26 August, 2016
The Lam Pak Keung Case
The recent decision of the Court of Appeal (CoA), in the case of Lam Pak Keung v Ip Tsz Keung & Others (the Lam Pak Keung case) [CACV 151/2015] serves as a useful reminder that businesses cannot avoid liability for health and safety in the workplace by engaging workers as contractors rather than employees.
Duties to Contractors
It is well established that a business that engages independent contractors to perform work on their premises has a statutory duty (as an occupier) to ensure the physical safety of the premises. However, that duty is more limited than the statutory duty that an employer owes to its employees, for whom it must also provide a safe system of work.
In the Lam Pak Keung case, the CoA confirmed that in some cases a business may be liable in tort for injury suffered by an independent contractor (or the employee of a sub-contractor) arising out of an unsafe system of work where the business is aware that that the system of work adopted is unsafe and fails to implement reasonable measures to ensure that safety concerns are addressed.
The Background
The plaintiff (LK) was a manual labourer employed by the second defendant (Chan) to perform loading and unloading work on a freight terminal. The terminal was leased to a logistics business (Lucky Guy), but the bulk of those operations were subcontracted to Chan, who had also sub-leased part of the terminal and operational equipment, including forklift trucks, from Lucky Guy.
A dispute arose after LK was injured at work when he was hit by a forklift truck operated by another of Chan's employees. The Court of First Instance found both the forklift operator and LK's employer were liable in negligence for LK's injury. However, Chan was uninsured and neither he nor the forklift operator had the means to pay damages to LK. LK therefore also brought a claim against Lucky Guy.
The Duty of Care: Unlucky Guy
The Court at both levels found that Lucky Guy had a duty of care to LK (and other employees of Chan who were working at the terminal) and that Lucky Guy was liable in negligence for breach of that duty. In this case, the duty arose because the arrangements under which LK performed work at the terminal created a "sufficient degree of proximity" between Lucky Guy and LK. In particular, the court was satisfied that Lucky Guy maintained control over Chan's employees, because:
- Lucky Guy maintained a significant presence at the terminal where the work was done and had a CCTV feed by which Lucky Guy's employees could monitor activities;
- Lucky Guy's employees provided supervision and issued instructions to Chan's employees from time to time – Chan himself was rarely at the terminal;
- Lucky Guy leased the fork lift equipment to Chan for use by his employee's at the terminal, eventhough Lucky Guy's employees were aware (or should have been aware) that Chan had nobody there to direct traffic, supervise and coordinate the work or to take responsibility for work safety; and
- the nature of the operations at the terminal, where forklift operators and manual labourers worked side by side in close quarters, meant that proper supervision and traffic control was necessary to mitigate the real and foreseeable risk of an accident causing injury to those working there.
Dangerous System of Work
The CoA agreed that it was "just and reasonable" to impose a duty of care on Lucky Guy and to hold Lucky Guy liable for its part in permitting the creation or continuation of a dangerous system of work at the terminal, resulting in LK's injury. In reaching this conclusion, the Court noted that there was a real probability that had Lucky Guy put in place a traffic controller to direct traffic at the terminal, then the accident would have been prevented.
Shared Responsibility: A Warning for Employers
This judgment is a reminder that responsibility for safety in the workplace is a shared responsibility. Employers and principals both play a part and may be held liable for injuries to workers under both occupational health and safety legislation and the tort of negligence. Businesses cannot simply turn a blind eye and do nothing where independent contractors used by them are engaging in unsafe work practices.
Employers should review their subcontractor arrangements and ensure that the parties have considered, and made provision for, the safety of all workers – direct employees and subcontractors alike.
For further information, please contact:
Gareth Thomas, Partner, Herbert Smith Freehills
gareth.thomas@hsf.com
