Wong Kai Hung v. Lam Geotechnics Ltd

DCEC 110/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 110 OF 2004

---------------------

IN THE MATTER BETWEEN

-------------------

Coram: Her Honour Judge C.B. Chan in Court

Dates of Trial: 27^th & 28^th February 2006

Date of Handing Down Judgment: 13^th April 2006

_________________

JUDGMENT

_________________

1.In this Action the Applicant made an application for compensation under s.16A(8) of the Employees’ Compensation Ordinance on 3^rd February 2004.  The parties entered into a Consent Summons on 2^nd February 2005 that leave be granted to the Respondent to apply under section 16B of the Ordinance for cancellation of the Review of Compensation Assessment (Form 6) out of time.

2.On 24^th February 2005, leave was also granted by consent to the Applicant to amend the originating procedure.

3.On 1^st March 2005, the Applicant amended the Application to bring the Application under s.18A of the Employees’ Compensation Ordinance.

4.The Respondent applied pursuant to s.16D of the Ordinance in DCEC 322 of 2005 to cancel the Form 6 on 9^th March 2005.

5.The circumstance in which the Respondent relies are:-

(a)    Form 6 was issued in ignorance of, or under a mistake as to the true nature of the injury; or

(b)    Form 6 was based upon false or misleading information or statement given or made.

6.On the 28^th October 2005 by Order of H.H. Judge Ng, it was ordered that the two actions be tried and heard at the same time.

Undisputed Facts

7.The following facts were undisputed:

(1) The Applicant was employed by Johnwing Engineering Company (“Johnwing”) to carry out demolition work at the rented premises of the Respondent at Flat No. 6, Ground Floor of Topsail Plaza, No. 11 On Sum Street, Shatin, New Territories, Hong Kong (“the Premises”).

(2) The accident to the Applicant happened on 17 July 2001 wherein the Applicant twisted his left ankle when he was removing a chiller that belonged to the Respondent that was placed in the Premises. 

(3) Mr. Sin Chi Fai a registered safety officer employed by the Respondent was duly notified of the accident and instructed an Assistant Safety Officer to attend the Premises to investigate what had happened and to prepare a report.  

(4) After discussion by Mr. Sin Chi Fai with Mr. Leung Man Kit, the Plant Manager of the Respondent was of the view that the Respondent was a principal contractor whilst Johnwing was a subcontractor.  On that basis the Mr. Sin Chi Fai filed Form 2 on behalf of the Respondent as principal contractor.        

(5) On 11 June 2003, the Employees’ Compensation (Ordinary Assessment) Board issued a Certificate of Review of Assessment.   On 18 June 2003, the Labour Department issued a Certificate of Review of Compensation Assessment.  The total amount of compensation was HK$294,112.00.

(6) Johnwing paid the Applicant HK$110,000.00 towards the assessed compensation.  

8.In his claim herein, the Applicant claims the balance of the compensation in the sum of HK$184,112.00.    The Respondent denies that he was the principal contractor of the Applicant at the material time.   The Applicant’s case at the trial was that he had only received the sum of HK$110,000.00 from Johnwing.   The balance of HK$184,112.00 had not been paid to him but Johnwing gave him a cheque for this sum which was dishonoured.   The Applicant was informed by Johnwing that the cheque was dishonoured because the Respondent did not pay this sum to Johnwing.   The Respondent contended at the commencement of trial that Johnwing had paid the Applicant the full sum of the compensation because the Applicant had signed receipt of the full sum to Johnwing.   The Applicant explained that he signed receipt for the entire sum to Johnwing because he was told by Johnwing that it was upon production of this receipt that the Respondent would reimburse the compensation to him.  Johnwing would only be able to pay compensation to the Applicant upon receipt of this from the Respondent.  At the conclusion of the trial Mr. Li Sin Keung the witness of the Respondent admitted that he had been informed by Johnwing that the Applicant had only been paid the sum of of HK$110,000.00 in compensation that the balance had not been paid.    The Respondent then conceded that the only issue of the trial is whether the Respondent was the principal contractor of Johnwing and/or whether Johnwing was the subcontractor of the Respondent in this project.

Evidence of the Applicant

9.The Applicant’s case is that the Respondent was the principal contractor of Johnwing.   When the Respondent filed the Form 2 stating that it was the principal contractor, it considered its position and came to the conclusion that the Respondent was a principal contractor before Mr. Sin Chi Fai prepared and signed the Form 2.  The Applicant adduced his Witness Statement dated 11^th June 2004 and Second Witness Statement dated 21^st June 2005 into evidence and confirmed it to be true.   The Applicant stated that the Respondent had taken no step to inform the Labour Department that it was not the principal contractor until its application in this Court even though there is provision to do so.  

10.The Applicant stated that at the site, he did the work of demolition of partition walls and removal of electrical wires.  He was responsible for removal of the electrical appliances.  After his accident, Johnwing told him that he had signed a contract with the Respondent for the works in question.    To his knowledge, the Respondent was the principal contractor who subcontracted all the works on the site.   Johnwing gave him instructions to work on the site.  

Evidence of the Respondent

11.The Respondent called Mr. Li Sin Keung a Senior Quantity Surveyor of the Respondent to give evidence.   He adduced his witness statement at pages 1 to 8 of Section B of the Bundle of Witness Statements.  

12.He stated in his witness statement that the Respondent had rented from Topsail Estate Limited Flat No. 6 with Carpark No. L8 on the Ground Floor of Topsail Plaza situate at No. 11 On Sum Street, Shatin, New Territories, Hong Kong for two years from 1 August 1999 to 31 July 2001 at the rental of HK$37,932.00 per month.   The Respondent used these premises as its office and workshop and to store consumable materials and spare parts of the machines used in construction projects.   The Respondent also repaired and maintained plant and machinery at the Premises.   The Respondent was required to return the said premises to its landlord in a bare shell condition which was the condition when the Respondent moved in.   Hence the Respondent engaged a demolition and clearance contractor Johnwing Engineering Company to carry out the demolition and clearance work for this.

13.Under the reinstatement contract, Johnwing had to provide labourers to carry out the work for the Respondent.  All the workers were under the direct supervision and control of Johnwing.  Johnwing charged the Respondent a total sum of around HK$32,000.00 for the reinstatement work.

14.The Applicant twisted his ankle when moving a chiller installed by the Respondent as a fixture on the said premises.  

15.He stated that after the Respondent was notified of the accident, Mr. Sin Chi Fai, the Safety Consultant of the Respondent and Mr. Leung Man Kit, the Plant and Logistics Manager of the Respondent mistakenly believed that the role of the Respondent was a principal contractor whilst Johnwing was a sub-contractor.

16.Mr. Sin Chi Fai submitted the Form 2 naming the Respondent as the principal contractor.  He stated that this was in fact a mistake.   He lodged this in the Labour Department purely because of his misconception that Johnwing was a sub-contractor of the Respondent.  

Was the Respondent a Principal Contractor

17.The Applicant’s Counsel argues that the Form 2 is an important document enacted under the Ordinance.    Mr. Sin Chi Fai who signed it was a Safety Officer or Consultant of the Respondent at all material times.   Mr. Sin Chi Fai had discussed with Mr. Leung Man Kit, the Plant & Logistics Manager of the Shatin Workshop at the material time before the completion of Form 2.   He must have thoroughly considered whether the Respondent was a principal contractor before he stated that in the Form 2.   Mr. Sin’s great care can be seen by the fact that on 14 August 2001, 10 days after the filing of Form 2, Mr. Sin Chi Fai wrote to the Labour Department to amend the Form 2 to state that the Applicant did not work on Sundays.   A Safety Officer is regulated under the Factory & Industrial Undertakings (Safety Officers and Safety Supervisors) Regulations, cap 59Z.   His work is subject to statutory control.   He submitted that Mr. Sin must have double-checked with Mr. Leung Man Kit before coming to the conclusion that the Respondent was a principal contractor. 

18.The Applicant’s Counsel also submitted that, in the course of cross-examination, Mr. Li Sin Keung stated that the Respondent had thought it was the principal contractor from the date of the accident up to the time they sought legal advice.  It was only upon legal advice that the Respondent changed its position to state that the Respondent was not a principal contractor.  In fact, the Respondent had submitted to its insurer, Tugu Insurance Co. Ltd. in the capacity of a principal contractor, receipts of payment signed by the Applicant to Johnwing.   The Respondent had also adopted the capacity of a principal contractor to discuss with Johnwing about the compensation arising from the accident.  

19.The Respondent is also a special contractor registered with the Buildings Department in ground investigation field works.   Their staffs are men in the trade and must know what being a principal contractor entails.   He therefore submits that it is incredible that a Safety Officer as senior and experienced as Mr. Sin Chi Fai could have made such a simple mistake to state that the Respondent is a principal contractor if it is not.  

20.The Applicant’s Counsel also submits that Form 2 is a legal document or is a document that has legal effect.   The Applicant’s Counsel relied on the case of Jumbo King Limited v. Faithful Properties & Others (1999) 2 HKCFAR 279, at 296, where Lord Hoffman NPJ stated that,

“Of course in serious utterances such as legal documents, in which people may be supposed to have chosen their words with care, one does not readily accept that they have used the wrong words.   If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other”.

21.The Applicant’s Counsel submits that the Form 2 is a document with legal effect as it is a form enacted in the Ordinance.

22.He also relies on United Ford Development Ltd. t/a King Ford Mahjong Club v Fung Yin Yee Shirley & Others [1993] 2 HKLR 290.    It is a case where 4 employees of a Mahjong Club died from excessive smoke when robbers robbed the cashiers downstairs.   The words of the trial Judge, H.H. Judge Downey were repeated in the judgement of the Court of Appeal as follows:

“I take Miss Lam’s [Counsel for the Employer] points, but as Mr. Liu was not called to give evidence I do not know how familiar he is or may be with the facts of this case, the relevant law, or his sources of knowledge.  I would point out that the question on the Form 2 is expressed in simpler, and possibly more intelligible language than the statute, because it refers to ‘work’.  If Mr. Liu believed that the three [deceased employees had stepped completely outside their] employment when they met their deaths, it would have been quite easy and straightforward to say that the accident did not occur in the course of their work.  I consider that I should treat these admissions as indications that the Respondent, eight days after the accident and after making enquiries of others, regarded their activities at the time of the fire as forming part of their work.  In the absence of any evidence to explain the answers given in the form, they must be taken at their face value, and must be presumed to have been given with full awareness of the reasons for their being required and the consequences which might ensue.  In my view, they add cogent support to the other evidence and I find that the deaths of Mr. Lam, Mr. Leung and Mr. Yim occurred in the course of their employment by the Respondent, as did that of Mr. Tai.”

Fuad VP, with whom other members of the Court of Appeal also agreed at page 297, line 11-12 stated, “In my judgment, the judge was fully entitled to give what weight he did to the admission contained in the Forms 2 and that his approach to them cannot be faulted.”

23.He submitted that the Court is perfectly entitled to draw reasonable inference from the simple admission in the Form 2 that the Respondent was a principal contractor.

24.Further, the Respondent failed to tender the two crucial witnesses, Mr. Sin Chi Fai and Mr. Leung Man Kit for cross-examination as regards how they came to the conclusion that the Respondent was a principal contractor when considering how to complete Form 2 and how they could have been mistaken as regards this.   Mr. Li Sin Keung did not offer any credible explanation as regards how such a fundamental mistake could have been made.  

25.He submitted that if there is an issue of doubt, the issue of doubt should be resolved in favour of the injured worker to fulfil the legislative intention which is for the protection of injured workers.  

26.The Respondent’s Solicitor seeks to rely on the definition of “principal contractor” in the Ordinance and in particular the definition stated in section 24 (1) of the Ordinance.  It states:

“Where any person (in this section referred to as the principal contractor), in the course of or for the purposes 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, the principal contractor shall be liable to pay to any employee employed by that subcontractor or by any other sub-contractor in the execution of the work any compensation under this Ordinance which the principal contractor would have been liable to pay if that employee had been immediately employed by him; and where compensation is claimed from or proceedings are taken against the principal contractor, then, in the application of this Ordinance, references to the principal contractor shall be substituted for references to the employer, except that the amount of any compensation calculated by reference to earnings shall be calculated by reference to the earnings of the employee under the employer by whom he is immediately employed.”    

27.The Respondent’s Solicitor refers to Poon Hau Kei v Hsin Cheong Construction Co. Ltd. v Taylor Woodrow International Ltd. Joint Venture [2000] 1 HKC 324 where the words “work undertaken by the principal contractor” in section 24(1) of the Ordinance is clarified in the judgment of Lord Hoffman.    At page 346 D, it states, “‘Work undertaken’ therefore means work which is the subject of a contract to be performed either personally or vicariously.”

28.He submits that from the evidence of Mr. Li Sin Keung, it is clear the work for which Johnwing was contracted related to reinstatement of the said Premises before it would be returned to its landlord.  The Respondent did not undertake any work, which was the subject of a contract to be performed either personally or vicariously.   Therefore, the Respondent could not have been a principal contractor according to section 24(1) of the Ordinance.   

29.He also referred to authorities to show that descriptions contained in Form 2 could not be binding or conclusive as against the Respondent but the question as regards whether the Respondent was a principal contractor is an issue of fact to be decided by the Court upon the evidence.    The authorities relied on are:

(1)   Lung Yui Man v Yee Hing Kee Plumbing Works Company Limited and Another [2000] HKEC 130, where Deputy Judge Li said,

“Mr. Law for the plaintiff asserted that by filing the statutory Form II to report an industrial accident wherein it is stated that the plaintiff sprained his back on the 6^th September 1993, the 1^st defendant cannot deny that the plaintiff suffered injury during the course of employment under the 1^st defendant on the day in question.  With respect, neither the filing of the form nor the payment of compensation under the Employees Compensation Ordinance, Cap.282 can operate as estoppel or admission against the 1^st defendant.  See Ho Mui v Gammon (Hong Kong) Limited and another [1975] HKLR 195 and Li Kwai Fong Ah Pat v Bachy Soletanche Group and another, Civil Appeal No 3 of 1989.”    

(2)   Chan Sik Pan & Another v Wylam’s Services Ltd. & Others (2001) 4 HKCFAR 308 where the Respondent filed a Form 2 admitting itself to be the employer, gave periodical payments to the appellant and made objection to the Commissioner of Labour’s assessment of compensation.  The Respondent subsequently denied that it was the employer.  The trial judge relied on the contents of Form 2 and did not allow the Applicant to give evidence.  The Court of Final Appeal ordered a new trial by reason of the trial Judge’s violation of the principle of natural justice.   Bokhary PJ stated at page 316 G, as follows:

“No tribunal of fact receiving evidence at first-hand has yet made any assessment of credibility or indeed any finding of fact.  In the absence of assessments of credibility and findings of fact on the material matters, I do not feel able to conclude that Wylam was Mr. Chan’s employer.”          

30.The Respondent’s Solicitor therefore submits that if the Form 2 were binding and conclusive, the Court could just rely on the Form 2 alone to decide who was the employer and there should be no need for a new trial.  

31.I am of the view that the description of the Respondent as principal contractor in the Form 2 should not be treated as binding or conclusive as regards the status of the Respondent as against Johnwing and the Applicant.  

32.Lord Hoffman’s definition of the words “work undertaken” in section 24(1) clearly states that such work has to be the subject of a contract to be performed by the principal contractor either personally or vicariously.   In this case, the evidence does not point to the fact that the work contracted by the Respondent to Johnwing was work that was the subject of a contract to be performed by the Respondent either personally or vicariously.  The very nature of a contract requires that the Respondent contract with another party in respect of the work undertaken which was the subject of work contracted to Johnwing.  The Respondent it seems entered into the contract with Johnwing because it was under contractual obligation in the Tenancy Agreement with its landlord to surrender the premises after reinstatement.  The Respondent had not entered into a contract to perform the subject work either personally or vicariously with another party.

33.Having considered the aforesaid, I come to the conclusion that the Respondent was not the principal contractor of Johnwing in relation to the work contracted to Johnwing.  

34.I therefore dismiss the Applicant’s action.    I grant an order nisi for costs of the action to the Respondent to be taxed if not agreed.   

Representation:

Mr. Andy Lam instructed by Messrs Ivan Tang & Co. for the Applicant.

Mr. Ng Man Kin of Messrs Kwok, Ng & Chan for the Respondent.