Kwong Kin Yin v. Shun Lee Copper & Decoration Ltd and Another

HCPI 285/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES NO. 285 OF 2008

(TRANSFERRED FROM DCPI 1784 OF 2006)

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Before : Hon Suffiad J in Chambers

Date of Hearing : 25 February 2010

Date of Judgment : 19 March 2010

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J U D G M E N T

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1.This is an appeal by the Third Party against the order of Master Ng given on 16 December 2009 whereby the Master dismissed the Third Party’s application to strike out the Third Party Notice taken out by the 2^nd defendant.

Background

2.This is a personal injuries claim brought by the plaintiff against the 1^st and 2^nd defendants arising from an accident to the plaintiff in the course of his employment.

3.It is not disputed that the 2^nd defendant was engaged as contractor by Kerry Warehouse (HK) Ltd (“Kerry”) to construct advertising signage (“the Works”) at the Kerry Cargo Centre (“the Site”).

4.On 27 June 2004, while the plaintiff was installing metal bars for such signage work at the Site, he met with an accident and was injured.

5.The plaintiff’s claim, based on inter alia negligence, against the 1^st defendant was on the basis that the 1^st defendant was his employer at the time of the accident.

6.The claim against the 2^nd defendant was on the basis that the 2^nd defendant was the main contractor and occupier of the Site.

7.By its Third Party Notice, the 2^nd defendant sought an indemnity or contribution from the Third Party on the basis that the Works at the Site was subcontracted by the 2^nd defendant to the Third Party and that the Third Party was the employer of the plaintiff, and the occupier of the Site.

Application to strike out by the Third Party

8.By the Re-amended Third Party’s Summons, the Third Party sought to :

(a)  strike out various paragraphs of the Third Party Statement of Claim dated 30 July 2008;

(b) strike out certain answers given by the 2^nd defendant in the Answers to the Request for Further and Better Particulars on the Third Party Notice; and

(c)  strike out or set aside the Third Party Statement of Claim.

9.The grounds upon which this application for striking out is made is stated in the Re-amended Third Party’s Summons to be :

(a)  that the Third Party Statement of Claim failed to disclose any reasonable cause of action or is frivolous or vexatious; or

(b) that the Third Party Statement of Claim may prejudice, embarrass or delay the fair trial of the action between the plaintiff and the 1^st and 2^nd defendants.

10.At the hearing before the Master and in this appeal therefrom, counsel for the Third Party has conceded that the Third Party no longer relied on the ground of no reasonable cause of action being disclosed.

11.Effectively, what was being sought to be struck out by the Third Party are those paragraphs in the Third Party Statement of Claim as well as those parts of the Answers to the Request for Further and Better Particulars on the Third Party Notice which state or plead that the plaintiff was an employee of the Third Party.

12.The real basis upon which this application is made is that the Third Party says that such a plea by the 2^nd defendant in the Third Party Statement of Claim and in the answers given are bound to fail since there is “overwhelming” evidence in this case to show that the plaintiff was the employee of the 1^st defendant but that there is absolutely no evidence to suggest that the plaintiff was the employee of the Third Party.

13.Before one can fully appreciate the evidence in this matter, that evidence has to be viewed in the light of the history and relationship which existed inter se between the 1^st defendant and the Third Party.

History and relationship between Third Party and 1^st defendant

14.The Third Party herein is the person of Wong Cheng Keung (“C.K. Wong”) formerly trading as ‘Shun Fat Metal Works Co.’.  For the purpose of this judgment, I shall endeavour to use, as far as possible, the same abbreviations adopted by the Master in her written Reasons for Decision which was handed down on 6 January 2010.  Thus, ‘Shun Fat Metal Works Co.’ will hereinafter be referred to as “the Firm”.

15.Before 2000, C.K. Wong was an employed technician in charge of constructing signage.  In January 2000, he started his own business in the name of the Firm whose business was also that of construction, manufacture and installation of signage.  C.K. Wong trading in the name of the Firm had business dealings with the 2^nd defendant during the time when the Firm operated its business.  The Firm ceased business on 30 September 2005.

16.In the late 90’s, C.K. Wong became acquainted with one Wong Wai Fuk (“W.F. Wong”) and his wife, Madam Mok.  W.F. Wong and Madam Mok were, at the time, directors of one Shun Lee Decoration & Engineering Ltd (“Shun Lee Eng”) which carried on a similar line of business as the Firm.  W.F. Wong was also the major shareholder of Shun Lee Eng.

17.In the early 2000’s Shun Lee Eng had good business relations with a number of factories in Mainland China and employed a number of technicians and skilled workers for its business.

18.Some time in June 2001, due to significant growth in the Firm’s business, and in order to enjoy economies of scale, W.F. Wong and C.K. Wong agreed to form a new limited company as an associated company of Shun Lee Eng.  As a result, the 1^st defendant was set up in mid June 2001 with Madam Mok and C.K. Wong being the directors and both of them holding equal shares in the 1^st defendant.

19.It was agreed between them that signage works contract or business procured by Madam Mok or C.K. Wong would be channeled through Shun Lee Eng as the principal contractor or main subcontractor (as the case may be) and subcontracted or sub-subcontracted to the 1^st defendant.

20.There was also agreement between them as to the percentage of sharing the fees and charges between Shun Lee Eng, the 1^st defendant and the Third Party, but for present purposes it is not necessary to go into such details.

21.It was also agreed that the 1^st defendant would be allowed to use the office premises owned by W.F. Wong and Madam Mok as well as the office equipment and the personnel of Shun Lee Eng for its business operation.

22.That evidence of the history and relationship referred to above came from the Third Party. 

The Third Party’s case and evidence relied on

23.Given the history and the relationship pertaining between the 1^st defendant and the Third Party as stated above, it is the case of the Third Party that prior to 2003, all workers engaged in doing the signage works subcontracted or sub-subcontracted to the 1^st defendant were employees of Shun Lee Eng.  In order to keep separate the accounts of Shun Lee Eng from that of the 1^st defendant, W.F. Wong decided that after mid-2003 all workers employed by Shun Lee Eng for carrying out such works would be transferred to the 1^st defendant and be paid by the 1^st defendant.  Such workers were therefore employed either by Shun Lee Eng and/or the 1^st defendant and never by the Third Party.

24.About the end of 2003, one Lee Siu Fai, a skilled worker employed by Shun Lee Eng since 2000, introduced the plaintiff to work as a relief casual worker for the 1^st defendant at a daily wage.  Whenever the 1^st defendant was short of workers, the plaintiff would be called upon to assist.

25.The employment record of the 1^st defendant showed that the plaintiff worked for the 1^st defendant for a short time between December 2003 and January 2004, and then again for some 5 days in June 2004 and also for some 15 days in July 2004.

26.The Third Party claims that by an oral agreement in or about April 2004, the 2^nd defendant subcontracted the Works, during which the accident to the plaintiff occurred, to Shun Lee Eng.  It is said that this oral agreement was made through Ms Connie Tsui of the 2^nd defendant on its behalf and W.F. Wong on behalf of Shun Lee Eng.  It is also said by the Third Party that by a further oral agreement made between W.F. Wong on behalf of Shun Lee Eng and C.K. Wong on behalf of the 1^st defendant, Shun Lee Eng in turn sub-subcontracted such works to the 1^st defendant.

27.In those circumstances, the Third Party’s case is that there was no contractual relationship between him and the 2^nd defendant as alleged by the 2^nd defendant.

28.The Third Party further relies on what is described as “overwhelming” evidence by its counsel in the form as follows :

(a)  MPF statements from the Bank of East Asia which shows that the 1^st defendant was the employer of the plaintiff at the time of the accident in July 2004.

(b) Transfer slips from the Bank of China showing payments, being the plaintiff’s wages, made by the 1^st defendant to the plaintiff.

(c) A letter from the Inland Revenue Department dated 9 January 2009 which gave details of the plaintiff’s income during periods of employment with the 1^st defendant as well as Employer’s IRD Return chopped with the 1^st defendant’s chop.

(d) Employees’ compensation claim commenced in the District Court in DCEC 1270/2005 by the plaintiff against the 1^st defendant.

(e)  What is stated by the plaintiff in his witness statement, namely, that through the introduction of Lee Siu Fai, he was employed as a decoration worker by the 1^st defendant in December 2003 and again in mid-June 2004.

(f)  The witness statement of Lee Siu Fai in which he stated that at the end of 2003, he had introduced the plaintiff to join the 1^st defendant as a casual assistant technician and that in mid-June 2004, the plaintiff was recruited by the 1^st defendant.

(g) The witness statement of So Chuen Fai Andy (“So”), the project manager of the 2^nd defendant who oversaw the work at the Site, where it is stated that So was informed by the 2^nd defendant that the works at the Site had been subcontracted by the 2^nd defendant to a company in which C.K. Wong was a member and that he should contact C.K. Wong in relation to such work.  Thereafter, C.K. Wong was requested to submit the names of workers and the relevant employees’ compensation insurance policy to enable workers’ cards to be issued by Kerry or the management company at the Site.  In this respect, it is said that the names of some 10 workers were submitted together with a copy of the insurance policy.  It was also claimed by So that upon checking such copy insurance policy submitted, he then came to know that the subcontractor of the Works was Shun Lee Eng.  He filled up the application forms and submitted them to the Manager at the Site and later informed C.K. Wong that the workers could pick up their admission cards from the management office and commence work at the Site.

(h) The Third Party’s own evidence as contained in the witness statement of C.K. Wong. 

The case and evidence from 2^nd defendant

29.The case of the 2^nd defendant is essentially that the Works were subcontracted by the 2^nd defendant to the Third Party.  It was on that basis that the workers including the plaintiff were given the permission to enter the Site and to work there.

30.The documentary evidence relied upon by the 2^nd defendant to say that the Works were subcontracted by the 2^nd defendant to the Third Party are :

(a)  One invoice dated 15 June 2004 and two invoices both dated 19 September 2004, all under the letterhead of the Firm and all of which bore the company chop of the Firm.  Two of those invoices were signed by C.K. Wong.

(b) A letter of completion from the 2^nd defendant to the Third Party dated 11 May 2005 certifying the completion of the Works and that the Third Party has received the full payment from the 2^nd defendant, which was confirmed and countersigned by C.K. Wong with the company chop of the Firm.

31.There is also evidence relied on by the 2^nd defendant contained in the witness statement of its deputy general manager, Ms Yiu Pui Man (“Ms Yiu”) to the effect that the 2^nd defendant had never contracted with the 1^st defendant which is unknown to the 2^nd defendant, but that the 2^nd defendant had previously subcontracted signage works to the Third Party.

32.It is also the evidence of Ms Yiu that the 2^nd defendant never carried out signage works on its own, but always subcontracted such works to experienced and skilled specialists.

33.In the present case, the 2^nd defendant had invited quotations from various subcontractors including the Third Party for the Works, and eventually chose the Third Party as the subcontractor on the basis of C.K. Wong’s experience/expertise and the price quoted by him.

34.Ms Yiu further stated that the Site was under the control of the manager and permission was required before workers would be allowed entry to the Site.  The 2^nd defendant had no permanent representative at the Site but would liaise with C.K. Wong as to the progress of the Works and if necessary would send its representative onto the Site from time to time.

35.In the circumstances, it is the 2^nd defendant’s case that the Third Party was an occupier of the Site and the reasonable inference to be drawn was that the Third Party was the employer of the plaintiff in respect of the Works at the Site.

Decision

36.From what has been stated above, it can immediately be seen that the main dispute between the case of the 2^nd defendant and that of the Third Party is that whilst the 2^nd defendant alleges that the Works were subcontracted by the 2^nd defendant to the Third Party, it is the case of the Third Party that the Works were not subcontracted to it by the 2^nd defendant but to Shun Lee Eng by the 2^nd defendant and in turn Shun Lee Eng sub-subcontracted same to the 1^st defendant.

37.The case as put forward by the 2^nd defendant that it had subcontracted the Works to the Third Party is not without documentary support in that the three invoices and the Letter of Completion relied upon by the 2^nd defendant all point to the Third Party being the subcontractor of the Works and with whom the 2^nd defendant was dealing.

38.On the other hand, the documentary evidence relied on by the Third Party to show that the plaintiff was the employee of the 1^st defendant as well as the evidence of the plaintiff and Lee Siu Fai to that same effect would show generally that to be the case since those documents are general in nature and do not pertain in any way to the Works carried out at the Site or the subcontract arrangement with the 2^nd defendant.

39.The issue which needs to be determined here is who was the employer of the plaintiff in the context of the plaintiff carrying out the Works at the Site, and not just generally.

40.In this respect, I have not lost sight of the fact that there is some evidence from So, the project manager of the 2^nd defendant at the Site, who after checking the copy insurance policy submitted to him for the purpose of obtaining the workers’ permits to be allowed into the Site, he “came to know” that the sub-contractor of the Works was Shun Lee Eng.

41.In so saying that he “came to know” that Shun Lee Eng was the subcontractor of the 2^nd defendant, So could only have been drawing an inference from the copy insurance policy.  Moreover, that inference may not necessarily be correct if it was drawn from insufficient or inadequate facts.  That is therefore another aspect which calls for proper investigation at the trial and fact finding to be made.  That evidence of So cannot simply be taken at its face value.

42.Therefore in coming to a determination on this issue, the relationship which pertained between the Third Party, Shun Lee Eng as well as the 1^st defendant is a significant factor and in particular the status of each of them in so far as the Works were concerned.

43.In this respect it is pertinent to note that the 2^nd defendant states, as part of its case, that it had never dealt with the 1^st defendant before the accident, but has had dealings with the Third Party in subcontracting signage works to it previously.  This would further lend support to the 2^nd defendant’s case that the Works were subcontracted to the Third Party in this case.

44.I further note that there is no explanation given by the Third Party as to the three invoices and the Letter of Completion and how it came about that the company chop of the Third Party came to be on these documents when it is the Third Party’s case that the Works was not subcontracted to it by the 2^nd defendant.

45.The only comment which came from counsel for the Third Party on this evidence relied on by the 2^nd defendant is contained in paragraph 13 of his skeleton submission to the effect that :

(a)  given that the Third Party (i.e. C.K. Wong) was the person in the 1^st defendant who was responsible for carrying out the Works on its behalf, and the informal atmosphere at construction sites, it is not surprising that there would be occasions when the Third Party performed acts in his own name when he was really doing so on behalf of the 1^st defendant; and

(b) those documents must be viewed in the light of the “overwhelming” evidence (referred above) showing that the plaintiff was the employee of the 1^st defendant.

46.In so far as the first reason given is concerned, it does not begin to explain how the company chop of the Firm (as opposed to the person of C.K. Wong) came to be on those documents relied on by the 2^nd defendant.

47.As for the second reason, to view the documents relied on by the 2^nd defendant against the documentary and other evidence relied on by the Third Party must mean, to my mind, going to a full trial where all those issues can be determined and finding of facts made upon hearing all the evidence as well as cross-examination.  The court will not conduct a mini trial on affidavit, as seems to be what is suggested here by counsel for the Third Party.

48.One further matter which needs to be dealt with in this judgment is the fact that up to this stage, I have not alluded to the stance or the case of the 1^st defendant.  The reason for that is because the Defence of the 1^st defendant, in which the 1^st defendant denied that the plaintiff was its employee at the material time, was a homemade defence, and before the Master, the Third Party took the point that since the 1^st defendant had not applied to court for leave to act by its director, the court should not have regard to that pleading by its director as being representative of the 1^st defendant.  On that basis the Master had ignored what had been pleaded therein as being the stance of the 1^st defendant.

49.Even without considering the stance of the 1^st defendant, there is here more than adequate material which would warrant this matter to go to trial and for all the disputed issues of fact to be resolved after hearing the evidence and cross-examination.

50.It is only in clear cases that the courts would accede to striking out.  Even when the evidence relied on by a party is weak, that is still not a proper basis for striking out.  This is not such a clear case to warrant striking out when all matters as set out above are considered.

51.Moreover, there cannot be a mini-trial on affidavit where there are disputed facts which need to be resolved and determined.  The only way that can be done is by a proper trial in which all the evidence and cross-examination can be properly conducted.

52.Given the above, I have come to the conclusion that the Master cannot be faulted for coming to the decision she did.

53.Accordingly, this appeal would be dismissed and the order of the Master is to stand in its entirety.

Costs

54.There will be an order nisi that the Third Party is to bear the costs of the 2^nd defendant in respect of this appeal to be taxed and paid forthwith if not agreed.

55.The costs order made below by the Master is to stand.

Mr Chan Pak Kong, instructed by Messrs Norman M.K. Yeung & Co.,  for the 2^nd Defendant

Mr Wilson Leung, instructed by Messrs John Ip & Co.,  for the Third Party