Chan Sze Yuen v. Tin Wo Engineering Co Ltd and Others

DCEC 193 & 750/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO.193 & 750 OF 2007

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BETWEEN

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Coram: Acting Chief District Judge S. T. Poon in Court

Dates of Hearing:  7^th, 8^th & 9^th September 2010

Date of Handing Down of Judgment: 29^th March 2011

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J U D G M E N T

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Introduction

1.The Applicant injured his right foot in an industrial accident happened on 24 June 2005 at the Venetian Hotel construction site (“the Site”) in Macau. He was a steel binder from Hong Kong. In the certificate of assessment issued on 17 April 2007 by the Employees’ Compensation (Ordinary) Assessment Board, the Applicant was assessed to have suffered 8% loss of earning capacity due to the accident.

2.There is no dispute as to whether the accident had happened as alleged and whether it was arising out of and in the course of the Applicant’s employment. Apart from some minor disputes in relation to the income of the Applicant, the issue for trial remains who was actually the employer of the Applicant at the time of the accident.

3.The 1^st Respondent (“R1”) is a Hong Kong company. It was not in dispute that, in the period between March to June 2005, until the first day of work at the Site, the Applicant was in the employ of R1 working at its construction site in Tung Chung as a causal worker. The case of the Applicant against R1 is that he was instructed by R1 or its agent to work in Macau and he continued to remain to be its employee at the time of the accident.

4.The 2^nd Respondent (“R2”) is a Macau company. It was a sub-contractor of the 3^rd Respondent (“R3”) who was the principal contractor for the Venetian project. As against R2, the primary position of the Applicant is that it was a common employer of the Applicant together with R1. Besides, the Applicant says that he was recruited or engaged by R2 in Hong Kong such that R2 would be liable to compensate him under Section 30B(5) of the Employees Compensation Ordinance Cap.282 (“ECO”) despite it being a company carrying on business outside Hong Kong.

5.It is not in dispute that R3 will also be liable under ECO as the principal contractor should R2 be found liable to the Applicant.

6.The position of the Respondents is that, the Applicant was an employee of R2 and R2 only at the time of the accident and since there was no recruitment or engagement of the Applicant in Hong Kong, R2 is also not liable to compensate him under the ECO. According to R2, it is all along willing to compensate the Applicant in accordance with the laws of Macau.

Evidence

7.At the time of the accident, the Applicant was 51 years old. He had 30 years’ experience in steel binding work. When working at the Tung Chung site for R1, he received a daily wage of HK$700. The wages were paid half-monthly through direct transfer to his bank account. R1 would also pay MPF contributions for him.

8.On 7^th June 2005, the Applicant was told by one fellow worker Chan Pui Sing that the foreman, Wong Shu Ming, directed him and other 3 workers to go to Macau the next day to work there. What he understood was that there was urgent work in Macau that required workers to help out. Chan Pui Sing directed him and the other 3 workers to go to work in Macau and they will be picked up by someone there. The Applicant knew that Wong Shu Ming was working in Macau and Chan Pui Sing often conveyed messages or directions from the foreman to workers. However, he did on occasion see Wong Shu Ming at the Tung Chung site while he was working there.

9.According to the Applicant, for those who were transferred to work in Macau, they would be paid an extra allowance of HK$70 per day and given free ferry tickets to and return from Macau. Besides, free quarters would also be provided.

10.The Applicant arrived at Macau on 8^th June 2005 together with the 3 other workers. He telephoned the foreman named Lam Chun Bun who told them to go direct to the Site by taxi. They met Lam Chun Bun at the Site and he gave them the keys of the quarter and asked them to work on the next day. They started working at the Site on 9^th June.

11.According to the Applicant, this Lam Chun Bun was a foreman of R1 who interviewed him and processed his access card for his working at the Tung Chung site for R1 in March 2005.

12.On 24^th June 2005, the weather was bad and there was heavy rain in Macau. The accident happened when the Applicant was standing on a 1.9 metres high platform helping to lift up a steel bar. For some reasons, the steel bar swung strongly and in order to avoid the swinging steel bar from falling, he held tight to the steel bar that caused him to land together with it onto the ground. As a result, his right leg bone was fractured. For the purpose of this action, it is not necessary to go into the details of the accident.

13.The said Chan Pui Sing, Wong Shu Ming, and Lam Chun Bun were not called to give evidence by any party.

14.The evidence of Au-Yeung Sing, manager of R1, was that both Wong Shu Ming and Lam Chun Bun had ceased being employed by R1 since May 2005. They were then employed by R2 as foremen to work at the Site. Chan Pui Sing was only a worker of R1 and has no authority to give direction to other workers.

15.Au-Yeung Sing maintained that R1 had never directed any of its workers working at the Tung Chung site to work in Macau. The Applicant chose to work in Macau on his own accord and he ceased to be the employee of R1 since then. Moreover, R1 did not do any business in Macau and was never a contractor for the Venetian project. R2 did not request R1 to assist in recruiting workers to work for them.

16.At the beginning of 2005, as the manager of R1, he was asked to assist R2 on documents for the Venetian project as there were not many people in his company who can read English. However, he was not involved in operational matters. He helped out on the documents as such for about 3 months. Apart from that, the management and finance of R1 and R2 were clearly separated.

17.There was in the exhibits a “salary notification”[1] issued by R1 in respect of the payment of the Applicant’s salaries in the period between 1^st June and 15^th June 2005, covering also the time when the Applicant was working in Macau. Au-Yeung Sing explained that as many of the Hong Kong workers in Macau did not have a bank account there for transfer of their wages, there was an arrangement between R1 and R2 that R1 would transfer their wages to their bank accounts in Hong Kong and the amount paid would be reimbursed by R2.

18.Au Yeung Sing agreed that in June 2005, Lam Chun Bun was the site supervisor at the Tung Chung site. He also knew Wong Shu Ming who was a foreman at the site. In cross-examination, he denied that the two were still being employed by R1 in July 2005.

19.Tsang Chun Fung is and was the Manager of R2. He started working formally for R2 since middle of July 2005[2]. He knew Lam Chun Bun and Wong Shu Ming and they worked for R2 since the end of May 2005. The two continued working with R2 until November 2008 but he did not ask any of them to make any written statement or record regarding the accident despite he knew that the Applicant has made a number of allegations concerning them.

20.According to Tsang Chun Fung, at the material times, 50% to 60% of steel binding workers working in Macau came from Hong Kong. They received a higher wages than local workers with also ferry allowances and free quarters. In June or July 2005, there were only 30 odd workers working in the Site but the number has rapidly increased to 500 to 600 towards the end of 2005 to 2006.

21.Tsang Chun Fung said there was no arrangement between R1 and R2 for secondment of R1’s worker to work in Macau. In or about May to June 2005, R2 required steel-binders to work at the Site and steel-binders in Hong Kong knew about this through words of mouth. R2 did not do any recruitment of steel-binders in Hong Kong and the recruitment and engagement process was conducted at the Site in Macau. On 8 June 2005, the Applicant and Chan Pui Sing attended the Site seeking to be recruited or enrolled. As they were experienced workers and had previously been employed by R1, they were recruited and enrolled by the supervisor at scene. They were employed as daily casual workers. The name of R2 was clearly stated as the subcontractor on R3’s daily return of subcontractor workers and the Applicant’s name also appeared there as R2’s worker. On the date of the accident, the Applicant was working at the Site under the employment of R2.

Analysis of Evidence

Employment

22.The evidence summarized thus far is not the only evidence given by parties’ witnesses at trial[3]. It is however in my view sufficient for determination of the issues on liability in this matter.

23.As mentioned above, the primary case of the Applicant is that he was still in the employ of R1 at the time of the accident. Mr. Lam, counsel for the Applicant, relied on the Hong Kong case Leif Christensen v. Regent International Ltd. & Another[4] and suggested that as R1 and R2 in reality belong to the same person(s), and the arrangements between them vis-à-vis the Applicant are “flexible, fluid, unidentified, and ad hoc”, the true position could be that both R1 and R2 are employers and both are liable. Mr. Lam also cited other employment cases[5] in Hong Kong in support of his proposition.

24.I agree that in cases where the employee is a permanent employee of an employer within its establishment, as opposed to casual workers who do not have a mutual obligation with the employer for work to be provided or accepted, the fact that the employee working for another person does not necessarily mean that he has ceased to be employed by the original employer. And this is the situation under those cases cited by Mr. Lam.

25.However, in the present case, it is unquestionable that the Applicant was employed by R1 as a casual worker before he went to work in Macau at the Site. Although, in my view, R2 has a close association with R1[6] , it is a separate legal entity from R1. R2 has sub-contracted the construction works from R3 and therefore was entitled and obliged to employ workers to work at the Site. Not being a sub-contractor as such, R1 has simply no right to employ any person to work there.

26.It is in the nature of casual employment that the worker may take up work wherever it can be found, with one or more employers[7].

The Applicant has agreed to work in Macau and there is no apparent reason why the Applicant would prefer to be employed by R1 instead of R2. In the construction industry, it is not uncommon that a worker would work for different employers and the real concern of the worker is whether he would be paid sufficiently, and not that who would be the one to pay. In my view, at the time when he agreed to work in Macau, the Applicant was simply indifferent about who (R1 or R2) would be his actual employer.

27.As to the payment of wages by R1 in Hong Kong for the Applicant’s work at the Site, I accept the evidence of Au Yeung Sing and Tsang Chun Fung that that was the arrangement made between R1 and R2 for administration convenience and not an indicator that R1 has a liability to pay for the wages of the Applicant.

28.There was no evidence adduced by the Applicant to suggest any control exercised by R1 on the Applicant’s work at the Site. Nor that it was the case of the Applicant that R1 has participated any way in the Venetian project. In the circumstances, and as agreed by parties, it is not necessary for this court to go through the list of indicia for employment in determination of whether the Applicant was still under R1’s employment at the time of the accident.

29.Subjectively, there was also no reason on the part of R1 to maintain the employment relationship with the Applicant when there was no inconvenience at all for the Applicant to be employed by R2 for his work in Macau.

30.As mentioned, R2 was the nominated sub-contractor at the Site who required workers to fulfil its contractual obligations. In the evidence, the Applicant and the other workers were received by Lam Chun Bun who was a foreman employed by R2 at the time. The only conclusion I can draw, and I do draw, is that R2 was the sole employer of the Applicant at the time of the accident.

Recruitment or engagement in Hong Kong?

31.Section 30B(5) of ECO provides that:

“If an employer who is a person carrying on business outside Hong Kong submits or has agreed to submit to the jurisdiction of the Court, then, notwithstanding that the accident causing the personal injury occurred outside Hong Kong, this Ordinance shall apply to employees within the meaning of this Ordinance who have been recruited or engaged in Hong Kong.”

32.There is no dispute that R2 and R3 had submitted to the jurisdiction of this court.

33.Mr. Lau, counsel for R2 and R3, submitted that there has been no recruitment or engagement of the Applicant in Hong Kong for his employment in Macau. He submitted that for recruitment, there must be some more acts on the part of the employer than simply providing information of a job opportunity. Mr. Lau further submitted that the recruitment or engagement of the Applicant was actually done by the foreman of R2 in Macau at the Site.

34.The Applicant learnt about the job opportunity in Macau from his fellow worker Chan Pui Shing, who told him that it was Wong Shu Ming’s instruction to ask them to go working in Macau. According to Tsang Chun Fung, Wong Shu Ming was then already working for R2.

35.From the evidence, during the relevant time in June 2005, the demand for workers at the Site has been rapidly increasing. There should be every incentive on the part of R2 to recruit more workers to work at the Site. Given its association with R1, an obvious convenient means open to R2 would be to recruit from those who were then working for R1.

36.I agree with Mr. Lau that there must be something more than just the provision of information of a job opportunity to constitute recruitment. Here, the Applicant understood from Chan Pui Shing that the foreman, Wong Shu Ming, “directed” them to go to work in Macau. This was not merely an information supply. On this point, I have no hesitation in finding that at the time of setting off to Macau, the Applicant must have been certain about his employment there and not that he went there merely to see whether he would be employed. Otherwise there would not be sufficient reason for him to take the risk of going to Macau but not being employed in the end while he could have continued working for R1 here in Hong Kong. I note the submission of Mr. Pirie, counsel for R1, on the extra benefits[8] that the Applicant would earn in Macau but in my view, those benefits might well justify the reason why he agreed to work in Macau but were simply too insignificant to cause him to risk the trouble of not being employed in the end.

37.Moreover, what Lam Chun Bun has done when he received the Applicant and the other workers in Macau was merely giving them the keys of the quarters, as if they were already R2’s workers. This is inconsistent with the allegation of R2 that the recruitment process was conducted only in Macau.

38.I note also Mr. Pirie’s submissions attacking the general credibility of the Applicant, particularly in relation to the incorrect evidence he has given initially on the dates of setting off to Macau and the hand-written entries in his diary. However, neither R1 nor R2 saw fit to adduce evidence from Wong Shu Ming or Lam Chun Bun to rebut the evidence given by the Applicant concerning what they did. I see no reason not to accept the Applicant’s evidence in this regard.

39.It follows that the employment of the Applicant to work at the Site must have been confirmed before he went to Macau. And hence, the recruitment or engagement of him must have taken place in Hong Kong, and in my view, by Wong Shu Ming on behalf of R2, through Chan Pui Shing.

40.In his closing submission, Mr. Lau mentioned about the meaning of the word “recruitment” in a dictionary[9] and listed out some usual activities[10] a company would do for recruitment. In my view, recruitment can take different forms and the lack of any of the listed activities does not mean that there was no recruitment. Besides, in the present case, it would be sufficient just to understand the word recruitment in its ordinary meaning without looking at a dictionary.

41.In the premises, I find the Applicant entitles under the ECO to compensations from R2 and R3, but not R1.

Quantum

42.As mentioned, there are some minor disputes on the issue of quantum, namely the monthly earning of the Applicant at the time of the accident and the deductions to be made for periodical payments.

43.There is no dispute that the daily wage of the Applicant was HK$770. It was the case of the Applicant that the monthly working days for calculation of earnings should be 26 days but the Respondents maintained that it should be 20 days. On this point, I accept the submission of Mr. Lam that :

(a)  There was a considerable demand of steel-binding workers in Macau at the time; and

(b)  From the List of Earnings filed by R1, the average monthly earnings of the Applicant in April and May 2005 was HK$21,525[11] being more than 26 days’ wages of HK$770 per day.

44.I find that the appropriate basis for calculation of section 9 compensation is 26 working days per month, and the amount of compensation is assessed as HK$20,020 x 72 x 8% = HK$115,315.

45.The amount of compensation under section 10 is HK$770 x187 x 4/5 = HK$115,192.

46.There is no dispute on section 10A compensation being HK$6,515.

47.Regarding deductions, the Applicant admitted that he received 2 sums of money totalling HK$90,968 from the Respondents after the accident. He denied that the amount was periodical payments to him for the accident but unable to explain what the payments could be apart from periodical payments.

48.There is however an admission made by the Applicant in his affirmation dated 8 October 2008 that he received sick leave payments from the Respondents. There is a speculation from Mr. Lam that someone of R2 had forged the signature of the Applicant for illegal purpose that may have some bearing on the true nature of the payments to the Applicant. But in my view, this allegation is too far-fetching in view of the available evidence that any further investigation on this point is a waste of time and resources.

49.I have no hesitation to conclude that the amount of HK$90,968 paid to the Applicant represented nothing but periodical payments. Hence, the amount shall be deducted from the compensation under section 10 and the remaining amount under this head should be HK$115,192 - HK$90,968 = HK$24,224.

50.Judgment is therefore entered against R2 and R3 in favour of the Applicant in the sum of HK$146,054 and interest thereon at 4% per annum from the date of accident to judgment and thereafter at 8% per annum until payment.

51.I make costs order nisi that :

(a)  Costs of the Applicant against R2 and R3 be borne by R2 and R3, to be taxed if not agreed; and

(b)No order as to costs between the Applicant and R1.

52.I make no order as to costs between the Applicant and R1 because R1 and R2 are associated companies and throughout the trial, R1 maintained the position that R2 should not be liable under ECO. I also doubt the necessity of engaging different legal representatives to represent R1 and R2.

53.For the avoidance of doubt, I certify the engagement of counsel in the trial.

54.The costs order nisi is to become absolute after 14 days.

55.The Applicant’s own costs be taxed in accordance with Legal Aid Regulations.

Mr. Simon K C Lam instructed by Messrs Tse, Yuen, Ting & Wong for the Applicant.

Mr. Nicholas Pirie instructed by Messrs Knight & Ho for the 1^stRespondent.

Mr. Roy K Y Lau instructed by Messrs Li, Wong, Lam & W. I. Cheung for the 2^nd & 3^rdRespondents.