CHAN PAK SANG AND OTHERS v. KIN YEN LUNG TRADING CO. LTD.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

LABOUR TRIBUNAL APPEAL NO. 42 OF 1987

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO. 1934 OF 1986)

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J U D G M E N T

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1. This is an appeal with leave from part of an order made by a Presiding Officer of the Labour Tribunal on the 26th June 1987 setting aside an award he had made earlier ex-parte in favour of each of the respondents/claimants for arrears of wages and a month's salary in lieu of notice totalling $118,074.00 and $1,650.00 costs, on the condition that the appellant paid those amounts into court within seven days of the order.

2. The appellant contends that the condition imposed by the Presiding Officer ought to be set aside on the main ground that he exercised his discretion wrongly in that he "failed to consider and/or failed to enquire into and/or failed to direct or apply his mind towards and/or failed to take into account matters which were relevant and material to the issue as to whether or not the defendant had a good defence on merits".

3. The circumstances leading to that order may be set out briefly. The record indicates that the parties first appeared on file 13th June 1986, and after listening to the appellant's representative the Presiding Officer explained the "position" to the respondents saying :

"If there is any truth in this it looks like you may have sued the wrong company unless there is some kind of 'agency' involved."

The respondents asked for, and were granted, two weeks to consult their lawyers.

4. At the resumed hearing on the 27th June, both sides maintained their previous positions; the respondents sticking to their claim against the appellant as their employer, the latter reiterating that the true employer was a company in China which it was financing and of which they were shareholders. This time, the Tribunal said:

"There could be a question of Chinese law involved a part from the issues of fact. Even on the facts I am unable to see any clear evidence of a contract of employment between the claimants and the defendant company so far, unless as I have said the issue of agency comes into play. I suggest you bring all your evidence here before finally deciding to proceed to trial."

Despite objections from the appellant, the Presiding Officer adjourned the matter generally with liberty to restore to enable the claimants to consult their lawyers on the various issues.

5. The matter next came before the Tribunal on the 8th December. This time the appellant did not attend and after noting that it had been served with a hearing notice, the Presiding Officer proceeded to hear evidence from two chosen representatives whose evidence was adopted by the remaining claimants in so far as it effected them and the Tribunal made the award in their favour.

6. On 26th June 1987 the appellant applied for setting aside that awards. Its representative explained that the company had changed its address "several times" and had not received the notice of hearing. He agreed that the Tribunal had not been notified of the appellant's change of address.

7. The Presiding Officer then set aside the award and imposed the condition which is now the subject matter of this appeal.

8. For the sake of completeness it may be said that the appellant subsequently applied unsuccessfully for review of that Order.

9. Mr Chu, for the appellant, cited a number of authorities to support his argument concerning the proper exercise of discretion. I hope that I will be forgiven if I do not refer to all those decisions, of which that of Macdougall J in Lam Pak-woon & others v. New Art Industrial Co., Labour Tribunal Appeal Ho. 88/86 in the most pertinent on this issue That concerned an order of a Presiding Officer dismissing an application to set aside an award. The learned judge took the view that what Lord Atkin had said in Evans v. Bartlam [1937] A.C. 473 at p. 480, though it concerned the discretionary power of a judge in relation to the setting aside of a judgment was "relevant to an application to set aside an award made by a Presiding Officer of the Land Tribunal", and that reads :

"Appellate jurisdiction is always statutory: there is in the statute no restriction upon the jurisdiction of the Court of Appeal and while the appellate court in the exercise of its appellate power is no doubt entirely justified in saying that normally it will not interfare with the exercise of the judge's discretion except on grounds of law, yet if it sees that on other grounds the decision will result in injustice being done it has both the power and the duty to remedy it."

10. In so far as the discretion to set aside an exparte award under the provision of section 21A of he Lands Tribunal Ordinance extends to imposing such terms as it thinks just, so also it seems to me that when considering whether to impose any terms, the paramount consideration must be, as Macdougall, J., said, to see that justice is done.

11. Mr Chu confined himself to arguing one ground of appeal, namely, the Presiding Officer erred in the exercise of his discretion by ignoring the merits of the defence; and abandoned the other ground concerning the means of cite appellant to be able to comply with the condition. His complaint is that the Tribunal refused the invitation of CHENG Kin-Lung, the appellant's representative, to see certain documents, which are exbibited to Mr Cheng's affirmation, before making the order. The record indicates that this happened after the Presiding Officer had already delivered his order.

12. I do not think that anything turns on the exact stage at which the attempt to bring those document to the attention of the Presiding Officer was made, this because of his declared views about the nature of the defence which must have been present in his mind at the time he dealt with the application to set aside the award.

13. Although at first sight, it appears that the condition imposed is perhaps in the nature of a double penalty the appellant having been condemned in costs upon closer scrutiny, even in the absence of any reasons, where the Presiding Officer was told that the appellant had not informed the Tribunal of the change of its address it is manifest that having decided to exercise his discretion to set aside the award, the was anxious to ensure not only that there would not be a similar repeat default by the appellant in the conduct of the case but also that the claimants would be adequately safeguarded if there was.

14. In my opinion thin is a fair and just approach, for which sufficient authority is to be found in City Construction Contracts (London) Ltd. v. Adam, Times L. R. of 4th January 1988 where the headnote reads :

"On an application to set aside a judgment entered in default of compliance with rules of count or an order of the court, the court's power to make it a condition of setting it aside that the defendant pay a sum into court was not confined to cases where the defence appeared shadowy or the defendant's credibility was in doubt or where it was proper to require security for costs. The court had power to impose such a condition even where there was a good arguable defence not to punish the defendant but to encourage the proper conduct of the litigation and to provide a measure of security for the plaintiff. The amount to be paid in should be fixed in accordance with the defendant's means so that the was capable of complying with the condition."

15. Since the ground as to the appellant's means was abandoned, I need not say any more about this aspect.

16. However, even if it were to be accepted, as the Presiding Officer had apparently accepted, that the appellant had raised bona fide points of defence, that there were no suspicious circumstances as to the mode of presenting its case, that the defence relies on was not shadowy as was submitted by Mr Chu the issue remains if I understood the argument correctly, whether these factors entitled the appellant to have the award set aside unconditionally as a matter of course.

17. Miss Stewart, for the respondents, argued that the Presiding Officer had properly taken into account two factors: first, it was the appellant's own fault that it had not received the notice of hearing and secondly, the delay in the making of the application to set aside. Counts have been lenient in excluding applicants on the ground of delay and the case of Evans v. Bartlam (supra) is authority also for saying that there in no rigid rule that the applicant must satisfy the court, (the Tribunal in this case) "why judgment was allowed to go by default, though obviously the reason, if any, for allowing judgment and thereafter applying to set it aside is one of the matters to which the court will have regard in exercising its discretion". Normally his default, if any, in that respect can be sufficiently punished by an order for cost or otherwise which the court in its discretion is empowered to impose.

18. I think it is important to remember that section 21A of the Ordinance is concerned with the setting aside of "an award or order made by the Tribunal ......... in the absence of a defendant". Quite clearly Ohio was a regular award, and it has been held that "more onerous conditions may be imposed once there is a default judgment", per Fuad J A in Coronation Electronics Ltd. v. Tharoomals (Hong Kong) Ltd., Civil Appeal No. 26/86 (unreported).

19. In all the circumstances, I am not persuaded that there was any miscarriage of the Presiding Officer's discretion in imposing the condition, with the result that this appeal is dismissed.