Leung Kwok Biu v. Tam San Yu t/a New Shine Engineering Co
Read the full judgment text of DCEC 1278/2007 on BabelCite. This District Court judgment.
1. On 17 November 2005, Mr. Leung, an electrical technician, was working on a metal platform at a height of about 2.87 metres and installing an indoor unit of a split-type air conditioner underneath the ceiling, when he fell from the platform and sustained serious injuries as a result. Mr. Leung claims that at the material time of the accident, he was employed by the Respondent, Mr. Tam, as a casual worker at a daily wage of $800. These proceedings are commenced by Mr. Leung against Mr. Tam fo
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DCEC 1278/2007 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION EMPLOYEES' COMPENSATION CASE NO. 1278 OF 2007 ----------------------
-------------------- Coram : Her Honour Judge Mimmie Chan in Court Dates of hearing : 3 - 5 & 14 November, 2008 Date of handing down Judgment : 21 January, 2009 ---------------------- J U D G M E N T ---------------------- Background 1.On 17 November 2005, Mr. Leung, an electrical technician, was working on a metal platform at a height of about 2.87 metres and installing an indoor unit of a split-type air conditioner underneath the ceiling, when he fell from the platform and sustained serious injuries as a result. Mr. Leung claims that at the material time of the accident, he was employed by the Respondent, Mr. Tam, as a casual worker at a daily wage of $800. These proceedings are commenced by Mr. Leung against Mr. Tam for compensation under the Employees' Compensation Ordinance. 2.Mr. Tam denies that he was Mr. Leung's employer. He claims that he had subcontracted the work in question to Mr. Leung for a sum of $4,600. It is Mr. Tam's case that Mr. Leung had agreed to work for him as an independent contractor under a co-operation or partnership arrangement. Issues 3.The issues which arose for determination at trial are :
Whether Mr. Leung was an employee of Mr. Tam, or an independent contractor carrying on business on his own account Legal principles 4.The modern approach to the question whether a person is an employee, as adopted in the case of Poon Chau Nam v. Yim Siu Cheung (2007) 10 HKCFAR 156, is to examine all the features of their relationship against the background of the indicia of employment with a view to deciding whether, as a matter of overall impression, the relationship was one of employment, bearing in mind the purpose for which the question is asked. The passage of Mummery J’s judgment in Hall v. Lorimer [1992] 1 WLR 939 at 944, cited in the judgment of Ribeiro PJ in Poon Chau Nam, provides the most useful guidance in the task which the court undertakes :
5.The indicia of employment developed in case law include control, whether the person performing the services provides his own equipment, whether he hires his own helpers, the degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has the opportunity to profit from sound management in the performance of his task. Obviously, this is not an exhaustive list. Control 6.On the question of control, the courts now recognize that this can no longer be regarded as the sole determining factor of a contract of employment, particularly in the case of a person who possesses and is engaged to exercise some qualification or skill, so that his method of working cannot be said to be under his employer's control. This is so in the present case, where it is not disputed that Mr. Leung was an experienced electrician, a master or "sifu" in his field of work, who was engaged for the work in question because of his experience and skills. For this reason, the fact that Mr. Leung may be able to decide on the work procedure and installation methods for the air-conditioners in question cannot, in my judgment, be regarded as determinative of the relationship between Mr. Leung and Mr. Tam. 7.On the evidence, the parties do not dispute that on 15 November 2005, Mr. Leung and Mr. Tam had met at the site, and Mr. Tam had explained to Mr. Leung the position where the air-conditioners had to be installed in accordance with the client's wishes, and both parties agree that as an experienced technician, Mr. Leung would know what was required to be done. 8.Counsel for Mr. Tam places emphasis on the statement made by Mr. Leung in his Declaration made to the Labour Department on 21 February 2006, in his submission that Mr. Leung had complete control over the actual work method and procedure, and that Mr. Tam had not given him any instructions in this regard. However, I do not regard the answer which Mr. Leung gave to the question asked of him, as relied upon by Counsel, to have the effect suggested by Counsel. Mr. Leung was asked about the detailed items included in the installation (冷氣安裝工程詳細包括什麽項目)(Question 7). The answer given was that the items included the making of a steel bracket, coolant pipes, insulating cover, etc.. Mr. Leung was then asked (Question 8) : "Which of the above items did Tam specify you had to do?" The answer given by Mr. Leung was : "Tam did not specify, he was the boss, and I had to do all." From my reading of Questions 7 and 8 and the answers given, I do not regard Mr. Leung to be saying that Mr. Tam had not given instructions for the installation methods and procedure for the job. 9.Moreover, when Mr. Leung was asked by the Labour Department officer whether Mr. Tam had the power of control over the installation method for the air-conditioners (Question 6), Mr. Leung's answer was that Tam did have such power of control, as he was the boss and was paying the money. 10.In any event, as I have explained above, even if Mr. Tam had not given instructions to Mr. Lam with regard to the installation methods and procedure, Mr. Leung's control over his own work cannot be regarded as being inconsistent with a contract of employment, by virtue of his recognized experience and expertise, and Mr. Tam's acknowledged trust of and respect for him as a senior master. Tools and equipment 11.Mr. Leung's evidence is that he had brought with him to the site all the relevant tools and equipment for the work, including a drill, a horizontal ruler, and even an electric welder. He claims this was common, as many workers preferred to use their own equipment to perform their work. Mr. Leung also claims that Mr. Tam did not have a welder (which is denied by Mr. Tam), so he had to bring his own. Mr. Leung's evidence is that Mr. Tam had asked him to bring his own tools to the site because Mr. Tam did not have the relevant tools. This is again denied by Mr. Tam. 12.Mr. Tam does not dispute that the metal working platform at the site and on which Mr. Leung worked was provided by him. 13.An employee is usually not required to supply his own work tools and equipment, but I accept that many workers do have their own preference to use their own familiar tools. Mr. Leung said that he had simply brought along his own tool box or bag, which contained all his usual tools, including a safety belt. On the facts of this case, I would regard Mr. Leung's provision of the small tools as a neutral factor. Engagement of additional worker 14.It is not disputed that another worker, Mr. Lau, was hired to carry out the work with Mr. Leung. According to Mr. Leung's testimony in court, he had discussed with Mr. Tam on the telephone on 15 or 16 November the employment of Mr. Lau for the job. Mr. Leung claims that he and Mr. Lau had both worked for Mr. Tam before on Mr. Tam’s projects before November 2005, including a project in Tokwawan, where Mr. Lau had worked at a daily wage of $600 and Mr. Leung had worked at a daily wage of $800 in accordance with the market rate. Mr. Leung said that Mr. Tam had agreed, in the course of their telephone conversation, to involve Mr. Lau for the job in question, and Mr. Leung then made the working arrangements with Mr. Lau. 15.It is not disputed that after the accident, Mr. Tam paid Mr. Lau $600, being his wages for 17 November 2005. Mr. Tam claims that he did so on behalf of Mr. Leung, as Mr. Lau was Mr. Leung's casual worker, and Mr. Leung was seriously injured and hospitalized. He said that the accounts would be settled with Mr. Leung in due course. Counsel for Mr. Leung claims that Mr. Tam's payment of wages to Mr. Lau is evidence of his employment of Mr. Lau, and Mr. Leung, as casual workers for the job in question. 16.I accept Mr. Leung's evidence that there are fixed market rates for the wages of senior, intermediate and junior workers in his field. The fact that Mr. Lau's wages were not discussed or specifically agreed between Mr. Leung and Mr. Tam does not render Mr. Leung's evidence unbelievable. There is also evidence that Mr. Leung and Mr. Lau had worked with Mr. Tam before, so Mr. Tam would have known the wages payable to Mr. Lau. I believe Mr. Leung's evidence that he had discussed and obtained Mr. Tam's agreement to the engagement of Mr. Lau for the work. If Mr. Leung had undertaken the job as an independent contractor, he would not need to consult or discuss with Mr. Tam his engagement of Mr. Lau, or anyone else, for the job. 17.Counsel for Mr. Tam highlights the fact that in Mr. Leung's Declaration made to the Labour Department on 25 January 2006, he had stated that he had not spoken to Mr. Tam about making arrangements for Mr. Lau to work on the job, as he considered that there was no necessity to speak to Mr. Tam about this. If Mr. Leung can hire Mr. Lau on his own accord and without seeking Mr. Tam's consent, this may suggest a contract for services as opposed to a contract of employment between Mr. Tam and Mr. Leung. 18.Mr. Leung's case is that at the time of making the Declaration, he was still suffering from the effects of his injuries and treatment, and was very confused. As evidenced by the answers which he gave in the Declaration, Mr. Leung had no recollection of when he was working at the site, what he was doing before the accident, how the platform was erected, etc. Mr. Leung also explained that he was feeling cross at the time when the Declaration was made. Moreover, when Mr. Leung was asked by the Labour Department officer as to why he could decide on the number of workers and make arrangements for involving Mr. Lau without discussing with Mr. Tam, he did explain that this was how he and Mr. Tam had operated in the past, and that Mr. Tam had all along respected his decisions. 19.Even on Mr. Tam's evidence, Mr. Leung was a more experienced and senior worker than Mr. Tam, and Mr. Tam claims that he had always consulted Mr. Leung on work related matters and had treated Mr. Leung with respect as he was the father of Mr. Tam's friend. I accept that it is understandable for Mr. Leung to have stated that there was no need for him to discuss with Mr. Leung the involvement of Mr. Lau on the job, bearing in mind his evidence that Mr. Lau had worked with Mr. Tam and Mr. Leung before, and the evidence that Mr. Leung and Mr. Tam had discussed the work involved in the evening of 15 November 2006, and there was agreement that the job required at least 3 workers. Mr. Tam himself acknowledged this in his Declaration made to the Labour Department on 9 February 2006. Provision of materials 20.The most controversial aspects of the evidence relate to the materials brought onto the site by Mr. Leung. 21.According to Mr. Tam, he had originally involved Mr. Leung on the job on a "co-operation" or partnership basis, as they had allegedly so worked in the past (which is denied by Mr. Leung). Mr. Tam claims that this means that the expenses incurred on the job, including the costs of materials and labour, would be deducted from the contract price obtained, and the balance would be shared between Mr. Leung and Mr. Tam on equal basis. However, Mr. Tam claims that on 16 November 2005, Mr. Leung had suggested to Mr. Tam that as he had some surplus materials which could be used for the job, the outlay required could be reduced and he would like to undertake the job on a subcontract basis at the price of $4,300, which was eventually increased to $4,600 inclusive of the cost of installing some additional parts. Mr. Tam agreed and claims that this was the basis on which the job was done by Mr. Leung. 22.Mr. Leung denies that there was any discussion about his undertaking the job on a subcontract basis. His case is that he had always worked for Mr. Tam on a daily wage basis. His evidence is that Mr. Tam had called him and asked him to bring his tools to the work site and to purchase materials for the job before commencing work on 17 November 2006. Mr. Leung claims that on the morning in question, he had gone with Mr. Lau to Mr. Leung's work place in Western to bring his tools and to purchase the materials for the job. Mr. Leung claims that he had purchased some materials but admits that he had also brought along some other materials left over from his previous jobs, to be used for Mr. Tam's job, but he had intended to charge for both. He had claimed in his Declaration made on 25 January 2006 that Mr. Tam would pay for the materials and transportation charges, and, in his Declaration made on 21 February 2006, that he would seek reimbursement from Mr. Tam in relation to the surplus materials he had provided. 23.I do not agree with Counsel for Mr. Tam that all the contemporaneous statements contained in the Declarations made to the Labour Department support Mr. Tam's case regarding the provision of materials by Mr. Leung. On 21 February 2006, Mr. Leung was asked (Question 9) whether he had brought materials to the site, to which Mr. Leung answered that he had. He was not asked whether he had purchased materials for the job, nor how all the materials for the job were obtained. Mr. Leung's answer to Question 9 does not contradict his case. 24.According to Mr. Lau's evidence, he had met with Mr. Leung between 9 a.m. and 10 a.m. for breakfast in Mongkok, and then they had gone to the Western district in Hong Kong for the materials and tools. They arrived in Western after 10 a.m., and Mr. Lau said he had to wait for some time by the side of the road before someone, whom Mr. Lau did not know, pushed out a cart with tools and materials. Mr. Lau was not familiar with Western, and said that he did not know how, or from where, the tools and materials were obtained. He had not gone to purchase any materials himself, but Mr. Lau did not know whether Mr. Leung made any purchase that morning. He had to wait some time before a hired van arrived to take them to the site in Mongkok, and Mr Lau no longer had any recollection who had called the hired van. According to Mr. Leung, they arrived at the site around noon. In my judgment, Mr. Lau’s evidence does not rule out the possibility of Mr. Leung purchasing the materials in the morning of the accident, but Mr. Leung admits that he had also brought some of his own surplus materials with the intention of charging Mr. Tam therefor. 25.On the evidence, I am not satisfied that there was an agreement made between Mr. Leung and Mr. Tam that the installation of the air-conditioners would be subcontracted to Mr. Leung at the price of $4,300 (later increased to $4,600), as alleged by Mr. Tam. There may have been a suggestion by Mr. Leung that he could bring along and use for the job in question surplus materials left over from Mr. Leung's other jobs, but that by itself cannot necessarily constitute an agreement whereby Mr. Leung would undertake the job on a subcontract basis. Mr. Leung explained that he thought he could help reduce Mr. Tam's outgoings, but that he would charge for the surplus materials, as he would for the expenses incurred by him in purchasing other materials and hiring a van for the transportation of the tools and materials to the site. 26.Mr. Tam seeks to rely on his record of expenses from May 2005 to December 2005 to show that on the projects in which he had worked with Mr. Leung in the past, there was a pattern of their sharing the income after deduction of expenses, and that Mr. Leung was not paid on the basis of daily wages as he claims. However, these expenses appear to have been inserted on a random basis, and not in the order of the alleged dates of payment. Counsel for Mr. Leung has also pointed out entries which contradict Mr. Tam's own evidence. 27.For the Tokwawan project ("TWK Project"), Mr. Tam's record of expenses for October 2005 shows that Mr. Leung was paid $1,700 as his half share from the project. He claims that Mr. Leung had only worked one day, and should have been paid $800 on daily wage basis. However, according to Mr. Leung, he had worked 2 days. Both parties agree that Mr. Leung had involved Mr. Lau on the TWK Project. Mr. Leung claims that he had involved Mr. Lau with Mr. Tam's consent. Mr. Tam agrees that Mr. Lau had worked 2 days and was paid $1,200. They also agree that Mr. Tam himself had brought a junior worker, Pang, to work on the TWK Project. 28.According to Mr. Tam's evidence on the partnership arrangement agreed between himself and Mr. Leung, the cost of materials and the cost of labour should be deducted from the contract sum, before the balance is shared between Mr. Tam and Mr. Leung. Mr. Tam claims that Mr. Lau's wages for 2 days, in the sum of $1,200, was paid by Mr. Tam and can be seen from Mr. Tam's record of expenses for September 2005. This is despite the fact that the TWK Project was done in October 2005, according to Mr. Tam's original evidence. Pang's wages were not shown. Mr. Tam sought to explain this by saying that Pang's wages were included in the entry of $3,771 shown in his records for October 2005. This is not credible when the entry for $3,771 is expressly stated as cost of materials for the TKW Project. There is also no reason why Mr. Lau's wages should be recorded in September 2005, and Pang's wages should be recorded in October 2005. Mr. Tam's direct payment of Mr. Lau's wages for the TKW Project is also inconsistent with Mr. Tam's evidence on the agreed manner of co-operation with Mr. Leung in relation to an earlier K1 project undertaken in April 2005, when each of Mr. Leung and Mr. Tam were (on Mr. Tam's evidence) to defray their own expenses of hiring helpers and purchasing materials for the job. Mr. Tam sought to explain this by saying that on the TWK Project, he had paid Mr. Lau's wages at Mr. Leung's request. Mr. Tam’s explanations for all these discrepancies are incongruous. 29.In relation to the K1 project which was undertaken in April 2005 ("K1 Project"), Mr. Leung claims that he had worked one day, and had spent $120 to purchase cleaning liquid for the job of cleaning 3 air-conditioners. There is no dispute that Mr. Leung was paid $1,000 for the K1 Project. Mr. Leung claims that this represents his daily wage of $800, reimbursement of the $120 he had spent, with a small surplus of $80, which Mr. Tam had asked him to keep. According to Mr. Tam, the $1,000 paid to Mr. Leung represents 50% of the contract sum of $2,000 received from the K1 Project. He claims that both Mr. Leung and he had brought their respective workers to help, and that under their partnership arrangement, it was agreed that each would pay his own worker's wages. Mr. Leung denies that he had brought any worker, but even if what Mr. Tam says were true, it does not tally with his account of their usual mode of operation, of deducting the costs of materials before sharing the balance, which should make Mr. Leung's 50% share $940. There is no entry in Mr. Tam's record of expenses in relation to the payments made for the K1 project. The entries headed April 2005 were stated by Mr. Tam to be an error, and conveniently corrected by him to read May 2005. 30.In view of the foregoing, I agree with Counsel for Mr. Leung that Mr. Tam's record of expenses is not shown to be a complete and accurate record, and should not be accepted as such. Further, they contradict his own claims as to the modus operandi said to have been adopted by himself and Mr. Leung in relation to their alleged prior co-operation on partnership basis, namely, that they would share the contract sum after deducting all expenses of hiring workers, purchasing materials and arranging for transportation. Mr. Tam's work 31.Mr. Tam does not dispute that under his alleged subcontract with Mr. Leung, Mr. Tam himself was to work on the job. His evidence is that they had all along envisaged that it would take 2 to 3 days to complete the job with at least 3 workers, including Mr. Tam himself. As early as the time when Mr. Tam made his Declaration to the Labour Department on 9 February 2006, he had stated that when Mr. Leung had asked for the job to be subcontracted to him, Mr. Tam had said to Mr. Leung that he would be working on the job with him. When the Labour Department officer queried Mr. Tam as to why he would work on the installation when he had already subcontracted the job to Mr. Leung, Mr. Tam had answered that he would be able to earn wages by helping. He accepted, however, that there would be no additional payment which he could obtain from the client. 32.I can see no reason whatsoever for Mr. Tam to work on the job if it was subcontracted to Mr. Leung at the fixed sum of $4,600, as Mr. Tam claims. As Counsel for Mr. Leung has repeatedly pointed out, Mr. Tam's alleged agreement to subcontract the job to Mr. Leung at $4,600 does not make commercial sense, when Mr. Tam had agreed to undertake the work for $5,800, had agreed with Mr. Leung to absorb any additional costs over $300 for the installation of an extra part of the air-conditioner (which turned out to cost $900), and had further agreed to pay an introduction fee of $500 to a Mr. Wong for the job. Mr. Tam's explanation is that he had already undertaken the general electrical part of the decoration works at the same site, was satisfied with the profit to be made under that part of the contract, and that to him, it was not a question of profits in relation to the air-conditioning part of the work which he had subcontracted to Mr. Leung, but of getting the job done quickly for the client. Even if this was true, it would be commercially unreal to accept that on top of making no or very little profit, Mr. Tam would agree to work on the job himself at no extra cost, when his daily wage should be $700. 33.Having rejected Mr. Tam's evidence that he had, on 16 November 2005, subcontracted the air-conditioning installation contract to Mr. Leung at the price of $4,300 (which was later revised to $4,600) and having found the other features of the parties' working relationship, I find that, as a matter of overall impression, the relationship between Mr. Leung and Mr. Tam was one of employment. 34.It was Mr. Tam who negotiated and managed the order received from the client. There is no evidence of Mr. Leung making any contribution to the capital aspect of the job, since I accept his evidence that he would be charging Mr. Tam for the surplus materials he had brought to the site. Mr. Tam's agreement was obtained for involving Mr. Lau to work at the market rate for an intermediate worker in the field. Mr. Tam was to be paid according to the number of days he worked on the job, at $800 per day being the market rate for a senior worker, from 8 a.m. to 6 p.m.. Mr. Leung may have relatively greater freedom in the hours of work (Counsel for Mr. Tam placing emphasis on the fact that Mr. Leung had only attended the site at 12 noon on the day of the accident after fetching his tools and materials), but Mr. Tam himself recognized and acknowledged to the Labour Department Officer on 9 February 2006 that he had the power to control and decide on the installation methods, despite leaving the execution of the work to Mr. Leung. Mr. Leung was instructed to bring his own tools and to purchase materials for the job before commencement of work. Mr. Tam supplied the metal platform for Mr. Leung to work on in the discharge of his duties. I cannot see any financial risk which Mr. Leung assumes for the job, apart from Mr. Tam defaulting in payment of his daily wages. Any losses were borne by Mr. Tam. In my judgment, the absence of control over Mr. Leung's work, including his working hours, should not bear too much importance in the overall picture in view of his experience and the particular relationship between Mr. Leung and Mr. Tam, as Mr. Tam acknowledges. 35.I do not see the relevance of Mr. Leung's relationship with the sole proprietorship business of Kwok Po Engineering Co. ("Kwok Po"). Even if Mr. Leung carried out work for Kwok Po, he could still undertake the job as a casual worker for Mr. Tam, particularly in view of his close relationship with the registered proprietor of Kwok Po, which is his wife. Taking Mr. Tam's case to its highest, even if I were to accept that Mr. Leung was the true operator of the business of Kwok Po, it does not mean that Mr. Leung cannot agree to work for Mr. Tam on a daily wage basis. It is Mr. Leung's evidence that at the material time, he worked as a casual worker for different businesses, one of which was Kwok Po, which also employed other casual workers besides himself. If Mr. Leung was an employee, the amount of compensation payable Section 7 36.According to the Certificate of Assessment issued by the Employees' Compensation (Ordinary Assessment) Board dated 1 April 2008, against which there is no appeal, Mr. Leung was assessed to have suffered 100% permanent loss of earning capacity. He suffered a cervical spine fracture resulting in urinary impairment, anorectal function impairment, impotence, gait impairment and upper limbs impairment. He was granted sick leave from 17 January 2005 26 March 2008. 37.I accept Mr. Leung's evidence that at the time of the accident, his daily wage was $800, and he worked 26 days a month on the average. His income was $20,800 per month. He was 47 years old at the time of the accident. 38.The amount payable under s.7 (1) (b) of the Ordinance is accordingly $20,800 x 72 x 100% = $1,497,600. Section 10 39.From 17 November 2005 to 26 March 2008, there is a total period of 861 days of sick leave. The compensation payable under s. 10 is: $20,800 x 861/30 x 4/5 = $477,568. Section 10A 40.I allow the sum of $21,048 as medical expenses, as they are not challenged. Section 8 41.I am satisfied on the evidence that in view of Mr. Leung's condition, he needs constant care and that his wife, who currently suffers from depression due to the death of the eldest son in April 2008 and requires psychiatric treatment at least for some time, will not be able to give the care and attention Mr. Leung requires. I am therefore prepared to allow the maximum award of $412,000 under s.8 (1)(a) of the Ordinance. Summary 42.The total compensation payable to Mr. Leung is :
43.Mr. Leung is entitled to interest on $2,408,216 at half the judgment rate from the date of the accident to the date of judgment and thereafter at the judgment rate until payment. I will also make an order nisi that the costs of the action are to be paid by Mr. Tam to Mr. Leung, to be taxed if not agreed, with certificate for Counsel. Mr. Leung’s and Mr. Tam's own costs are to be taxed in accordance with the Legal Aid Regulations.
Mr. Joeson Wong, instructed by Messrs. Fung & Fung (assigned by D.L.A.) for the Applicant Mr. Walker Sham, instructed by Messrs. Knight & Ho (assigned by D.L.A.) for the Respondent |
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