Lee v. Chung ~Case Study of EU Tort Law

Outline
Fact
Legal Setting 1
Legal Setting 2
Holding
Reasons
German Legal Aspect
French Legal Aspect
Distinction between two kinds of Liabilities
The Arrangement of Legal Issues
Conclusion: Various Approaches


Fact

The plaintiff, a mason, was in charge of chiseling concrete for the defendant, a sub-contractor at a construction site. He received instructions from and used tools supplied by the defendant,while the main contractor inspected his work periodically. The defendant paid him either at a daily or piece-work rate. He also worked for other contractor from time to time, but he gave the priority to his work for the defendant. He was injured during a time when he was working for the defendant. At issue was whether he was an employee of the defendant for the purpose of Hong Kong workers compensation legislation.

Legal Setting 1

The first criterion was control, in Collins v. Hertfordshire County Council(1969), Hilbery J. wrote in the case that the distinction between the contract for service and the contract of service can be summarized in this way:

In the one side the master can order or require what is to be done, while in the other case he cannot only order or require what is to be done but how it shall be done.

-> This criterion is stressed that a high level of control by the employer, extending to the manner in which the work is done.

In Stevenson, Jordan and Harrison Ltd. v. Macdonald, Denning LJ proposed an alternative test based on the organization of the employer’s business:

Under a contract of service, a man is employed as part of business, and his work is done as an integral part of the business; whereas under a contract for services, his work , although done for business, is not integrated into it but is only accessory to it.

Legal Setting 2

In Market Investigations Ltd. v. Minister of Social Security(1969), Cooke. J. wrote that:
Is the person who has engaged himself to perform these services performing them as a person in business or his own account?The most that can be said is that control will always have to be considered, though it can no longer regarded as the sole determining factor, and the other factors have to been considered are that:

Whether does the man perform the services providing by his own equipment?
Whether does he hire his own helpers?
What degree of financial risk does he take?
What degree of responsibility for investment and management does he have?
Whether and how far does he have an opportunity of profiting from the sound management in the performance of his task?

Holding

The court of first instance found that the plaintiff was not an employee but an independent contractor and dismissed his claim. The court of appeal dismissed the appeal of the plaintiff.
The Privy Council reversed the judgment of the court of appeal and remitted the case back for further determination.

Reasons

In the present case, Lord Griffiths said that the question is to determine whether the workman as an employee or as an independent contractor. All tests, mentioned by Cooke J. in Market Investigations Ltd. Case point towards the status of an employee rather than an independent contractor. The equipment was provided by his employer. The plaintiff did not hire his own helper. The plaintiff explained that he gave priority to the defendant’s work and if asked by the defendant 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 contract by hiring others to fulfill the contract he had to leave. The plaintiff had no responsibility for investment or management of the work on the construction site. It was true that he was not supervised in his work, while he was a skilled man and was simply told what to do and left to get on.


German Legal Aspect

According to §831 BGB, the employee is a subordinate who is dependent on the instructions of the employer, unless employed commercial representatives because of their autonomy. Even independent contractors and traders can be included if they are dependent on the instructions of the employer.

-> The standard of deciding who is employee in terms of existing instructions cannot be directly used in the present case, since in this case what shall be decided is that whether he was an employee of the defendant for the purpose of Hong Kong workers compensation legislation.
Pursuant to § 3 Liability Act, holding the operator liable if, in the operating of a mine, a quarry, a factory, or during excavation, damage occurs as a consequence of a fault of a person in charge. The operator does not have the defences of §831.

-> Also, this rule cannot be directly applied for the same reason mentioned above.



French Legal Aspect

Article 1384 al. 5 creates a strict liability regime for situations in which someone carries out activities as someone else’s subordinate.

A contract between the two is not required. While, the employer-employee relationship has to be real and cannot result from a situation of pure appearance. Also, in the present case, the question is whether the plaintiff was the employee of the defendant for purpose of Hong Kong workers compensation legislation, not as regard the vicarious liability of employer. Hence, we cannot directly use the French model to decide whether the employer-employee relationship existed .

Distinction between two kinds of liabilities

Basically, in terms of England law, the employer is only vicariously liable for a tort of an employee and not for a tort of an independent contractor. However, the employer can be liable for a tort committed by an independent contractor if he has authorized it. What is decisive is the level of independence with which the work is carried out, who determines the working hours,and who has control over the work.While, the level mentioned above is to be used in the
circumstances of imposing the vicarious liability on the employer for the injury of the third party caused by the employee, in the present case, what we have to solve is that whether the employer-employee relationship existed for purpose of compensating the worker who was injured during his working time. Hence, there is a distinction between the two kinds of liability.
In this case, can we use the same standard to judge whether there was an employer-employee relationship between the plaintiff and the defendant?


The Arrangement of Legal Issues

In Imperial Chemical Industries Ltd v. Shatwell (1965), Lord Pearce expressed the rationale of the employer’s liability for damage caused by his employee. He said that the doctrine of vicarious liability has grown from social convenience and rough justice. The master having employed the servant, and being better able to make good damage which may occasionally result from the arrangement, is answerable to the world at large for all the torts committed by his servant within the scope of it. Hence, it is based on the concern of risk, instead of fault.
Initially, these rules were designed to protect the claimant against the employee’s insolvency.
However, the discussion has shifted to the protection of employee. The basic idea is that it is considered to be unfair to let an employee pay for the damage he causes while carrying out activities for the benefit of the employer.

-> Hence, could the same reason be used to support that in the present case the plaintiff shall get the compensation since he did injure because of working for defendant?

Conclusion: Various Approaches

In the present case, it is incorrect to use the same standard to judge whether there was the employer-employee relationship. In terms of traditional test, there is no obvious control of work between the plaintiff and the defendant, though the requirement of instruction given by the master do not have to be detailed.

-> This is the approach of fault since who has the power, and who shall has the duty.

In position of protecting the employee, maybe we can support the employee because he injured during his working time for the benefit of the employer. Since the employer had been imposed on the vicarious liability for damages caused by his employee, the more serious liability he had borne, the less serious of his employee’s injury he should compensate.

-> This is the approach of risk, since who profits from the activities, who shall bear the loss from the same object.

However, as Dam said in his book, work relations are getting more flexible, non-core business activities are being outsourced to other companies, and more people work on a freelance basis. This has complicated the distinction between employees and independent contractors.
Also as Drucker said, companies or businessman tend to concentrate on the core business activities they excel than others to gain more profits, since the development of communication and transportation makes it possible for corporations to outsource the non-core business activities to other companies or businessmen.

Thus, in the present case we cannot treat the plaintiff as the defendant’s employee, since the plaintiff was not the staff of the dependant and he only worked for himself , and also because this result is too surprising for employer, compared with the way of the real commercial society.

-> This is the approach of Law and Management, and the judiciary shall make a balance between the law in book and the rule in action.

And we can get evidence from several legal systems that the business customs are usually prior than the statutes in commercial deals. While considering that the enterprise shall bear its social responsibility, it is clear that the defendant shall treat the plaintiff as its employee, then compensate the plaintiff’s loss if there is a huge difference of capital between the two.

Finally, I would like to point out that the plaintiff was an independent contractor according to the analysis of Chinese culture and society. The background of this case we should bear in mind is that it occurred in Hong Kong, was ever the colony of UK, but maintained their old living style of Chinese way. Thus, I personally support the decisions of the first instance and the appeal of court since they also concerned the commercial customs of Chinese society.