KEI SIU HUNG v. CAF SECURITIES CO LTD

HCLA 39/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 39 OF 2008

(On appeal from Labour Tribunal Claim No. LBTC 1238 of 2008)

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D E C I S I O N

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Introduction

1.  This is the Claimant’s application for leave to appeal against the decision of the Presiding Officer dismissing his claim against the Defendant for annual leave pay, statutory holiday pay, salaries and damages.  The proceedings in the Labour Tribunal were conducted in Chinese.  However, the Claimant’s application for leave to appealfiled by the Claimant while still acting in person is in English and the Claimant was legally represented by counsel at the hearing of the application.  Accordingly, I adopt English as the language for the present proceeding.

2.  The Defendant carried on business dealing in securities.  It engaged sales representatives.  Some of the sales representatives, or account executives as they were usually called, were employed as employees under a Contract of Employment (僱傭合約) with basic salary and the usual entitlements to annual leave and statutory holidays, while some were employed under a Sales Representative Agreement (營業代表合約) without any such benefits.  The Claimant was employed under such a Sales Representative Agreement. He was never given any annual leave or statutory holiday.  His income was solely derived from the commission generated by transactions he introduced to the Defendant.  The Presiding Officer rightly identified the issue in dispute as whether the Claimant was employed under a contract of employment or under a contract for services.  He found that the Claimant was not employed under a contract of employment but under a contract for services.  Accordingly, he dismissed the Claimant’s claim.  The Claimant now seeks leave to appeal against that decision.

Grounds of appeal and some relevant legal principles

3.  The following is a summary of the Claimant’s grounds of appeal against the decision of the Presiding Officer:

(1)  the Presiding Officer failed to give any or any sufficient weight to the true intention of the parties as evidenced by the fact including that the Defendant (a) purchased employee insurance for the Claimant; (b) contributed in the capacity of an employer to the Mandatory Provident Fund of the Claimant; and (c) treated the remuneration paid to the Claimant as salaries;

(2)  the Presiding Officer erred in holding that the actual economic relationship between the parties was a more important factor in determining the relationship between the parties;

(3)  the Presiding Officer erred in holding that the nature, practice and customs for the employment of staff in the securities industry did not assist the Tribunal in determining the relationship between the parties;

(4)  the Presiding Officer failed to give any or any sufficient weight to his own finding that the Defendant provided most of the necessary equipment for the work of the Claimant;

(5)  the Presiding Officer failed to give any or any sufficient consideration to the fact that the Claimant had not obtained a business registration certificate while working for the Defendant;

(6)  the Presiding Officer erred in holding that the Claimant had employed an assistant, namely his brother, by his own in that the Presiding Officer failed to give any or any sufficient consideration to the fact that his brother had no direct employment or any contractual relationship with the Claimant in regard to the work for the Defendant;

(7)  the Presiding Officer erred in holding that an agreed high percentage of return to the Claimant supported a non-employment relationship between the parties in particular the Presiding Officer failed to give any or any sufficient regard to the practice in the field of securities brokers;

(8)  the Presiding Officer failed to give any or any sufficient weight to the following indicia: the control exercised by the Defendant over the Claimant, the non-involvement by the Claimant in the investment of the Defendant’s business, the Defendant’s power in determining the fees charged by the Defendant to clients and that the Claimant provided his skill and labour in return for a percentage of the commission fixed and received by the Defendant; and

(9)  the Presiding Officer erred in not holding that the reasonable conclusion should be the existence of an employment relationship between the parties.

4.  In essence, all those grounds of appeal are merely attacks on the finding of fact by the Presiding Officer framed as error of law.  The appeal is an appeal against the finding of basic fact and inference drawn from those finding of fact by the Presiding Officer that the true nature of the contract between the parties was a contract for services and not a contract of employment.  Section 32 of the Labour Tribunal Ordinance provides that a party may only apply for leave to appeal to the Court of First Instance on the ground that the award or determination of the Labour Tribunal is erroneous in point of law or outside the jurisdiction of the tribunal.  It is not permissible to appeal against the finding of fact of the Labour Tribunal unless the determination is based on a finding of fact or inference from those facts which is perverse or irrational, or where there is no evidence to support the decision or where the decision was made by reference to irrelevant factors or without regard to relevant factors.  In an appeal on law only, the appellate court must bear in mind what scope the circumstances provide for reasonable minds to differ as to the conclusion to be drawn from the primary facts found.  If the conclusion found by the fact-finding tribunal is reasonable, that is one which is within the scope for reasonable minds to differ, the appellate court cannot disturb that conclusion, even if its own preference is for a contrary conclusion.  But if the appellate court regards the contrary conclusion as the true and only reasonable one, the appellate court is duty-bound to substitute the contrary conclusion for the one reached by the fact-finding tribunal: per Bokhary PJ in Kwong Mile Services Limited And Commissioner of Inland Revenue [2004] 3 HKLRD 168 and adopted in Guido Ferrando and Hua Dao Shipping (Far East) Limited, HCLA 44 of 2007.

Discussion

5.  In his long and detailed reasons for decision, the Presiding Officer set out in detail the case of the Claimant and the case of the Defendant.  He identified all the indicia consistent with a contract of employment in favour of the Claimant and all the indicia consistent with a contract for services in favour of the Defendant.  I do not find it necessary to repeat his finding.  He also quoted the relevant provisions in the Claimant’s Sales Representative Agreement which provided (1) that the Claimant shall be remunerated from commission derived from settled transactions which he introduced to the Defendant and (2) that the Claimant shall be liable to make good and indemnify the Defendant of any loss caused to the Defendant as a result of overtrading of the Claimant’s clients, fraudulent trading by the Claimant, closing out of the Claimant’s clients’ unsettled transactions and falsification of accounts by the Claimant.  He considered all those indicia.  He took the view that the actual economic relationship between the parties carried more weight in determination of the nature of their contractual relationship.  He adopted the approach set down by the Court of Final Appeal in Poon Chau-name v Yim Siu-cheung [2007] 1 HKLRD 951 and formed a global view that the Claimant was employed under a contract for services and not a contract of employment.

6.  Having read the detailed reasons for decision of the Presiding Officer, I am satisfied that the Presiding Officer had considered all those factors or indicia before he made his finding of basic fact and drew his conclusion.  What weight the Presiding Officer gave to the individual factor is one solely for the Presiding Officer.  It was up to the Presiding Officer in his mental process to decide what weight to give to each factor and then form a global view as to the nature of the relationship between the parties.  There is nothing wrong for the Presiding Officer to give more weight to some of the factors and less to others.  So long as there is evidence on which the Presiding Officer may find those basic facts and that the conclusion drawn from those basic facts is a reasonable one, that is one which is within the scope for reasonable minds to differ, I cannot interfere with his conclusion.  Indeed, I agree with the conclusion reached by the Presiding Officer. 

7.  I now turn to some specific grounds of appeal.  Under Ground (1), the Claimant alleges that the Presiding Officer failed to give any or any sufficient weight to the true the intention of the parties.  According to the Claimant he intended his contract with the Defendant to be a contract of employment whereas according to the Defendant the intention was to be a contract for services.  In fact, the Presiding Officer has considered the intention of the parties but he rejected the Claimant’s evidence as being incredible: see paragraph 48 of the Presiding Officer’s reasons for decision.  That was a finding of fact which was well supported by the evidence.  The Claimant had operated a business before joining the Defendant.  It lied ill in his mouth to say that for all the years when he worked with the Defendant he thought he was an employee but never claimed any paid annual leave and statutory holidays because he did not realise that he was entitled to.  Finding of credibility is a matter for the fact-finding tribunal which the appellate court may not intervene. 

8.  Under Grounds (3) and (6), the Claimant alleges that the Presiding Officer erred in holding that the nature, practice and custom for the employment of staff in the securities industry did not assist the Labour Tribunal in determining the nature of the relationship between the parties.  Indeed, there was no dispute that in the industry, sales representatives or account executives were engaged either as employees or as self-employed representatives.  There was no evidence of a consistent or common practice in favour of a contract of employment.  Accordingly, the Presiding Officer was entitled to hold, as he did, that the practice and custom in the industry was of little assistance and hence place no weight on such practice and custom.

9.  The Claimant alleges in Ground (6) that the Presiding Officer erred in holding that the Claimant had employed an assistant on his own because the Presiding Officer failed to give any or any sufficient consideration to the fact that the assistant had no direct employment or contractual relationship with the Claimant in regard to the work for the Defendant.  There was no dispute that the Claimant entered into an arrangement with the Defendant under the Business Development Allowance Application (業務發展津貼申請) whereby the Claimant’s brother was engaged to assist the Claimant in developing the Defendant’s business in the People’s Republic of China (“PRC”) and be paid all the first $10,000 commission received from the business derived from the PRC.  50% of that commission would otherwise have been paid to the Claimant under clause 2 of his Sales Representative Agreement.  The Presiding Officer therefore found that effectively the Claimant contributed to half of the cost of the Defendant’s engagement of his assistant, which the Presiding Officer held was unusual and contrary to the interest of someone employed under a contract of employment.  It appeared that the Presiding Officer did not place much weight on that finding.  That was to the advantage of the Claimant and could hardly be a cause of complaint.  There is no substance in this ground of appeal.

Conclusion

10.  In conclusion, this appeal is an appeal against the finding of basic fact and inference drawn from those finding of fact which is framed as error of law.  I am satisfied that the finding of fact was well supported by the evidence and the inference that the true nature of the agreement between the Claimant and Defendant was a contract for services was a reasonable and proper one to be drawn in the circumstances.  I am unable to draw as the only reasonable conclusion that the true nature of their agreement was a contract for services.  There is no error of law made by the Presiding Officer.  The Claimant’s application for leave to appeal must therefore be refused.