So Yuk Kam v. Lau Kam Yuen t/a Ngai Shing Construction and Another
Read the full judgment text of DCEC 30/2008 on BabelCite. This District Court judgment.
1. The 2 nd Respondent operated a transport business. On the day in question, two containers converted to offices were to be moved to another spot on the same compound occupied by the 2 nd Respondent for its business. The two containers were fixed and joined by a ladder welded to each of them. Before moving the containers, the ladder had to be dislodged, and welding work had to be done to remove the welded joints. The Applicant was one of the welding workers engaged to do the necessary welding
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DCEC 30/2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION EMPLOYEES' COMPENSATION CASE NO. 30 OF 2008 ---------------------- BETWEEN
---------------------- Coram: H. H. Judge YUNG, District Judge Dates of Hearing: 16th & 17th December, 2008 Date of Handing Down of Judgment: 19th December, 2008 ------------------------ J U D G M E N T ---------------------- The Two Bases of Claim 1.The 2nd Respondent operated a transport business. On the day in question, two containers converted to offices were to be moved to another spot on the same compound occupied by the 2nd Respondent for its business. The two containers were fixed and joined by a ladder welded to each of them. Before moving the containers, the ladder had to be dislodged, and welding work had to be done to remove the welded joints. The Applicant was one of the welding workers engaged to do the necessary welding work. While in the course of his employment, the ladder collapsed and injured him 2.The Applicant is seeking employees’ compensation against the Respondents and both of them denied liability. Both Respondents denied that the Respondent was their employee. It is not in dispute that the Applicant is an employee, either of the 1st Respondent or of the 2nd Respondent. 3.The first basis of the Applicant’s claim is that the 1st Respondent was the employer and that the 2nd Respondent, was the principal contractor. The alternative basis is that the 2nd Respondent was the direct employer. 4.It is convenient to deal with the issue whether the 2nd Respondent was a principal contractor. Liability of the 2nd Respondent as Principal Contractor 5.The Applicant was recruited by the 1st Respondent. He either recruited the Applicant as his own employee, making him an independent contractor of the 2nd Respondent. In that event, the 2nd Respondent is liable if and only if it was the principal contractor within the meaning of the Employees’ Compensation Ordinance. There is no explicit definition of “principal contractor” in this Ordinance. The ordinary meaning of the term should be invoked in the interpretation of its true meaning. In fact the reference to the liability of a principal contractor in section 24 of the Ordinance lends some support to this approach. Section 24 provides:
6.The ordinary meaning and the scenario described in section 24 points to the existence of an end-user of the work, or employer, who employed a contractor to do the work. When this contractor contracted out the work to another contractor. The former contractor becomes the principal contractor. The latter one is referred to as sub-contractor. In the instant case, the 2nd Respondent was not engaged by another party to do the welding work. The 2nd Respondent was not a contractor undertaking to another person to do the welding job or the job of removing the containers. Therefore the 2nd Respondent cannot be a principal contractor within the literal meaning of the section. 7.The same conclusion would have been obtained, even if a purposive approach is adopted in the interpretation of the term. This particular ordinance is a piece of social legislation for the protection of workers. It enables employees to obtain compensation for injury sustained while in the course of employment, without having to establish any fault on the part of the immediate employer. By section 24 it provided further protection to prevent a contractor from evading the liability by contracting out the work. Section 24 is not intended to extend the liability to a person who employed an independent contractor to do work which he has not obtained from another, but of which he himself was the end-user. For instance, if a house owner employs an independent contractor to decorate his house. The house owner would not be held liable to his contractor’s employees as a principal contractor for employees’ compensation. Whether he is the actual employer or is liable for common law damages is a different matter. The legislative intent is clear that the extension of liability stops at the first contractor employed by another to do the work. The 2nd Respondent never obtained a contract to do the welding work and therefore, like the house owner in the above example, cannot be a principal contractor within the meaning of section 24. 1st Respondent---Independent or Employee 8.The 1st Respondent claimed at the trial that he himself also was the employee of the 2nd Respondent. He operated as contractor from time to time issuing invoices. I don’t blame him that he believed he was an employee. The basis of his belief is mainly that his dealing with the 2nd Respondent has changed, now that he was not given lump sum contracts. Counsel for the 2nd Respondent has given a convincing argument that the 1st Respondent was an independent contractor. He pointed out all the factors which had to be taken into consideration. I accept his submission. My conclusion is that the 2nd Respondent was an independent contractor of the 2nd Respondent. Liability 9.It follows that if the Applicant was the employee of the 1st Respondent, the 1st Respondent alone would be liable. On the other hand if the Applicant was the employee of the 2nd Respondent, the 2nd Respondent alone would be liable. 10.I find the Applicant a truthful and frank witness. He plainly admitted he looked upon the 1st Respondent as his employer. His reason is obvious. It was the 1st Respondent who offered him work on daily wages basis from time to time. It was also the 1st Respondent who provided by him with the heavy equipment and tools for the trade The 1st Respondent handed the wages to him. Quite understandably the Applicant regarded the 1st Respondent as his employer. I would be surprised if his answer was different. His belief is a factor to take into consideration when deciding whether the 2nd Defendant was his employer. 11.Counsel for the 2nd Respondent argued ably that the Applicant was not the employee of the 2nd Respondent. I accept that the factors he pointed out should be taken into consideration. It is not in dispute that it was the 1st Respondent who recruited the Applicant. The matter did not rest there. An independent contractor can recruit employees for its principal contractor. This type practice is not uncommon. 12.The 1st Respondent obtained work from the 2nd Respondent from time to time. The 1st Respondent and the person in charge of the 2nd Respondent had been friends for over thirty years. In the past the 1st Respondent was given the usual lump sum contracts. Then the practice changed. He was told that he could no longer be given lump sum contracts. No one gave evidence about the status of the workers to be recruited under the new practice. I find that, as the 1st Respondent claimed, they trusted one and another. These matters might not have been formally discussed. They did not appear to have any discussion about the total cost of the welding work in question or other details. I find that it was because they trusted each other. The 2nd Respondent trusted the 1st Respondent to look for competent workers for the job, and would not overpay them. However under the new arrangement the 2nd Respondent could only earn a profit from his wages on a daily basis, out of which he had to pay some small expenses. He had to give an account of the identity of persons working on the job and specifying the daily wages paid to them. He gave evidence that he was not allowed to make a profit out of wages paid to the worker. This point is not challenged by counsel for the 2nd Respondent or the person in charge of the 2nd Respondent when giving evidence. I accept that this is true. Under these special circumstances of the new arrangement, I find that when the 1st Respondent recruited the Applicant, he did that as the agent of the Respondent. I find that the 2nd Respondent was the employer of the Applicant and the 1st Respondent was not. The 2nd Respondent alone is liable. Order 13.The quantum is not disputed. I therefore make an award in that amount against the 2nd Respondent with the usual interest. The claim against the 1st Respondent be dismissed. There be an order for costs in favour of the Applicant with certificate for counsel. As between the Applicant and the 1st Respondent there be no order as to costs. The Applicant’s own costs be taxed according to Legal Aid Regulations. There be liberty to apply for variation of costs order within 8 weeks.
Mr. K.K. Chan, instructed by M/S Liu, Chan & Lam for the Applicant. The 1st Respondent in person. Mr. S.Y. Lam of M/S Lam & Partners for the 2nd Respondent. |
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