rate of payment for the skirting board work. He no long had the document in his possession. It is his case that he had worked at the said construction site for R2 for one year from October 1998 to 1999. Three to four months after he commenced work, the payment system changed and a quota was imposed. Everyone working more than the daily quota would get extra pay.

15. Sometime in 1999, the R1 was put in charge of the skirting board work, at the same time, he was also doing door frames work. His pay was $385 a day, based on the number of units finished, he would get extra paid for work done above the daily quota. He recalled the pay for skirting board work was $470 per floor including painting work on the skirting board after the Chinese New Year period in 1999. Though R2 had engaged one worker to perform the skirting board work at the said construction site, it was obvious that with just one worker the R2's schedule could not be met. He was told by the R2's site foreman RW2 Kuo Chien Cheng to get the skirting board finished quickly so that the plasterers could start work. He told R2's project manager Mr. Lo Chun Wo that he needed more men and then sought out the Applicant to start working on the skirting board in the evening to be out of the way of the electricians and other workers who were there during the day time. It is R1's case throughout that he had obtained the approval of R2's project manager Lo Chun Wo. He had further informed Lo that the Applicant and AW2 would be working on the skirting boards on or about 1 April 1999.

16. It was R1's evidence that he had gone to the said site with the Applicant and AW2 on the first evening, showed them where to pick up the tools and where to start work on. He had worked with them from 7 p.m. until after 10 p.m. He told them he could not join them the next evening. He reckoned there would be 4 days of work for them. R1 had agreed to pay them $400 per floor and they would be paid when he received payment from R2.

17. It was R1's evidence that the Applicant had telephoned him after the accident on 3 April 1999. Later on, he visited the Applicant at Pamela Youde Nethersole Eastern Hospital. He had also reported the accident to Lo and gone to the Labour Department with the Applicant.

18. R1 was cross-examined on the payments he received from R2. R2's record of payments to R1 on page 263 of the bundle was extensively examined.

The 2nd Respondent's Case

19. R2 called RW2 Kuo Chien Chen the site foreman to give evidence on its behalf. RW2 said R2 at no time sub-contracted work out at the said construction site in 1999. That there were no night-time workers at the said construction site working for R2 at the relevant time and that the sign in and sign out sheets would bear this out. It was his evidence that the Applicant was sacked sometime in February 1999. He disagreed that the Applicant or anyone else was engaged to work at the said site on 3 April 1999.

20. He agreed the skirting board work was paid on the basis of $50 per residential unit. He agreed he had no knowledge of what was stated in the wage and sub-contractor vouchers during that relevant period for the benefit of R1 (pages 186 to 187 of bundle). He, however, agreed the R1 was a hardworking, responsible and reliable worker who had a special arrangement with R2 on the skirting board work. He admitted he had given R1 a document setting out the rates of payment.

21. One of R2's directors Madam Hui Mui Ping (RW3) gave evidence and said the R2 had no sub-contractors at the said construction site during the relevant period. She agreed that Mr. Lo Chun Wo was the project manager at R2 at the time and he was responsible for recruitment of workers, site supervision and supervision of the accounts clerk at R2's office including dealing with insurers etc. Mr. Lo, however, could no longer be located by R2.

The 3rd Respondent's Case

22. R3 called RW4 Poon Kin Sang, the R3's Deputy Assistant Administrative Manager. It was his evidence that in March and April 1999, door frame installation had just commenced, there was no pressing urgency for plastering workers to start work at the said site. He received no notification for overtime work to be conducted at the site at the relevant time.

Findings

23. Based on the evidence adduced before me and the documents filed in court, I come to the following conclusions on the facts:

(a) R1 had all along been an employee of R2 according to R1's own evidence and RW2's evidence;

(b) R2 did not admit to sub-contracting out any part of its work (see RW2 and RW3's evidence);

(c) The Applicant, prior to the termination of work in February 1999 was already working for payment calculated on the basis of $50 per unit. This can be seen from pages 174 to 175 of the bundle, the two wage and sub-contractor vouchers for 13 January to 9 February 1999. When approached by R1, he was offered $50 per unit, there being 8 residential units on each floor, the Applicant would be paid $400 per floor for skirting board work.

(d) R1 admitted to be paid $470 per floor for skirting board work, this is supported by the wage and sub-contractor vouchers on pages 186 to 187 of the bundle for 26 June 1999 and 5 July 1999. R1 clearly had been paid $470 per floor in addition to the door frames installation work for the same period of time. According to R1's evidence, he would pay $400 per floor to the Applicant and RW2 and the extra $70 would be for his getting the skirting board painted, his supervision and repair work required such as loose boards etc. on the completed skirting boards.

(e) R1 was rated by R2 as a trustworthy worker who was reliable and hardworking according to the evidence of RW2, the R2's site foreman. R1 was therefore given the skirting board job when he was told R2's work on the skirting board was behind schedule. R1, with Mr. Lo, the project manager's permission and approval, hired the Applicant and AW2 to work on the skirting board in the evening. It was not intended by R1 to be a long term arrangement, he, however, did inform Mr. Lo R2's project manager in charge of recruitment of the hiring of the Applicant and AW2 before they started work.

(f) Lo had approved of the action of R1 and he was informed of the accident on 3 April 1999 on the following day (see Lo's hand-written statement dated 4 August 2000 on pages 258 to 259 of the bundle para. 4 and page 250 dated 18 November 1999). Though the Form 2 on page 107 was not sent to the Labour Department until on or after 21 May 1999, Lo's statement revealed this form was filled in by the Applicant the day after the accident.

(g) Later on, Lo informed R1 that he made a mistake about the Applicant's employee status. The evidence of the Applicant and R1 both revealed that they went to see Lo about compensation for the Applicant. Lo made use of the opportunity promising to assist the Applicant in pursuing the compensating on one hand and on the other hand asked the Applicant to sign the waiver letter on page 248 of the bundle on 17 November 1999. This was obviously done because he discovered from the R2's insurers that the Applicant's claim would not be covered and he wrote a letter to a Miss Lam of the insurers on 15 October 1999 on page 243 of the bundle, followed by further details on the employment record of the Applicant on 17 October 1999 on page 244 of the bundle.

(h) The accident and the report of the accident is indisputable because they are borne out by the evidence of the Applicant, AW2, R1 and documents in writing in the Form 2 filed (page 107 of bundle) and various notes prepared by Lo including the note on page 254 signed by the Applicant, AW2 and Lo bearing R2's company chop, his letters and notes to the insurers on pages 243, 244 and 256 not to mention his hand-written statement of 4 August 2000 on pages 258 to 259.

(i) There is ample evidence that R1 was put in charge of the skirting board and door frames work at the said site from R2. The numerous wage and sub-contractor vouchers, the expenses, invoices, the payment cheques and the R1's payment account from 12 February to 22 July 1999 on page 263 of the bundle are clear evidence that R1 was responsible for the wages of not only himself but a number of workers working on door frames and skirting boards. As these documents were the accounting records of R2, they were clearly authorised by the R2.

24. I have examined and carefully considered R2's accounting documents including wage vouchers, cheques and invoices. Page 263 of the bundle showed the R2's record of payments to R1 between 12 February 1999 and 22 July 1999, and on 12 February 1999 to the Applicant. Pages 169 to 173 were payments by cheque between 14 April 1999 and 7 June 1999 to R1. Pages 176 to 188 were "wage and sub-contractor vouchers" and pages 176 to 187 bore the signature of R1 indicating his acknowledgement of the calculations. Page 175 is the wage and bonus slip of the Applicant for work done from 29 January to 9 February 1999, bearing the Applicant's signature. The payment of the Applicant's wages for this period was by cheque No. 685233 (page 167 of bundle) authorised by expenses invoice on page 204 of the bundle.

25. The only logical conclusion from the above facts is R1 was the agent of R2. I find that R1 had hired the Applicant and AW2 on a temporary basis to perform the work required and that R1 had been authorised by R2 to do so. From RW3's evidence, Mr. Lo was effectively running the business on a day to day basis at the relevant time. He and a Mr. Lam Shek Kwan, also a staff of R2, were signing cheques for payment of the workers' wages (see pages 167 to 173 of the bundle) from an account opened in their joint names at the China State Bank Ltd. They would not have done so without having been so authorised by R2.

26. In spite of the lengthy and vigorous cross-examination by counsel for R2 and Miss Chong for R3, the Applicant, AW2 and R1 were shown to be honest witnesses who in spite of their lack of education were able to give details on the accident and the background in this case. I further find R2's site foreman RW2's evidence unreliable - I find it difficult to accept that he had no knowledge of any of the documentary evidence of payments to R1 of $25,696.50 in June 1999 and $17,000 in May 1999. It is unfortunate that Mr. Lo Chun Wo, R2's former project manager was not called, consequently, there was no evidence given to explain the numerous letters, notes and statements written by him and the filing of Form 2 on 21 May 1999. In view of the absence of his or Mr. Lam's evidence in court, I come to the above conclusions based on the evidence made available to me. On the evidence adduced before me and records kept and documents filed by R2, I conclude on a balance of probability that the Applicant was an employee of R2 at the time of accident through R1 who acted as an agent of R2.

27. Even if I was wrong on R1 being R2's agent in the employ of the Applicant, R1 would, to say the least, be the Applicant's employer under a sub-contract from R2 under S.3 of the Employees Compensation Ordinance, a sub-contract is defined as to mean :-

"(a) any person who enters into a contract, express or implied, with a principal contract to perform all or any part of the work which the principal contractor has undertaken to perform; and

(b) any other person who enters into a contract, express or implied, to perform all or any part of the work which a sub-contractor within the meaning of paragraph (a) has undertaken to perform;"

28. S.24 of the Ordinance, it is provided that "

"24.(1) Where any person (in this section referred to as the principal contractor), in the course of or for the purposes of his trade or business, contracts with a sub-contractor for the execution by or under the sub-contractor of the whole or any part of any work undertaken by the principal contractor, the principal contractor shall be liable to pay to any employee employed by that sub-contractor or by any other sub-contractor in the execution of the work any compensation under this Ordinance which the principal contractor would have been liable to pay if that employee had been immediately employed by him; and where compensation is claimed from or proceedings are taken against the principal contractor, then, in the application of this Ordinance, references to the principal contractor shall be substituted for references to the employer, except that the amount of any compensation calculated by reference to earnings shall be calculated by reference to the earnings of the employee under the employer by whom he is immediately employed."

29. It follows that not only R2 is liable, R3 the main contractor is also liable to the Applicant under the interpretation of the Court of Appeal in the Hong Kong case of Wong Leung-tak and another v. Hip Hing Construction Co. Ltd. [1991] 2 HKLR 345. S.24 was given a liberal construction by the Court of Appeal, it held both employer and the principal contractor were severally liable to pay compensation to the employee for the same injury. The employee was entitled to join both the employer and the principal contractor in the same proceedings for compensation after which he was entitled to recover the full amount of compensation from one or other of them.

30. Counsel for R2 and the solicitor for R3 submitted that the Applicant was an independent contractor working on his own account. They cited the authority of the Court of Appeal case of Chan Kwok Kin v. Mok Kwan Hing and another [1990] 2 HKC 65 where the appellant was a scaffolding worker on a job-by-job basis at the second respondent's building site. It was held that the test was whether the person was in business on his own account therefore the contract was a contract for service or the contract was a contract of service. The facts in the Chan Kwok Kin case revealed the appellant to be a skilled artisan working for more than one employer as an employee and not as a small businessman venturing into business on his own account as an independent contractor.

31. On the analogy of the Court of Appeal in Chan Kwok Kin's case, the Applicant clearly worked for no one else but on the instructions of R1 at the R2's project. His wage was based on the number of units and floors completed as was the practice before 9 February 1999 and at the same rate. Clearly, he could not have been an independent contractor.

Quantum

32. Counsel for R2 do not dispute the quantum sought by the Applicant save for the number of units the Applicant claimed he was able to finish a day. The Applicant on the other hand is relying on the monthly wage claimed in the Form 2 filed by the employer R2 at $10,100 per month. I accept this sum as the Applicant's average wage. In fact, even on R2's own record on page 165 of the bundle, the Applicant was capable of finishing up to 12 units a day.

33. Based on the average wage of $10,100 per month, the claim under S.9 of the Ordinance is:

$969,000 x 25% = $242,400.00
(25% being the agreed loss of earning capacity)

S.10 claim comes to:

37/30 x $10,100 x 4/5 = $9,965.00

S.10A claim comes to : $2,008.00

The total award is therefore $254,373.00.

Interests

34. I am grateful to counsel and solicitors for the parties in forwarding the authorities and submissions on interests relied by them respectively on the appropriate interests to be awarded under the Ss. 9, 10 and 10A awards subsequent to the hearing. The authority for awarding interests stems from S.21 (3) and paragraph (e) of the definition of 'compensation' in section 3 of the Employees' Compensation Ordinance.

Section 21(3) provides that:-

"The Court may, in any proceedings, brought in the Court for the recovery of any compensation, order that there shall be included in the sum for which an order for payment is made interest at such rate as it thinks fit on the whole or any part of such sum for the whole or any part of the period between the date of the accident and the date of the order."

35. Deputy Judge Davies (as he then was) held in Tse Hin v. Ying Ming Construction Ltd. (ECC NO. 101 of 1986) after the amendment of section 21 of the Ordinance in 1982:-

"There, therefore, now exists in the court a very wide discretion as regards the rate of interest which can be awarded and the period for which interest can be paid."

He reconsidered the Court of Appeal case of Ng Oi Wa v. Lamp's Co. C.A. 129/80 (unreported) and accepted that it still represented good law in respect of employees' compensation award and awarded interests from date of accident at half judgment rate.

36. Though interests in employees' compensation awards are by no means only awarded for such a period or at such rate, each case must be determined on its own facts. I believe section 21 (3) was so designed to give a wide discretion to the trial judge. The facts in this case showed that the Applicant had reported the accident within hours of the accident to R1. R1 and the Applicant had gone to report the accident to R2 the day after the accident. There is therefore early notice to all the Respondents though for some unknown reason R2 failed to properly notify R3 soon after the accident. The Applicant had done everything in his power to notify all relevant parties in the months following the accident. Consequently, I award interest at half judgment rate from the date of accident to date of judgment, and thereafter at full judgment rate until judgment is paid in full.

37. R3 asked for full indemnity against the R2 under Ss.24 and 25 of the Ordinance; under the Ordinance, R3 is entitled to make such a claim. I so order.

38. Costs nisi to the Applicant to be paid by the 2nd and 3rd Respondents to be taxed if not agreed.