Chan Yiu Man v. 冼錦堂 and Another

Case No.DCEC 46/2006

Court

District Court

Date—

Judge—

Case Document

100%Judiciary

DCEC 46/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 46 OF 2006

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BETWEEN

	CHAN YIU MAN	Applicant
	and
	冼錦堂	1^st Respondent
	BUDDHIST DAO HOPE YUEN CHARITY COMPANY LIMITED	2^nd Respondent
	(佛教道合園 (慈善)有限公司)

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Coram: Deputy District Judge R. Cheung in Court

Date s of Hearing: 7^th and 8^th February 2007

Date of Handing down Judgment: 28^th February 2007

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JUDGMENT

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The Claim

1.The Applicant claims against the 1st Respondent and the 2nd Respondent for employees' compensation under the Employees' Compensation Ordinance, Cap. 282 ("the Ordinance"). The Applicant claims against the 1st Respondent and the 2nd Respondent in the alternative that one of them was his employer. The Applicant also takes the fall back position that, even if the 2nd Respondent were not his direct employer, the 2nd Respondent is nevertheless liable towards him as the principal contractor of the 1st Respondent, pursuant to Section 24 of the Ordinance. This fall back position was however not seriously pursued. On quantum, the Applicant seeks compensation under Sections 9, 10 and 10A of the Ordinance.

2.The 1st Respondent was absent at the trial.

3.The 2nd Respondent took issue on both quantum and liability. The 2nd Respondent's case on liability is that it had engaged the service of the 1st Respondent as its independent contractor. The Applicant was the employee of the 1st Respondent. The 2nd Respondent was not the employer of the Applicant, nor was it the principal contractor of the 1st Respondent under Section 24 of the Ordinance.

Witnesses

4.AW1 was the other worker who worked together with the Applicant and the 1st Respondent on the date of the accident. The Applicant himself testified as AW2. The 2nd Respondent called only one witness who is RW1. RW1 is over 70 years old.

Matters not in dispute

5.Certain matters are not in dispute and I find the facts accordingly. It is not in dispute that on 25 September 2004, the Applicant suffered personal injury by accident arising out of and in the course of his employment.

6.The Applicant was born on 15 May 1949 and has received primary school education. At the time of the accident he was aged 55. The Applicant was familiar with AW1. They had known each other for years. The Applicant's family members lived in China and so the Applicant lived alone in Hong Kong by renting a room from AW1, who also lived in the same flat. The two of them often worked together.

7.At the material times, RW1 was the agent of the 2nd Respondent. He managed the practical affairs of the 2nd Respondent. He was a director and shareholder of the 2nd Respondent. The 2nd Respondent was formed in 2001 to take over the management of Dao Hope Yuen, a Buddhist monastery of long standing. I would use the expressions "the 1st Respondent" and "Dao Hope Yuen" interchangeably in this Judgment. Dao Hope Yuen is located at the mid-level of a hill and accessible by a narrow village path which goes uphill from a playground at the bottom of the hill (see the photograph at Trial Bundle page 108, hereafter "TB108", mutatis mutandis). There is a village settlement called Pai Tau Village along the village path. Dao Hope Yuen did not employ any salaried staff. Its day-to-day needs and affairs were taken up by unpaid voluntary workers. RW1 is one among them.

8.The resident spiritual leader of Dao Hope Yuen is a Buddhist monk called Sik Chi Hung. Mr. Sik has given a witness statement but in the end he has not testified.

9.Dao Hope Yuen had to carry out certain building works in 2004. RW1 on behalf of Dao Hope Yuen contacted the 1st Respondent in this connection. The 1st Respondent contacted AW1 in turn in this connection. AW1 was told that there would be one day's work to do. AW1 contacted the Applicant in turn in this connection.

10.As a result of the above, on 25 September 2004 sometime after 9 a.m., the 1st Respondent, AW1, the Applicant and RW1 met at the above playground at the bottom of the hill. RW1 gave a short briefing as to what were the building materials that were to be transported to Dao Hope Yuen. He then left. That day, the 1st Respondent, AW1 and the Applicant worked together to transport, among other things, iron bars and pipes from the playground to Dao Hope Yuen via the village path. They had a lunch break from about 12 noon to 1 p.m., then they resumed their work.

11.The three of them employed the use of a conveyance commonly called a "village truck" to convey the loads uphill. The village truck was a gasoline powered three wheel truck with a receptacle at the front for carrying the loads. The control mechanism of the village truck was at the rear (see TB107 for a similar model). The maximum carrying capacity of the village truck was 300 kg. It was owned by the 1st Respondent.

12.The three of them were trying to transport the last load of building materials uphill along the village path when the accident happened at about 3 to 4 p.m. The village truck then toppled over to the right. The load of iron bars and rods fell out and crushed the right leg of the Applicant. The 1st Respondent was also injured in the accident. The police and firemen were summoned to the scene. The 1st Respondent and the Applicant were taken to the hospital.

13.That evening, RW1 visited the Applicant in the hospital and gave him $500. Later on, there was an occasion when the Applicant and RW1 again met each other outside the train station at Shatin when RW1 gave the Applicant another $1,000.

Notice to the 1st and 2nd Respondents

14.The Applicant in his Application has stated that no notice under Section 14 of the Ordinance was given to the 1st and 2nd Respondents. Counsel for the 2nd Respondent has expressly indicated that no point would be taken on this. I find that the 1st and 2nd Respondents were not prejudiced by the want of notice, under Section 14(1)(b) of the Ordinance.

Discussion and Fact Finding

15.To determine whether the 1st Respondent or the 2nd Respondent was the Applicant's employer, it would be necessary to examine the true nature of the relationships (1) as between the Applicant and the 1st Respondent, (2) as between the Applicant and the 2nd Respondent, and (3) as between the 1st Respondent and the 2nd Respondent. There was no serious suggestion that the Applicant himself was an independent contractor or self-employed when he worked on 25 September 2004. The evidence clearly shows that he was an employee. The question is: of whom? Was it the 1st Respondent or was it the 2nd Respondent?

16.The question here does not turn solely on the construction of a contract document. So, it is a mixed question of law and fact.

17.Questions of this nature have vexed the Courts for years. In the widely publicized case of Cheung Yuen v. The Royal Hong Kong Jockey Club, CACV 146/1996, 7 January 1997, Hon Nazareth V.P. said:

"…….. it is far from easy to define a contract of employment, or the relationship of employer and employee. The courts have not in the event been able to formulate a satisfactory test or definition. They have instead settled for indicia, which is that expression suggests, are merely indications or guidance …….. ".

18.In dealing with questions of this nature, the Courts have in the past referred to one helpful article in the Hong Kong Law Journal (1972) Vol.2 No. 2 by Mr. John Rear. There the writer observes:

“Because a person is a “casual labourer” it does not follow that he is working under a contract of service, despite the employer’s control of the manner of the work. Considering the factors listed above, we may in the building trade observe many of the marks of the self-employed, particularly in the case of the skilled craftsmen who supply their own tools and of whom it is unrealistic to say that the employer may control him by telling him the manner in which he should exercise his skills. These men hold themselves out for hire and wait to be contacted. Many are hired not by the contractor of his foreman but indirectly through the offices of a union official. The employer has no right to demand the man’s exclusive services and frequently he is engaged not generally but for a particular task. The work is either on a job or a daily basis; a man turns up or stays away as mood and financial necessity take him.

Where there are informal gangs, as there are, for example, in the painting trade, further problems arise. Where a contractor engages A on the basis that A brings along others to assist him, and A seeks out B and C with whom he regularly teams up, who is the employer of A, B and C? Atiyah has pointed out that in the gang situation there are four distinct possibilities:

(1) the leader of the gang may be a foreman, in which case all the members of the gang will be treated as employed by the employer of the foreman, who is, in this case, a superior servant with authority to engage inferior servants;

(2) the leader of the gang may be a servant and the workmen may be sub-servants employed by the leader but not servants of the over-all employer;

(3) the leader of the gang may be an independent contractor and the members of the gang may be his servants, employed by him under contracts of service;

(4) the leader of the gang and the men may all be independent contractors vis-à-vis the employer, in which case they may be partners inter se, or there may be no contractual relationship between themselves.”

19.The Courts have also referred to academic authorities on the subject, in particular, Chitty on Contract, Vol. 2, 29th Edition . Paragraphs 39-010 to 39-028 of Chitty contain a discussion on the factors identifying a contract of employment. Paragraph 39-010 lists out a number of relevant factors, as follows:

“The factors to be considered. 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.

20.Paragraph 39-026 of Chitty, supra, contains the following discourse:

"Labour-only sub-contracting is the practice by which a main contractor on a project secures the labour he requires by contracting with one or more sub-contractors. It is normally the intention that there will be no contract of employment involved in this sub-contracting relationship. Labour-only sub-contracting has become widespread in the building industry. In relation to that industry, successive Finance Acts have made provision for deduction in respect of income tax to be made by main contractors from any payments to labour-only sub-contractors unless the sub-contractor holds a certificate of exemption. Various different kinds of labour-only sub-contracting arrangement are found in practice, and their legal effects are a matter of difficulty. There are two main types of sub-contracting arrangement: the two-party arrangement where the worker contracts directly with the main contractor, and the three-party arrangement where there is an intermediary, such as a gang-leader or a sub-contracting company, who contracts with the main contractor to provide labour and with the worker to obtain labour. In any given case, there may be room for argument about whether the arrangement is of the two-party or three-party type. If the arrangement is of the two-party type, the contract will normally purport to be a contract for services and not a contract of employment. The courts have sometimes found that there is indeed no contract of employment in such cases; but the arrangement may be held to fall within statutes dealing with the employment relationship and has even been classified as a true contract of service despite the parties’ clear intention that it should be regarded as a contract for services. A variant upon the two-party type of arrangement is that whereby the worker contracts as one of a firm of partners; in this case the existence of a contract of employment is clearly negated. If the labour-only sub-contracting arrangement is held to be of the three-party type, more complex questions arise. The contract between the main contractor and the intermediate sub-contractor will normally not be a contract of employment. The contract between the intermediate sub-contractor and the worker may be a contract of employment, or a contract for services. An important decision in favour of the contract of employment analysis was that of the Privy Council on appeal in Lee-Ting Sang v Chung Chi-Keung. It should follow from the three-party classification of the arrangement that there is no contract (of employment or for services) between the main contractor and the worker; but there may be held to be an employment relationship between them for statutory purposes. Some statutes have expressly deemed the worker an employee of the main contractor.”

21.There is an abundance of judicial authorities on the above question. These would include , for example, Market Investigations Ltd. v. Minister of Social Security, (1969) 2 Q.B. 173, Wong Man Luen v. Hong Kong Wah Tung Stevedore Company, CACV 17/1971, 25 October 1971, Wong Po Sin, sister of Wong Man Shun (deceased) v. New Universal Paper Co. Ltd. CACV 15/1972, Lee Ting Sang v. Chung Chi Keung & Another, (1992) 2 W.L.R. 1173, Kent Knitters Ltd. v. Lu Yat Sang & Others, Labour Tribunal Appeal No. 18 of 1991, 18 November 1991, Poon Siu Kuen & Others v. Pine Corporations Ltd., HCLA 71/2001, 10 July 2004.

22.With that, I would proceed to examine the evidence.

23.The control exerted by Dao Hope Yuen as to how the job was to be done was minimal on 25 September 2004. It was not in dispute that RW1, in the presence of the 1st Respondent, AW1 and the Applicant, only gave short briefings as to what building materials were to be transported to Dao Hope Yuen, and then he left. It was the 1st Respondent who organized the work. He alone knew how to operate the village truck. He decided what was to be included in each load to be carried uphill on the village truck and how the loaded material were to be secured/placed. There is no evidence as to who emptied the village truck of its contents when it arrived at Dao Hope Yuen up in the hill, but there is undisputed evidence that the 1st Respondent, AW1 and the Applicant did not have to do the unloading work. During the entire course of the work, it was the 1st Respondent who had been giving instructions for AW1 and the Applicant to follow.

24.The Applicant himself had worked for two years as a casual worker prior to the accident. He had taken up work in similar fashion in the past. He said that in the trade, if a casual worker in the position of the Applicant after the first day's work decided not to return to work the following day, the casual worker would inform the person who called him to work. In the present case, he regarded the 1st Respondent as the person who called him to work.

25.I accept that the Applicant's work on 25 September 2004 did not involve any prospect of profit or risk of loss. He merely worked to earn his wages.

26.As for the 1st Respondent, the evidence from RW1 is that he agreed on a lump sum to perform the transportation services. If such evidence is accepted, then of course the 1st Respondent's work did involve a prospect of profit or risk of loss. Should I accept such evidence?

27.The evidence of RW1 in this connection was somewhat vague. By and large, he appeared to maintain that before he approached the 1st Respondent, he already had in mind what things he would require the 1st Respondent to transport to Dao Hope Yuen. These things were substantially the same in kind as in quantity as (1) those set out in the Cash Sales Memo of Wah Loong Metals & Building Materials Ltd. ("Wah Loong Metals") at TB112-3, which were building materials consisting mainly of iron bars and rods; (2) those set out in the Cash Sales Memo of City Building Materials Co. ("City Building Materials") at TB114, which were building materials consisting mainly of concrete, sand, stones and bricks; and (3) foodstuff and provisions such as oil and rice, which RW1 would order from other suppliers. According to RW1, he had written out the above things that he would require the 1st Respondent to transport , on a piece of white paper, which he showed to 1st Respondent to obtain the latter's quotation. RW1 said that he only wrote out the requirements on a rough basis. RW1 has since disposed of that piece of white paper. The 1st Respondent and RW1 then agreed on applying certain unit rates and quantities to calculate the total contract price, the details of which are as set out in paragraphs 7 and 8 of RW1's witness statement at TB63-64. The total contract price, a lump sum, was then agreed at $8,134.00. In other words, it was a lump sum contract although unit rates and quantities were applied to ascertain the lump sum.

28.Although somewhat vague and imprecise, the tenor of RW1's witness statement clearly conveyed the suggestion that the contract between Dao Hope Yuen and the 1st Respondent is a piece-rate contract, leaving the total contract price to be worked out after the job is done, in accordance with the agreed unit rates and the quantities actually transported.

29.According to RW1, the contract between Dao Hope Yuen and the 1st Respondent was concluded some 5 to 6 days before 23 September 2004, when the contract was actually performed. RW1 said that the performance of the contract had possibly started on 22 September 2004 but equally, it might not have started then. He was clear that the transportation work had started on 23 September and continued on 24 & 25 September 2004. So, it would be reckoned that Dao Hope Yuen had entered into the transportation contract with the 1st Respondent on about 17 or 18 September 2004.

30.According to RW1, upon entering into the transportation contract with the 1st Respondent, RW1 then called up the suppliers by telephone on about 19 September 2004. Over the telephone, RW1 placed orders with Wah Loong Metals and City Building Materials.

31.In the case of City Building Materials, RW1 had placed an order for 4 kinds of building materials of different prices and quantities. In the case of Wah Loong Metals, RW1 had placed an order for altogether 15 items of building materials (mainly iron bars and rods) of different prices, specifications and quantities by mere word of mouth over the telephone. There is no evidence that Wah Loong Metals had even bothered to fax back the details of the telephone order to Dao Hope Yuen for confirmation.

32.RW1 said that the two suppliers Wah Loong Metals and City Building Materials both trusted him, so he did not have to pay even a deposit before the ordered materials were duly delivered by the suppliers to the playground at the foothill. RW1 said that the deliveries were duly made sometime between 19 September 2004 to 23 September 2004. The goods ordered from Wah Loong Metals were delivered in two instalments. The goods ordered from City Building Materials were delivered all in one go. RW1 however later said that part of the goods ordered from Wah Loong Metals were delivered on 25 September 2004.

33.RW1 said that in the case of Wah Loong Metals, he went to the supplier's shop to make payment in cash on 24 September 2004 and that was the occasion on which the supplier wrote out the Cash Sales memo dated 24 September 2004 at TB112-3. In the case of City Building Materials, he went to the supplier's shop to make payment in cash on 1 October 2004 and that was the occasion on which the supplier wrote out the Cash Sales memo dated 1 October 2004 at TB114. By 1 October 2004, according to RW1, the goods were already delivered. The supplier had given him credit based on personal trust. He went there to make payment only. RW1 had no plausible explanation to give when he was questioned why in the Cash Sales Memo, the supplier City Building Materials had to write down the address for the delivery of the goods, when the goods were already delivered by then.

34.It also appears to me to be rather odd that RW1 would have agreed with the 1st Respondent in advance that the quantity of bricks to be transported was 2098 pieces, when his evidence is that the bricks were sold by City Building Materials in lots of 500 pieces each.

35.I would decisively reject RW1's evidence concerning the scope and the terms and conditions of the contract between Dao Hope Yuen and the 1st Respondent. There was, of course, a contract between Dao Hope Yuen and the 1st Respondent. What is the true nature of their relationship? Both AW1 and the Applicant were not present when RW1 discussed with the 1st Respondent about engaging the latter's transportation service. The 1st Respondent has given a declaration (which is, in essence, a witness statement) to the Labour Department, and that appears at TB77-78. The 1st Respondent of course may have his own interest to serve. He never appeared in Court and the truth of his evidence, which is hearsay, was never tested in cross examination. I am fully aware of all that. However, taking everything into account, I have accepted parts of his evidence, as follows.

36.According to the 1st Respondent, in January 2004, he had worked as an employee of Dao Hope Yuen for 15 days and was paid wages of $380.00 per day. I accept that as true. The 1st Respondent did not mention in his witness statement that he had to employ the use of his village truck when he worked for Dao Hope Yuen in January 2004. I find that he had not.

37.I accept that on 24 September 2004, the 1st Respondent transported a quantity of foodstuff and provisions including rice and oil uphill to Dao Hope Yuen using his village truck at the request of RW1. RW1 on behalf of Dao Hope Yuen also asked the 1st Respondent to get two more workers to transport a quantity of building materials, mainly iron bars and rods, to Dao Hope Yuen on 25 September 2004. In this connection, I note that RW1 did testify to the risk of the iron bars and rods being stolen if left at the playground unattended. RW1 had also mentioned that, in any event, it would not be proper to leave such building materials at the playground for too long a period of time to cause obstruction. I accept that it was understood between RW1 and the 1st Respondent that the 1st Respondent would use his village truck to transport the building materials. The 1st Respondent thus enlisted the help of the Applicant and AW1 for the job. RW1 did not specify who the two additional workers should be. The amount of remuneration for the 1st Respondent, AW1 and the Applicant was not expressly agreed beforehand. They did not even discuss that. The 1st Respondent proceeded on the assumption that Dao Hope Yuen would decide on and pay the wages of the Applicant and AW1 direct. On 11 October 2004, RW1 paid $1,000.00 to the 1st Respondent, which the 1st Respondent accepted as payment for the remuneration that he was entitled to, for the services he rendered on 24 & 25 September 2005, at the rate of $500.00 per day. I find that to be the reasonable charge that the 1st Respondent was entitled to.

38.I find, in the circumstances, that the 1st Respondent's work for Dao Hope Yuen on 24 & 25 September 2004 did not involve him in any prospect of profit or risk of loss. There was no prospect of profit or loss in the sense that the 1st Respondent might earn a significantly greater amount of money through more effective management and cost control or that he might suffer any significant financial loss through inept management or cost control. The gasoline cost that he would incur is minimal. He did not have to pay the wages of AW1 or the Applicant.

39.I accept that the transportation work undertaken on 25 September 2004 is not an integral part of Dao Hope Yuen's religious activities. This is too obvious to merit any explanation.

40.I also note that the transportation work on 25 September 2004 stopped short of entering the premises of Dao Hope Yuen proper. The loads of building materials were taken out of the village truck and placed at the entrance of Dao Hope Yuen, not inside.

41.I find that the Applicant was not carrying on a business on his own account. It would not be entirely accurate to describe the Applicant's work on 25 September 2004 as carrying on the business of Dao Hope Yuen. However, I am prepared to accept that his work was to meet a practical need of Dao Hope Yuen at the time.

42.As for the 1st Respondent, I accept that he was carrying on his own business on 24 September 2004 when he rendered transportation services to Dao Hope Yuen solely on his own, making profitable use of his village truck. I accept the evidence from RW1 that such was indeed the 1st Respondent's trade, and that the 1st Respondent used to hang around at Pai Tau Village, offering his services to villagers who might need to carry loads by the use of his village truck. Despite my initial hesitation, I also find that the 1st Respondent was carrying on his own business on 25 September 2004.

43.The necessary equipment to get the jobs done on both 24 & 25 September 2004 was the village truck owned by the 1st Respondent. The 1st Respondent had to foot the cost of the gasoline consumed by the village truck. The operation of the village truck did require some skill, though not much.

44.The Applicant did not have to pay any tax. There is no evidence that the 1st Respondent has to pay any salary or profit tax.

45.The Applicant was unclear throughout who was his employer on 25 September 2004. He was not interested in who was actually his employer so long as he would get his wages. The 1st Respondent's declaration does not clearly state that he regarded himself as the employee of Dao Hope Yuen in carrying out the transportation jobs on 24 & 25 September 2004.

46.I accept that the power of selecting which two workers to work on 25 September 2004 was vested in the 1st Respondent. The 2nd Respondent was not interested in the identities of the two additional workers. I infer that both the 1st Respondent and the 2nd Respondent would be concerned that the additional workers should be competent. Both of them did not want any delay due to incompetence at work. I also infer that the 2nd Respondent might be more interested in the personal attributes of the two additional workers as he would have to work with them closely the whole day on 25 September 2004. The 1st Respondent would probably have preferred someone whom he was familiar with.

47.I consider that very little turns on the power to dismiss or suspend the Applicant in the circumstances of this case.

48.There was a conflict of evidence between the Applicant and RW1 as to the nature of the payments made by the latter to the former, after the accident. I find that the $500.00 paid by RW1 to the Applicant to be made up of in part Dao Hope Yuen's payment of the Applicant's wages for 25 September 2004 and in part a gratuitous payment out of sympathy towards the Applicant. I find that the part that constituted wages to be no less than $380.00 and was probably $400.00. The gratuitous part of the payment was therefore $100.00.

49.I find that the subsequent payment of $1,000.00 by RW1 to the Applicant to be an entirely gratuitous payment out of sympathy.

50.There was also a conflict of evidence between AW1 and RW1 as to whether the latter had paid the former any wages after the accident. According to AW1, RW1 came to the scene after the accident and paid him $400.00 at the playground. The 2nd Respondent's case is that no such payment was made. I however accept the evidence of AW1 and I also find this payment was intended to be and accepted as payment of AW1's wages.

51.I accept that the Applicant, AW1 and the 1st Respondent had in January 2004 worked in the premises of Dao Hope Yuen as casual workers. RW1 was there and had given brief instructions as to what work was to be done. That was how the Applicant got to know RW1. The Applicant worked there for 15 days and was paid wages at the daily rate of $380. The payment was made to him in one go at the end of the wage period. AW1 had worked only for a few days. It was RW1 who paid the respective wages of the Applicant and AW1, directly to them. As noted earlier, I have found that the 1st Respondent had also worked for Dao Hope Yuen during the same period as its employee for 15 days. He was also paid wages at the rate of $380 per day.

52.Counsel for the 2nd Respondent in his closing speech submitted that it would be absurd for the 2nd Respondent, having engaged the services of the 1st Respondent as an independent contractor, yet proceed to employ two other workers to assist the independent contractor. This is an attractive and forceful argument, one that cannot be lightly dismissed. Yet, having weighed and considered all the circumstances, in the end, I have decided against it. It is not a decision that I have arrived at without much hesitation and difficulty. I appreciate that my finding would be indeed unusual, but I feel that I am driven to make this finding on the facts of the present case. Perhaps in rare and exceptional circumstances, there are life situations that cannot be nicely fit into general categories clearly delineated by those very learned authors, whose immense knowledge and experience on the subject unquestionably warrant my deference. I find that on 25 September 2004, the 1st Respondent was self-employed and that the 2nd Respondent had engaged him as an independent contractor to provide transportation services. Unusual as it may seem, I also find that the 2nd Respondent had employed the Applicant and also AW1 to assist the 1st Respondent.

53.In making these findings, I am fully aware of the fact that the Applicant has not been totally consistent in his evidence, in particular, in relation to whether there was an agreement as to the amount of wages for him, before he went to work.

The "principal contractor" argument premised on Section 24 of the Ordinance

54.As noted earlier, the Applicant did not seriously pursue this contention. There are two hurdles which the Applicant cannot overcome. In order that the 2nd Respondent may be regarded as a principal contractor under Section 24 of the Ordinance, the 2nd Respondent must have contracted with the 1st Respondent in the course of or for the purpose of its trade or business. Can Dao Hope Yuen, a Buddhist monastery, be regarded as carrying out a trade or business when it sought to implement some building works to its premises? I do not think so. The other hurdle is that there is an additional requirement before the 2nd Respondent may be regarded as a principal contractor, and the additional requirement is that the 2nd Respondent must have contracted with the 1st Respondent for the execution of the whole or any part of the work undertaken by Dao Hope Yuen. It was held in Poon Hau Kei v. Hsin Cheong Construction Co. Limited Taylor Woodrow International Limited Joint Venture, FACV No. 12 of 1999, 15 December 1999 that the words "work undertaken" in Section 24(1) of the Ordinance means "work which is the subject of a contract to be performed either personally or vicariously". In the present case, it cannot be said that Dao Hope Yuen had contracted with itself to carry the building materials uphill in the incident.

55.Section 24 of the Ordinance therefore does not assist the Applicant. But all these are noted for the sake of completeness only and do not affect my conclusion, as I have found liability against the 2nd Respondent on the ground that it was the direct employer of the Applicant.

Finding of Liability

56.I would therefore dismiss the Applicant's claim against the 1st Respondent. I find the 2nd Respondent liable to pay employees' compensation to the Applicant. I would now turn to the question of quantum.

Quantum

57.The quantum of the Applicant's entitlement will now fall to be determined.

Monthly Earnings

58.There is no clear evidence as to the amount of wages earned by the Applicant for the month immediately preceding the date of the accident (i.e. from 25 August 2004 to 24 September 2004, see Section 11(1)(a) of the Ordinance). As for Section 11(1)(b) of the Ordinance which relates to the Applicant's monthly earnings for the 12 months prior to the accident or a lesser period, I note that the Applicant was paid wages of $380.00 per day for 15 days in January 2004 by the 2nd Respondent. The Applicant was a casual worker and the possibility of his not being able to secure employment for a number of days in a month is very real. He said he used to work 23 to 24 days in a month. I believe that there is an element of exaggeration here although I am prepared to accept that he used to work for about 20 days in a month. To calculate the Applicant's wages in accordance with Section 11(1)(b) of the Ordinance, I consider that it is appropriate to treat his wages as $380 per day to be multiplied by 20 days. That gives $7,600.00 as his monthly earnings.

Compensation for Permanent Total Incapacity under Section 7 of the Ordinance

59.The amount of compensation for permanent total incapacity under Section 7 of the Ordinance must be first ascertained before one may proceed to ascertain the amount of compensation for permanent partial incapacity under Section 9. As noted earlier, the Applicant was aged 55 at the time of the accident. Section 7(1)(b) therefore applies. A lump sum that equals 72 months' earnings of the Applicant would be $7,600 x 72 = $547,200.

Is the Incapacity Permanent?

60.This was no real dispute about this. Dr. Wong See Hoi in his report of 14 July 2006 at TB124-131 says inter alia as follows:

“17. The assessment was done more than 1.5 year after the accident. Mr. Chan still complained of right leg soreness especially after prolonged walking and standing, when lifting heavy objects and running, and in rainy and humid days. He also had right foot pain… …..

20. Having examined Mr. Chan, I believe his right leg and right foot pain was compatible with the post-fracture status associated with persistent soft tissue inflammation around the injured site.

21. Orthopaedically, I agree that Mr. Chan has reached maximum medical improvement. He is suitable for assessment. The prognosis is good. He would still have on and off right leg and right foot pain permanently following the fracture of right fibular shaft and right medical cuneiform. The condition would be aggravated by performing heavy manual work, running, jumping, climbing up and down, and prolonged standing, squatting and walking. He may require treatments on a need-to basis………

23. Concerning his present complaint of right leg and right foot pain, I recommend 4% of whole person impairment for his right leg injury after the accident on 25^th September 2004.

24. Regarding his present orthopaedic condition, I believe he is able to resume his pre-injury work as a delivery worker but with reduced efficiency and capacity. With pain in his right leg and foot, he should have certain difficulty in standing and squatting in a prolonged period when lifting and carrying heavy loads. Continuous heavy manual work would aggravate his right leg and foot pain. It he were to take up the job as a delivery worker, he would require to take rest often of about 15 minutes after having worked for an hour and do some stretching exercises to relieve his problem. If the job does not allow him to take rest often as advised, he should consider changing jobs with less strenuous duties. Jobs such as messenger or car park attendant suit him better.

In the first Schedule of Employees’ Compensation Ordinance, there is no reference to such kind of injury.

For the purpose of employees’ compensation claims, I estimate the loss of earning capacity to be 6%.

25. For such injury, I consider the sick leave recommended by his treating doctors from 25^th September 2004 to 9^th May 2005 reasonable.”

61.Although I accept that the injury has left the Applicant with permanent partial incapacity, I would note in passing that I do not accept that the Applicant was a delivery worker before the accident as stated by Dr. Wong. The Applicant was a casual worker. I also do not accept that he is able to resume his pre-accident work as a casual worker.

Compensation under Section 9(1) of the Ordinance

62.The injury suffered by the Applicant is a non-scheduled injury. There is no exact match with any of the items of injuries listed in the First Schedule of the Ordinance. Item 33 of the First Schedule however provides that the loss of a leg below the knee is to be reckoned as 65% loss of one's earning capacity. In this connection, Section 9(1)(b)(i) effectively puts a cap on the amount of the compensation recoverable by the Applicant such that it cannot exceed 65% of the amount recoverable for permanent total incapacity under Section 7. Section 9(1)(b)(ii) effectively enjoins this Court to look for an item of injury listed in the First Schedule that bears closest resemblance to the Applicant's injury, and use the percentage loss of earning capacity designated for that item as a reference point to determine the Applicant's loss of earning capacity as a percentage. Section 9(1)(b)(ii) requires this Court to have regard to the percentages specified in the First Schedule and the Note thereto in the process. The difficulty of this exercise is the absence of a rational basis to make the determination. What then, shall be my guide? I take it to be proper for me to rely on what has been accepted as the common practice in judicial authorities.

63.In dealing with Section 9(1)(b) claims, it is common practice to rely on the formula commonly know as the Hong Kong Paper Mills formula, as corrected in the case of Lui Kwong Yan (see Hong Kong Paper Mills Ltd. v. Chan Hin Wu, CACV 45/1981, 18 June 1981 and Lui Kwong Yan v. Shui Hing Decoration Works & Another, CACV 62/1992, 15 December 1992). See also in general paragraphs 1555-1652 of Butterworth's’ Hong Kong Personal Injury Service, Issue 14. I would proceed on this basis notwithstanding the 2nd Respondent’s contention that the above formula is not applicable.

64.As noted earlier, I accept that the Applicant is no longer capable to resume work as a casual worker as he did in the past. He is however able to work as a gasoline station attendant or cleaner. According to the Applicant, jobs of such nature would yield $4,200 to $4,300.00 per month. Originally, his case on this aspect was pitched at $6,000.00 per month. I consider that the Applicant has understated the wages of jobs of such nature and I find it probable that such jobs would yield an income of about $5,000 per month.

65.The loss of earning capacity is therefore ($7,600.00 minus $5,000.00) divided by $7,600.00 and that gives 34.21%.

66.The amount of compensation under Section 9(1) of the Ordinance would be $547,200 x 34.21% = $187,197.12.

Whether Section 9(1A) of the Ordinance is applicable

67.Section 9(1A) may be invoked if a determination of the Applicant's loss of earning capacity solely under Section 9(1) would be substantially less than a determination under Section 9(1A). Section 9(1A) takes account of the unique circumstances of the individual.

68.The Applicant has given evidence that he had worked for two years as a casual worker prior to the accident. He walked normally in Court. He said he had tried to find suitable jobs without success. I do not believe that. I do not find any special circumstances to invoke Section 9(1A). Counsel for the Applicant does not seek to rely on Section 9(1A). Section 9(1A) is not applicable.

Appeal against the assessment of loss of earning capacity in the Certificate issued under Section 16F of the Ordinance

69.The Ordinary Assessment Board has made an assessment and issued a Certificate on 3 February 2006 under Form 7, see TB138. The loss of earning capacity was stated in the Certificate to be 0.5% only. The Applicant's Notice of Appeal against that decision was filed on 6 February 2006, well within the time limit. I would substitute the Board's assessment of 0.5% with my assessment here of 34.21%, pursuant to Section 18(3) of the Ordinance.

Appeal against the assessment of period of absence from duty necessary as a result of the injury in the Certificate issued under Section 16F of the Ordinance and Compensation under Section 10 of the Ordinance

70.The abovementioned Certificate states two periods as the Applicant's periods of absence from duty necessitated as a result of the injury, from 25 September 2004 to 13 December 2004 and then from 14 March 2005 to 9 May 2005. I however accept that the Applicant was totally incapacitated during the period when he was granted sick leave. The memo of Dr. H.S. Cheng of the Hospital Authority stated that the Applicant was granted sick leave from the date of injury to 9 May 2005. Again, I would substitute my decision for the Board's decision in this regard.

71.The compensation under this head will therefore be $7,600/30 x 4/5 x 227 days = $46,005.33.

Compensation under Section 10A of the Ordinance

72.This was agreed at $600.00.

Total Compensation

73.The total entitlement is therefore $187,197.12 + $46,005.33 + $600 = $233,802.45.

Orders

74.I would make the following orders accordingly:

(1) The Applicant's claim against the 1st Respondent is dismissed.

(2) There be no order as to the costs of this action as between the Applicant and the 1st Respondent.

(3) The 2nd Respondent do pay the Applicant the sum of $233,802.45 with interest thereon at 50% of the Judgment rate from the date of the accident to the date hereof, and thereafter at the full Judgment rate until payment.

( 4) There be an Order Nisi that the 2nd Respondent do pay the Applicant's costs of this action save that, for the avoidance of doubt, there be no order as to costs as between the Applicant and the 2nd Respondent in relation to the Applicant's application for an order for substituted service against the 1st Respondent. Such costs is to be taxed if not agreed. Unless there is an application to vary the same, this Order Nisi shall become absolute in 14 days.