Lam Hoi San, The Person Appointed To Represent the Estate of Lam Yiu Wah, Deceased v. Win Lee Auto Engineering Co Ltd and Another

DCEC 1445/2015

[2021] HKDC 502

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1445 OF 2015

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BETWEEN

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Before: Deputy District Judge Kay Seto in Court

Date of Hearing: 22 April 2021

Date of Judgment: 28 April 2021

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J U D G M E N T

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Introduction

1.This is the trial of an employees’ compensation case commenced by the late Mr Lam Yiu Wah (“Deceased”) in respect of an accident on 16 August 2013 at No. 9 South Section, Wa Shan Village, Sheung Shui, New Territories, where he suffered an electric shock and sustained left elbow and back injuries.

2.By an application dated 14 July 2015, the Deceased claimed compensation from the 1^st respondent as employer under sections 9, 10 and 10A of the Employees’ Compensation Ordinance (Cap 282) (“ECO”), namely, for permanent partial incapacity, periodical payments and medical expenses respectively.  He also appealed against the Certificate of Review of Assessment (Form 9) issued by the Employees’ Compensation (Ordinary Assessment) Board dated 11 May 2015.

3.The Deceased passed away on 11 January 2019 from an illness unrelated to the accident.  By the order of HH Judge Levy dated 10 September 2019, Mr Lam Hoi San was appointed to represent the estate of the Deceased and to carry on these proceedings. Thereafter, leave has been granted for the Deceased’s witness statement dated 21 March 2018 to be admitted as evidence herein without calling the maker.

4.The 1^st respondent was initially legally represented.  Its former solicitors were granted leave to cease to act for it on 20 August 2018.  Since then, the 1^st respondent, who is not legally represented, has not participated at all in these proceedings, including this trial.

5.By the order of HH Judge Levy dated 19 June 2020, the Employees Compensation Assistance Fund Board (“Board”) was joined in these proceedings as the 2^nd respondent, pursuant to section 25A(a) of the Employees Compensation Assistance Ordinance (Cap 365) and Order 15, rule 6 of the Rules of the District Court (“RDC”), to contest the issue of quantum only.  The Board has made it clear throughout that it does not take any position on the issue of liability.

6.The applicant has filed affirmations of service proving that the last court order which, among other things, set out the dates of this trial, and the trial bundle, have been served on the 1^st respondent’s address in Sheung Shui.  This is the 1^st respondent’s registered address as recorded in its annual return filed with the Companies Registry on 24 October 2017.  The applicant’s solicitors conducted an updated search on 19 April 2021, which reveals that no further filing has been made by the 1^st respondent at the Companies Registry since then.  I am satisfied that the 1^st respondent has had notice of this trial, and I proceeded with the trial in its absence pursuant to RDC Order 35, rule 1(2).

7.In the light of the above procedural history, it is for the applicant to prove his case against the 1^st respondent on liability.  On quantum, the applicant and the Board are able to reach an agreement shortly before the trial commenced.

Liability

8.The issue is whether the accident arose out of and in the course of the Deceased’s employment with the 1^st respondent.  In its answer, the 1^st respondent denies that to be the case and avers that, on the day of the accident, the applicant worked as an independent contractor.

9.As the Court of Final Appeal held in Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156, §18, per Ribeiro PJ, the modern approach to the question whether one person is another’s employee is to examine all the features of their relationship against the background of the indicia developed in the relevant case law with a view to deciding whether, as a matter of overall impression, the relationship is one of employment, bearing in mind the purpose for which the question is asked.  It involves a nuanced and not a mechanical approach.

10.In Poon Chau Nam (at §17), the Court of Final Appeal cited with approval the following passage from Cooke J’s decision in Market Investigations Ltd v Minister v Social Security [1969] 2 QB 173, 184-185:

“... the fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’ If the answer to that question is ‘yes,’ then the contract is a contract for services. If the answer is ‘no,’ then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”

11.In the present case, according to the Deceased’s evidence, he started working for the 1^st respondent as a welder on 18 February 2013.  He was paid a basic salary of $20,000 plus an award of $3,000 monthly.  He had to work according to the 1^st respondent’s instructions.  He was provided with all tools and equipment for the work.  He could not refuse any work assigned to him by the 1^st respondent and was under the supervision of its director, Mr Chan Yiu Fai.  He did not employ his own workers.  He had to obtain the 1^st respondent’s permission whenever he wanted to take leave.  He took no part in the profit and loss of the 1^st respondent.  He was reimbursed travelling expenses and other miscellaneous purchases by the 1^st respondent.

12.There are contemporaneous documents before me in support of the applicant’s case that the Deceased was employed by the 1^st respondent at the time of the accident:

(1) Receipts of salary payments (described as “薪俸” and “工資”) and disbursements signed by the Deceased show that he was paid a monthly salary of $20,000, allowances and reimbursements of miscellaneous purchases on various dates from June to August 2013, viz. shortly before the accident took place.

(2) A notice of termination dated 25 August 2013 (viz. 9 days after the accident), issued by the 1^st respondent, gave the Deceased 7 days’ notice to terminate the contract between the parties.  I note that the notice period provided for accords with the statutory requirement for termination of a contract of employment by notice under section 6(2) of the Employment Ordinance (Cap 57) (“EO”).

(3) An agreement dated 18 December 2013 between the Deceased and the 1^st respondent, under which the 1^st respondent, as employer, agreed to pay a sum of $10,000 to the Deceased, as employee, in settlement of his claims for arrears of wages, payment in lieu of notice, annual leave pay and severance payment under the EO, the Minimum Wage Ordinance (Cap 608) and the contract of employment.

13.On the whole of the evidence, I accept the applicant’s contention that the Deceased worked as the 1^st respondent’s employee at the time of the accident.  The Deceased’s evidence on his working relationship with the 1^st respondent, as set out above, is unchallenged, the 1^st respondent being absent at the trial.  Applying the well settled principles in Poon Chau Nam, supra, and having regard to the indicia of employment as explained in the Deceased’s evidence, including the degree of control exercised by the 1^st respondent, the provision of equipment by the 1^st respondent, and the lack of interest on the applicant’s part in the 1^st respondent’s prospect of profit or risk of loss, it is clear that the Deceased worked for the 1^st respondent as an employee rather than an independent contractor at the time of the accident.

14.I therefore find as a fact that the Deceased was an employee of the 1^st respondent at the time of the accident.  In the absence of evidence to the contrary, I also hold that the accident arose out of and in the course of the Deceased’s employment with the 1^st respondent: see ECO section 5(4)(a) and (b). Accordingly, the 1^st respondent is liable to pay employees’ compensation to the applicant.

Quantum

15.At the trial, upon the consent of the applicant and the Board, I granted leave to admit the orthopaedic expert report of Dr Miu Yin Shun Andrew dated 24 July 2020 as expert evidence without calling the maker.  It is Dr Miu’s opinion that the Deceased’s loss of earning capacity caused by the accident was 8%, as opposed to 6% as assessed in Form 9.

16.As stated above, the applicant and the Board have reached an agreement on quantum.  In the absence of any challenge by the 1^st respondent, I am prepared to give effect to the agreed figures so long as they are within the range of compensation payable under the ECO and are substantiated by evidence before the court: see Lai Yuk Tsan v Poly Chance (Asia) Limited and Anor, DCEC 2601 of 2014 (31 October 2017), §15.

17.Having considered the factual evidence and the orthopaedic expert evidence of Dr Miu, I am satisfied that the following bases^[1] upon which the applicant and the Board agreed on quantum are within the range of compensation payable under the ECO and also substantiated by the evidence before me:

(1) For the purposes of calculating the applicant’s claims under sections 9 and 10, the Deceased’s monthly earnings are agreed at $20,000.  This figure is supported by the receipts of salary payments signed by the Deceased on various dates from June to August 2013.

(2) The Deceased’s loss of earning capacity, for the purposes of calculating section 9 compensation, is agreed at 8% as opined by Dr Miu.

(3) The Deceased was aged 58 at the time of the accident.  The applicable multiplier for calculating section 9 compensation shall be 48: see ECO sections 7(1)(c) and 9(1).

(4) The Deceased’s sick leave, for the purposes of calculating section 10 compensation, is 187 days. This is supported by the sick leave certificates produced by the applicant.

(5) The medical expenses incurred by the Deceased amount to $6,070.  This is supported by the receipts produced by the applicant and would form the basis of section 10A compensation.

18.Accordingly, I hold that the 1^st respondent is liable to pay compensation under the ECO as follows:

Section 9 compensation: $20,000 x 48 months x 8%	$76,800.00
Section 10 compensation: $20,000 x 187/365 x 12 months x 4/5	$98,367.12
Section 10A compensation	$6,070.00
Total:	$181,237.12

Conclusion

19.In view of my decision above, there shall be judgment against the 1^st respondent in the sum of $181,237.12.

20.The 1^st respondent shall pay interest on the judgment sum at half of the judgment rate from the date of the accident to the date of judgment, thereafter at the judgment rate until full payment.^[2]

21.The applicant’s appeal against the assessment in Form 9 is allowed as provided for at §17(2) above.

22.On the issue of costs, I have been referred to authorities in which the employer (who was either absent or did not actively contest the proceedings) was ordered to pay the costs of the employee and/or the Board: see e.g. Lai Yuk Tsan, supra, §§26-27.  It is clear that the court may exercise its discretion to order costs against the 1^st respondent where a settlement has been reached between the applicant and the Board.  In the present case, I am prepared to exercise my discretion to order costs against the 1^st respondent as proposed by the applicant and the Board.

23.I therefore make an order nisi that:

(1) the 1^st respondent do pay the costs of the applicant in these proceedings vis-à-vis the 1^st respondent and the 2^nd respondent, including the costs of and occasioned by the 2^nd respondent’s joinder, with certificate for counsel, to be taxed if not agreed;

(2) the 1^st respondent do pay the costs of the 2^nd respondent in these proceedings, with certificate for counsel, to be taxed if not agreed;

(3) there be no order as to costs between the applicant and the 2^nd respondent; and

(4) the applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

The costs order nisi shall become absolute upon the expiry of 14 days after the date of this judgment if there is no application to vary the same within the 14-day period.

24.I thank counsel for their assistance.

Ms Christina Lee, instructed by L & L Lawyers, assigned by the Director of Legal Aid, for the applicant

The 1^st respondent, unrepresented, did not appear

Mr Tony H H Chow, instructed by Cheng, Yeung & Co., for the 2^nd respondent