Wong Yuk Sim v. Kam Hung Construction Engineering Ltd and Another
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DCEC 1372/2005 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION EMPLOYEES’ COMPENSATION CASE NO. 1372 OF 2005 ____________ BETWEEN
____________ Coram: Deputy District Judge Anthony Kwok in Court Date of Hearing: 16th & 19th March 2007 Date of Handing Down Judgment: 16th May 2007 _________________ JUDGMENT _________________
1.The Applicant is the lawful wife of Lam Heung Wah (“the deceased”). Her claim is for compensation under the Employees’ Compensation Ordinance for herself and other members of the deceased against the 1st and 2nd Respondent for the death of the deceased. Undisputed Facts 2.The 2nd Respondent was the main contractor of a construction project in the archery field of Lion Rock Park, NK136 Lion Rock Road, Wong Tai Sin, Kowloon, Hong Kong (“the said Project”). The 1st Respondent was the sub-contractor to the said Project. 3.The deceased became the director of the 1st Respondent on 18th June 2003 together with Mr. Lo Chi Hung (“Mr. LO”). Prior to this, on 23rd April 2003, Mr. Lo became the director of Kam Wah Industrial Engineering Limited (“Kam Wah”), which was a company owned and run by the deceased. 4.There were 2 name cards of the deceased. One stating that he was the Unit Foreman of the 2nd Respondent with the other stating that he was the director of the 1st Respondent. There was an application form of the 2nd Respondent (“Application Form”) containing particulars of the deceased on it. 5.The deceased was also the director and shareholder of Kong Win Industrial Limited which involved in construction business and Quanteen Industrial Limited which is a property investment company. 6.On 27th February 2004, the deceased died at the site of the said Project whilst he was operating a wheel loader. On 4th March 2004, a Notice of Accident (“Form 2”) was submitted to the Labour Department by the 2nd Respondent. 7.An Employer’s Return of Remuneration and Pensions (the Employer’s Return) dated 22nd May 2004 was prepared by the 1st Respondent stating that the deceased was a director and had been paid salary in the sum of $240,000 for the financial year 2003-2004. A Notice of Assessment for Salaries Tax for 2003/04 dated 21st March 2005 (“Notice of Assessment”) was issued by the Inland Revenue Department. The Applicant’s Case 8.The Applicant, being the wife of the deceased, knows nothing about his business. It is her case that the Form 2, the Employer’s Return and the Notice of Assessment all supports her contention that the deceased was an employee of the 1st Respondent. Such was further reinforced by the evidence of Mr. Lo who confirmed that the agreement was for him and the deceased to receive $30,000 monthly salary and Ms. Cheung Choi Ying (“Ms. Cheung”), the accounts clerk of the 1st Respondent who stated that the deceased was a salaried partner of the 1st Respondent. 9.Alternatively, the Form 2, the terms of the contract between the Respondents, the Application Form and the name card all tend to show that the deceased was an employee of the 2nd Respondent. 10.Accordingly, the 1st Respondent, so the Applicant says, is liable as the employer of the deceased who died in the course of the employment with the said Project whilst the 2nd Respondent should also be liable as the main contractor. Alternatively, the deceased was an employee of the 2nd Respondent as well. The 1st Respondent’s Case 11.It is the 1st Respondent’s case that the deceased was not an employee of the Respondents but rather a director of the 1st Respondent on a profit sharing basis. 12.It is Mr. Lo’s evidence that there was a verbal agreement for the deceased to join the 1st Respondent as a director in June 2003 in order to be involved in the said Project. It was agreed between them that the profits made from the said Project would be shared by them. Net profits would be paid out at $30,000 per month to each of them for the number of months the said Project lasted upon completion of the said Project. Should there be surplus after this monthly payment, it would be distributed between them in equal shares. Till the time of the accident, there had not been any payment made since the said Project was still in progress. 13.The deceased did invest funds into the said Project and both of them were responsible for the supervision of the work progress. Neither of them was required to be involved in the substantive work and both of them would attend the site for inspection or arrangement of materials only. Their working hours were at their sole discretion and there was another foreman assigned by the 1st Respondent for the said project who would stationed at the site. 14.There was no MPF contribution made by the 1st Respondent as the employer for the deceased. Concerning the Employer’s Return, Mr. Lo denied any knowledge of it and had confirmed with the accountant of the 1st Respondent that such had not been filed with the Inland Revenue Department. The 2nd Respondent’s Case 15.Mr. Chu is the director of the 2nd Respondent (“Mr. Chu”). He said that he was told by Mr. Lo that the deceased was the partner of Mr. Lo. According to the contract between the Respondents, the 1st Respondent had to provide personnel to work on the site for the said Project. In order to facilitate the workers of the 1st Respondent including the deceased to deal with other parties in the name of the 2nd Respondent, name cards were printed for them to state that they were workers of the 2nd Respondent. That is why the deceased was referred to as the Unit Foreman of the 2nd Respondent on the name card. This is a common practice in the trade. And the Application Form should be prepared to facilitate the making of the name card. There is no employment relationship between the 2nd Respondent and these staff of the 2nd Respondent. 16.The Form 2 was only filed as a notification of the accident to the Labour Department to avoid prosecution for failure to do so. It was clearly stated therein, however, that the employer of the deceased was the 1st Respondent with no salary paid. The Issue 17.The issue in this case is whether the deceased was an employee of the 1st Respondent or alternatively of the 2nd Respondent. 18.Mr. Chu had explained why the name card was provided to the deceased. There is nothing to the contrary. I found the explanation of Mr. Chu sensible and reasonable. Being the representative of the sub-contractor, the deceased may have to deal with other parties involved in the said Project for and on behalf of the main contractor. To facilitate the carrying out of the work, it would not be surprising for the 2nd Respondent to have provided the deceased a name card to hold out that he was a staff of the 2nd Respondent. According to Ms. Cheung, the Application Form was to supply information of the employee of the 1st Respondent who worked for the 2nd Respondent as requested by the 2nd Respondent. It is clear that the Application Form is not evidence of the deceased’s job application with the 2nd Respondent even though that appeared to be so on the face of the document itself. I found the name card and the Application Form cannot be taken to show that the deceased was an employee of the 2nd Respondent. 19.The Applicant relied on Clause 13 of the contract between the Respondents which stated that the 1st Respondent had to recommend staff include Unit Foreman to the 2nd Respondent for direct employment by the 2nd Respondent to support the argument that the deceased was employed by the 2nd Respondent under such circumstances. But one had to note that Clause 14 of the same contract also provided that the salary of such staff should be paid by the 1st Respondent by arranging for the money to be deposited into an account nominated by the 2nd Respondent. It was Mr. Lo’s evidence that no salary had ever been paid to the deceased. It is Ms. Cheung’s evidence that money was paid to the deceased by cheque but not to an account nominated by the 2nd Respondent. If the deceased was the kind of staff to be caught by Clause 13, Clause 14 should be applicable to them and should be complied with in pursuant to the contract. The fact that this was not done suggested that the deceased was not an employee of the 2nd Respondent under Clause 13 of the contract. 20.Albeit the Form 2 was filed by the 2nd Respondent, the information stated in it was inconsistent with the fact that the deceased was an employee of the 2nd Respondent. It was stated in it that the deceased was an employee of the 1st Respondent as salaried director. The mere fact that such Form 2 was submitted cannot support the Applicant’s case and in particular with such information contained in it, on the contrary, it rebuts the allegation that the deceased was an employee of the 2nd Respondent. 21.Even though the deceased was being described as a salaried director on the Form 2 and by Ms. Cheung, this is not a conclusive evidence. This court must look at the actual arrangement rather than the way the deceased was addressed. 22.It is the submission by Counsel for the Applicant that the evidence of Mr. Lo did support the contention that the deceased was an employee of the 1st Respondent. I cannot agree with him. Mr. Lo’s evidence is not challenged and there is no evidence to the contrary. It is clear from the evidence of Mr. Lo that the deceased was a profit sharing director but not an employee. Without any evidence to the contrary, I cannot see how I can decline to accept his evidence. Moreover, the deceased and Mr. Lo became directors of the 1st Respondent on 18th June 2003 and before this, on 23rd April 2003, Mr. Lo became the director of Kam Wah. The only reasonable inference to be drawn from this fact is that the two men were fostering close business ties by way of cross-directorship. What is more is that the registered address of the 1st Respondent is a property owned by the deceased. This is wholly inconsistent with the contention that the deceased was only an employee of the 1st Respondent. 23.The Employer’s Return was being prepared after the accident. There is no evidence as to why and how such document comes into existence. But according to the evidence of Ms. Cheung, what contained in this document is not a true fact since what was allegedly paid to the deceased in the Employer’s Return was in fact not paid, at least not paid in full. This Employer’s Return therefore contains information which is not the truth. This court cannot simply rely on the same document to establish the fact that the deceased was an employee of the 1st Respondent. 24.The Applicant is also relying on the evidence of Ms. Cheung to establish that the deceased was a salaried director of the 1st Respondent. But the evidence of Ms. Cheung was unclear on this point. She had at one point stated that the deceased was paid around $20,000 per month since July 2003. But in the same statement, she had further qualified her answer by saying that in fact the money paid to the deceased were mainly consisted of repayment of money advanced by him to the said project. It is not clear as to what sort of money was being paid to the deceased. And according to the bank statements of the deceased, no such fixed sum was paid into his account. There is nothing to support the Applicant’s contention of the monthly salary received by the deceased. Ms. Cheung’s evidence also stated that the deceased being the boss of the 1st Respondent, had the authority to deal with money of the company. The payment of money to the deceased could be his dealing with the company assets as a director but not salary to him. It is also Ms. Cheung’s evidence that the deceased did inject fund into the said Project. All these facts are inconsistent with the deceased being an employee of the 1st Respondent. 25.There is no MPF contribution made by the deceased or any employer of his. Had he been an employee ever, he and his employer were duty bound to make such contribution. The absence of this without any explanation tends to point to the fact that the deceased was not an employee of anyone, including the 1st and 2nd Respondent. 26.It appeared from evidence of Mr. Lo that the deceased would receive $30,000 per month as salary. But such interpretation is taking the evidence out of context. According to Mr. Lo, the $30,000 was in fact a distribution of profits by monthly payment and not monthly salary as alleged. I therefore found the payment is not a salary payment but profit distribution. Conclusion 27.Having considered the totality of the evidence before me, I found the evidence supports the contention that the deceased was a partner in the said Project on a profit sharing basis. As a partner in the said Project, he has injected funds into it. I also found that the $30,000 per month to be paid was his share of the profit upon completion of the said Project and not salary payment, but such had never been paid since the said Project was still in process. As such, the Applicant had failed to establish that the deceased was an employee of the 1st or 2nd Respondent and her claim must be dismissed accordingly. Costs 28.There is no reason why costs should not follow the event. I order that the Applicant do pay the Respondents’ costs of this claim, with certificate for counsel, to be taxed if not agreed. This is an order nisi to be made absolute upon expiry of 14 days.
Mr. Kenneth Chik instructed by Messrs C. P. Cheung & Co for the Applicant Mr. Ashok K. Sakhrani instructed by Messrs W. K. To & Co for the Respondents |