Read the full judgment text of CACV 000013/1986 on BabelCite. This Court of Appeal judgment was delivered on 13 May 1986 before Silke JA, Power J, Nazareth J.
Employees' compensation – illegal immigrant employee – death in course of employment – whether dependants have independent cause of action unaffected by illegality of contract – whether s. 2(2) discretion should be exercised in favour of dependants – method of calculation of compensation – Employees' Compensation Ordinance (Cap 282) ss. 2(2), 3, 5, 6, 6(1), 6(4), 11(1), 24, 43, 44 – Immigration Ordinance ss. 17G, 17G(2), 17I(1). Facts: The appellant's son, a lift installation mechanic, was electrocuted and died on 10 August 1984 while working at Lok Wah Estate. It was undisputed that the death arose out of and in the course of his employment. The deceased was in fact an illegal immigrant who had obtained employment by using a false identity card, in breach of the Immigration Ordinance. The deceased was employed by Mr Fung, a sub-contractor of the 1st respondent (Analogue Engineering Company Limited), who was in turn a sub-contractor of the 2nd respondent (Swire Engineering Limited), the head contractor. The appellant claimed compensation on behalf of himself, his wife and a daughter, all residing in mainland China, who were found to be dependants. The trial judge assessed compensation at $21,000 but held that the contract of service was illegal and refused to exercise his discretion under s. 2(2) in the applicants' favour, dismissing the claim. First issue: whether the contract was unlawful but not illegal and a valid contract under the Ordinance – held: s. 2(2) was intended to cover contracts that are illegal and void ab initio, not merely those whose illegality arises in performance; the deceased's contract was an illegal contract falling within s. 2(2). Second issue: whether the Ordinance creates a new cause of action for dependants unaffected by illegality – held: dependants have an independent cause of action requiring proof of a different factual situation (including dependency), but they must still prove a contract of employment recognized by the Ordinance, so that illegality affecting the contract will defeat their claim equally. Third issue: whether the trial judge wrongly refused to exercise his discretion under s. 2(2) – held: yes; once the discretion is exercised, the contract must be treated as valid for all purposes under the Ordinance, including under Part IV, so that s. 43 makes any sum under a policy of insurance forthwith due and payable by the insurer, and the insurer cannot defeat the scheme by pleading underlying illegality. Fourth issue: whether the method of calculating compensation was correct under s. 6(4) – held: the method of taking a percentage of the maximum figure under s. 6(1) was not the proper approach; s. 6(4) requires the court to make some form of actuarial assessment of what is reasonable and proportionate to the injury. Fifth issue: whether the findings of fact as to earnings and remittances were manifestly wrong – held: the earnings figure of $1,665 was wrong, and the Certificate figure of $2,470 should have been used under s. 11(1), though this did not affect the final award; the remittance figure of $340 per month was acceptable, and the trial judge's deduction of $90 for watches, a television and a tape recorder should not have been made, as such items could properly be regarded as necessaries for retired, aging parents. Outcome: appeal allowed; judgment for the appellant at HK$340 per month over seven years' purchase, totaling HK$28,560.00.
Legal issues: Whether the contract of service was unlawful but not illegal and a valid contract under the Ordinance · Whether the Ordinance creates a new and independent cause of action for dependants unaffected by illegality · Whether the trial judge wrongly refused to exercise his discretion under s. 2(2) · Whether the method of calculation of compensation was correct under s. 6(4) · Whether the findings as to the deceased's earnings and remittances were manifestly wrong
Outcome: Appeal allowed; judgment for the appellant in the sum of HK$28,560.00.