CHAN YEE LING ELAINE v. M/s CHRISTINE M. KOO & IP, SOLICITORS & NOTARIES

HCLA 6/2018

[2018] HKCFI 2670

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 6 OF 2018

(ON APPEAL FROM LABOUR TRIBUNAL
CLAIM NO 2759 OF 2011)

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DECISION

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Introduction

1.  This is the applicant’s application pursuant to section 32 of the Labour Tribunal Ordinance (Cap 25) for leave to appeal against the decision (“the Decision”) of the Presiding Officer (“the Presiding Officer”)dismissing the applicant’s claim against the defendant for various payments which the applicant claimed the defendant had failed to pay upon the termination of her working relationship with the defendant.

2.  The applicant was represented by Mr Chiu of Counsel during the two hearings before me.  The submissions filed before the Court were in English.  Those two hearings were conducted in English.  The choice to use English was that of the applicant.  I have no issue with that.  I accordingly give this Decision in English despite the fact that the hearing before the Presiding Officer was in Punti, and that her Reasons for Decision (“the Reasons”) was written in Chinese.

Relevant background

3.  The applicant is a solicitor.  The defendant is a firm of solicitors.  Between 17 January 2011 and 30 July 2011, the applicant was engaged by the defendant as a solicitor.  I used the word “engaged” neutrally.  The exact nature of that engagement is the central issue in this application before me.

4.  On 7 September 2011, the applicant filed a claim against the defendant before the Labour Tribunal for inter alia outstanding commissions, payment in lieu of notice and payment in lieu of annual leave against the defendant.  The trial took place on 27 and 28 February 2018.  The applicant gave evidence.  For the defendant, Ms Christine Koo and Mr Albert Tang were called as witnesses.  They were both partners of the defendant.  At the end of the trial, the Presiding Officer dismissed the applicant’s claim and ordered her to pay costs in the sum of HK$61,778. 

5.  The Presiding Officer handed down her Reasons on 2 March 2018.  It is a detailed document, comprising 24 pages with 76 paragraphs.  Its structure and effects may be summarized as follows:

(a)   At §2 to §5, the Presiding Officer set out the background of the claim. In particular, she pointed out at §3 that it was the defendant’s case that the applicant was not engaged as an employee but was engaged to provide service in her capacity asa self-employed person.  At §5, the Presiding Officer identifiedthe two issues involved, namely (1) whether the defendant was the applicant’s employer, and (2) if so, whether the defendant was liable to the applicant for any payment.

(b)   At §6 to §12, the Presiding Officer gave an overview of the witnesses before her and the documents adduced.  In particular,at §11, she stated her view on the applicant’s credibility as a witness.  She stated that.

「綜觀陳小姐整體的作供表現，她都有信口開河、誇張失實、選擇性作供自相矛盾的情況。陳小姐每當作供時被發現出現前言不對後語的情況，都會以她誤解或他人誤解作為掩飾。例子如下……」

The Presiding Officer then proceeded to give 10 examples.  At §12, she stated that she found the evidence of Ms Koo and Mr Tang comparatively more believable and reliable.  She accepted the case of the defendant as the factual basis of the case. 

(c)   At §13 to §19, the Presiding Officer set out in some details the applicant’s case.

(d)   At §20 to §31, the Presiding Officer set out in some details the defendant’s case.

(e)   The Presiding Officer then proceeded to analyze the case.  She concentrated upon the issue as to whether the defendant was the applicant’s employer.  She considered the law at §32 to §39.  At §37, she in particular cited Poon Chau Nam v Yim Siu Cheung trading as Yat Cheung Air Conditioning & Electric Co [2007] 1 HKLRD 951.  She set out the 8 criteria on the existence or otherwise of an employer/employee relationship, namely (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 theworker was carrying on business on his own account or carryingon 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; and (8) the traditional structure ofthe trade or profession concerned and the arrangements within it. 

(f)   The Presiding Officer then at §41 to §71 considered the evidence in the context of the criteria.

(g)   Having analyzed the evidence and considered the law, the Presiding Officer concluded at §71 that:

「本席認為文件上，例如委任信的部份用詞、報稅表及強積金供款的模式都是雙方存在僱傭關係的表徵，但是當細膩查證雙方的行為及表現時，本席認為席前有充分的證據顯示陳小姐是以自僱人士或正確來說是contract for service的方式替律師事務所工作。」

The Presiding Officer further concluded at §72 that the applicant had failed to persuade her that the applicant was an employee of the defendant. 

6.  On 9 March 2018, the applicant applied to review that Decision.  That application was refused on 17 May 2018.  In her written reasons, the Presiding Officer expressed the view that “the [applicant] sought to review every decision that was against her and put forth repetitious grounds which I have fully considered before a decision was made.”

The application for leave to appeal, and the hearings

7.  On 26 March 2018, the applicant filed her Form 14 for leave to appeal on point of law.  It was subsequently amended on 14 June 2018.  The main grounds may be summarized as follows:

(a)   the Presiding Officer erred in holding that the applicant was engaged at the material times by the defendant as an independent contractor rather than an employee;

(b)   the Presiding Officer had “committed” certain “breaches of her statutory duty to investigate and/or conduct adequate inquiry into the practice and rules governing the solicitors’ profession”;

(c)   the Presiding Officer erred in law in holding that the plaintiff bore her own financial risk because, inter alia, she chose to accept or turn down new cases and negotiated her own rates; and

(d)   the Presiding Officer’s finding that the applicant was an independent contractor was, for those and other reasons,irrational perverse and/or one which no reasonable tribunal would have reached.

8.  The application first came before me on 20 June 2018.  The applicant was, as mentioned above, represented by Mr Chiu.  He identified the sole issue in the proceedings below and in this appeal as being this, namely whether the applicant was an employee or an independent contractor providing services during the material period. He submitted that:

“ … it is at least arguable that the [Presiding Officer] erred in arriving at the determination that P was not D’s employee but an independent contractor. In particular, the [Presiding Officer] arrived at this determination without regard to relevant factors and/or without evidence, and/or that the [Presiding Officer] failedto discharge the statutory duty to investigate and such failure has given rise to injustice, in that a fair and proper determination of P’s claim cannot be attained.” (§4)

Whilst Mr Chiu made clear that he relied on each and every ground of appealset out in the amended Form 14, the focus of his written submissions was onthose grounds relating to the traditional structure of the solicitors’ profession, and on what he submitted to be:

“ the [Presiding Officer’s] complete disregard of the confirmationby the Law Society of Hong Kong (‘Law Society’) of P’s stance in these proceedings as well as the failure to consider and assess the impact of the relevant principles of the Hong Kong Solicitors’Guide to Professional Conduct (‘Guide’) and statutory provisions.” (§12)

He concluded on this focal point of his submissions at §34 that:

“ Had the [Presiding Officer] considered the above and taken theminto account before arriving at her determination, she would haveappreciated that even from the perspective of the Law Society, thestructure of the solicitors’ profession does not permit arrangements involving independent contractors working as solicitors in law firms, and that the relevant principles of the Guide and statutory provisions do not support D’s contention.”

9.  During that hearing on 20 June 2018, I raised with Mr Chiu, by way of illustration, the Solicitors (Group Practice) Rules, Cap 159X.  Rule 2(2) and (3) thereof provide that:

“ (2) In these Rules, reference to a solicitor who practises within a group practice is a reference to a solicitor who practises—

(a) as a member of a group practice;

(b) as a principal of a member firm of a group practice; or

(c) as an employee of or consultant to a member of a group practice.

(3) For the purposes of these Rules, a solicitor is a consultant to another solicitor or to a firm if he agrees to undertake for remuneration work that forms part of the practice of the other solicitor or of the firm, other than in the capacity of—

(a) an employee of the other solicitor or of the firm; or

(b) a solicitor practising on his own account or in partnership.”

10.  Those Rules clearly contemplate the existence of a class of solicitors who “undertake for remuneration work that forms part of the practice of the other solicitor or of the firm, other than in the capacity of an employee of the other solicitor or of the firm”. Mr Chiu’s submission that the structure of the solicitors’ profession does not permit arrangements involving independent contractors working as solicitors in law firms is clearly inconsistent with that.  Upon conclusion of that hearing, I adjourned the hearing to 11 July 2018 and allowed Mr Chiu liberty to carry out further research and file further submissions on that topic.

11.  On 6 July 2018, and for the purpose of the hearing to be held on 11 July 2018, Mr Chiu filed a supplemental set of submissions.  Having made reference to the Solicitors (Group Practice) Rules, Mr Chui made the following concession at §3, that:

“ With the guidance of the Court, P accepts that there exists a category of consultants in the appropriate context (such as in group practices) where these solicitors are neither a solicitor practising on his own account or in partnership, or as an employee of the other solicitor or of the firm.”

He then drew to my attention two further matters:

(a)   Wong Sui Kwan v Cheong Pui Fan DCCJ 4987/2004 (unreported, 27 October 2006):

(i)   In that case, the disputes were between two practising solicitors.  The plaintiff was the founder and later a consultant of a firm of solicitors.  His exact status in,and relationship with, that firm were in issue.

(ii)   On the status of the plaintiff, Deputy District Judge K W Wong (as he then was) recorded at §15 of his Judgment that:

“ Senior Counsel Mr. Ambrose Ho for the Plaintiff submitted that in Hong Kong quite a number of law firms have consultants. Many of them are neither employees nor partners. According to Mr. Ho S.C., the practice of consultants attaching themselves to certain law firms to carry out their businesses, serve their ownclients using those firms’ resources and split the income is indeed very commonplace in Hong Kong. Both the law firms and the consultants can be mutually benefited from such arrangements.Many consultants are consultants to more than one firm. A list comprising names of over 60 of such consultants/partners having the so-called ‘multiple roles’ is also exhibited. Since the distinguishing features of a fiduciary are the obligations of loyalty and fidelity, if consultants are held to owe fiduciary duties to the law firm and are restrained from taking away their clients or their clients’ business from those firms, there will be very serious adverse repercussions in the whole market places.”

(iii)   That submissions were accepted by the learned Deputy District Judge, as he observed at §195 of his Judgment that the plaintiff was neither a partner nor an employee of the defendant. 

(iv)   I notice that the case subsequently came before the Courtof Appeal (CACV 145/2007).  The matters set out above did not form the subject matter of any appeal. 

(b)   In The Professional Conduct of Lawyers in Hong Kong by Wilkinson & Sandor, the learned authors at paragraphs 1655 – 1680 state that:

“ Many consultants are employed by Hong Kong firms of solicitors. They may be partners or employees of the firm, although many are neither partners nor employees. They are often employed tobring in clients to the law firm in return for receiving a commission on the work brought in. It is common for consultants to serve more than one law firm.”

12.  Notwithstanding the above, it remained Mr Chiu’s submissions on behalf of the plaintiff that the fundamental error of the Presiding Officer was that she failed to discharge her statutory duty to investigate into, failed to take into account and accordingly wholly disregarded, the professional codes of conduct and statutes governing solicitors’ practice.

13.  At the end of that hearing, I reserved my ruling.

14.  On 23 July 2018, the applicant, through her solicitors, wrote a letter to my clerk.  She sought to place before me for my consideration two emails exchanged between her and Mr Wilkinson.  Mr Wilkinson is one of the authors of The Professional Conduct of Lawyers in Hong Kong.  Those correspondence took place after the last hearing on 11 July 2018 before me.  What the applicant had done was that she postulated certain scenarios for Mr Wilkinson and sought his view on the same.  She elicited a one-line answer from him.  In their letter to my clerk, the applicant’s solicitors said this:

“ Whilst our client accepts there is a judicial decision (albeit in the District Court) which seems to suggest that there is a category of consultants who might work as non-employees of a firm, the email correspondence suggests equally that the position is not clear cut.”

15.  I will not receive such additional evidence.  It should be noted that according to section 35 of Cap 25, even on an appeal for which leave has been granted, the Court of First Instance has no power to receive further evidence. 

The applicable law on granting leave

16.  The applicable principles were summarized by B Chu J at paragraph 16 of her Judgment in Mak Wai Man v Richfield Realty Limited HCLA 28/2015 (unreported, 30 October 2015), that:

“ (1) Under s 32 of the Labour Tribunal Ordinance, a party may only apply for leave to appeal on the ground that the award of the Tribunal is erroneous on point of law or outside its jurisdiction;

(2) The threshold onus of an application for leave is to show that the intended appeal has arguable grounds;

(3)     Apart from errors of law, leave will also be granted if the Tribunal’s determination (a) was made without regard to relevant factors, (b) was made without evidence, or (c) there was failure to discharge the statutory duty to investigate and such failure has given rise to injustice, in that a fair and proper determination of the claim cannot be attained.”

17.  On the ground of “failure to discharge the statutory duty to investigate”, I find it important to emphasize that it is, and ought not to be used as, a pretext for a claimant to try to put in issue all factual findings madeby a tribunal and to put them under minute scrutiny.  It imposes a high hurdle.  As Au J has observed in Wai Mei Lai Stella v Viya Pramita HCLA 3/2010 (unreported, 28 June 2011) at §16:

“ … it is trite that not every failure to investigate a relevant matterwill give rise to an appeal. The appellate court has to be satisfiedthat the subject matter of the complaint must not only be relevantbut be of such a nature that the lack of investigation will give rise to injustice, in that, a fair and proper determination of the claim cannot be attained”.

Discussion

18.  The Presiding Officer correctly cited and considered the law relevant to the determination of an employment relationship at §§32 – 39. At §37 she in particular cited and relied on Poon Chau Nam.  She correctly set out the 8 criteria relevant to the determination as to whether an employment relationship exists. 

19.  In Poon Chau Nam, Ribeiro PJ observed at paragraph 18 that:

“ 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 ….”

His Lordship further observed at paragraph 22 that:

“ It is ‘firmly established that the question of whether or not the work was performed in the capacity of an employee or as an independent contractor is to be regarded by an appellate court as a question of fact to be determined by the trial court.’”

20.  After the Presiding Officer had considered the law, the determination of the case became primarily a matter of consideration and evaluation by her of the facts as guided by the applicable legal principles. It was a question of fact.  She concluded at §71 of the Reasons that:

「……但是當細膩查證雙方的行為及表現時，本席認為席前有充分的證據顯示陳小姐是以自僱人士或正確來說是contract for service的方式替律師事務所工作。」

21.  When submissions were first made to me, the main plank of the applicant’s case for leave as put by Mr Chiu on her behalf was that the structure of the solicitors’ profession does not permit arrangements involving independent contractors working as solicitors in law firms.  I could see the possibility of the involvement of a point of law there, eg whether, upon proper construction of the legal regime under inter alia the Legal Practitioners Ordinance, those arrangements were impermissible as a matter of law.  However, in the light of the Solicitors (Group Practice) Rules and the authorities which Mr Chiu has subsequently found and helpfully placed before me, that plank is in my view not arguable.  Mr Chiu himself no longer seeks to argue that. 

22.  Mr Chiu then submitted that the Presiding Officer had failed to discharge her statutory duty to investigate into, failed to take into account and accordingly wholly disregarded, the professional codes of conduct and statutes governing solicitors’ practice.  I do not accept that.  The Presiding Officer had considered the correspondence between the applicant and the Law Society, which the applicant placed before her.  She made her finding at §11(3), that all the Law Society did was to refer the applicant to the relevant principles of the Hong Kong Solicitors’ Guide to Professional Conduct.  She found that the applicant was unable to place before her any evidence, for example Law Society Circular, to support the applicant’s case (§52).  She further accepted Ms Koo’s evidence to the contrary effect, that:

「顧女士則指出事務律師的行業一直有不少律師是以自僱人士身份參與律師的工作，而大家都是以拆賬的方式獲得收入。本席相信及接納顧女士的解釋，現今的事務律師行存在一批自顧人士執業。」 (§53)

In my view, the Presiding Officer has sufficiently discharged her duty in that regard.

23.  Mr Chiu further argued that on the question of financial risk, the Presiding Officer has applied the wrong test.  The Presiding Officer only considered that aspect of the case briefly in one paragraph at §50.  She has not elaborated on her detailed consideration.  It is not apparent on the face of her Reasons that she has misdirected herself on law.  I am in any event not satisfied that this, which was all but one small aspect of her overall consideration, might affect the conclusion that she ultimately reached.

24.  Once the above is disposed of, what are left with the Grounds are a barrage of what are in my view challenges of a factual nature disguised as alleged failure on the Presiding Officer’s part to carry out her duty to investigate.  They concerned factual matters like the commission-based arrangement between the applicant and the defendant, the defendant’sexplanation on the way certain Employer’s Returns were filed with the InlandRevenue Department, the applicant’s attitude to superiors, her choice to turn down new cases, her ability to negotiate her fees, etc.  Those were factual matters which the Presiding Officer considered in the context of the criteria which she had identified.  I am not satisfied that it is arguable that the applicant has suffered any injustice, or that a fair and proper determination of the claim has not been attained.  I am not satisfied that any of the other Grounds are arguable.  I in particular reject the Ground that the Decision was irrational or perverse.

Conclusion

25.  For the reasons set out above, I refuse to grant leave to the applicant to appeal against the Decision and dismiss her application for the same.