Chan Kwan v. Wang Fat Scaffolding Ltd and Others

DCEC758/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES' COMPENSATION CASE NO. 758 OF 2008

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BETWEEN

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Before: Her Honour Judge H C Wong in Court

Dates of Hearing: 27-29 July 2010 and 2 August 2010

Date of Delivery of Judgment: 2 August 2010

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J U D G M E N T

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1.The applicant, Mr Chan Kwan, applies for compensation under sections 9, 10 and 10A of the Employees’ Compensation Ordinance, Chapter 282 of the Laws of Hong Kong. He was injured in the course of work while erecting the “Yu Lan” Festival structures on 10 July 2006 at about 4.50 pm at Po On Road Playground. He fell 10 to 15 feet from the bamboo scaffolding onto the ground. As a result of the fall, he suffered lacerated injuries to his forehead, left shoulder contusion, fracture of the ankle and cervical cord injury.

2.The three respondents denied liability.  On the first day of the hearing, they reached an agreement with the applicant on the quantum of damages at $425,862 without admitting liability.  The amount agreed consisted of the claim of $89,069 under section 9, $326,586 under section 10 and $10,207 under section 10A.  The only issue remaining for the trial is liability. 

Liability

Background

3.The applicant was engaged in the erection of the bamboo scaffolding theatre structures at the Cheung Sha Wan Playground at Po On Road for the “Yu Lan” Festival in July 2006.  The erection of the Yu Lan Festival theatre structures was commissioned by the four community organisations, including the Lee Cheng Uk Estate and Cheung Sha Wan Kaifong Association and the Cheung Sha Wan Chiu Chow and Commercial Labour Union Yu Lan Festival Association.

4.Construction works commenced on 6 July 2006.  Completion of the structures was expected one to two days before the Yu Lan Festival.  The Cheung Sha Wan Playground is a government property maintained by the Leisure and Cultural Services Department (LCSD) from which the four community associations hired for the period of the Yu Lan Festival.

5.The applicant claimed that the 1st respondent, Wang Fat Scaffolding Limited, was his employer on the day of the accident, 10 July 2006.  This is denied by the 1st respondent.  It is not disputed that the 2nd respondent is the main contractor of the Yu Lan Festival scaffolding theatre structures (hereinafter called “the structures”).  The work of erecting the bamboo scaffolding structures was subcontracted to the 1st respondent by the 2nd respondent.  The 3rd respondent is the insurer of the employees’ compensation policy taken out by the 1st respondent. 

6.It is not disputed that after the accident, the Labour Department immediately conducted an investigation on the accident and the work site.  Based on the Labour Department’s accident report and the statements and declarations of the applicant Mr Chan, the ganger Mr Tsang Pui-sum (“Mr Tsang”), the 1st respondent’s director and shareholder Mr Ko Wang-tsun (“Mr Ko”), and the 2nd respondent’s director and shareholder Mr Wong Siu-lam (“Mr Wong”).  The Labour Department prosecuted Mr Ko under sections 6(1), 6(2)(a) and 6(3) of the Occupational Safety and Health Ordinance, Chapter 509 of the Laws of Hong Kong, on 22 May 2007 for failing to ensure the safety and health at work of all the employees of the employer and for failure to provide or maintain plant and system of work that are, so far as reasonably practicable, safe and without risks to health.   

7.According to the investigation report, the Labour Department found no fall-protection system of work platform or fall-resisting equipment installed to facilitate and protect workers at the site.  After the trial at the magistrate court, Mr Ko was acquitted of all offences because the deputy magistrate Mr Wong, was not satisfied the 1st respondent was Mr Tsang and the applicant’s employer.  Like all criminal proceedings, the Labour Department was required to discharge the burden of proof beyond all reasonable doubt.

8.The 1st respondent has taken out an employees’ compensation insurance policy issued by the 3rd respondent as required under section 41(1) and the Fourth Schedule of the Employees’ Compensation Ordinance.  The 2nd respondent, on the other hand, being the main contractor did not do so.

9.At the hearing, the issue of dispute by the respondents is not whether the applicant injured himself in the course of employment or in the course of work but whether he was the 1st respondent’s employee at the time.  The issues in dispute therefore are:

(1)     whether the 1st respondent was the direct employer of the applicant;

(2)     whether the 2nd respondent is liable as a principal contractor under section 24 of the Employees’ Compensation Ordinance.

The Applicant’s Case

10.The applicant had been working as a scaffolder for 27 years at the time of the accident.  He came to know Mr Tsang Pui-sum over 20 years ago while engaged in scaffolding work at a construction site.  Mr Tsang is an experienced scaffolder with 30 years’ experience.  He admitted to have worked with numerous scaffolding contractors and had been working as a ganger or foreman for scaffolding contractors.  He is particularly experienced in the building of bamboo scaffolding structures for the “Yu Lan” Festival which are held every year in July and August.  He had erected the “Yu Lan” scaffolding at the Po On Road Playground for 10 years prior to the date of the accident.

11.It is his evidence that he would usually be contacted by contractors as the person who would gather a team of experienced scaffolders to take up the “Yu Lan” scaffolding works.  The applicant was one of Mr Tsang’s team members in the “Yu Lan” scaffolding works.

12.Both Mr Tsang and the applicant, Mr Chan, would on days, other than the “Yu Lan” Festival period, work as casual scaffolding workers at construction sites, earning a regular daily wage of $800.  Mr Chan, the applicant, produced his yearly work earnings record in the 12 months prior to the accident in support. 

13.Like all construction site bamboo scaffolding works, Yu Lan scaffoldings are charged according to the size of the scaffoldings erected.  A scaffolding unit is called “井”.  Each「井」or unit measures 10 feet by 10 feet, i.e. 10 square feet.

14.The 1st respondent, Mr Ko, obtained Mr Tsang’s name through Mr Choi Chong for recruitment of scaffolding workers of the Po On Road Yu Lan scaffold theatre job.  Mr Tsang was given Mr Ko’s phone number to contact Mr Ko to discuss the details.  As a result, they met at a restaurant on 28 June 2006.  At the meeting, they agreed the unit price for the work of $650 per「井」.  As it is paramount that the Yu Lan Festival scaffolding structures had to be completed one to two days before the Yu Lan Festival, the 1st and 2nd respondents had guaranteed the time for completion with the four community organisations.  The time schedule is known to the applicant and Mr Tsang for both had been engaged in Yu Lan scaffolding structures for many years.

15.It is the applicant’s case that each scaffolder of the 12‑person team, including the applicant Mr Chan, and Mr Tsang, would bring with them their own hand tools consisting of a knife, a pair of scissors, a handsaw and a small awl.  It was the 1st respondent that supplied the bamboo poles, iron foil sheets, wooden floor boards, iron cable or wire, bindings and large saws for the work at the site. 

16.It is not disputed that on the first day of work at 10 am, Mr Ko attended the god-worshipping ceremony for the commencement of work.  He also officiated the ceremony and cut the roast pig.  He then gave each of the 12 workers a $100 laisee packet each.  He proceeded to give Mr Tsang a sketch plan of the scaffold theatre structures to be erected with exact measurements on the plan (see page 320 of the bundle).  The working hours of the 12 workers were between 8.30 am to 7.30 pm or 8.30 pm each day.

17.It is Mr Tsang and the applicant’s evidence that the workers’ wages for the work on the Yu Lan scaffolding are different from the usual construction site scaffolding pay of $800 per day in that the workers are paid according to the total area of scaffolding completed.  The workers who took part in the construction of the scaffolding of Yu Lan theatre structures would be paid according to the number of days he worked.  In the Po On Road Playground Yu Lan Festival scaffoldings in 2006, the 12 workers, including the applicant, Mr Chan, completed 177 units of scaffolding.  They were paid at the unit price of $650 per 「井」unit which was a total sum of $115,050.  The sum was divided equally into 79 parts, being the 79 man days which the 12 workers jointly contributed.  Consequently, each man day worked was valued at $1,456.

18.The applicant having worked four days on the scaffoldings was paid $1,456 x 4 = $5,825 for his contribution.  Mr Tsang, who worked seven days on the Yu Lan scaffolding structures, was paid $10,194 ($1,456 x 7).  He received the same amount as anyone of the 12 workers who did seven days’ work at the scaffolding structures.  Mr Tsang produced a chart he prepared for the payment of the 12 persons on his team at page 318 of the bundle.

19.The applicant admitted that July is the month of the Yu Lan Festival. Mr Chan would be engaged in the Yu Lan scaffoldings work for the whole of the month.  It was the most lucrative month for an experienced scaffolder like himself and Mr Tsang.

The Respondents’ Case

20.The three respondents admitted the applicant Mr Chan and Mr Tsang were the employees of the 1st respondent at the time of the accident. Mr Ko said he had approached an experienced scaffolding contractor, Choi Chong, after he subcontracted the Yu Lan scaffolding job at Po On Road in June 2006 from Mr Wong, and he had consulted Mr Choi on the pricing and the labour for the job.  He was told to liaise with Mr Tsang.  Later, he received a phone call from Mr Tsang about the work at Po On Road.

21.They arranged a meeting at a restaurant on 28 June 2006 where they discussed the unit price and the approximate size of the scaffolding structures to be erected at Po On Road Playground.  The unit price of $650 was agreed. Mr Tsang asked for a deposit and was given a cheque from Mr. Ko’s company bank account in the name of Wang Shun Scaffolding Factory.  Mr Ko claimed that he was given a name card by Mr Tsang that bore the business name of Mr Tsang’s operation, 森正Scaffolding Works and his address and phone numbers. Mr Ko claimed he was told by Mr Tsang that he would take up the work with his team of scaffolders and he was assured the Yu Lan scaffolding structures would be completed on time.  They agreed the total payment for the job would be determined after completion by measuring the exact footage of the scaffolding structures completed.

22.Mr Ko claimed that he had no knowledge of the number of scaffolders engaged to do the work under Mr Tsang nor did he know their names.  He left the work completely to Mr Tsang after the first day when he attended the god-worshipping ceremony on 6 July 2006.  The ceremony was also attended by Mr Wong of the 2nd respondent.  On that occasion, he claimed Mr Wong gave a sketch plan of the structures to be erected to Mr Tsang and they had a discussion on the work to be undertaken.  Neither he nor Mr Wong was present on the day of the accident.

23.Mr Ko and Mr Wong admitted that Mr Wong had issued a cheque of $40,000 on the 1st respondent’s behalf on 21 July 2006 when Mr Tsang requested for a second payment on the works.  At the time, Mr Tsang signed the receipt for the two payments (the receipt can be seen at page 322). 

24.The scaffolding works completed on 22 July 2006 in spite of work having been interrupted by the Labour Department’s investigation after the accident for over seven days.  Mr Ko admitted to have paid a final sum of $55,050 with his own company’s cheque on 24 July 2006 to Mr Tsang. 

25.Mr Ko’s evidence was supported by Mr Wong, the director and shareholder of the 2nd respondent.  Mr Wong admitted he had learnt scaffolding skills from his master who used to build Yu Lan Festival scaffoldings.  He admitted that he first met Mr Ko when he worked for Mr Choi Chong and that he had contracted from the four community associations to build the Yu Lan Festival scaffoldings.  It was the second Yu Lan scaffolding job he had ever contracted to do as a contractor.

The Law

26.Miss Lau, counsel for the 3rd respondent, relied on the decision and dicta of Ribeiro PJ in the CFA case of Poon Chau Nam v Yim Siu Cheung [2007] 10 HKLR 156 where he held in paragraph 18 on page 167:

“The modern approach to the question whether one person is another’s employee is therefore to examine all the features of their relationship against the background of the indicia developed in the abovementioned case law with a view to deciding whether, as a matter of overall impression, the relationship is one of employment, bearing in mind the purpose for which the question is asked. It involves a nuanced and not a mechanical approach, as Mummery J emphasised in Hall v Lorimer in a passage approved by the English Court of Appeal:

In order to decide whether a person carries on business on his own account, it is necessary to consider many different aspects of that person’s work activity. This is not a mechanical exercise of running through items on a checklist to see whether they are present in, or absent from, a given situation.  The object of the exercise is to paint a picture from the accumulation of detail.  The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making informed, considered, qualitative appreciation of the whole.  It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details.  Not all details are of equal weight or importance in any given situation.  The details may also vary in importance from one situation to another.”

[2007] 10 HKCFAR 167.

27.Mr Cheung, counsel for the applicant, referred to an earlier paragraph, paragraph 17 of Ribeiro PJ’s judgment in the Poon Chau Nam case where the dictum of Cooke J in the case of Market Investigations Limited v Minister of Social Security [1969] 2 QB 173 was referred to at page 184H to 185B, it received the praise of Lord Griffiths in the Privy Council case of Lee Ting Sang v Chung Chi Keung [1990] 1 HKLR 764 at pages 766H to 767B. Paragraph 17 of Ribeiro PJ’s judgment in the Poon Chau Nam case is as follows:

“The other influential first instance decision is that of Cooke J in Market Investigations Limited v Minister of Social Security. It earned the Privy Council’s accolade in the Lee Ting Sang v Chung Chi Keung & Another, where Lord Griffiths stated that their Lordships ‘agreed with the Court of Appeal when they said that the matter had never been better put than by Cooke J’ in that case. The passage approved of runs as follows:

The fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’  If the answer to that question is ‘yes,’ then the contract is a contract for services.  If the answer is ‘no,’ then the contract is a contract of service.  No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to their relative weight which the various considerations should carry in particular cases.  The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”

28.At page 768 A to G of the Lee Ting Sang case, Lord Griffiths went further:

“Upon these findings of fact their Lordships would have no hesitation, if sitting as a court of first instance, in concluding that the appellant was working for the respondent as an employee and not as an independent contract. All the tests, or perhaps it is better to call them indicia, mentioned by Cooke J point towards the status of an employee rather than an independent contractor. The appellant did not provide his own equipment, the equipment was provided by his employer. He did not hire his own helpers; this emerged with clarity in his evidence when he explained that he gave priority to the 1st respondent’s work and if asked by the 1st respondent to do an urgent job he would tell those he was working for that they would have to employ someone else: If he was an independent contractor in business on his own account, one would expect that he would attempt to keep both contracts by hiring others to fulfil the contract he had to leave. He had no responsibility for investment in, or management of, the work on the construction site, he simply turned up for work and chipped off concrete to the required depth upon the beams indicated to him on a plan by the 1st respondent. There is no suggestion in the evidence that he priced the job which is normally a feature of the business approach of a subcontractor; he was paid either a piecework rate or a daily rate according to the nature of the work he was doing. It is true that he was not supervised in his work, but this is not surprising, he was a skilled man and he had been told the beams upon which he was to work and the depth to which they were to be cut and his work was measured to see that he achieved that result. There was no question of his being called upon to exercise any skill or judgment as to which beams required chipping or as to the depths that they were to be cut. He was simply told what to do and left to get on with it as, for example, would a skilled turner on a lathe who was required to cut a piece of metal to certain dimensions. Taking all the foregoing considerations into account, the picture emerges of a skilled artisan earning his living by working for more than one employer as an employee and not as a small businessman venturing into business on his own account as an independent contractor with all its attendant risks. The appellant ran no risk whatever save that of being unable to find employment which is, of course, a risk faced by all employees. In particular, it is a risk faced by casual employees who move from one job to another, and such casual employees are specifically covered by the ordinance.”

29.At page 772 D to E, Lord Griffiths held:

“In the building and construction industry, the test may lead to the error of only considering those on the permanent staff as employed under a contract of service and thus excluding all those from the protection of the ordinance who are taken on for a particular project because, not being on the permanent staff, they are not ‘part and parcel of the organisation.’ It is perhaps not without significance that neither the judge nor the Court of Appeal referred to the provisions in the ordinance covering casual workers and those who work for more than one employer.”

(1)     Whether the 1st Respondent was the Direct Employer of the Applicant

30.In Lord Griffith’s own words in the Privy Council case of Lee Ting Sang, whether a person is employed under a contract of service is often said in the authorities to be a mixed question of fact and law (page 768 H to I).  In the present case, the relationship has to be determined by an investigation and evaluation of the factual circumstances in which the work was performed.  It is therefore a question to be determined by the trial judge upon considering and weighing up the evidence and the facts in the case.

31.This is supported by Ribeiro PJ in the Court of Final Appeal case of Poon Chau Nam where he approved Clough JA’s dictum in Chan Kwok Kin v Mok Kwan Hing [1991] 1 HKLR 631 at page 636 where he held:

“It was for the court and not the applicant to evaluate the facts and determine the legal relationship of the applicant to the 1st respondent. The applicant no doubt knew who he was working for, namely, the 1st respondent, but in all the circumstances we think his classification of their legal relationship and of his legal relationship with Law, the ganger, can have no significant evidential value.”

32.The 1st respondent in his submission relied heavily on the deputy magistrate Mr Wong’s findings acquitting him of the charges under section 6(1), 6(2)(a) and 6(3) of the Occupational Safety and Health Ordinance. 

33.However, one must bear in mind that different criteria apply in a criminal trial.  In a criminal court, the judge can only convict a person charged when the prosecution who has the burden of proof that beyond all reasonable doubts the person charged is guilty of the offence charged.  In a civil court, the standard of proof is on the balance of probability.

34.Deputy Magistrate Mr Wong did not have the benefit of the relevant employee compensation case authorities cited to him, the most important of which is the CFA case of Poon Chau Nam.  On the other hand, he is of course not obliged to look into those authorities in a magistrate court trial because these authorities were decisions made in employees’ compensation cases. 

35.The present case is an employee’s compensation case.  I am bound by these authorities, and I have to follow them in my determination as to whether the applicant was an employee of the 1st respondent at the time of the accident.  I have to apply the criteria set out in the CFA decision of Poon Chau Nam and the authorities approved and adopted by the CFA in that case. The criteria included the following:

Is the Applicant Working in a Gang?

36.This is an issue raised by Miss Lau as one of the indicia of employment or self‑employment, that Mr Chan was part of Mr Tsang’s gang of scaffolders. Mr Cheung, counsel for the applicant, referred me to Mr John Rear’s article in 1972 “Self-employment in Building Industry” (1990) 1 HKLJ 764 which was commented on by the Privy Council in the Lee Ting Sang case. 

37.It was cited also in paragraph 452 of the Hong Kong Personal Injuries Service, pages 259 to 260 which stated:

“Mr Rear was of course concentrating on the construction industry when he wrote. However, his description of such a pool of labour is applicable to other industries in Hong Kong. For instance, a similar group of casual workers exists to service the transportation industry, and this latter group is also recruited on a daily or job-by-job basis by gangers or drivers although here the recruitment often occurs off street corners which are known to all parties concerned as places to wait for work. It is important to note that while sometimes only one worker will be recruited out of the casual labour pool, more often, what happens is that an employer contacts a ganger known to him and asks him to get a gang of workers to do a specific task. Usually, the ganger will be told that a lump sum will be allocated for payment to the gang to complete that task, and it will be left to the gang as to how they split the money. The quantum of lump sum is normally calculated by the employer on a piece basis, for example, for concreters, how many square metres concreted and/or for transportation workers how many sacks of rice loaded. But within the gang, the same would be split equally as between its members. There is one exception to this equal-splitting rule. Sometimes, the ganger gets an extra share although this is not invariably the case. The actual payment of the lump sum is almost always made to the ganger, and he then goes off to pay individual gang members.

Another matter to bear in mind is that often, these casual workers are very experienced in their particular field. This may mean that they describe themselves particularly in more skilled trades, for example, bamboo scaffolders, as masters or “si-fus”. Accordingly, practical control by the employer over what they do is limited although there is little doubt that the employer has power to control. Further, these more skilled casual workers would often bring to the site the personal tools of their trade, but these are usually minor, comprising, for instance, spades, trowels or the like. Invariably, however, the major items of equipment or materials would be provided by the employer although sometimes he so provides by giving the ganger funds to purchase the same. Sometimes, the ganger, like many supervisors or foremen, can hire and fire individual members of the gang. However, even here certain particularities exist. Thus, insofar as hiring is concerned, a complication exists with the occasional practice whereby replacement workers are brought in not by the ganger but by the particular gang members who have to absent themselves from work for a time. These replacement workers may even be paid by that original gang member by means of his handing over the wages due for the period the replacement occurred. As for dismissal, in practice, the same rarely seems to occur as the gang members, if not clansmen or men from the same village in China, would at least have known each other and worked together for a long time, and as such, dismissal never seems to be contemplated. Instead, other more face‑saving ways of easing out an unsatisfactory gang member seem to be used.

It will be apparent from a consideration of the cases which followed that some general principles can be extracted which can then be applied to cases involving Hong Kong casual workers, be they in gangs or not. Those principles are:

(i) The mere fact that a worker is working as part of a gang, recruited and paid through a ganger is insufficient to cause the worker to not be an employee.

(ii) The mere fact that a ganger can hire and fire gang members would not cause the ganger or the gang to become contractors.

(iii) The mere fact that gang members engage and pay for temporary replacement workers will not cause the gang to become contractors.

(iv) The mere fact that a worker is a master or 師傅and thus works unsupervised is insufficient to cause that worker to not be an employee.

(v) The mere fact that a worker brings his own personal small tools, e.g. spade, trowel to the job is insufficient to cause that worker not to be an employee.

In fact, it is probably correct to say that even the presence together and at one time of all the aforesaid conditions would still not suffice to cause the casual workers of a gang to not become employees.  It is only if evidence, which is usually of financial risk, of the carrying-on of business on the workers’ own account exists that one can safely conclude that the workers were not employees. ”

“It is worth reiterating the point earlier made that such financial risk does not include the risk common to all casual workers, namely, the risk of finding no work and thus earning nothing. Financial risk here means the risk of making a loss as distinct from a profit”. (footnote 4)

38.Based on the authorities and the dicta of the Privy Council in Lee Ting Sang and the CFA in Poon Chau Nam, the fact that the applicant was recruited by Mr Tsang, the ganger, is not an indication that he was employed by Mr Tsang nor would that make him a self‑employed scaffolder. 

The Issue of Control or Supervision

39.It is common knowledge that in the scaffolding trade, the master or 師傅scaffolder, being highly skilled, requires little or no supervision.  The control or supervision, whether exercised by the employer or not, is not an indicia of employment either. 

40.The 1st respondent’s Mr Ko admitted he had no prior experience in the construction of Yu Lan scaffolding structures while Mr Wong of the 2nd respondent admitted he had learnt the skill under his 師傅.  He had one previous experience in contracting the Yu Lan Festival scaffolding prior to the one in Po On Road Playground in July 2006. 

41.Compared to them, Mr Tsang and Mr Chan, who had erected the Yu Lan Festival scaffolding at the Po On Road Playground for many years prior to 2006, were much more experienced.  It would be unreasonable on these bases, because the employer lacked the skill of the subcontractor, to regard the subcontractor not an employer. 

42.In the present case, the evidence from Messrs Tsang, Ko and Wong showed there were instructions given and supervision handed down at the beginning of the construction.  It was Mr Wong who obtained the Yu Lan scaffolding plans from the four community associations.  He and the 1st respondent, Mr Ko, gave the plan to Mr Tsang on the first day of work.  They discussed with Mr Tsang the owner’s requirements.  On the first day of work, Mr Ko admitted he officiated the worshipping ceremony and cut the roast pig.  He also handed out 12 laisee packets to each of the 12 scaffolders.  He was further identified by Mr Chan as the boss. Furthermore, he signed the Labour Department’s Form 2 reporting on the accident, admitting he was the employer of the applicant two weeks after the accident.

43.The fact that on the first day of work he officiated the worshipping ceremony and handed out laisee packets are important details to indicate to all scaffolders that Mr Ko was the boss and the employer.  Even though Mr Wong was also present that day at the ceremony, he did not officiate the ceremony. Neither did he hand out laisee packets to all the workers or cut the roast pig in front of all the workers.  Traditionally, it is an important start of work for the workers.  It symbolises a good start by appeasing the gods which would look after the construction work of the Yu Lan Festival structures.

44.All 12 workers were present and all received a laisee packet from Mr Ko. Therefore, Mr Ko had met each and every one of them on the first day.

The Financial Risk and Opportunity for Investment

45.This is an important factor for the determination of whether the worker is engaged in a contract for services or a contract of service.  I refer to the judgment of Pickering J in the case of Wong Man Luen v Hong Kong Wah Tung Stevedore Company CACV00017 of 1971, the judgment was handed down on 25 October 1971, at page 12:

“In Market Investigation Limited v Minister of Social Security, it was held that control, although a matter for consideration, was not decisive, and the fundamental test in determining whether a person was performing services under a contract of service or for services was whether the person engaged to perform those services was performing them as a person in business on his own account and thus under a contract for services. As we see it, the status of being in business on one’s own account implies the possibility not only of profit but also of loss and when this test is applied to the applicant’s situation in relation to the work which he was performing at the time of his injury, it is impossible to perceive the possibility of financial loss accruing to him. His contract was to deliver certain goods with the assistance of vehicles and additional coolies and to be paid for that service upon its conclusion by reference to the cost of hiring the vehicles and to the number of cases transported by the gang of coolies. No possibility of loss existed and applying this modern test it would appear that both from the viewpoint of the exercise of control by the respondent firm and of the method of remuneration adopted that the appellant was in fact a workman rather than an independent contractor.”

46.In the present case, the applicant was part of Mr Tsang’s gang.  The gang of 12 headed by the ganger, Mr Tsang, negotiated the payment for the Yu Lan scaffolding structures at $650 per unit.  Mr Tsang is a very experienced Yu Lan scaffolding worker, he knew exactly how long it would take to erect the structures at Po On Road.  Given the time available, Mr Tsang also knew how many scaffolders would be required to complete it on time. 

47.Charges for the work for the gang of scaffolders who did the work was based on the number of units of scaffolding in the Yu Lan scaffolds structures.  Mr Tsang, together with Mr Chan and the other 10 scaffolders would share equally the sum received amongst themselves according to the number of days each worked.  The financial risk therefore is no different from a casual labourer at any construction site.  There is, further, no opportunity of investment to speak of or profiting from sound management in the performance of the work.

48.In this case, Mr Tsang, the ganger, did not get a larger share than his gang members.  He had worked for seven days and received 7/79 of the 177 units of scaffoldings erected. 

Equipment and Hand Tools

49.It is not disputed that each scaffolder brought with him some small tools, including a knife, a pair of scissors, a handsaw and an awl.  On the other hand, the 1st respondent provided all the bamboo poles, iron sheets, wooden boards, binders and a few large saws.  This arrangement is no different from any construction site scaffolder engaged on a casual basis. 

Hiring of Workers

50.Even though Mr Tsang was the person who got in touch with Mr Ko, it was through the introduction of Mr Choi Chong whom Mr Ko consulted on his subcontract of the Yu Lan scaffolding work.  It is no different from any homeowner or contractor requesting worker to find a sufficient number of workers to perform a certain construction job at the site.  The only difference is the Yu Lan scaffold structures had to be completed one to two days before the festival so that the ganger and his gang working on the project must be experienced, trustworthy and know what they were doing for the work to be completed on time.  It is therefore not surprising for Mr Tsang to have complete control over the hiring of the scaffolders on his team for they would work side by side on an equal footing and were paid the same wages.  As paragraph 4.452 at page 260 of the Hong Kong Personal Injury Service stated:

“(ii) The mere fact that the ganger can hire and fire gang members would not cause the ganger or the gang to become contractors.”

51.The overall picture is clear.  The 1st respondent subcontracted the job from the 2nd respondent.  The 1st respondent took out the insurance policy which met with the requirements laid down by the four community associations. The 2nd respondent did not take out the insurance policy as he had requested the 1st respondent to do so.  He was satisfied with the 1st respondent’s policy.  The 1st respondent met 12 members of the gang on the first day of work at the god-worshipping ceremony.  He officiated the ceremony, cut the roast pig and gave each of the 12 members a laisee packet.  He supplied the building materials and the saws.  He made a profit from the work and he paid the workers by the number of units of scaffoldings erected.

52.Even though Mr Tsang was responsible as a ganger and was responsible for quoting the unit price for the work, he was paid the deposit of $20,000 before he got the team of 12 together and that he had issued a receipt of $60,000 after he received the interim of $40,000 and the final payment based on the 1st respondent’s acceptance of the total number of units of scaffold at 177 erected, he did not make a profit over and above what his team members shared.  He took no risk financially.  He was just one of the scaffolders who did the job like Mr Chan, the applicant.

53.Consequently, I am satisfied the applicant is within the meaning of “employee” under section 2 of the ordinance, defined as any person who has entered into work under a contract of service with an employer in any employment, whether by way of casual labourer, clerical work or otherwise, and whether the contract is implied or express, is oral or in writing.

(2) Whether the 2nd Respondent is Liable as a Principal Contractor under Section 24 of the Employees’ Compensation Ordinance

54.Mr Wong alleged Mr Chan, the applicant, to be an independent contractor.  I found no evidence that Mr Chan was an independent contractor.  Being a skilled scaffolder does not make him an independent contractor.  Neither would Mr Tsang’s being in possession of a name card, with an unregistered business name, make him an independent contractor. 

55.The 2nd respondent admitted he was the main contractor, he was awarded the contract by the four community associations in Cheung Sha Wan in June 2006.  He subcontracted the work to the 1st respondent.  Therefore, there is no question that he is liable as the principal contractor under section 24(1) of the Employees’ Compensation Ordinance which provides:

“Where any person (in this section referred to as the principal contractor), in the course of or for the purposes of his trade or business, contracts with a subcontractor for the execution by or under the subcontractor of the whole or any part of the work undertaken by the principal contractor, the principal contractor shall be liable to pay to any employee employed by that subcontractor or by any other subcontractor in the execution of the work any compensation under this ordinance which the principal contractor would have been liable to pay if that employee had been immediately employed by him; and where compensation is claimed from or proceedings are taken against the principal contractor, then, in the application of this ordinance, references to the principal contractor shall be substituted for the references to the employer, except that the amount of any compensation calculated by reference to earnings shall be calculated by reference to the earnings of the employee under the employer by whom he is immediately employed.”

Conclusion

56.For the aforesaid reasons, I find the 1st respondent and the 2nd respondent liable to compensate the applicant, Mr Chan, under sections 9, 10 and 10(a) of the ordinance.  The 3^rd Respondent is liable as the insurer.  As the parties have agreed the quantum of compensation to be $425,862, I give judgment of this said sum to the applicant. 

Interest

57.Interest to be at half judgment rate from the date of accident to the date of judgment, thereafter at judgment rate until full payment.

Costs

58.Costs to follow the event, to be borne by all the respondents to the applicant, to be taxed if not agreed, with certificate for counsel.

Mr Wallace Cheung, instructed by Wong, Fung & Co., for the Applicant

1st Respondent, in person, represented by Mr Ko Wang-tsun

2nd Respondent, in person, represented by Mr Wong Siu-lam

Miss Julia Lau, instructed by Messrs Liu, Chan & Lam, for the 3rd Respondent