Choi Kam Wing v. Sky Dragon International Construction Company Ltd and Others

DCEC 984/2021

[2024] HKDC 483

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 984 OF 2021

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IN THE MATTER OF AN APPLICATION BETWEEN

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JUDGMENT

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Introduction

1.By an Application dated 17 May 2021 and amended on 18 January 2024 (“Amended Application”), the Applicant (“Mr. Choi”) claims against the 1^st Respondent and the 2^nd Respondent for compensation under the Employees’ Compensation Ordinance Cap. 282 (“ECO”) in relation to an alleged accident (“Accident”) that occurred on 17 December 2019 at the construction site at Wah King Hill Road, Kwai Fong, New Territories, Hong Kong (“Site”). The Site was part of the works covered by the Landslip Prevention and Mitigation Programme, 2017, Package K, Contract No. GE/2018/01 (“Contract”) entered into between the Civil Engineering and Development Department (“CEDD”) and the 2^nd Respondent.

2.According to Mr. Choi, the Accident occurred while he was carrying out safety inspection at the Site and he slipped and fell on the stairs. As a result of the Accident, Mr. Choi injured his left knee and lower back.

3.In paragraph 3(3) of the Amended Application, Mr. Choi claims that at the time of the Accident, he was in the course of employment and an employee of “the 1^st Respondent and/or the 2^nd Respondent”. As Mr. Wong (together with Ms. Ronald), counsel for Mr. Choi, submitted:-

a. Mr. Choi’s primary case is that the 2^nd Respondent was all along his employer.

b. In the alternative, if the Court finds that the 2^nd Respondent was not Mr. Choi’s employer, then the Court should find the 1^st Respondent as Mr. Choi’s employer.

4.At the outset, I note that Mr. Choi had given an account as to how he met with the Accident while working on the Site. Mr. Choi’s evidence is largely consistent with what was recorded on the Form 2, which was filled in by the 2^nd Respondent’s staff. There is thus little doubt that Mr. Choi was injured at work. The main issue is who the employer of Mr. Choi was at the time of the Accident.

5.The 1^st Respondent did not file any Answer to the Application and did not appear at trial. As it transpired that the 1^st Respondent did not have a valid employees’ compensation insurance policy in place, the 3^rd Respondent (the “Board”) applied to intervene on 22 December 2023, which was granted by the order of HH Judge Levy on 16 January 2024.

6.It is trite that in joining into these proceedings, the Board is discharging its statutory duties to scrutinise Mr. Choi’s claim to ensure that he will receive such compensation as he is entitled to. See Wo Chun Wah v Employees Compensation Assistance Fund Board (2019) 22 HKCFAR 495 at paras.44-46.

Issues to be tried

7.The following issues fall to be decided by the Court:-

a. Whether Mr. Choi was the 2^nd Defendant’s employee? If not, whether the 2^nd Defendant should be liable as the principal contractor of the Site under s. 24 of the ECO?

b. Whether Mr. Choi was the 1^st Defendant’s employee?

c. What is the appropriate amount of compensation to be awarded to Mr. Choi under sections 9, 10 and 10A of the ECO?

Whether Mr. Choi was an employee of the 2^nd Defendant

8.The approach for determining the existence of an employer-employee relationship has been laid down by the Court of Final Appeal in Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156 at paras.9-18. As Rebeiro PJ observed at paragraph 18 of the judgment:-

“18. The modern approach to the question whether one person is another’s employee is therefore to examine all the features of their relationship against the background of the indicia developed in the abovementioned 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…”

9.There is no dispute that Mr. Choi was an employee (as opposed to an independent contractor) working on the Site. The issue as to whether it was the 1^st Respondent or the 2^nd Respondent who was Mr. Choi’s employer at the material time is the main focus of the trial. Thus, the indicia that it was the Applicant who brought his own equipment to work (safety boots and safety helmet), whether Mr. Choi was carrying on business on his own account, and whether there was any prospect of profit or risk of loss are of much lesser significance as they would assume in other cases.

10.Mr. Choi is the only witness who testified at trial. His evidence, in gist, is that:-

a. In early 2019, he accepted a job invitation by one Mr. Martin Yeung, who was the site agent of the 2^nd Respondent, to work as a foreman for the 2^nd Respondent.

b. He worked as a foreman for the 2^nd Respondent at different sites since 2 July 2019, until the Accident on 17 December 2019. His job duties were to supervise and direct other construction workers, including workers of the 1^st Respondent, to comply with different building regulations in different construction sites of the 2^nd Respondent.

c. In around August 2019, Mr. Choi was assigned to work at the Site and another site in Tsing Yi.

d. Mr. Choi was informed if he had to take leave, he should inform the 2^nd Respondent through Mr. Yeung. Mr. Choi would receive instructions from Mr. Ricky Ko, Mr. Yeung and “Hung Gor” of the 2^nd Respondent.

e. On the date of the Accident, Mr. Choi was instructed by Hung Gor to meet at another construction site in Happy Valley at 10:00 am to inspect that site with staff of CEDD.

f. After that inspection, Hung Gor arranged Mr. Choi and the staff of CEDD to go to the Site for safety inspection, during which the Accident took place.

g. After the Accident, Mr. But (who was a foreman and safety supervisor of the 2^nd Respondent) and a CEDD office helped Mr. Choi up and carried him to his car. Hung Gor asked Mr. Choi to take sick leave to see the doctor.

h. At around 11:00 a.m. on the day of the Accident, Mr. Yeung sent in a WhatsApp group chat reporting that Mr. Choi slipped on the stairs, and has gone to visit a bone-setter. The screen capture of the relevant group chat was produced as part of Mr. Choi’s evidence, despite the fact that Mr. Choi now cannot recall clearly who the participants of the group chat were.

11.The contemporaneous documents suggest that Mr. Choi was an employee of the 2^nd Respondent. According to the organization chart of the 2^nd Respondent dated 18 September 2019 (annex 3 to Mr. Choi’s witness statement), Mr. Choi was named as an environmental supervisor, hazard identification activity instructor (“HIA Instructor”) and site foreman.

12.By a letter from CEDD to the 2^nd Respondent dated 14 October 2019, the 2^nd Respondent’s nomination of Mr. Choi to be the Safety Supervisor in relation to the Contract was accepted by the CEDD.

13.By a document titled “Kwan On Construction Co Ltd Appointment of Competent/Authorized Person” dated 28 October 2019, Mr. Choi (as Foreman) was appointed as HIA Instructor in relation to the Contract with effect from 28 October 2019.

14.It appears that, after the Accident, the 2^nd Respondent wrote to the CEDD by letter dated 24 December 2019 submitting that Mr. Choi was a direct employee of the 1^st Respondent (which was the sub-contractor of the 2^nd Respondent). CEDD replied by letter dated 31 December 2019, stated that “based on our record, Mr. CHOI is the Safety Supervisor under the [Contract] and should be under direct employment of you according to D1(4) of additional conditions of contract. In addition, your submitted attendance record also indicated that Mr. CHOI is under direct employment of you.”

15.According to the attendance record in relation to the Contract for the months of August, September, October and November 2019, the employee number of Mr. Choi was KOC0998, and his position was “Foreman”. Mr. Choi was recorded to have attended work regularly on an almost daily basis.

16.Mr. Fong for the 2^nd Defendant submitted that these documents did not spell out clearly that Mr. Choi was the employee of the 2^nd Respondent, as opposed to him merely being an employee of the 2^nd Respondent’s sub-contractor (viz the 1^st Respondent). I am unable to accept this submission.

17.Firstly, there is no evidence whatsoever to support that submission. The 2^nd Respondent did not call any witness, despite having earlier filed the witness statement of Ma Ving Hoo, who did not attend trial and consequently his witness statement (together with its exhibits) was expunged from the trial bundle.

18.Secondly, this submission sits uncomfortably with the contemporaneous documentary evidence mentioned above. For instance, the attendance record did not show that Mr. Choi was the employee of the 2^nd Respondent’s sub-contractor. To the contrary, the attendance record shows that Mr. Choi was given an employee number and the position of foreman, with the relevant contractor being stated as “Kwan On Construction Company Limited”, i.e. the 2^nd Respondent.

19.I have little doubt that Mr. Choi was at the material time of the Accident the employee of the 2^nd Respondent.

20.Given my finding on this, it is not strictly necessary to consider whether the 2^nd Respondent should be held liable under s. 24 ECO as the principal contractor of the Site. However, for completeness sake, I note that:-

a. The 2^nd Respondent does not dispute that it was the principal contractor of the Site.

b. The 2^nd Respondent’s case is that the sub-contract with the 1^st Respondent had already been terminated on 16 December 2019, just one day before the Accident.

21.In so far as it is necessary, I would also reject this suggestion as it is objectively inconsistent with the unchallenged evidence of Mr. Choi that he was arranged to attend a safety inspection with the staff of CEDD at the Site on 17 December 2019. It is difficult to understand why even after the alleged termination of the sub-contract with the 1^st Respondent on 16 December 2019, Mr. Choi would be assigned to accompany the staff of CEDD to conduct an inspection at the Site. In any event, the 2^nd Respondent did not call any witness to provide an explanation as to that.

Whether Mr. Choi was an employee of the 1^st Defendant

22.It is in theory possible that the 1^st Defendant was also the employer of Mr. Choi in relation to his work at the Site. However, as Mr. Wang (counsel for the 3^rd Respondent) submitted, it is difficult to envisage how an employee could be under the employment of two employers at the same time in respect of the same services. In Chung Yuen Yee v Sam Woo Bore Pile Foundation Ltd (2013) 16 HKCFAR 315, the plaintiff sued four related companies for damages on the basis that the deceased was employed by all four defendants. The trial judge and the court of appeal found some of the defendants to be co-employers but the Court of Final Appeal found that only the 2^nd defendant was the employer. Lord Hoffmann NPJ said at para.13:-

“Employment is a bilateral relationship and there is nothing to show that Mr Lai was party to these tax or accounting arrangements. But the judge and the Court of Appeal concluded that Mr. Lai had been the servant of (at least) two masters. No doubt a person may be simultaneously employed by more than one employer in respect of different services, but I know of no case in which anyone has been held to have two independent employers in respect of the same services.”

23.The evidence which might suggest that the 1^st Respondent was the employer of Mr. Choi is mainly:-

a. A Form 2 submitted by the 2^nd Respondent dated 21 December 2019, which stated that the 2^nd Respondent was the principal contractor, and the 1^st Respondent was the employer of Mr. Choi. The Form 2 bears two receipt chops of the Labour Department dated 3 Jan 2020 and 31 Dec 2019.

b. A cheque copy dated 5 September 2019 in the sum of HK$38,000, issued by the 1^st Respondent to Mr. Choi. According to Mr. Choi’s unchallenged evidence, he received the cheque from the 2^nd Respondent’s staff at the office of the 2^nd Respondent as payment of his monthly wage for August 2019. Apart from this payment, Mr. Choi had not received any payment of wages, and he is in the course of claiming for his outstanding wages at the Labour Tribunal.

24.In respect of the Form 2, it was filled in by the 2^nd Respondent after the Accident. Mr. Wong relied Shek Kam Ching v Po Kee Construction Engineering Ltd & Ors [2002] 3 HKLRD 795 at para.5 in relation to the weight to be given to information contained in Form 2. In that case, Deputy Judge To (as he then was) placed little weight on the hearsay statements contained in the Form 2 filed by the principal contractor regarding the identity of the true employer, as the principal contractor might not have been accurate in identifying the relevant employer, given the manly levels of sub-contracting involved.

25.In Chan Yau Wing v Hyundai Engineering & Construction Company Limited & Ors, DCEC 672/2024, 26 September 2005 at paras.67-69, HH Judge Marlene Ng (as she then was) considered Shek Kam Ching and refused to attach any weigh to the time and circumstances of the alleged accident as described in Form 2.

26.In the present case, the statement made by the 2^nd Defendant in the Form 2 that it was the 1^st Respondent who was Mr. Choi’s employer is to an extent self-serving. In the absence of any evidence from the 2^nd Respondent as to how the Form 2 was filled in, and on what basis was the 1^st Defendant named as the employer of Mr. Choi, I refuse to attach any weight to that aspect of the Form 2.

27.The fact that it was the 1^st Respondent which drew a cheque for the payment of Mr. Choi’s August 2019 salary in the sum of $38,000 is only one of the indicia that the Court has to consider, and is by no means conclusive. According to Mr. Choi, the $38,000 was paid by the 1^st Respondent on behalf of the 2^nd Respondent, and he was told that he would have to make a repayment of $38,000 to the 1^st Respondent when he eventually gets paid by the 2^nd Respondent.

28.There was no evidence from the 2^nd Respondent as to the financial arrangement between the 1^st Respondent and the 2^nd Respondent. Little weight can therefore be placed on the 2^nd Respondent’s submission that it was unusual for a sub-contractor to advance wages and make payment on behalf of a principal contractor.

29.All in all, taking into account all the relevant indicia, and in particular that the contemporaneous documents pointing to the fact that the 2^nd Respondent was the employer of Mr. Choi, and Mr. Choi’s unchallenged evidence as to fact that he took instructions only from the 2^nd Respondent’s staff (Ricky Ko, Mr. Yeung and Hung Gor), I came to the conclusion that the 1^st Respondent was not the employer of Mr. Choi when Mr. Choi was working on the Site.

Quantum

30.Mr. Choi claims that his monthly earnings at the time of the Accident was $38,000. This was also the figure that the 2^nd Respondent stated in the Form 2. Further, according to the cheque and receipt dated 7 September 2019, $38,000 was paid to Mr. Choi in respect of his wages for August 2019.

31.The Certificate of Review of Assessment (Form 9) dated 16 March 2023 was issued by the EC (Ordinary Assessment) Board. There was no appeal from that. Mr. Choi was assessed to be suffering from a loss of earning capacity permanently of 1.5%, and the period of absence from duty as a result of the injury arising from the Accident was from 19 December 2019 to 26 August 2022.

32.Compensation under s. 9 ECO is calculated as follows:-

a. Mr. Choi was born on 20 December 1975, and was aged 43 on the date of the Accident. The applicable multiplier is thus 72 months in accordance with s. 7(1)(b) of ECO.

b. According to the Sixth Schedule to ECO (as of 26 April 2019), the applicable ceiling of the monthly earnings for calculation of compensation under s. 9 is $30,530.

c. Compensation payable under s. 9 ECO is thus $30,530 x 72 months x 1.5% = $32,972.40.

33.Compensation under s. 10 ECO is calculated as follows:-

a. According to Form 9, sick leave was allowed from 19 December 2019 to 26 August 2022, totalling 982 days (32 months and 8 days).

b. According to s. 10(2), the period of absence from duty certified shall be deemed to be a period of total temporary incapacity. Pursuant to s. 10(5) ECO, the Court has a discretion to extend the period of total temporary incapacity to beyond 24 months for a period of not more than 12 months.

c. The compensation for the initial 24-month period should be $38,000 x 24 months x 4/5 = $729,600.

d. As for the further 8 months and 8 days, the Court has a discretion under s. 10(5) to extend the sick leave period for not more than 12 months. This is an appropriate case to grant such an extension such that the whole sick leave period of 32 months and 8 days can be covered.

e. s. 11(1A) and (1B) ECO provide for the annual increase allowed in accordance with the rate of increase in the Consumer Price Index (“CPI”).

f. According to the Monthly Report on CPI published by the Census and Statistics Department on 20 July 2023, the adjustment in CPI(A) in December 2021 was 3%. Hence, the compensation for the extended period outside the initial 24-month period from 19 December 2021 to 26 August 2022 is $38,000 x 1.03 x 251/30 x 4/5 = $261,997.07.

g. The total compensation payable under s. 10 ECO is thus $991,577.07 ($729,600 + 261,977.07).

34.Compensation under s. 10A ECO is claimed at $2,685, which is not challenged by the Respondents.

35.It is common ground that credit should be given to the $14,030.77 already received by Mr. Choi from the 2^nd Respondent as compensation.

36.The total compensation payable by the 2^nd Respondent to Mr. Choi is thus $991,577.07 + $2,685 + 32,972.40 – 14,030.77 = $1,013,203.70.

37.The 2^nd Respondent shall also be liable to pay interest on the total sum of compensation in the following manner:-

a. From the date of the Accident to the date of this Judgment, at the rate of 4% per annum.

b. From the date of this Judgment to the date of payment of the compensation awarded, at the judgment rate.

Costs

38.As the Court finds that the 2^nd Respondent was the employer of Mr. Choi, the 2^nd Respondent should be liable for the costs of Mr. Choi’s claim herein.

39.As the 2^nd Respondent had suggested in the Form 2 that the 1^st Respondent was the direct employer of Mr. Choi, it appears reasonable for Mr. Choi to have joined the 1^st Respondent in these proceedings, despite the fact that ultimately the Court found that only the 2^nd Respondent was the employer of Mr. Choi. In turn, the 3^rd Respondent had to join in because the 1^st Respondent was joined. A Sanderson order appears to be appropriate.

40.In accordance with Wo Chun Wah v Employees Compensation Assistance Fund Board [2019] HKCFA 48, paras.43-46, it appears fair for there to be no order as to costs as between Mr. Choi and the 3^rd Respondent.

41.As such, the Court shall make a costs order nisi as follows, which shall become absolute in the absence of an application to vary the same within 14 days hereof:-

a. The 2^nd Respondent shall be liable for the Applicant’s costs incurred in these proceedings, with certificate for one counsel, to be taxed if not agreed.

b. The 2^nd Respondent shall be liable for the 3^rd Respondent’s costs incurred in these proceedings, with certificate for counsel, to be taxed if not agreed.

c. There be no order as to costs between the Applicant and the 3^rd Respondent.

42.I thank all counsel involved for their assistance.

Mr C. K. Wong and Ms Ronald Rachel, instructed by Chan & Chan, for the Applicant

The 1^st Respondent is acting in person and absent

Mr Chris Fong, instructed by S. K. Wong & Co., for the 2^nd Respondent

Mr Clark Wang, instructed by Gallant, for the 3^rd Respondent