Tse Chiu v. 郭健 and Others
Read the full judgment text of DCEC 1141/2018 on BabelCite. This District Court judgment was delivered on 19 February 2021.
1. The applicant (“Tse”) was a 65 years old cross-border container tractor driver at the time of the accident. At about 1:30 pm on 6 June 2017, when he was working at the Tsing Yi Cargo Examination Compound he fell from the rear platform of a container mounted on a tractor. It is Tse’s case that the cause of his fall was due to the malfunction of the backdoor and locking system of the tractor. As a result of the fall, Tse suffered a fracture to his skull and bleeding from his ears. He was ref
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DCEC 1141/2018 [2021] HKDC 191 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION EMPLOYEES’ COMPENSATION CASE NO 1141 OF 2018 ________________________ IN THE MATTER OF AN APPLICATION BETWEEN
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________________________ J U D G M E N T ________________________ 1.The applicant (“Tse”) was a 65 years old cross-border container tractor driver at the time of the accident. At about 1:30 pm on 6 June 2017, when he was working at the Tsing Yi Cargo Examination Compound he fell from the rear platform of a container mounted on a tractor. It is Tse’s case that the cause of his fall was due to the malfunction of the backdoor and locking system of the tractor. As a result of the fall, Tse suffered a fracture to his skull and bleeding from his ears. He was referred to neurosurgery after admission to Princess Margaret Hospital on 6 June 2017. From 6 June 2017 to 1 November 2018 he was granted 514 days of sick leave. He attended 17 sessions of physiotherapy between 9 August 2017 and 8 March 2018. His hearing and balancing ability were also affected by the accident. The Employee’s Compensation (Ordinance Assessment) Board (“the Board”) assessed Tse to have suffered head injury resulting in residual headache and residual unsteadiness in gait. His permanent loss of earning capacity caused by the Accident was assessed to be at 3%. There is no appeal against this decision. 2.The respondents were alleged to be the owner(s) of the container truck and employer(s) of Tse. The 1st respondent, Kwok Kin (郭健) (“R1”) is the father of the 2nd respondent, Kwok Ka Kit Danny (“R2”). The 3rd respondent, Kwok’s Int Logistics Limited, (“R3”) is a private company with limited liability incorporated in Hong Kong carrying out the logistics business. R2 is the sole owner and director of R3. MATTERS NOT IN DISPUTE 3.The accident is not disputed. The respondents admits that on 6 June 2017 at the time of the accident, Tse fell from the tractor with registration number SH1826 (“the tractor”), whilst trying to close the back door of the container mounted thereon. THE ISSUES 4.Quantum has been agreed and the issues before the court are as follows:-
THE APPLICANT’S CASE 5.Tse has worked as a driver since he graduated from secondary school. After briefly following his father to work in the trading industry, Tse started his career as a driver. He has since driven light goods vehicles, buses and tractors for over 10 years. Tse then started his own business by driving a 16 tons lorry as delivery driver for the over 10 odd years. Subsequently, he worked as a jack-hammer truck driver at the construction site. 6.In July 2014, through a friend Lau Wai Kong (劉偉光), Tse met with R1 and orally agreed with R1 to work as a cross Hong Kong and mainland border container tractor driver. The oral agreement was for Tse to work for both R1 and R2. Tse and R1 agreed the salary and commenced work on 1 August 2014. Tse was assigned to drive tractor SH1826 between Tsing Yi or Tuen Mun to Shenzhen bay or Sha Tau Kok. Since R2 ran his business in the name of R3, so far as Tse was concerned, he was under the employment of all three respondents. 7.Tse drove SH1826 from specific sites to pick up and deliver containers on the instructions of R1 and R2 since 1 August 2014. So far as Tse was aware, the tractor was owned by R2. Tse was paid $200 to $400 per container delivered depending on the delivery location. With the advice and consent of R2, Tse earned the price difference in the buying and selling of petrol across the border. He earned on average at around RMB5, 000 to RMB6, 000 per month for selling petrol. His earnings for the month immediately preceding the accident was $23,800. THE RESPONDENT’S CASE 8.The respondents’ case is that R1 and/or R2 never employed Tse and R3 had merely entered into a cooperation agreement with him as an independent contractor for the provision of logistics services. The respondents did not make any salary payment or MPF contributions for Tse. They made no payment to Tse for statutory holidays, annual leave or sick leave. 9.Tse was given his share of the service fees upon completion of delivery of goods in advance, even before receipt of the service fees from customers. The payment of service fees was partly by way of cash and partly by way of cheque. All of which were deposited into Tse’s bank account. THE WITNESSES 10.Apart from Tse himself, Tse called Chan Chong Man (陳中文) (“Chan”), a former co-worker, who worked for the respondents. R1 and R2 gave evidence. THE LEGAL PRINCIPLES 11.In determining whether a person is an employee or independent contractor, the CFA has set out the relevant indicia to be considered in Poon Chau Nam v Yim Siu Cheung t/a Yat Cheung Air Conditioning and Electric Co [2007] 1 HKLRD 951 §§11 to 18 as follows:-
12.It was further clarified at §§11-13 of Poon Chau Nam’s case that degree of control covered:-
THE ANALYSIS The degree of control exercised by the respondents 13.The respondents managed the business and hired other drivers including Chan to carry out cross border delivery work. Tse took delivery orders and carried out delivery works when receiving instructions from R1 and/or R2 via a WeChat Group called “海東支援車隊”. Tse was neither acquainted with any of the respondents’ clients nor would he liaise with them. He hired no assistant and had to personally handle each delivery. 14.Tse was directed by R2 to park the tractor at the designated roadside and waited in Yuen Long, albeit for convenience, Tse would drive the tractor and park it closer to his residence. It is not disputed that Tse could only use the tractor to deliver the respondents’ orders. Tse had to follow R1 and R2’s instructions regarding the destination for delivery. He required R2’s approval before taking leave. Tse could only go off work when he had completed all the deliveries assigned to him. 15.Further, Tse had to personally carry out the work assigned to him and did not hire others to help. His work dates were decided by the respondents and it is obligatory for him to accept works assigned to him by the respondents and carry out work orders until he had completed all the assigned deliveries. 16.Mr Tang, counsel for the respondent submits that Tse could freely accept or reject jobs due to the nature of his income. I disagree. One must look at the reality of the nature of work. When Tse is not at work, he is on standby and expected to take orders on short notice. He is the designated registered driver for SH1826 and he is obliged to carry out his assigned duties if he was to keep the job. I find that R2 and R3 had a high degree of control over Tse’s work. THE PAYMENT OF WAGES OR OTHER REMUNERATION 17.Tse was assigned jobs at an agreed rate between $200-$400 per empty container depending on the number of containers delivered and the destination. Tse states that he agreed with R1 the rate at - ‘九龍300, 新界200, 鹽田400’. This was confirmed by R1 in court - ‘新界落蛇口200, 九龍落蛇口300, 九龍沙頭角400”. For customers referred by Tse, he would receive half of the business fees. He was regularly paid once a month by way of cash or cheque issued by R3 or Madam Tsang Ling (R1’s wife and R2’s mother) who worked for R3 as a book keeper. Tse was paid before the respondents had received payment from the customers. Receipts were issued to Tse on a monthly basis. Some receipts bear R3’s chop. Some receipts for Tse’s monthly fees provided by the respondents contained the term “salary receipts (薪給收據)”. Some of R3’s monthly statements revealed that money paid to Tse were “wages (出糧/運費人工)” or simply “人工” which signifies that the respondents have considered Tse to be an employee. R2 tried to explain why the term “salary receipts (薪給收據)” was used by stating that the receipts were internal documents for accounting purpose only and the terms were adopted as requested by the accountant. R2 contended that the term “人工” (salary) in the monthly statements were only used for the sake of simplicity to distinguish the item from other amounts such as delivery fees. The term “出糧” (providing wages) was also repeatedly used in the respondents’ documents. Had the parties been in a cooperation profit, sharing basis, referring to the share of profit, the term “分潤” (分配利潤) or “拆賬” should have been used. It made no sense to use the term “人工” and “出糧” unless the respondents had considered the relationship with Tse to be one of employer and employee. 18.When being cross-examined on the authenticity of some of the unsigned version of the receipts with amendments, R2 was unable to provide any explanation and stated that they were handled by the accountants. R2 made no attempt to obtain the originals from the accountant. 19.When being cross-examined on why R3’s company chop was stamped on one of the receipts with the deletion of the words “人工” was made, R2 stated for the first time that it was Tse who requested not to include him as staff for tax purpose. This allegation was not put to Tse. The significance of this evidence suggests that but for Tse’s request, R2 and R3 were set to include Tse as their employee. The authenticity of these deletions and the receipts were clearly in issue and regrettably the respondents’ accountant was not called to give evidence to explain these documents and the originals were not made available for closer examination. TSE’S PROSPECT OF PROFIT OR RISK OF LOSS 20.The respondents sought to rely on a hand written note stating that Tse’s profit share was at 70% of the delivery fee. This sheet was not signed and the alleged 70% share was not borne out by the accounts. This was not the respondents’ pleaded case. This was also not set out in the respondents’ witness statements and R2 in examination had difficulty in explaining the circumstances surrounding the making of this document. Further, there appeared to be an overlapping handwritten marks on the percentage ‘70%’. This suggests rewriting and amendments to this number. R2 in cross-examination denied knowledge about how the document was prepared. When pressed as to why he could not produce its original, he answered that he considered it unimportant and it was probably with the accountant. 21.The respondents also provided other versions as to how the profit were shared between the parties. In the Amended Answer, the version were (1) If Tse solicits business for R3, the profit is split 70:30 in Tse’s favour; and (2) if the business is referred to Tse by R3 and Tse uses R3’s vehicle, then Tse shall pay a sum of $500 – $900 to R3, depending on the distance of the trip, and keep the rest as commission. However, the respondents’ record of account in the form of the driver’s work sheet shows that on many occasions Tse was only paid $200 for the total delivery fee of $550 per container. 22.Apart from the perks of pocketing the difference in gas price, there is no evidence that Tse shared profits with the respondents. Tse did not know how much the respondents charged their clients. Tse was not provided with any quotations and invoices for fees paid by the respondents’ customers. Although R1 states that Tse should know how much the respondents charged their clients, R2 admitted that Tse was not told how much the respondents charged their clients. All the profits were for the respondents’ account. Apart from the benefits of the gas sale, Tse gained no financial reward beyond his agreed daily rates. 23.R2 in examination also stated that there were other profit sharing arrangements, including (1) Company 70: Driver 30; (2) 50% each for company and driver. These were neither pleaded nor put to Tse. R2 states that Tse had requested a reduction in the fee split from 70:30 to 50:50 because the 50:50 split was more advantageous to Tse. This allegation was not pleaded and is not reflected in the accounts. When being cross-examined on the respondents’ pleaded case of the rate at $500-$900, R2 stated that it took into account the tractor rental cost but he was unable to give any breakdown. It is also noted that the original Answer states if R3 sub contracts business to Tse, R3 shall pay a sum of $1,200 to Tse. The respondents’ case on how Tse was to be remunerated had shifted. Having heard the evidence, I find R1 and R2s’ evidence to be inconsistent, goes against the pleaded case and makes no commercial sense. I find that their evidence is erratic and they have made up their case as they went along. R2 juggled the figures to suit this case of there being a tractor rental agreement. 24.In any event, it is not disputed that Tse gets paid regularly on a monthly basis before the respondents had received payment from their customers. Perhaps with the only exception that when Tse fails to record delivery or fails to produce delivery notes to R3, then Tse will not get paid. 25.In general, Tse is not required to shoulder any risk for clients not making payment. This defies any notion that Tse and R3 were in a cooperation relationship, as it made no commercial sense for R3 to pay Tse his share of profit even before R3 had received payment from the customers and assume all the risk of not getting paid. In my judgement, the evidence shows that Tse bore minimal financial risks for the loss of business, and this is more in line with Tse being an employee rather than an independent contractor. THE PROVISION AND OWNERSHIP OF THE TRACTOR 26.It is not disputed that at the time of the accident, Tse drove tractor SH1826 as provided by R2. R2 was the registered owner of SH1826. The motor insurance policy was taken out by R2. R2 was responsible for the general repair and maintenance of the tractor and R1 and/or R2 decided on the garage for the necessary repair works of the tractor. 27.The respondents alleged that the SH1826 was let by the respondents to Tse in return for a higher rate of distribution in profit in each trip of delivery of containers. Tse denies there to be any such rental agreement. 28.There was no written rental agreement for the alleged tractor rental. There was no evidence that R2 or R3 have received any rental income from Tse for the alleged rental of the tractor. It makes no commercial sense for R2 to rent the tractor to Tse but not receive any rental income in return. Further, it is not disputed that Tse was only allowed to use the tractor to deliver orders from the respondents. To Tse, a rental agreement did not bring him any additional benefit. For R2, there is no account produced for the alleged rental agreement. No tax return have been produced to account for the rental. There is no particulars provided for the alleged letting agreement, for instance, how the rate for the letting of the tractor was calculated. From the evidence, I am not satisfied that there was any letting agreement for the tractor SH1826 and I find that the tractor was provided by R2 to Tse for the business of R2 and R3. R2 AND R3 PAYS FOR THE OUTGOING EXPENSES 29.R2 and R3 paid for the Approval Notice for the vehicle and driver from the Guangdong Public Security Bureau (中港兩地牌); and R1 and/or R2 paid for and gave directions to Tse to renew the Vehicle Licence for the PRC (國內行車證). 30.Disbursements incurred in the course of the work were borne by the respondents. These included fees for the issue of necessary permits for Tse to drive the Tractor across the border, engine fuel fees, toll fees, parking fees, tunnel fees, dockyard gate entrance fees “入場費 or 閘費” , repair and maintenance fees. These fees were reimbursed to Tse on a monthly basis. Motor insurance was also under R2’s name and paid by R2. 31.That said, Tse paid for 50% of the monthly subscription fees “拖頭入線費” at $2,000 per month. According to Tse this was to partly set off his gains in the gas selling operation. 32.Tse and the respondents shared the traffic accident repair expenses. On one occasion, for a traffic accident in Nanping (南平) $25,000 was incurred for the tractor’s repair costs. R2 or R3 paid 50% of this repair expenses and Tse paid for the rest. 33.In general, Tse paid for fixed penalty tickets including speeding and illegal parking tickets. R2 or R3 would occasionally pay for up to two traffic tickets per month. 34.Had Tse been an independent contractor, these expenses would have been the outgoing expenses for Tse’s own business. I find that R2 and/or R3 making a contribution to these expenses goes against the notion of Tse being an independent contractor. CONCLUSION 35.I have taken into consideration the fact that the respondents made no contribution of MPF and made no payment of statutory entitlements (i.e. statutory holidays, annual leaves or sick leaves) to Tse, but on the totality of the evidence, I find that Tse was not carrying on business on his own account but carrying out work on the business of R2 and R3. It follows that at the time of the accident, Tse was in the course of employment with R2 and R3. THE CASE AGAINST R1 36.R1 may have negotiated and confirmed the terms of employment with Tse on behalf of R2. R1 himself was also a cross-border driver. He was not a director of R3. He was also assigned orders by R3. I find that R1 worked as a driver and assisted in R2’s business as a driver. Tse did not take orders from R1, as R1 only takes orders for factory goods and Tse did not accept factory goods orders. Whilst R1 may have taken part in the administration of R3, as he helped to get drivers like Tse and joined the WeChat Group “海東支援車隊”, from the evidence, it is unsubstantiated that he was a sub-contractor of R3 and I am not satisfied that R1 was the employer of Tse. QUANTUM 37.Quantum is not disputed. It is agreed that Tse sustained head injuries and bleeding from his ears. Quantum under ss 9, 10, and 10A of the Employees’ Compensation Ordinance (Cap 282) (“ECO”) is agreed at $363,280.67. The agreed breakdown are as follows:- Section 9 compensation 38.Tse’s monthly earnings for the month immediately preceding the accident was $23,800.00. He was over 56 years of age at the time of the accident, a lump sum equal to 48 months’ earnings should be used for calculating Tse’s compensation under s.9 of the Ordinance. 39.The permanent partial loss of earning capacity is therefore at $23,800.00 x 48 months x 3% = $34,272. Section 10 compensation 40.From 6 June 2017 to 1 November 2018, Tse was granted 514 days of sick leave. 41.Compensation under s 10 of the Ordinance is therefore at $23,800.00 x 4/5 x 514 days / 30 days = $326,218.67. Section 10A compensation 42.As of 20 June 2019, the medical expenses incurred by Tse is about $2,790. 43.The total EC compensation is therefore agreed at:-
ORDER 44.I awarded Tse $363,280.67 against R2 and R3 with interest at half the judgment rate from the date of the accident to the date of judgment and thereafter at the judgment rate until payment. Tse’s case against R1 be dismissed. COSTS 45.I make a cost order nisi against R2 and R3 in favour of Tse and R1’s costs shall be paid by Tse to be taxed if not agreed, with certificate for counsel. Tse’s own costs to be taxed in accordance with the Legal Aid Regulations. In absence of any application for variation, this costs order shall be made absolute in 14 days from the date hereof.
Mr Derek Hu, instructed by Siao, Wen and Leung, assigned by the Director of Legal Aid, for the applicant Mr Howard Tang, instructed by Francis Kong & Co, for the 1st to 3rd respondents |
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