Chan Wai Keung v. Li Yau Hing and Another

DCEC 1232/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1232 OF 2010

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JUDGMENT

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1.The applicant claims against the 1^st and 2^nd respondents for compensation under sections 9, 10 and 10A of the Employees’ Compensation Ordinance Cap 282 (“the Ordinance”) for injuries sustained in the course of and arising out of the employment with the 1^st and 2^nd Respondents on 8 October 2009.

2.The 2^nd respondent and his wife are the registered joint owners of a property known as House 55B, Tai Wo Village, Kam Tin, New Territories (“the premises”). 

3.According to the applicant, he was instructed by the 1^st respondent to work at the premises on 8 October 2009.  It is his case that the 1^st respondent was the sub-contractor of the 2^nd respondent for the plastering work at the premises, or alternatively, the 2^nd respondent was the owner and main contractor or the direct employer of the applicant to carry out plastering work at the premises.  Further alternatively, the 1^st respondent who was the main contractor of the plastering work was the employer of the applicant at the premises on 8 October 2009.

4.Both the 1^st and 2^nd respondents denied they were the employers of the applicant on 8 October 2009.  The 1^st respondent further denied the applicant had an accident in the course of employment on 8 October 2009, while the 2^nd respondent admitted the applicant had an accident at the premises, he denied he was the applicant’s employer.

5.The 1^st respondent further claimed he was a mere introducer of plasterers to the 2^nd respondent for the work at the premises.  He claimed the applicant was directly employed by the 2^nd respondent.

6.The 2^nd respondent maintained the applicant was a direct employee of the 1^st respondent or an agent or representative of the 1^st respondent or a sub-contractor of the 1^st respondent for the plastering work.

7.The issues in dispute are:-

(a)  Whether the applicant encountered an accident on 8 October 2009?

(b)   Whether the applicant suffered personal injuries in the course of and/or arising out of the employment in the accident?

(c)  If so, what is the respective capacity of the 1^st and 2^nd respondents on 8 October 2009?

(d)   Quantum of damages, if applicable.

The applicant’s evidence

8.The applicant, Mr Chan (“Mr Chan”), had been a plasterer since 1966.  Between 1966 and 1970, he worked as a plasterer’s apprentice and acquired the necessary skills of a master plasterer.  He had been engaged in the same trade for over 30 years employed by various sub-contractors on a casual basis.  He denied he had ever worked as a self-employed plasterer.

9.Mr Chan said the daily wage of a plasterer like him in 2009 was $800 per day.  Prior to 8 October 2009, he claimed he was working 6 days a week for 26 days a month, earning $20,800 per month in wages. As a casual worker, he received his wages in cash and did not deposit his wages into a bank account.

10.On 6 or 7 October 2009, he received a call from the 1^st respondent, Li Yau Hing (“Mr Li”), who asked him to take up plastering work for him on 8 October 2009 at $800 per day.  They agreed to meet at a restaurant in Tai Po, New Territories on the morning of 8 October 2009 together with another plasterer Mr Chan Chi Wing before setting off to the premises.

11.After breakfast at the restaurant, Mr Li took Mr Chan and co-worker Mr Chan Chi Wing (“Ah Wing”) to meet up with the 2^nd respondent, Mr Ling Kam Hung (“Mr Ling”).  Mr Li instructed Mr Chan and Ah Wing to board Mr Ling’s car, he told them he would not be joining them at the work site.

12.Upon arrival at the premises which is a two storey house with a front garden fenced by a concrete and brick parapet wall, Mr Ling told them the plastering work required was on the inside of the wall fencing the garden and the house.  The wall was 2 meters high and 150 mm thick.

13.After Mr Chan and Ah Wing told Mr Ling the work on the parapet wall would require 5 to 6 days of work by the two of them, they commenced working on the wall.  As experienced plasterers, they had brought with them their own palette and trowel, but they had looked to Mr Ling for other tools such as ladders and scaffolding materials and equipments for the work to be completed in the absence of Mr Li.  Mr Ling showed them where they could find wooden ladders and planks at a shed in the premises.  They erected a trestle scaffold working platform with wooden planks and ladders found at the shed and worked on the top of the wall.

14.At about 1:30 pm to 2 pm when Mr Chan was working on the 0.6 m high trestle scaffold platform, the wooden plank he was standing on suddenly broke causing him to fall to the ground.  As a result of the fall, he sustained a sprain on his right foot and crashed onto the ground.

15.He was later taken to the North District Hospital for treatment.  His right foot was found to have sustained a fracture.  He received an operation and was hospitalised until he was discharged on 20 October 2009.  He later received physiotherapy and occupational therapy treatments.

16.Mr Chan claimed that in spite of the treatments, he would suffer from right heel pain if he walked or stood for over 1 hour, he would feel stiff and numb in his right foot and occasional cramps in his right leg and he could not squat.  He could no longer climb up scaffolds or carry weight.  He was given sick leave from 8 October 2009 to 18 October 2010, a total of 376 days.  He returned to work as a plasterer after the expiry of his sick leave, but as he could no longer take up heavy duty work his income suffered due to the reduction of work.  He now works as a security guard.

The 1^st respondent’s evidence

17.It is the evidence of Mr Li that he had taken up indoor plastering work at the premises for Mr Ling in April 2009.  He claimed when Mr Ling asked him to work on the garden wall, he had turned it down because he preferred to work indoors but agreed to introduce workers to Mr Ling.

18.On 7 October 2009, he told Mr Ling he would be introducing two workers to him and that their daily wage would be $800 each. He claimed he had told Mr Ling the two workers would give him an estimate of the number of man days required for the job.

19.After he met Mr Chan and Ah Wing for breakfast on 8 October 2009, he took them to Mr Ling’s car and told Mr Ling to pay their wages directly to them.  He maintained he did not gain any benefits from the introduction because he was a mere introducer not an employer or contractor.

The 2^nd respondent’s evidence

20.Mr Ling told the court that he and his wife purchased the premises in 2007 as a retirement home.  He had paid for it with a mortgage because he did not have enough cash to pay the purchase price of $300,000 and he had to save up to pay for the renovation work.

21.In or about April or June 2009, he obtained a quotation from Mr Li to do the interior tiling work on the two bathrooms, kitchen and the floor of the house at $23,400 based on an estimate of 13 man days at $800 per day.  Mr Li sent 5 to 6 workers over a total of 10 days to carry out the work. Mr Ling claimed that though only 10 man days were involved and Mr Li had visited the premises only twice, he was charged the full $23,500 for the work.  He admitted his brother-in-law had already done some work on the garden wall before he contacted Mr Li.

22.In early October 2009, he called Mr Li and asked him to take up the garden wall plastering work.  On 7 October 2009, Mr Li called him back to inform him he would send two workers to the premises to do the work at a wage of $800 per day not inclusive of materials.

23.Mr Ling said he met Mr Li and the two workers he brought with him at the Tai Po train station.  He was told by Mr Li to take the two workers to the premises and they would tell him the number of days and costs required to complete the plastering work.  At the premises, the two workers told him it would take the two of them 5 days to finish the work.  He accepted their estimate and they started working on the garden wall.

24.Mr Ling claimed that he showed the two workers the equipments left behind by Mr Li and they found further equipments to erect the working platform from the shed where his brother-in-law had stored planks and ladders. When he saw the trestle platform erected by Mr Chan and Ah Wing, he told them to place a few more wooden planks on the platform to strengthen it, but they ignored his warning.  He assumed they were experienced plasters and knew what they were doing, he therefore left them to their work.

25.He said he heard a scream sometime after 1 pm and discovered the applicant Mr Chan had an accident.  He then arranged for Mr Chan to be taken to North District Hospital for treatment.  The other worker Ah Wing carried on working at the garden wall until 5 pm, but failed to return the next day to finish the work.  When he called Mr Li about the work, he was told by Mr Li that he would send workers to complete the job.  However, Mr Li called him later on and told him the applicant Mr Chan was still in hospital and said to him he had no further part to play.  Mr Ling said Mr Li had failed to return to the premises to pick up his tools or send any workers to finish the job.

26.Mr Ling denied he was a main contractor or direct employer of the applicant.  He claimed he had contracted with Mr Li for the work to be done, he took no part in hiring workers and did not know if Mr Li sub-contracted out the work.  He further said Mr Chan and Ah Wing had used the tools left by Mr Li to work on the garden wall on 8 October 2009.

Discussion

(a) Whether the applicant encountered an accident on 8 October 2009?

27.Based on the evidence of the applicant Mr Chan, Mr Ling and the medical reports of the North District Hospital, it is clear Mr Chan did have an accident and fractured his right ankle calcaneum on 8 October 2009.

(b) Whether the applicant suffered personal injuries in the course of employment in the accident?

28.According to the evidence of Mr Chan and Mr Ling, supported by the record of the medical reports of the North District Hospital Accident and Emergency Department and Department of Orthopaedics and Traumatogy, Mr Chan did suffer personal injuries in the course of employment.

(c) What is the respective capacity of the 1^st and 2^nd respondents on 8 October 2009?

29.The applicant’s counsel, Mr Lau, submitted that both the 1^st and 2^nd respondents jointly or concurrently employed the applicant to work on 8 October 2009.  That the 1^st respondent Mr Li was not a mere introducer but a contractor of the plastering work and the 2^nd respondent was not a mere house owner contracting out plastering work, he was a main contractor.

30.The law on whether a person was in business on his own or an employed person is set out in the CFA case of Poon Chau Nam v Yim Siu Cheung t/a Yat Cheung Air Conditioning & Electric Co [2007] 10 HKCFAR 156.  At para 17-18 of the CFA judgment (p 166 of the HKCFAR report vol 10), Ribeiro PJ held:-

“17.     The other influential first instance decision is that of Cooke J in Market Investigations Ltd v Minister of Social Security.  It earned the Privy Council’s accolade in Lee Ting Sang v Chung Chi Keung, where Lord Griffiths stated that their Lordships “agree 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 that: ‘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 the 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.”

18.       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 check list 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 an 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.”

31.The factors to be considered to identify a contract of employment is summarised at para 39-010 of Chitty on Contracts vol 31 pages 1083-1084:-

“The factors to be considered. The case law suggests that the factors relevant to the process of identifying a contract of employment may usefully be listed as follows:

(1)    The degree of control exercised by the employer;

(2)    whether the worker’s interest in the relationship involved any prospect of profit or risk of loss;

(3)   whether the worker was properly regarded as part of the employer’s organisation;

(4)   whether the worker was carrying on business on his own account or carrying on the business of the employer;

(5)   the provision of equipment;

(6)   the incidence of tax and national insurance;

(7)   the parties’ own view of their relationship;

(8)   the structure of the trade or profession concerned and the arrangements within it.

These and other aspects of the relationship that have been regarded as important to the task of classification are considered in the following paragraphs.  Valuable guidance about the way classification should be approached is provided by the judgments of the Privy Council in the case of Lee Ting Sang v Chung Chi Keung and of the Court of Appeal in Hall (Inspector of Taxes) v Lorimer.”

32.There is no doubt in my mind Mr Chan was employed together with Ah Wing to do the plastering job at the premises.  Mr Li admitted in his cross-examination that Mr Chan was employed to do the work（『打工』）.  Mr Chan said in all his 30 odd years as a plasterer, he was employed as a casual labourer.  Even though as a master plasterer he would bring along his own trowel and palette, the employer would supply all other equipments and materials.  These included sand, concrete, paint, mosaic tiles, buckets, ladders, scaffolds and working platforms etc.  His work was arranged for him and he would only be paid a daily wage.

33.As to who was his employer, one would look at the same criteria including: (1) who controlled the work? (2) who would profit from the work besides the worker? (3) Who was carrying on the work as a business? (4) Who provided the equipments? (5) who was responsible for taking out insurance? (6) The parties’ own view of their relationship; (7) the structure of the trade and arrangements within it, etc.

34.According to the evidence of Mr Ling, he renovated the premises on a piece-meal basis because he did not have sufficient funding to pay for it in one go.  That was why after he purchased the premises in 2007, it was not until April 2009 that he engaged Mr Li to do the floor tiling and the tiling of the two bathrooms and kitchen.  He had asked Mr Li to take up the garden wall tiling work at the time but Mr Li had other more urgent plastering work to do after the indoor tiling work completed.  He said, during work on the bathrooms and kitchen, Mr Li had only come to the premises twice to inspect the work progress.  Mr Li left his own tools and equipments including his own trowel (with his surname inscribed), cement bucket, electric drill and cutter etc, these can be seen in the two photographs produced by Mr Ling (p 188 of the bundle).  Mr Ling also produced Mr Li’s name card showing that he had been trading as Hing May Plastering Engineering（興美泥水工程）, with his address, telephone numbers and the kind of work he specialised in printed on the card.  These are factors indicating Mr Li held himself out as a plastering contractor.

35.The evidence of Mr Chan also supported his claim that he was employed by Mr Li to carry out plastering work at the premises on 8 October 2009.  It was Mr Li who arranged the work for him, even though he may be told by Mr Li he would be paid by Mr Ling directly.  The daily wage of $800 was also arranged by Mr Li for Mr Chan and Ah Wing.  He said he looked to Mr Li for payment and work arrangements.  He admitted he had ignored Mr Ling’s suggestion to add another wooden plank on the trestle platform and told him not to interfere with his work.  This showed at the time, he did not regard Mr Ling as his employer.

36.On the aforesaid basis, I am satisfied Mr Chan was employed by Mr Li, not by Mr Ling.  Mr Ling had contracted Mr Li to do the indoor plastering work in April 2009, he expected Mr Li to also take up the garden wall plastering but had allowed Mr Li to delay the work to a later date because the premises was not his usual residence and he had limited funds.  He had also waited for Mr Li to finish the work that his brother-in-law partly finished for him on the garden wall.  He admitted he had not done any work on the house himself.  That was why he called up Mr Li when no one turned up to work on the day after the accident. 

37.Mr Ling was not in the plastering or construction trade, I find he was not the main contractor of the work on his own property as defined in S 24 of the Employees’ Compensation, it provides that:-

“24. Liability in case of employees employed by sub-contractors

(1)   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 sub-contractor for the execution by or under the sub-contractor of the whole or any part of any work undertaken by the principal contractor, the principal contractor shall be liable to pay to any employee employed by that sub-contractor or by any other sub-contractor 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 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.”

38.Applying the CFA case of Poon Hau Kei v Hsin Chong Construction Co. Ltd. Taylor Woodrow International Ltd Joint Venture [2000] 1 HKC342, I am satisfied Mr Ling was the owner of the property, not a main contractor, he did not act as his own principal contractor on the work on the house owned by him.

Quantum

The applicant’s earnings

39.The 2^nd respondent do not challenge the 8-10% loss of earning capacity suggested by the orthopaedics expert Dr Wong See Hoi, while the 1^st respondent simply denied any liability at all.

40.It is not disputed by the parties that the Medical Assessment Board’s review assessment of Mr Chan’s injuries suffered remained at 5% loss of earning capacity.  Mr Chan is appealing against the review assessment of 5% (p 60-63 of bundle).

41.I notice from the occupational therapist’s report of 15 December 2010 that after 4½ months of therapy that Mr Chan could perform a full squat as oppose to half squat and his bilateral arm lift strength and bilateral carrying strength both improved from 17 kg to 35kg.  His bilateral pushing and pulling strength had also greatly improved.

42.According to Dr Wong’s report 18 October 2011, Mr Chan admitted to Dr Wong he had a right leg injury in  July 2010 after a slip and fall accident in the street.  As a result of the fall, his proximal fibula of the right leg was factured.  Though the facture was not directly related to the accident on 8 October 2009, it was possibly because in July 2010, his right ankle was still weak and unstable that he slipped and fell.  In Dr Wong’s opinion, the prognosis of recovery of the right fibula fracture would lengthen the overall recovery of Mr Chan’s right ankle.

43.In Dr Wong’s opinion (paras 30 and 32 of the report) because Mr Chan’s right calcaneum fracture was fixed by the implant of plant and screw, they were palpable.  His right calf circumference was 1 cm smaller than his left calf was disuse atrophy due to pain.  Dr Wong considered that the removal of the implant should reduce the irritation over the surrounding area of the implant and re-fracture over the stressed area between the screw and bones.  He also opined that the pain on Mr Chan’s right thigh is not related to the accident.

44.Dr Wong said in his report that Mr Chan would expect to have residual pain especially when walking on uneven grounds, frequent climbing up and down lifting heavy weight and prolonged walking or standing.

45.On the day of the examination by Dr Wong in October 2011, Mr Chan was said to have walked with a limping gait, but he was able to walk on tip-toes and heels, did single leg stand though with less steadiness on his right leg and he could half squat without support.  Mr Chan could manage his daily living activities and in Dr Wong’s opinion, jobs such as gas station attendant or watchman would be more suitable due to his inability to climb scaffoldings and carry heavy weights.

46.On the basis of Dr Wong’s report, I accept Mr Chan’s loss of earning capacity is 10%.

47.Mr Chan returned to work as a plasterer after the expiry of sick leave, but he found he was not given much work as before and therefore could not earn the same monthly income as before.  His work efficiency deteriorated because he was not able to lift heavy bags of cement and sand or climb up and down scaffoldings.  Under cross-examination, he admitted it was his own assumption when he said the contractor he used to work for, Mr Yau, did not give him work because he was slow and Mr Yau had only told him he did not have enough work for him.  He said he stopped working for Mr Yau after January 2012.

48.Mr Chan further admitted that he made $140,580 when he was working full time for Wui Po Construction Transportation Company in the tax year 1 April 2006 to 31 March 2007.  In 2007/2008, he said he had a small income, he therefore did not report his income to the IRD, while in the tax year 2008/09, he reported an income of under $30,000.  The documentary evidence from IRD is clearly inconsistent with Mr Chan’s claim that he was making $20,800 per month at the time of the accident.

49.Mr Chan admitted he has now been trained to work as a security guard, and he wanted to work in that field in future since his condition after the injury no longer allowed him to work as a plasterer.  He admitted he has been working as a security guard since 6 October 2012 at $7,800 per month.

50.Mr Chan’s annual income while working as a general construction site worker（雜工）was $140,580, in the previous 2 years, his reported income was $76,200 in 2004/05 and $65,150 in 2005/06 working for the same company Wui Po Construction.  Mr Chan claimed he did not report his income in the tax return to the IRD when he was working for various plastering contractor in 2008 as a casual labourer at $800 per day.

51.Mr Chan claimed he was working 25 to 26 days earning $20,800 a month prior to the accident, but he was not able to produce any documents in support of this claim.  I have doubts if he was really fully employed before the accident as a casual labourer when he had to rely on different contractors for work instead of working full time for a single employer like Wui Po Construction in 2004 to 2007. 

52.Mr Chan admitted he was earning $140,580 annually in 2006/07 for Wui Po Construction when the daily wage of a plasterer was $650.  He also admitted he was discharged by Wui Po in 2008 and he began taking up work for various contractors after that.  If he was capable of earning a $650 daily wage in 2006/07 working 26 days a month, he would not have stayed in the employ of Wui Po for $140,580 per year.  It is unrealistic for a casual labourer working on construction sites like Mr Chan who had to rely on a number of contractors to employ him to be fully engaged for 26 days in a month.  Like the engagement from Mr Li, he would be asked to take up work for 4-5 days at a time, he would then have to wait for the next job to come up from another sub-contractor.  On this basis, I assess his monthly earnings at $800 per day for 20 days a month in 2009, ie $16,000 per month.

53.Mr Chan also admitted he had returned to work as a plasterer after the expiry of sick leave.  On the basis that he had only started work as a security guard 10 days before the trial, and he may return to work as a plasterer when his health condition improves, the Hong Kong Paper Mill formula is not applicable.

S 9

54.Mr Chan was 57 at the time of assessment, the S 9 compensation is $16,000 x 48 x 10% = $76,800.

S 10

55.Mr Chan was given 376 days of sick leave from 8 October 2009 to 18 October 2010, the sick leave payment is:-

$16,000/30 x 376 x 4/5 = $160,426.67

S 10A medical expenses

56.The applicant’s claim of $3,180 medical expenses is not disputed.  I allow this sum.

Summary

57.

Interests

58.Interests at half judgment rate from date of writ to date of judgment, thereafter at full judgment rate until full payment.

Costs

59.Cost order:-

Cost order nisi to the applicant to be borne by the 1^st respondent to be taxed if not agreed.  There will be no orders of costs of the 2^nd respondent.  The Applicant and the 1^st and 2^nd respondents’ own costs to be taxed in accordance with the Legal Aid regulations.

60.Finally, I wish to thank counsel for the assistance rendered to the court in this case.

Mr Steven Lau, instructed by KW Luk & Co, assigned by Director of Legal Aid, for the applicant

Mr Bowie Yip, instructed by Cham & Co, assigned by Director of Legal Aid, for the 1^st respondent

Mr Gary KH Chung, instructed by Cheng, Yeung & Co, assigned by Director of Legal Aid, for the 2^nd respondent