Poon Chau Nam v. Yim Siu Cheung t/a Yat Cheung Airconditioning & Electric Co.

DCEC410/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 410 OF 2003

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IN THE MATTER OF AN APPLICATION BETWEEN:

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Coram : Deputy District Judge P. Li in Court

Dates of Hearing : 29^th December 2004, 30^th December 2004

Date of Handing Down of Judgment : 8^th February 2005

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JUDGMENT

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Background

1.The Applicant, Poon Chau Nam, was an air-conditioning technician. On 18 September 2002, he had an accident which resulted in an injury to his left eye. He was hospitalized for about one and a half months before being discharged from Tung Wah Eastern Hospital. He lost about 30% of eyesight in his left eye. He lost 45% of his earning capacity.

The key issues

2.The dispute was whether there was employment relationship between the parties. If there was, the Applicant invited this court to assess compensation.

3.The Applicant alleged that he was an employee of the Respondent trading as Yat Cheung Air-conditioning Company (Yat Cheung) at the material time. Despite the Applicant joined a MPF scheme on 1 December 2000 declaring to be self-employed, he argued that a court should look at all other evidence. The joining of a MPF scheme as self-employed would not be conclusive. The Applicant maintained that the injury occurred during the course of employment. He should be entitled to compensation under the Employee’s Compensation Ordinance.

4.The Respondent denied that the Applicant was his employee. He accepted that there was an accident. The Applicant did lose 45% of his earning capacity because of the injury to his left eye.

Evidence

5.The Applicant’s evidence is as follows:

a.	He adopted his written statement in the trial bundle. He came to know the Respondent while working as an apprentice in Wing On Air-conditioning Company in 1993. He was later employed by Yat Cheung in September 1993. He formed his own company in 1994 which ceased operation in 1996. He was an employee of Yat Cheung again from June 1996 to March 1997.
b.	He worked for other companies from 1997 to 2000. In late 2000 to early 2001, he was employed by Po Hing Company. During this period, he also worked for Yat Cheung on a casual basis. In February 2001, he finally joined Yat Cheung as a casual worker at a daily wage of $550. The working hour was 9am to 6pm. The Respondent would pay travelling expenses if he needed to go to another site or other places during the working hours. He was entitled to over time. There was no other benefit. It was an oral employment contract.
c.	Sometimes, he collected tools from the office of Yat Cheung at Kwun Tong. In those occasions, the Respondent would drive him and other workers to the site. He only brought along a towel, some medicinal ointment, some clothing and water. He needed no supervision from the Respondent. He just worked with the co-workers.
d.	In November 2000, Yat Cheung issued a letter (part D, page 20 of the trial bundle) confirming that he was employed by Yat Cheung. He used the letter for an application of a technician licence.
e.	He was instructed by the Respondent to go to different sites wherever need arose. On average, he worked 26 days a month. When a project was completed and there was no work, he received no pay. This explained that there were only 16 working days in June 2002 (part D, page 73 of the trial bundle). He was not paid regularly at the end of each month. He was not paid a fixed amount. Sometimes the payment was in arrears for a few months.
f.	He filled in the work record himself and submitted them to the Respondent for payment. The records are at part D, pages 71 to 76 of the trial bundle. The payment schedule was recorded on the back of page 76 which was produced as page 76A of the trial bundle.
g.	About the work record in March 2002, he first said it was recorded in a notebook. When pointed out that he had not included the working days in March in the work records (part D, pages 71 to 76 of the trial bundle), he then said he did not intend to claim the 8 to 10 working days in March. The sum was trivial. On further questioning, he said he lost the notebook for recording the record in March. He further said he used 3 to 4 notebooks for different months. He just lost the one used for March. Finally, he even agreed that there was no record for the month of March.
h.	There were other employees of Yat Cheung working with him. They were paid monthly wages.
i.	In November 2000, the Respondent told him to join a MPF scheme for himself. The Respondent indicated that it would be a criminal offence to employ him without joining a MPF scheme. He subsequently joined a MPF scheme provided by the Bank of East Asia. He thought a casual worker was self-employed. He did not know the meaning and implication of the term ‘self-employed’. He understood that the MPF scheme would provide a lump sum for him on his retirement. Had he known that the insurance of the Respondent would not cover him, he would not join any MPF scheme. He however contributed $1,400 for the 4 months ending 31 March 2001 and $5,400 for the year ending 31 March 2002.
j.	He never filed any tax return as he thought he needed not pay income tax. He also confirmed that Yat Cheung never filed any tax return in the capacity as his employer except for the period July 1996 to March 1997 when he was so employed (part D, page 17 of the trial bundle).
k.	He confirmed that he could refuse the offer of work from Yat Cheung but he never did. He never took any leave. Yat Cheung was not obliged to give him work.
l.	When he was an employee of both Po Hing Company and Yat Cheung during November 2000 to February 2001, if both companies offered work, he would work for Yat Cheung despite Po Hing offered a higher daily wage of $600. He thought he had a choice.
m.	When there was no work from Yat Cheung, there was nothing preventing him to work for others. He needed only to inform the Respondent in advance about the length of his engagement with the others.
n.	However, he denied ever worked for other companies while employed by Yat Cheung. He just once cleaned air-conditioners for neighbours.

6.The Respondent, Mr. Yim Siu Cheung, gave evidence as follows:

a.	He was the sole proprietor of Yat Cheung. He adopted his statement at part B, pages 7 to 11.
b.	The Applicant started working as a contractor for Yat Cheung in July/1996. After finishing that project in 1996, the Applicant then became an employee of Yat Cheung in 1997. He left Yat Cheung again a year later as there was insufficient work and it was not flexible. He filed a tax return as the employer of the Applicant in 1997 (part D, pages 17 & 18).
c.	For the period Nov/2000 to September/2002, when there were new projects, he would contact the Applicant to work as a contractor. If the Applicant had no work, he would work for Yat Cheung. There was no obligation for the Applicant to turn up or accept work everyday. In case the Applicant refused his offer, he would contact another contractor. A contractor had freedom to accept work or not. There was no need for any explanation. He might not need the Applicant any further if there was no further project.
d.	He normally took the Applicant to the site and told him what to do. The Applicant usually brought along screw drivers, forceps, goggles and gloves. He supplied heavy equipment.
e.	There was no supervisor at the site. The workers, including the Applicant, were all experienced and could make arrangements themselves.
f.	He would pay travelling expenses when the Applicant was required to go to another site or places during working hours.
g.	After the completion of a project, the Applicant submitted work records. He would sometimes make a one-off payment, sometimes by several installments. There was no fixed date for payment.
h.	For his employees, he paid them on the 5th and 20th of each month. Their wages ranged from $10,000 to $12,000. There were 4 paid holidays per month and 7 days annual leave on top of other statutory holidays. They were entitled to double pay and bonus payment too. He filed tax return for the employees but could not locate the documents during the trial.
i.	There was an occasion that he discussed with the Applicant about joining a MPF scheme at the office of Yat Cheung at Kwun Tong. He told the Applicant that this was mandatory under the law. He proposed to include the Applicant as an employee but the latter refused. The Applicant indicated that remaining self-employed allowed more freedom and he could take other jobs. He did point out to the applicant that the insurance policy would not cover a self-employed person.
j.	He arranged a MPF scheme for all other employees of Yat Cheung in January 2001 (part D, page 70 of the trial bundle).
k.	He wrote to the Labour Department on 23 November 2002 clarifying the self-employed status of the Applicant. He never discussed about compensation with the Applicant. The form at part D, pages 54 to 58 was submitted by his insurance agent. He did not sign on it. (Counsel for the Applicant indicated that they would not rely on this form to prove employer-employee relationship.)
l.	As to the letter at part D, page 20, he wrote this on the request of the Applicant who needed the letter for some unknown purposes. It was a common thing in the trade. He admitted that it was not accurate that the Applicant was an employee. The Applicant asked him to write in that way as the Applicant needed to be certified as an employee. Given their previous relationship, he thought there would not be a problem even if there were falsity.
m.	The work records for August and September (part D, pages 75 and 76) were not submitted to him yet. The Applicant did not submit work records regularly. He had not submitted any record for 2 to 3 months before the accident.

Analysis of evidence

7.I find the following aspects of the evidence of the Applicant doubtful. As a whole, I do not find him reliable:

a.	When asked about his tax return as an employee. He said that he needed not pay tax so he did not file one. He even said page 17 in part D of the trial bundle was his tax return. When pointed out that page 17 was the employer’s document, he then said the IRD never mailed one to him. He went on to say that it was his wife who dealt with this matter. I found this response evasive.
b.	When asked about the work record for March and April, he first indicated that he recorded the March record in a notebook. When told that he did not include that in his calculation on pages 71 to 76 of part D of the trial bundle, the Applicant then said he would not claim the 8 to 10 days in March. After further questioning, he then said he just lost the March record as he used several notebooks to make records. Finally, he agreed that there was no record for the month of March. I find his response unreliable and not forthcoming.
c.	He claimed that he never took up work for other companies while under the employment of Yat Cheung from February 2001 onwards. However, he had no difficulty saying that when he took up another job for other companies, he needed only inform the Respondent the period of his engagement.
d.	When asked about outside work. He first said he did take up outside work but later said he thought the question was about the time when he operated his own company in 1994 to 1996. I failed to see how he could mix up the context of the question. He was just being evasive.

8.As to the Respondent, he was frank and direct in giving evidence. He admitted without hesitation the inaccuracy in the letter certifying the employee status of the Applicant (para. 6(l) above). He made no attempt to cover it up. As a whole he impressed me as a reliable witness.      

9.I have considered the evidence of both parties. The following aspects of the evidence are important:

Offer of work
a.	The Applicant admitted that there was no obligation for the Respondent to offer work. He could reject the offer albeit he never did. This is consistent with the evidence of the Respondent. This option to reject work is inconsistent with an employee-employer relationship.
b.	The Applicant agreed that he could take up jobs from other companies. There was no need for him to ask the Respondent’s permission. He could just tell the Respondent the period of the engagement with the other companies. This is inconsistent with an employer-employee relationship.
c.	During the time when the Applicant claimed to be an employee of both Po Hing and Yat Cheung from November 2000 to February 2001, the Applicant said he could have a choice as to which employer he would work for. He would prefer to work for Yat Cheung despite the pay was lower. I find it strange that he could be employed by two employers in concurrent periods. It is even more strange that he could choose which one to work for.
MPF scheme
d.	(i)	The Applicant maintained that it was the Respondent who told him to join a MPF scheme in November 2000. His evidence was that the Respondent indicated in November 2000 that it would be a criminal offence to employ him without joining a MPF scheme. He thus joined a MPF scheme provided by the Bank of East Asia. He was not aware of the implication of joining a MPF scheme as a self-employed person. The Respondent did not dispute that there was such a discussion. He further confirmed that he took out a MPF scheme for all other employees of Yat Cheung in January 2001.  The fact that he did take out a MPF scheme for other employees spoke for itself. There is no reason for him to single out the Applicant.
	(ii)	Further, according to the MPF document of the Applicant, he joined the scheme on 1 December 2000. At that time, he alleged that he was an employee of Po Hing as well as Yat Cheung. It is illogical why he had to join a MPF scheme then if he was an employee of two companies.
	(iii)	Having considered the relevant evidence, I do not think the suggestion made by the Respondent to the Applicant to join a MPF scheme was a sham to evade his responsibilities as an employer. I accept the Respondent’s evidence that it was the Applicant who wished to maintain flexibility and remained as self-employed. This fact is a strong indication that there was no employer-employee relationship.
Payment of wages
e.	The Applicant was only entitled to a daily wage of $550. There was no other benefit. There was no fixed payday. From page 76A of part D of the trial bundle, the Applicant was paid quite irregularly. Sometimes in arrears of a few months. This is consistent with the evidence of the Respondent that the Applicant was paid at the end of a project or whenever the latter submitted work records.
f.	As to the work records, for the reasons given in Para. 7b, I find that there was no work for the month of March 2002. From February to September, the Applicant worked for 117 days. This is consistent with the evidence of the Respondent that the Applicant was employed when need arose. It was “on a casual as required basis”.
Equipment
g.	I accept that the Respondent was to supply most of the equipment especially the heavy ones. This factor alone is neither here nor there. I do not think it furthers the Application’s argument.
Supervision
h.	The Applicant argued that he worked in accordance with the instruction of the Respondent. However, he did not need any supervision. This is consistent with the Respondent’s evidence that all workers were experienced and could made arrangement for themselves. The degree of supervision was minimal.
Testimonial written by the Respondent
i.	There was a letter written by the Respondent dated 4th November 2000 certifying that Yat Cheung employed the Applicant as a technician. The Respondent explained that he wrote the letter on the request of the Applicant for the purpose of making some kind of application. He plainly accepted that he told a lie that the Applicant was an employee. He added that this kind of certification was common in the trade. I noticed that there was a similar letter at pages 15 and 16 of part D of the trial bundle. In this latter dated 18th September 1997, the Respondent similarly certified that the Applicant worked in his company since 1st September 1993. This is obviously inaccurate as it was the evidence of the Applicant that he set up his own company from 1994 to 1996. This latter supported the Respondent’s evidence that it was a common practice in the trade. The content was not necessarily accurate. Having considered all the evidence, I accept the evidence of the Respondent that the testimonial was so worded for the purpose of making an application which was likely to be a technician licence. I do not think this letter is conclusive of the status of the Applicant.

Conclusion

10.Having considered the points above, I reject the Applicant’s argument. I am satisfied that there was no employer-employee relationship. In view of the ruling, I need not deal with the assessment of compensation. I make the following orders:

i)	The application is dismissed.
ii)	Order nisi that:
	i.	costs of this application to the Respondent to be taxed if not agreed.
	ii.	the Applicant’s own costs to be assessed in accordance with the Legal Aid Regulations.
iii)	Such order nisi be made absolute 14 days after the date of handing down of this judgment.

Representation:

Mr. Clough Neal John, instructed by DLA for Applicant.

Miss Yanky Lam, instructed by M/S. Chiu, Szeto & Cheng for Respondent.