Cheng Yuen v. The Royal Hong Kong Golf Club

Labour Tribunal Appeal
No. 37 of 1996

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H E A D N O T E

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A caddie was told by a golf club not to turn up at its golf course anymore. He sued the club in the Labour Tribunal. The tribunal awarded him wages in lieu of notice and a long service payment. The club appealed to the High Court against that award.

On appeal, the sole question was whether the caddie was an employee or an independent contractor. Caddies were paid by the club, but the club said that it made such payments as agent for individual members who used the caddies' services, itself making no money and indeed losing money through such arrangement.

HELD (dismissing the appeal) :

(1) The fundamental test was the one laid down by Cooke J. in Market Investigations Ltd v. Minister of Social Security [1969] 2 QB 173 in a statement at pp 184 - 185 approved by the Privy Council in Lee Ting Sang v. Chung Chi-keung [1990] 2 WLR 1173 at p. 1176.

(2) Applying that fundamental test, considering the six specific indicia mentioned in the statement laying down that test, and considering also the eight factors suggested in "Chitty on Contracts", Vol. 2, pp 703 - 704, para. 37-008, the Court's firm conclusion was that the caddie was indeed an employee as the tribunal had found.

(3) In any event, since the relationship between the club and the caddie had to be determined by an investigation and evaluation of the factual circumstances in which the work was performed, whether such work was performed by the caddie as an employee or an independent contractor was a question of fact : Lee Ting Sang v. Chung Chi-keung (supra) at p. 1178 C - H. And since appeals from the Labour Tribunal to the High Court lie only on points of law or jurisdiction and not as appeals on facts as such (see section 32(1) of the Labour Tribunal Ordinance, Cap. 25) the tribunal's finding that the caddie was an employee could only be reversed if an appellate court could say that no tribunal correctly directing itself as to the law could reasonably have reached that conclusion: ibid. But that could not possibly be said in the present case.

(4) As to the agency argument, it was unconvincing : since the idea of a club setting itself up as a money-losing agent is unconvincing; and what is convincing is the idea of a club providing a range of services, some of which may be subsidized, to its members.

IN THE HIGH COURT

Labour Tribunal Appeal
No. 37 of 1996

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Coram : The Hon. Mrs Justice V. Bokhary in Court

Date of Hearing : 28 June 1996

Date of Judgment : 5 July 1996

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J U D G M E N T

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Mrs Justice V. Bokhary :

INTRODUCTION

1. This is an appeal from a decision of the Labour Tribunal made on 14th February 1996 awarding to the Respondent against the Appellant $4,680.00 wages in lieu of notice and a long service payment of $29,160.00 which two sums add up to $33,840.00 in all.

2. The Appellant is a golf club. From September 1986 to October 1995, the Respondent, who is now 83 years old, was a caddie at one of the Appellant's golf courses, namely the one at Deep Water Bay.

THE QUESTION

3. It all comes down to this question : as a caddie, was the Respondent an employee or was he an independent contractor?

4. That is the question. For the Respondent stopped being a caddie when the Appellant told him not to turn up at the course anymore. If he was an employee of its, then the Appellant does not dispute that he would be entitled to what the Labour Tribunal awarded him. If, on the other hand, he was an independent contractor, then there can be no doubt that no part of the award in his favour can stand.

THE PRIMARY FACTS

5. The primary facts are not in dispute. They are essentially as follows.

6. Caddies - and there is nothing to suggest that the Respondent's position differed in this or any other respect from that of caddies at the Respondent's golf courses generally - would accompany member of the club when they played golf, carrying their bags for them and so on.

7. The Respondent became a caddie at the Appellant's golf course at Deep Water Bay by filling in an application form, which document does not shed any light one way or the other on whether he was an employee or an independent contractor. There was no written contract. So I am not concerned with any caddie who has entered into a written contract but with this one who has not.

8. His application having been accepted, the Respondent was assigned a number, allocated a locker, provided with a uniform and shown his duties by one of the Appellant's junior golf professionals.

9. It was up to the Respondent, as it was to any other caddie, whether he turned up at the course at all and how long he stayed if he did turn up. In practice however, he turned up more or less every day of the week, arriving at the course in time for the first golf session which began at 6 o'clock in the morning and getting home at about 5 o'clock in the afternoon, since there seems to have been quite a lot of waiting around for actual work.

10. Like all the other caddies, the Respondent would wait his turn to work. He would work if called upon, and then he would receive payment. There was no guarantee that there would be work for him or any other caddie. If the weather was bad or there were very few players around for whatever reason, then a caddie may not have work. In practice, however, it seldom happened that the Respondent went a day without any work at all. On average, he would work - by which I mean actively work as opposed to wait around for actual work - four hours a day and earn $180 per day.

11. Caddies, the Respondent included, did not receive insurance cover, sick leave, holidays or pension.

12. As to payment, caddies, the Respondent included, were paid by the Appellant which later on debited each of the members concerned for the caddie service which he or she had utilised, doing so at precisely the same rate as the one at which it paid the caddies.

13. There was produced a standard form of letter for caddies at the Appellant's golf course in Fanling to sign saying, among other things this :

"I agree that should the Club accept me as a caddie I will throughout hold and continue to hold the status of a self-employed person and that the arrangement between me and the Club shall not, in any event or circumstances, constitute or be construed as a relationship of employer and employee, of principal and agent, of joint venturers or of partners, or of any other relationship of whatsoever nature, save and except that of independent contractors. I further acknowledge that I will not be entitled to any benefits offered or to be offered by the Club to its employees (whether permanent or temporary), including without limitation, the benefits of any pension scheme, any employer's liability insurance, medical insurance, life insurance, bonus or commission."

14. As it happens, the Respondent was never asked to sign such a document. So I am not concerned with any caddie who has signed such a document but with this one who has not.

15. There was also produced a copy of a notice in English and Chinese dated January 1995 displayed at the Applicant's club premises saying :

" Accident

In the eyes of law, caddies are independent contractors, not an employee. As caddies are employed by individual golfers and without any employment relationship with the Club, caddies cannot made any Employees' Compensation claims against the Club. If a caddie is hit by a golf ball, he should report the accident to the Security Department who will record the facts, and should claim against the one who hit the ball. The Club will not be responsible for any Employees' Compensation claims."

16. That notice is of course not contractual.

17. As far as control is concerned, the position is perhaps best illustrated by simply quoting a question which the Presiding Officer asked the Appellant's general manager in the course of his evidence. Taking it from the Presiding Officer's note, the question and answer are as follows.

"Court : In the event any member had complaints against any caddies, did the club do anything?

A : There are 3 gradings in Fanling Club House, First class, Regular, and Bag carrier. If there are 3 bad reports against a particular caddie, he would either be demoted or asked not to come to serve."

18. Those then are the primary facts. The legal conclusion to be drawn from them is something to which I will come after considering the relevant law.

THE RELEVANT LAW

Cooke J.'s fundamental test and six specific criteria

19. In considering the relevant law, I go at once to what Cooke J. said in Market Investigations Ltd v. Minister of Social Security [1969] 2 QB 173 because the Privy Council said in an appeal from Hong Kong (Lee Ting Sang v. Chung Chi-keung [1990] 2 WLR 1173 at p. 1176) that the matter has never been better put than by Cooke J. when he said this at pp. 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."

20. Next, I turn to this very useful statement in "Chitty on Contracts," Vol. II, pp 703 - 704, para. 37-008 :

" Recent case law suggests that the factors relevant to the process of identifying a contract of employment may usefully be listed as follows :

(1) the degree of control exercised by the employer;

(2) whether the worker's interest in the relationship involved any prospect of profit or risk of loss;

(3) whether the worker was properly regarded as part of the employer's organisation;

(4) whether the worker was carrying on business on his own account or carrying on the business of the employer;

(5) the provision of equipment;

(6) the incidence of tax and national insurance;

(7) the parties' own view of their relationship;

(8) the traditional structure of the trade or profession concerned and the arrangements within it."

ANALYSING THE PRIMARY FACTS BY REFERENCE TO THE RELEVANT LAW

21. When the primary facts are analysed by reference to the relevant law, this is what emerges.

22. Testing the circumstances of the present case by reference to Cooke J.'s indicia, this is the position as I see it.

23. First, as to control, there was here control to the extent of putting caddies in uniform, grading them and even demoting them. That is suggestive of an employer-employee relationship.

24. Secondly, as to whether the man performing the services provides his own equipment : caddies do not provide their own equipment; but then neither does the Appellant provide them with any equipment unless uniforms are to be regarded as equipment. The circumstances of the present case are therefore largely neutral in regard to the provision of equipment.

25. Thirdly, as whether the man providing the services hires his own helpers : caddies do not hire their own helpers; but then neither does the Appellant hire any helpers for them. The circumstances of the present case are therefore wholly neutral in regard to the hiring of helpers.

26. Fourthly, as to what degree of financial risk the man providing the services takes : caddies do not take any of the risks which a person in business on his own account takes. Looked at realistically, the only financial risk caddies take is the risk which piece-workers generally take. That is suggestive of an employer - employee relationship.

27. Fifthly, as to what degree of responsibility for investment and management the men providing the services has : caddies do not have any such responsibility at all; but then neither do a lot of independent contractors. So all that can be said here is limited to this. When the question as to responsibility for management and investment is asked in the present case, the answer, in so far as it points anywhere, points away from independent contractor status.

28. Sixthly and finally, as to whether and how far the man providing the services has an opportunity of profiting from sound management in the performance of his task : it is wholly unreal to think of caddies being able to profit from sound management in the performance of their task. Management simply does not come into it. And in so far as that points anywhere, it also points away from independent contractor status.

29. On the whole, it can be seen therefore that testing the circumstances of the present case by reference to those six specific indicia produces a picture unfavourable to the Appellant which asserts that its caddies are independent contractors and favourable to the Respondent who asserts that they are employees.

30. As I see it, the same picture emerges when one stands back and takes a realistic look at the facts of the present case before answering the question which Cooke J. formulated as the fundamental test to be applied : "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" In all the circumstances, to think of these uniformed, graded and demotable caddies as businessmen of any kind is wholly unrealistic. I say nothing as to other kinds of caddies including those who assist top players in major tournaments. I am only concerned with caddies such as this Respondent. They do hard, honest and respectable work for modest reward. They deserve respect. But - and it is no reflection on them of course - to call them businessmen is simply not real.

31. Leaving Cooke J.'s fundamental test and six specific indicia, I turn now to the eight factors listed in the statement in "Chitty" which I quoted earlier.

Chitty's eight factors

32. I deal with them one by one.

"(1) the degree of control exercised by the employer" : I need not repeat what I have already said as to control.

"(2) whether the worker's interest in the relationship involved any prospect of profit or risk of loss" : Nor do I need to repeat what I have already said as to profit and loss.

"(3) whether the worker was properly regarded as part of the employer's organisation" : Plainly, caddies are an integral part of a golf club and by no means casually or temporarily engaged merely for the purpose of completing some specific task ancillary to the club's main activity. So this factor points to an employer - employee relationship here.

"(4) whether the worker was carrying on business on his own account or carrying on the business of the employer" : I need not repeat what I have already said as to business.

"(5) the provision of equipment" : Nor do I need to repeat what I have already said as to equipment.

"(6) the incidence of tax and national insurance" : This factor sheds no light on the present case one way or the other.

"(7) the parties' own view of their relationship" : Nor does this factor shed any light on the present case one way or the other, since each party seems to have taken an opposite view throughout.

"(8) the traditional structure of the trade or profession concerned and the arrangements within it" : There is no evidence on such structure or arrangements which makes reference to this factor rewarding in the present case.

AGENCY

33. Now, it is the Appellant's contention not only that caddies are independent contractors but that they contract with individual members rather than with the club itself. So the fact that it paid the caddies is something which the Appellant not surprisingly perceived as calling for an explanation.

34. The explanation which it offered is its contention that it made such payments as agent for individual members who used the caddies' services.

35. That, the Appellant argues, must be so since it did not make any money through caddie fees and indeed would have lost money in connection therewith through the administrative costs of the arrangement and the loss of interest which such arrangement involved.

36. I do not find the argument convincing despite the persuasive way in which Mr. Stone for the Appellant advanced it. The idea of a club setting itself up as a money-losing agent is unconvincing. What is convincing is the idea of a club providing a range of services, some of which may be subsidized, to its members.

THE APPELLATE APPROACH

37. Since I am dealing with this matter on appeal from the Labour Tribunal rather than at first instance, my approach is governed by this statement of the Privy Council's in Lee Ting Sang v. Chung Chi-keung (supra) at p. 1178 C - H :

" Whether or not a person is employed under a contract of service is often said in the authorities to be a mixed question of fact and law. Exceptionally, if the relationship is dependent solely upon the true construction of a written document it is regarded as a question of law : see Davies v. Presbyterian Church of Wales [1986] 1 W.L.R. 323. But where, as in the present case, the relationship has to be determined by an investigation and evaluation of the factual circumstances in which the work is performed, it must now be taken to be firmly established that the question of whether or not the work was performed in the capacity of an employee or as an independent contractor is to be regarded by an appellate court as a question of fact to be determined by the trial court. At first sight it seems rather strange that this should be so, for whether or not a certain set of facts should be classified under one legal head rather than another would appear to be a question of law. However, no doubt because of the difficulty of devising a conclusive test to resolve the question and the threat of the appellate courts being crushed by the weight of appeals if the many borderline cases were considered to be questions of law, it was held in a series of decisions in the Court of Appeal and in the House of Lords under the English Workmen's Compensation Acts 1906 and 1925 that a finding by a county court judge that a workman was, or was not, employed under a contract of service was a question of fact with which an appellate court could only interfere if there was no evidence to support his finding : see Smith v. General Motor Cab Co. Ltd. [1911] A.C. 188, Bobbey v. W. M. Crosbie & Co. Ltd. (1915) 114 L.T. 244 and Easdown v. Cobb [1940] 1 All E.R. 49. More recently in O'Kelly v. Trusthouse Forte Plc. [1984] Q.B. 90 the Court of Appeal, despite a powerful dissenting judgment by Ackner L.J., held that whether or not a waiter was employed under a contract of employment within the meaning of the Employment Protection (Consolidation) Act 1978 was a question of mixed fact and law, and that the finding of an industrial tribunal on this issue, from which an appeal lay on a point of law only, could only be impugned if it could be shown that the tribunal correctly directing itself on the law could not reasonably have reached the conclusion under appeal. Sir John Donaldson M.R., at p. 123, pointed out that this was a heavy burden on an appellant and concluded by saying :

'I would have though that all this was trite law, but if it is not, it is set out with the greatest possible clarity in Edwards v. Bairstow [1956] A.C. 14.' "

38. All of that is wholly apposite to my function in this appeal since (by virtue of section 32(1) of the Labour Tribunal Ordinance, Cap. 25) appeals from the Labour Tribunal to the High Court lie only on points of law or jurisdiction and not as appeals on facts as such.

39. As it happens, applying well-established principles to the primary facts which emerged with clarity in the present case leads me to the firm conclusion that the Respondent was an employee of the Appellant's.

40. But even if I leaned towards the opposite conclusion, it would nevertheless be quite impossible for me to say that no tribunal correctly directing itself on the law could reasonably have reached the conclusion under appeal.

41. Accordingly, I dismiss this appeal.

42. But before parting with this case I wish to thank Mr Stone and pay tribute to the way in which he conducted this appeal on behalf of the Appellant. It was everything which the courts have come to expect from counsel of his calibre : powerful in support of his client's cause but still fair to the litigant in person on the other side and helpful to the court from start to finish.

Representation:

Mr. William Stone Q.C. (instructed by Johnson, Stokes & Master) for the Appellant.

The Respondent in person.