Chan Po Kai v. Ng Moon Sum and Another

DCEC820/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 820 OF 2004

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BETWEEN

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Before: Her Honour District Court Judge Marlene Ng in Chambers (Open to Public)

Date of Hearing: 21^st February, 2006

Date of Handing Down Decision: 24^th February, 2006

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DECISION

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Introduction

1.This is an application by the 2^nd Respondent (“R2”) to strike out the Applicant’s (“AP’s”) claim for employees’ compensation. R2 acts in person and is represented by its director Mr Wong Pak Sum (“Mr Wong”).

2.AP claimed that (a) he was employed as a decoration worker by the 1^st Respondent (“R1”), (b) R1 was a sub-contractor of R2, and (c) R2 was the principal contractor within the meaning of the Employees’ Compensation Ordinance Cap.282 (the “Ordinance”). AP further claimed that on 29^th November 2003 he was assigned to carry out decoration work at a restaurant (觀塘碼頭餐廳) at G/F, Kwun Tong Harbour Plaza, Kwun Tong, Kowloon (the “Site”). Whilst he was at his work, his co-worker nearby caused a small projectile to strike his left eye (the “Accident”). AP therefore suffered personal injuries.

3.R1 in his Amended Answer dated 30^th July 2005 claimed that the tile flooring works at the Site (to be completed between 28^th November and 1^st December 2003) was sub-contracted by AP for HK$7,500.00. R1 reiterated this in his Defence in HCPI470/2003 (see below – the “PI Action”). However, R1 did not aver which party sub-contracted the tile flooring works to AP.

4.R1 continued to say in his Amended Answer that AP engaged experienced/ qualified workers for such works. Further, before entering into the sub-contract AP represented to R1 he had employees’ compensation insurance otherwise there would not have been any sub-contract arrangement. R1 claimed that AP had a construction safety card and that AP supplied safety equipment on his own. R1 averred that AP ought to have known that he should report any industrial accident whether by himself or by his agent at the first opportunity right at the Site and that he could have reported to the police if “the company” refused to submit the relevant form. R1 did not specify the name of “the company”.

5.R2 in its Second Answer claimed that it was the employer of the works at the Site (發包方) and not the principal contractor. After negotiations with 周香生(representative of 忠誠工程公司) and R1 (representative of 森記), R2 engaged 森記 to carry out the restaurant decoration works at the Site (the “Works”) based on the latest written quotation by 森記. The Works under such quotation included inter alia “裝修設計出圖則連包括100%出飲食牌照顧問費 HK$50000元”. As evidenced by 2 receipts signed by 周香生, 森記 authorised 周香生 to collect the 1^st and 2^nd deposits of HK$40,000.00 and HK$30,000.00 from R2 on 15^th and 25^th November 2003 respectively. On 26^th November 2003, R1 of 森記 informed R2 he could not contact 周香生 who had disappeared. R2 made a report to the police on 19^th December 2003 that 周香生being a representative of the principal contractor 森記 had disappeared and was suspected to have made off with some decoration deposits (工程訂金). Later, upon enquiry by the Labour Department, R2 told the Labour Department that it was the employer of the Works at the Site (發包方) and not AP’s employer. R2 further informed the Labour Department the principal contractor of the Works was 森記 and AP was a sub-contractor of 森記. Mr Wong verified the above matters by affirmation.

R2’s application

6.R2 applied by summons dated 9^th August 2005 to “剔除[AP]對[R2]身份之聆訊”. Although the summons was not elegantly worded, it is plain (and Mr Wong confirmed at the hearing before me) that R2 applied to strike out AP’s claim for employees’ compensation against R2 on the basis that (a) R2 was not the principal contractor but the employer of the Works at the Site (發包方) and/or (b) AP was a sub-contractor and not an employee. The application therefore proceeded as a striking out application under Order 18 rule 19 of the Rules of the District Court (the “RDC”) and/or under the inherent jurisdiction of the court.

7.Ms Yip, counsel for AP, did not take any issue over the applicability of Order 18 rule 19 of the RDC, so it is unnecessary for me to decide on the issue. I note that Order 18 rule 19 of the RDC refers to the striking out of “any pleadings or the indorsement of any writ in the action, or anything in any pleading or in the indorsement”. Although there is no writ of summons and arguably no “pleadings” in the employees’ compensation cases, the Court of Appeal in Li Kwok Shing v Law Ka Fu trading as Wing Fai Electrical Engineering & anor CACV212/2002 (unreported, 21^st June 2003) held that a particular rule in the RDC only had no effect in employees’ compensation claims if it conflicts with one or more rules of the Employees’ Compensation (Rules of Court) Rules (the “ECR”). There is clearly no conflict between Order 18 rule 19 of the RDC and the ECR since the ECR do not contain any provision for striking out. Order 18 rule 19 of the RDC arguably fills in the lacuna in the ECR as a result of section 21(1) of the Ordinance which provides inter alia that “the law, rules and practice relating to such civil actions …… of the Court shall mutatis mutandis apply”.

8.However, Ms Yip submits that I should be cautious in the exercise of the inherent jurisdiction of the District Court, which unlike the Court of First Instance, does not enjoy unlimited jurisdiction. Nevertheless, it is clear that the District Court has inherent jurisdiction to protect its process against vexation, frivolity and abuse (see Ng Yat Chi v Max Share Ltd FACV/2004, 20^th January 2005 per Ribeiro PJ).

The witness statements in the PI Action

9.R2 filed Mr Wong’s 2 affirmations dated 9^th August and 16^th September 2005 in support of its present application. AP filed his 4^th affirmation dated 2^nd September 2005 in opposition.

10.AP has issued the PI Action in the Court of First Instance against R1 and R2 for damages in respect of personal injuries suffered as a result of the same Accident. AP’s solicitors have included in the hearing bundle various witness statements made on behalf of AP, R1 and R2 in the PI Action, namely, the witness statements of AP and 凌正志dated 25^th October and 16^th September 2005 respectively and those of 馬慶昌, R1 and Mr Wong dated 18^th, 28^th and 20^th October 2005 respectively. R2 by a fax dated 23^rd November 2005 to AP’s solicitors objected to the inclusion of such witness statements in the hearing bundle.

11.By my Order dated 12^th August 2005, I gave directions for the filing/service of affirmation evidence in respect of R2’s present application. Leave was granted to AP to file/serve affirmation in opposition within a specified deadline and AP accordingly filed his 4^th affirmation. R2 responded to such affirmation evidence by filing/serving Mr Wong’s 2^nd affirmation. I further ordered that no further affirmation be filed/served without leave of the court. AP did not make any prior application for leave to adduce further affirmation evidence or to read/rely on the witness statements in the PI Action at the adjourned hearing for argument.

12.At the adjourned hearing for argument before me on 30^th November 2005, which was further adjourned due to Mr Wong’s illness, I urged Ms Yip to resolve the dispute over AP’s intended reliance on the witness statements in the PI Action prior to the further adjourned hearing for argument. It was not so resolved. At the further hearing for argument before me, Ms Yip applied to read/use the witness statements in the PI Action to oppose R2’s present application and if necessary for leave to do so. Mr Wong maintained his opposition to Ms Yip’s application. His position was that the evidence for R2’s present application should be confined to the affirmations as filed by AP and R2.

13.After hearing arguments at the hearing and having considered all the circumstances, I decline to exercise my discretion to grant leave for AP to read and/or rely on the witness statements in the PI Action for the purpose of R2’s present application. In my view, this is an attempt by AP to adduce further factual evidence in opposition of R2’s application without the formality of an affirmation when opportunity had been given to AP to file/serve affirmation in opposition. Further, given that this is a no-fault employees’ compensation case with issues that are more confined than or perhaps even different from a common law action and that the nature of the application before me is a striking out application, I do not see any reasonable probity or need for adducing the witness statements from the PI Action.

14.I should however mention that Mr Wong in the course of his submissions before me referred to a number of factual matters not found in his affirmations. These assertions from the Bar table drew objections from Ms Yip, particularly as some of the matters raised are disputed by AP. I have no doubt that Mr Wong referred to such factual matters with a view to explain R2’s position more comprehensively to the court, but it is necessary to consider what is fair and just for both parties. I consider it would be unfair and unjust to require AP, who had expected to meet R2’s present application on Mr Wong’s 2 affirmations, to address a widened scope of factual assertions made across the Bar table, especially when some of the factual issues are contested. In the end, Mr Wong accepted that he would rely on the factual matters as set out in his affirmations.

Striking out

15.The law on an application to strike out a claim/pleadings is succinctly set out in Hong Kong Civil Procedure 2006 Vol.1 para.18/19/4 at p.327 as follows :

“It is only in plain and obvious cases that the court should exercise its summary powers to strike out the indorsement on any writ or any pleading under this rule. There should be no trial upon affidavit. Disputed facts were to be taken in favour of the party sought to be struck out. Nor should the court decide difficult points of law in striking out proceedings. The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out …… Where the legal viability of a cause of action is sensitive to the facts, an order to strike out should not be made …… The mere fact that the case is weak and not likely to succeed is no ground for striking it out …..

The jurisdiction should not be exercised if it requires a minute and protracted examination of the documents and facts of the case in order to see whether the plaintiff really has a cause of action ……

It is for the party seeking to strike out an indorsement on a writ or pleading to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail ……”

Employee vs independent contractor

Employer of the works (發包方) vsprincipal contractor

16.As regards the legal principles for determining whether AP was an employee or a sub-contractor at the time of the Accident, I refer to the well-known test by Cooke J in Market Investigations Limited v Minister of Social Security [1969] 2 QB 173 as approved by the Privy Council in Lee Ting Sang v Chung Chi-keung [1990] 2 WLR 1173 :

“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.”

23.  It is apparent from the above test that the court usually has to consider all the circumstances and to evaluate many facts before coming to a finding of fact as to whether a party is an employee or an independent contractor. The aforesaid principles were approved and adopted in Poon Chau Nam v Yim Siu Cheung trading as Yat Cheung Airconditioning & Electric Co CACV86/2005 (unreported, 4^th and 15^th November 2005) where the Court of Appeal held that whether the person was an employee or an independent contractor was a question of fact to be determined by the trial court (para.8). 

24.  Section 3(1) of the Ordinance defines a principal contractor as a person referred to as a principal contractor in section 24. Section 24(1) of the Ordinance refers to the principal contractor (vis-à-vis the injured employee) as “any person …… in the course of or for the purpose of his trade or business, contracts with a sub-contractor for the execution by or under the sub-contractor of the whole or any part of any work undertaken by the principal contractor ……” Whether a party’s capacity is that of the employer of the works or a principal contractor likewise turns on the true nature of the business undertaken by the party and his relationship with the contractor in all the circumstances notwithstanding any labels or descriptions.

25.  It is with the above principles in mind that I now turn to the circumstances of the present case.

Undisputed matters

17.The following matters are not in dispute :

(a)   The Site was at Shops 106-107 and 112-117, G/F, Kwun Tong Harbour Plaza, 182 Wai Yip Street, Kwun Tong, Kowloon.

(b)   R2 had 2 corporate directors/shareholders. R2’s business registration certificate described the nature of its business as “import & export, wholesale, retail and production”. R2’s registered office as stated on its annual return dated 12^th July 2005 was Shops 3-7, 22-35, 55-61, 72-100, G/F, Kwun Tong Harbour Plaza, 182 Wai Yip Street, Kwun Tong, Kowloon. R2 owned/occupied at least 55 shops at Kwun Tong Harbour Plaza.

(c)   Mr Wong was appointed as R2’s director since 16^th August 2005.

(d)   On 1^st December 2003, R2 paid HK$2,100.00 to AP who signed a written acknowledgment (drafted by Mr Wong) inter alia that the sum was for “工程費款項, 工程地址為觀塘碼頭廣場” (the “Receipt”).

(e)   On 10^th December 2003, AP signed and submitted a Notice of Industrial Accident to the Labour Department (the “Notice”). AP reported about the Accident in the Notice and stated therein that R1 was his employer and Mr Wong of Tai Ming Tong Furniture at G/F of Kwun Tong Harbour Plaza (tel no 26028882) was the principal contractor.

(f)   On 17^th December 2003, the Labour Department wrote to R2 to urge R2 to submit inter alia Form 2. On 3^rd January 2004, R2 replied to the Labour Department saying that it was the employer of the Works (發包方) but not AP’s employer and that AP’s employer (正式僱主) should be 森記. R2 also informed the Labour Department that it had made a report to the police about a week before in respect of the uncompleted decoration works. On 5^th January 2004, R2 wrote to the Labour Department to confirm again it was not the principal contractor or AP’s employer.

(g)   The Labour Department issued a memo dated 24^th February 2004 to introduce AP to the Director of Legal Aid since AP wished to seek assistance to claim for compensation (the “Memo”). The Memo stated that AP’s direct employer and principal contractor were R1 and R2 respectively, but also noted that “according to the allegations of [AP], he met with an accident whilst at work on 29.11.03.However, the employer disputed the liability on the ground that [AP] was not his employee ……”

The affirmation evidenceand submissions

18.As seen below, there are disputes of fact between AP and R2 in relation to (a) the inferences to be drawn from the documentary evidence and (b) the parties’ description of the relevant events.

(a) Documentary evidence

19.The company search records of R2 show that R2 trades under the business name of BG Lamparas. AP suggested that R2 therefore had a close relation to interior decoration. Mr Wong claimed that such suggestion merely reflected an outsider’s misconception.

20.Since the address of the Site was different from R2’s address (ie its registered office), Mr Wong claimed that R2 was not the user/occupier of the Site. In his oral submissions, Mr Wong suggested that觀塘碼頭餐廳 did exist and was a tenant of the Site.

21.Mr Wong submitted that AP’s assertion in the Notice that the principal contractor was Mr Wong of Tai Ming Tong Furniture was drastically different from AP’s current claim that R2 was the principal contractor. The Notice did not mention R2 at all and AP had never sought to amend the Notice to reflect his current contention that R2 was the principal contractor. On the other hand, Ms Yip submitted that the telephone number and address stated in the Notice for Mr Wong of Tai Ming Tong Furniture were consistent with R2’s telephone number and address, so she argued that AP must have been referring to the same Mr Wong of R2. Further, since AP could not have known of such particulars, R1 must have given them to AP.

22.Although AP relied on the Memo which referred inter alia to R2 as the principal contractor, it is plain from the face of the Memo that its contents were based on information from AP. Indeed, the Labour Department in its letter dated 6^th September 2005 confirmed that it issued the letters to the “employer” and “principal contractor” based on information provided by AP in the Notice. But the Labour Department also pointed out that the telephone number of “Mr Wong” of Tai Ming Tong Furniture was the same as the telephone number for R2. Mr Wong rejected AP’s reliance on the Memo and the Notice which he submitted were self-serving. He claimed that conversely R2’s denial that it was the principal contractor was supported by “legally effective” documentary evidence.

(b) Parties’ description of events

23.AP claimed R1 was his direct employer. AP said he officially started to work for R1 on 16^th November 2003 but due to the urgency of the works and on R1’s request, he started to work at the Site in the afternoon of 15^th November 2003. As was usual, he brought some handy tools with him, but R1 provided him with the use of an electrical saw to cut the tiles at the Site. Although there was no express agreement as to wages, AP expected R1 to pay him HK$375.00 for the said half working day. Mr Wong submitted that these matters were irrelevant vis-à-vis R2.

24.AP said that between 16^th November and 1^st December 2003 (ie the period AP worked at the Site), he saw Mr Wong coming to the Site to oversee the progress of the Works. AP claimed Mr Wong spoke to R1 in a bossy manner and requested R1 to carry out the Works as soon as possible. AP was therefore sure Mr Wong was R1’s boss. Mr Wong on the other hand argued that such conclusion was speculative since the communications between himself and R1 were just ordinary dialogue on work arrangements between an employer of the Works (發包方) and the principal contractor.

25.AP said that on/about 21^st November 2003, R1 paid him HK$5,000.00 in cash for his wages. Mr Wong doubted this because on the basis of AP’s claimed daily wages of HK$750.00 and 6.5 working days (ie from 15^th to 21^st November 2003), his accrued wages should have been HK$4,875.00 and not HK$5,000.00. Mr Wong argued that an employer would hardly have made such mistake and overpaid the employee.

26.AP claimed that after the Accident on 29^th November 2003 he continued to work at the Site until 1^st December 2003 when he felt discomfort and sought medical treatment. On the same day, he asked R1 to pay him his wages, but R1 said he was busy and asked AP to get payment directly from Mr Wong. AP said that at about 8:30pm that day, he went to Mr Wong’s office at Kwun Tong Harbour Plaza (the “Office”) to request payment of HK$2,100.00 being wages owed to him. On the other hand, Mr Wong explained that such sum was for part payment of the sub-contract sum for the restaurant decoration project. As a result of the disappearance of 周香生, the principal contractor (森記), the sub-contractors who were willing to continue to work for 森記 and the workers agreed that upon verification by森記of the work done, the payments for the decoration project (工程費) and wages would be made/collected by the principal contractor, sub-contractors and workers.

27.AP claimed he underwent an eye operation and was discharged from the hospital on 8^th December 2003. He said that on/about 9^th December 2003 he telephoned R1 to chase for the balance of his wages. R1 told him he had no money and asked him to get payment from Mr Wong. So AP and his wife attended the Office on the same day, but Mr Wong’s secretary informed them that Mr Wong was not in. AP said that when he further liaised with R1, R1 told him Mr Wong would find someone to chop him and further told him to report to the police. AP consequently made a report to the police by dialing 999. Pursuant to his arrangements with R1 and the police, AP later went to the police station to meet R1. When AP saw R1, he chased R1 for payment of his outstanding wages and reported to the police about the default in payment of his wages. He made an appointment to give his statement to the police the following day. On 10^th December 2003, AP again chased R1 for his outstanding wages. R1 repeated that he had no money. He persuaded AP not to give any witness statement to the police against his promise to accompany AP to the Labour Department on the same day to report the Accident and to lodge a claim against Mr Wong for the outstanding wages. R1 telephoned Mr Wong several times in vain that morning, so R1 told Mr Wong’s secretary that he would go to the Labour Department with his employees.

28.AP said that in the afternoon on that day, R1 together with 4-5 employees of the Works (including AP and his wife) went to the Labour Department. R1 admitted to the officers of the Labour Department that he was Mr Wong’s sub-contractor. Whilst AP’s wife filled in the Notice on behalf of AP, R1 told AP’s wife that the principal contractor was Mr Wong of Tai Ming Tong Furniture at Kwun Tong Harbour Plaza. AP claimed that Tai Ming Tong Furniture was closely related to interior decoration. On the other hand, Mr Wong claimed that AP’s allegations in paragraph 27 above and this paragraph were irrelevant vis-à-vis R2.

29.AP claimed that at about 3:00pm on 10^th December 2003, Mr Wong’s secretary suddenly telephoned R1 and told him not to cause so much trouble. She asked all of them to go to the Office to get payment. So R1, AP and the other employees immediately went to the Office. On arrival at the Office at about 5:00pm, Mr Wong said he only had a certain amount of money for paying wages to them on R1’s behalf. Mr Wong paid HK$5,000.00 to AP who signed to acknowledge receipt of such sum. Mr Wong reminded them not to bother him any more after such payment.

30.On the other hand, Mr Wong claimed that R2 agreed with the principal contractor, sub-contractors, miscellaneous workers and casual workers that upon completion of the Works (and indeed various parts of the Works were progressively completed on/about 6^th to 7^th December 2003) the principal contractor 森記 would work out and verify the decoration payments (工程費) and the wages for the sub-contractors and workers respectively, so that the decoration payments (工程費) for the sub-contractors and the wages for the workers would be released immediately upon the provision of the aforesaid information by the principal contractor.

31.Mr Wong also doubted AP’s assertion that he received a further sum of HK$5,000.00. On AP’s case, he received a total sum of HK$12,100.00 (ie HK$5,000.00, HK$2,100.00 and HK$5,000.00), but on the basis of AP’s claimed daily rate of HK$750.00 and 16.5 working days, his wages should be HK$12,375.00 and not HK$12,100.00. Mr Wong submitted that the latter sum (if received by AP) must be payment for the sub-contracted works and not wages. Further, according to R1’s Answer (before amendment), AP only worked as a sub-contractor for 5 days.

32.AP in his 4^th affirmation claimed that on/about 30^th December 2003, he and his wife went to the Office to give Mr Wong and/or R2 his medical/sick leave certificates, but was told by Mr Wong’s secretary that he was not in. AP’s wife told Mr Wong’s secretary that AP wanted to hand over the medical/sick leave certificates to Mr Wong since he was the person in charge of the principal contractor. The secretary took the original medical/sick leave certificates and promised to hand them over to Mr Wong. Mr Wong in his affirmation said R2 did not have any information on such assertion.

(c) The “co-worker”and insurance

33.Mr Wong in his 2^nd affirmation said that AP sub-contracted the 泥水工程 from R1. The “co-worker” mentioned in the Application who caused the Accident was in fact AP’s employed worker and AP was responsible for paying his wages. Mr Wong said 森記did not have any record of payment of wages to such “co-worker”. Mr Wong referred to an extract of R1’s 工數 record for 29^th November 2003, which referred to the identity card numbers and daily wages of 3 miscellaneous workers and 1 furniture worker, but in contra-distinction no such particulars were stated for 泥水(判). He argued that since it was implausible for a worker to work without receiving wages, the only plausible explanation was that it was AP who as sub-contractor paid the wages to the “co-worker”. Mr Wong added that it was unlikely that R1 made up its 工數 record for 29^th November 2003 at such an early stage when there was as yet no threat of legal action by AP.

34.Mr Wong submitted that AP should have purchased insurance to cover the sub-contract works as well as employees’ compensation for his worker. Since AP claimed that the “co-worker” caused the Accident, AP should have sued the “co-worker” and his employer (ie himself) instead of R2. Mr Wong claimed that AP only issued the present proceedings because he failed to purchase insurance coverage for the Accident and was trying to shift such liability to other parties.

Analysis

35.I will start with two preliminary points made by Mr Wong.

36.First, Mr Wong submitted that AP’s solicitors had been careless in the conduct of the present proceedings. Mr Wong noted that AP’s solicitors had to apply to amend R1’s name and address and that they only effectively served the Application on R2 about half a year after the commencement of the present proceedings. Mr Wong said that AP’s solicitors should have proceeded with due care and diligence, and AP should bear any costs incurred for dealing with or rectifying the aforesaid mishaps and/or delay. Mr Wong submitted that for R2 the present proceedings and the PI Action were “飛來橫禍” which was compounded by AP’s unwillingness to withdraw the claim against R2 despite R2’s reminder to AP’s solicitors to carefully study the relevant facts and documents.

37.Secondly, Mr Wong submitted that R2 was entitled to strike out AP’s claim and avoid proceeding to trial so as to minimise the period of time which AP’s unmeritorious claim against R2 would adversely affect R2’s financial credit. Mr Wong in his oral submissions claimed that by reason of the present proceedings and the ongoing PI Action, R2 suffered difficulties in arranging finance or in attracting investors. But such assertion is unsupported by any affirmation evidence. Indeed, Mr Wong admitted he was not in a position to adduce evidence on the same.

38.However, the above complaints do not aid R2’s present application. Unless AP’s claim against R2 is plainly, obviously and unarguably bad so that it is liable to be struck out under the legal principles discussed above, the matter ought to proceed to trial. Further, Mr Wong’s contentions are a far cry from sustaining any assertion that AP’s claim against R2 is scandalous, frivolous, vexatious or an abuse of the court’s process. A party’s belief that he has a strong case does not connote that the other party has not used the court’s process in a proper and bona fide manner. As seen from the analysis below, AP’s case is not entirely without substance. I also do not regard the fact that AP is legally aided and therefore litigating on public funds supports any suggestion that he is using the court’s machinery for vexatious and oppressive purpose. Unless a party satisfies the legal principles described above, there is no basis for striking out a claim for inconvenience, financial or otherwise, caused by the litigation. In any event, there is scant evidence of such inconvenience.

39.It is clear from the affirmation evidence that there are serious disputes of facts between AP and R2. The issue of whether a party is an employer of the works (發包方) or a principal contractor turns not on assertions by any of the involved parties but on a finding of the true relationship upon assessment of the totality of the evidence. It involves evaluating the relevant documents (but bearing in mind that labels or descriptions are not necessarily definitive) as well as the conduct of the involved parties in light of the entire picture. Even though the case of Tsang Kwong Tong v Tennille Decorations &Design Limited & ors DCEC645/2003, H H Judge Chow (unreported, 18^th October 2005) cited by Ms Yip turns on its own facts and is presently under appeal (HCMP48/2006, 9^th February 2006, Tang JA), it serves to illustrate that the whole picture must be evaluated/considered in order to determine the relationship of the respondents in an employees’ compensation case. In my view, the disputed issues in the present case, namely, whether AP was an employee and whether R2 was the principal contractor at the time of the Accident, are plainly fact-sensitive and dependant on the court’s assessment of the weight of the evidence and the credibility of the witnesses. I am therefore satisfied that AP’s claim against R2 is not amenable to any striking out application.

40.I propose to illustrate the above conclusion with the following observations on the affirmation evidence. Since I conclude that AP’s claim against R2 should not be struck out and the matter therefore will proceed to trial in due course, it is inappropriate for me to form any definitive view on the evidence. I propose to only highlight the reasons why AP’s claim against R2 should be allowed to proceed.

41.Mr Wong did not dispute that R2 was involved in the restaurant decoration project at the Site. R2 claimed its role was limited to that of the employer of the works (發包方). Having considered the affirmation evidence and the factual disputes, I am of the view that it is necessary to evaluate the evidence on R2’s relationship vis-à-vis the Site, the restaurant decoration project, the occupier of the Site and the contractor in order to determine its legal relationship with R1 and AP. Although Mr Wong in his 2^nd affirmation suggested that some matters were irrelevant to R2, AP’s and R1’s reaction and interaction might reflect their understanding of R2’s role at the material time. All relevant circumstances have to be considered under the aforesaid legal tests and I am not persuaded that these matters are necessarily irrelevant.

42.I note that despite R2’s claim that it was the employer of the Works and that R1 was the principal contractor, this was not fully corroborated by R1. R1’s Amended Answer did not aver who sub-contracted the floor tiling works to AP apart from a vague reference to “the company” (公司) and R1 did not say whether such “company” was the employer of the works or the principal contractor. Indeed, R1 did not even say whether it was he who sub-contracted the floor tiling works to AP.

43.In R1’s original Answer (which Mr Wong relied as an exhibit to his 2^nd affirmation) prior to the amendment, R1 had the following to say :

“本人[R1]於2003年9月1日至2003年12月5日任職於觀塘廣場裝修部管工,因工程需要造地台磚師父,所以經朋友介紹[AP],當時工程量很少,約四百尺也方,[R2]與[AP]講價錢,最後以7500元5天完工,就判給[AP],而我將事情以向公司報告,第二天[AP]帶同一名伙記一齊開工,五天後完工,我驗查後就向上級取錢給[AP],單以交給公司。”

R1 seemed to suggest that (a) he was employed (任職) as a foreman at觀塘廣場裝修部 and that he worked under a supervisor (上級) and (b) the floor tiling works were sub-contracted to AP by “the company” (公司) since R1 reported his negotiations with AP to “the company” and asked his supervisor for monies to pay AP. Such suggestions do not sit well with R2’s claim that R1 himself trading as 森記was the principal contractor. This immediately calls into question the roles of the elusive “company” and/or R2. I also note that there is no description on the face of the latest quotation from 森記 as to whom it was addressed. In my view, the discrepancy in the assertions by R1 and R2 could only be resolved by cross-examination of the witnesses at the trial.

44.Mr Wong also submitted that the Site was occupied by the tenant 觀塘碼頭餐廳 and that R2 was not the occupier. If觀塘碼頭餐廳 were the occupier and had the benefit and use of the Works whilst R2 was not the occupier, it again calls into question (a) R2’s role and capacity vis-à-vis the Works and (b) R2’s claim that it was the employer of the Works. Much would turn on the true relationship amongst R2, 觀塘碼頭餐廳, “the company” and R1, which cannot be determined on affidavit.

45.Furthermore, Mr Wong did not deny he attended the Site and discussed the progress of the Works. AP claimed that Mr Wong’s visits and his bossy demeanour suggest that R2 was the principal contractor whilst R2 claimed they only reflected R2’s role as the employer of Works (發包方). The proper inference to be drawn from the primary facts can only be made at the trial upon cross-examination of the witnesses. The court is unable at this stage to resolve the matter on affidavits.

46.In light of the above matters, even though R2’s business registration certificate and company search records seem to suggest that its main business was in lights/lamps and trading, I am of the view R2’s role and capacity is not so plain and obvious that it admits of no other conclusion except as the employer of the Works.

47.I also do not agree that the Notice is conclusively against AP’s contention. Although it is true that the Notice did not mention R2’s name, it did state that AP’s employer was R1 and that the principal contractor was Mr Wong of Tai Ming Tong Furniture. There is no dispute that the address and telephone number of the stated principal contractor were the same as those for R2 and that R2’s responsible person was also known as “Mr Wong”. Although Mr Wong criticised AP for failing to amend the Notice after finding out what AP claimed to be the true position, AP did explain in his 4^th affirmation the circumstances as to how the Notice came into existence and how R1 informed him of the particulars of the principal contractor. In any construction/decoration project there are various levels of subcontractors between the principal contractor and the injured worker and it is quite possible there may be no privity of contract between them. It is not uncommon for the principal contractor to misidentify the relevant sub-contractor as the relevant employer or superior sub-contractor of the injured worker (Shek Kam Ching v Po Kee Construction Engineering Ltd & ors [2002] 3 HKLRD 796, 800). Such observation can easily apply to the vice versa situation that it may not be uncommon for an injured worker to misidentify the principal contractor. It is therefore a question as to what weight should be attached to the hearsay information contained in the Notice and what inferences should be drawn from Notice. This can only be resolved at the trial.

48.Mr Wong submitted that his report of the disappearance of 周香生 to the police was a weighty consideration. Given the risk of committing an offence by giving false information to the police, he argued it was logical to expect he would have told the truth about the parties’ relationships to the police. However, I note that AP by his 4^th affirmation also claimed he had reported to the police about the default in payment of his wages. I do not think it is appropriate to draw inferences as to the credibility of the witnesses at this interlocutory stage. Such conclusions should be made upon considering the totality of the evidence at trial.

49.Coming to the matter of payments to AP, Mr Wong did not deny that R1 paid HK$5,000.00 to AP on 21^st November 2003 although he criticised such evidence based on arithmetical calculations of the wages (see paragraph 25 above). Whether such payment was in fact made and whether it amounted to wages or contract payment must turn on an assessment of the evidence upon cross-examination of the witnesses. R1 claimed that the floor tiling works started on 28^th November 2003, but AP said he actually started working in the afternoon of 15^th November 2003. It is important to reiterate here that there should be no trial on affidavit and in an application for striking out, disputed facts are to be taken in favour of the respondent to the application.

50.AP claimed that on 1^st, 9^th and 10^th December 2003 he chased R1 for payment of his outstanding wages, but R1 gave various excuses and asked him to approach R2 for payment. Ms Yip queried why, if R2 was not the principal contractor and had no obligation to pay AP, R1 would direct AP to approach R2 for payment or why R1 would keep chasing Mr Wong on 10^th December 2003 by threatening to go to the Labour Department. R2’s explanation that it was prepared to release contract funds upon verification of work done by森記 may well find favour (or it may not) with the trial judge after hearing and assessing the evidence, but it is not for the court at this stage to determine on affidavit evidence whether R2’s payment of HK$2,100.00 on 1^st December 2003 and alleged payment of HK$5,000.00 on 10^th December 2003 to AP were contract funds or wages and/or why AP was directed to approach R2 for payment.

51.The disputes of fact between AP and R2 as to the circumstances that led to the payment of HK$2,100.00 to AP render it inappropriate to make any definitive conclusions at this stage. In coming to this view, I have borne in mind that the Receipt as signed by AP describes R2’s payment of HK$2,100.00 as “工程費款項”, but labels are not necessarily definitive and must be weighed in light of the total picture.  As regards AP’s claim that Mr Wong of R2 paid HK$5,000.00 to him on 10^th December 2003 and that he signed an acknowledgment of receipt for Mr Wong, Mr Wong did not directly deny this in his 2^nd affirmation but only sought to be criticise such evidence by saying the total amount allegedly received by AP does not tally with his wages calculated on AP’s claimed daily rate of HK$750.00. These submissions go to the weight of the evidence and are plainly unsuitable for determination in an application for striking out.

52.Moreover, there is a direct factual conflict between AP and R1 in that the total sum of HK$12,100.00 AP claimed he received is well in excess of the sub-contract sum of HK$7,500.00 as alleged by R1. AP’s affirmation evidence therefore raises a query as to whether he was an independent sub-contractor as R1 claimed. Further, according to AP, he actually worked for more than 5 days and was paid in excess of HK$7,500.00, yet R1 in his original Answer claimed that AP not only completed the work in 5 days, he was already paid by monies R1 got from his 上級. Such differences could only be resolved at trial.

53.R2 also does not expressly deny that AP and his wife gave original medical/sick leave certificates to Mr Wong’s secretary.  Mr Wong merely said R2 did not have any information. AP’s case was that he would not have given his medical/sick leave certificates to R2 unless he regarded R2 to be the principal contractor liable to make periodical payments. Such evidence may well be tested by cross-examination in due course but it cannot be ignored at this stage.

54.R2 claimed that the Memo was not “legally effective”. I assume Mr Wong meant that the identification of AP’s employer and the principal contractor therein was based on AP’s self-serving assertions in the Notice. AP would no doubt on the other hand say that R2’s assertion that it was only the employer of the Works in its correspondence with the Labour Department was also self-serving. The weight to be attached to such documents as well as the veracity of its contents will again have to be tested against the totality of the evidence, which cannot be done at this stage.

55.R2 challenged the capacity and role of AP’s “co-worker” by saying that it was AP who as sub-contractor engaged the co-worker. Although the extract of R1’s 工數 record of 29^th November 2003 stated 泥水(判), labels are not necessarily determinative. In any event, AP’s case against R1 is still pending and unresolved, and R1’s defence argument that AP was a sub-contractor is not yet determined. Further, the “co-worker” is as yet unidentified in these proceedings. What is plain is that the extract of工數 record of 29^th November 2003 shows a number of workers did carry out the Works at the Site on that day. Such record on its face cannot conclusively show AP’s “co-worker” is necessarily not amongst the workers named therein.

56.Mr Wong suggested that AP was motivated to issue the present claim against R2 because of his failure to purchase insurance coverage, but such assertion is premised on R2’s view that AP was a sub-contractor and not an employee. In any event, this is a matter for trial and not for determination on affidavit evidence.

57.In summary, I am of the view that AP’s claim against R2 is not so plain and obvious or so unarguably bad that it ought to be struck out. On the matters pleaded in the Application and on the affirmation evidence before me I cannot say that the claim is impossible or unsustainable. Much will turn on the weight of the evidence, the inferences to be drawn from the documents and the parties’ conduct in light of the whole picture. It is plainly a fact-sensitive matter and ought to be left for trial. R2 has failed to demonstrate that AP’s claim against R2 is bound to fail or is abusive, vexatious or frivolous.

Conclusion

58.In the circumstances, R2’s present application is dismissed. However, AP was unsuccessful in his application to rely on the witness statements in the PI Action. Both Ms Yip and Mr Wong informed me that if I should dismiss R2’s present application, AP and R2 are anxious to progress the present case as quickly as possible. In my view, the present case should be brought back to court for a call-over directions hearing to be attended by all parties (including R1) as soon as possible. I therefore order that (a) all parties do attend a call-over directions hearing at 12:00 noon on Friday, 17^th March 2006, (b) AP’s solicitors should draw up this order in Chinese and serve the order on R1 and (c) the Registrar of the District Court do give Chinese written notice of call-over hearing to all parties in respect of the aforesaid call-over directions hearing.

59.There is no reason why costs should not follow event. Ms Yip and Mr Wong both agreed that the costs of the hearing on 30^th November 2005 should be made costs in the cause of R2’s present application and I grant an order by consent to such effect. I also grant a costs order nisi that AP do pay R2 the costs of the striking out application to read/rely on the witness statements of the PI Action in any event to be taxed if not agreed. I also grant a further costs order nisi that R2 do pay AP’s costs of the application (including all costs reserved, if any) in any event to be taxed if not agreed with certificate for counsel. To assist the taxing master, I apportion 35 minutes of the hearing time on 19^th February 2006 for AP’s application to read/rely on the witness statements in the PI Action. Costs orders “in any event” do not confer the right to tax costs until the case is finally decided or settled. Here AP and R2 are respectively entitled to certain costs pursuant to the aforesaid costs orders nisi. Further, although R2 is unsuccessful in its striking out application, I cannot say at this stage that its case is without merit. It is sensible for all taxation of costs be dealt with at the conclusion of the present case. There should be legal aid taxation of AP’s own costs.

Ms Anita Yip instructed by Messrs Lo, Chan & Leung for the Applicant.

The 2^nd Respondent in person and represented by its director Mr Wong Pak Sum.