“Russian doll effect” has big impact on main contractors

27 November 2013

By Vincent Connor in Hong Kong

Now in its third year, the construction boom in Hong Kong has brought a real buzz of activity on construction sites, and also increasing attention from the Hong Kong government on health and safety.

It has led to a step up in the level of monitoring of construction sites and also a rising number of criminal prosecutions for breaches of health and safety rules.

As in many other countries, construction in Hong Kong relies heavily on chains of sub-contractors and sub-sub-contractors. As in many other countries, too, Hong Kong law requires a workplace proprietor, which includes construction contractors, to ensure the safety of its employees.

But Hong Kong goes a step further: it says that a proprietor having control and management of a construction site can be convicted for every "like offence" committed on the site by someone else.

What constitutes a "like offence" was recently decided by Hong Kong’s top court, the Court of Final Appeal (CFA), in a decision that is going to have significant effect for all main contractors in Hong Kong.

The story here started back in 2008 when two local contractors were charged in relation to accidents at two different sites. Both charges were bought because they were the main contractors who had control of the construction sites. In both cases the victims were not their employees. They were both found guilty, but they challenged their convictions in the CFA, arguing that the lower courts hadn’t properly understood that important phrase "like offence".

They asked the CFA to decide:

 

1. Whether a main contractor could be convicted of a "like offence" in relation to a person who was not his employee
2. If so, whether any defence would be available to the main contractor.

 

The CFA said yes to both questions (although it went on to acquit both contractors on a technicality).

It held that when health and safety rules are breached on a construction site, contractors are like Russian dolls, with the outermost contractor liable for a "like offence" to the one committed by its sub-contractors.

They established a simple test: if the main contractor’s business covers the business of the sub-contractor then that main contractor is also liable.

The CFA went on to say that main contractors could be convicted even where the sub-contractor was not convicted of the offence. The only way the main contractor could defend itself was to prove that the sub-contractor had not committed any offence or that the sub-contractors have done everything reasonable practicable to prevent the offence. Put plainly, main contractors have scant chance of defending themselves against such charges.

This much anticipated CFA decision has given the Hong Kong government the green light to prosecute main contractors as "proprietors" of the construction site for offences committed by their sub-contractors.

Main contractors here, who are already feeling the new zeal for prosecutions, need to be even more vigilant than ever because they have effectively been turned into the final line of responsibility for all accidents on site.

Vincent Connor is head of the Hong Kong office of law firm Pinsent Masons