CHAN PUI KWAN v. ECRENT (HK) CO LTD AND ANOTHER

HCLA 5/2018

[2018] HKCFI 1619

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 5 OF 2018

(On appeal from Labour Tribunal Claim No LBTC 2232 of 2017)

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D E C I S I O N

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Introduction

1.  The claimant (Ms Chan) claimed against the 1^st defendant (Ecrent HK) and the 2^nd defendant (Ecrent Worldwide) for arrears of wages, unpaid commission and wages in lieu of notice.  Both defendants were absent at the hearing before the Tribunal.  The Tribunal held that Ecrent HK was liable to the claimant on the claim but dismissed the claim against Ecrent Worldwide.

2.  Ecrent HK applied to the Tribunal for review on the ground that Ecrent HK had not received notice of the proceedings, having moved office from the registered office (“the RO”) in Tsuen Wan to Bank of America Tower.  They also denied that Ms Chan was their employee. 

3.  The Pesiding Officer held that the notice of hearing sent by the bailiff to the RO on 15 August 2017 pursuant to section 827 of the Companies Ordinance, Cap 622, was well before the move to Bank of America Tower.  He dismissed the application for review on the ground that the service was valid; and that he placed little weight on the evidence filed by Ecrent HK before the Tribunal.

4.  This is the application by Ecrent HK for leave to appeal.

5.  Leave to appeal would be granted if there are arguable points of law: section 32(1)(a) of the Labour Tribunal Ordinance (“LTO”), Cap 25.  Failure to investigate pursuant to section 20(3) of the LTO is a point of law.

6.  Ecrent has advanced 4 intended grounds of appeal:

(1)   No valid service of the notice of hearing;

(2)   Failure to investigate the merits of the claim in that the terms of employment were far from clear and the significance of a Settlement Agreement dated 10 April 2017 signed by Ms Chan was never considered;

(3)   Failure to investigate the claim against Ecrent Worldwide despite clear evidence and indicia that Ecrent Worldwide instead of Ecrent HK was the employer; and

(4)   Failure to give adequate explanation for rejecting the unchallenged evidence of Ecrent HK at the review hearing in respect of the contractual role of Ecrent Worldwide in managing and operating Ecrent HK.

Ground (1) - no valid service of the notice of hearing

7.  Section 13(2) LTO provides as follows:

“Service of a copy of the claim and of a notice of hearing –

…

(b) shall be effected –

(i) by delivering them personally to the defendant;

(ii) by leaving them with some person for him as his last known place of residence or at his place of business;

(iii) by sending them by post addressed to him at his last known place of residence or at his place of business; or

(iv) In such other manner as may be directed by the registrar.” (underline added)

8.  Rule 5(3) of the Labour Tribunal Rules provides that,

“The person effecting the service shall endorse on a copy of the document retained by him the date and place of service and the name of the person receiving it and shall sign the endorsement.” (underline added)

9.  Mr But, counsel for Ecrent HK submits that service of the claim and notice of hearing was not in accordance with section 13 LTO in that it was not left with some person at Ecrent HK’s last known place of business.  Moreover, Ms Chan knew of the place of business of Ecrent HK, as evidenced by the fact that the notice of conciliation meeting was issued by the Labour Department to that address and Ecrent HK did attend the conciliation meeting.  She should have informed the bailiff of that address for service.

10.  The notice of hearing was served by the bailiff on the RO.  The Presiding Officer held that it was valid service in accordance with section 827 of the Companies Ordinance, Cap 622.  There was no need to establish that the company had actual notice of the writ where service was effected under section 827.  A writ might be served on a company by simply leaving it at its registered office even though the plaintiff was aware that the office had already been vacated.

11.  I agree with the holding of the Presiding Officer.  Section 827 provides that a document may be served on a company by leaving it at, or sending it by post to, the company’s registered office.  On its proper construction, section 827 applies to all kinds of service on a company.

12.  Section 13 LTO can be compared to Order 10, rule 1(2) of the Rules of the High Court.  Order 10 does not make specific provision for service of a writ on companies but it does not exclude the application of section 827 of Cap 622.  It has always been section 827 that applies where a limited company is to be served. 

13.  By the same token, section 13 LTO does not exclude the application of section 827.  By allowing service of a claim and notice of hearing on the “last known place of business” of a defendant, the Ordinance in fact expands the chance of seeking out a defendant to aid in efficient disposal of employment claims.

14.  Where service on a defendant company is pursuant to section 13 LTO, the bailiff has to comply with rule 5 of the Labour Tribunal Rules by recording the name of the person receiving the document; but not where service is under section 827 of Cap 622.

15.  The first intended ground of appeal is not arguable.

Grounds (2)-(4)

16.  It is too early to say that the evidence was unchallenged, as suggested by Mr But. However, common to these 3 grounds is that the Presiding Officer placed little weight on the defences raised by Ecrent Worldwide without investigation or giving any reasons for this holding.

17.  Ecrent HK has pointed out that Ms Chan’s own claim has problems.  By way of example, as she did not have a written contract, she could not be sure which defendant had employed her.  She could not explain whether her commission should be computed on the basis of 60% or 80%.  There was no finding as to her basic salary being $12,000.  Despite the termination notice to Ms Chan purportedly giving 14 days’ notice, the Tribunal awarded her one month’s wages in lieu of notice without any finding as to whether she was under probation (as evidenced in one of the apps messages produced by her) and the notice period for termination.  There were other defences raised by Ecrent HK which it is not necessary to set out here. 

18.  Suffice to say that there is an arguable case of failure to investigate in grounds (2)-(3), and the Presiding Officer has failed to give reasons for his decision not to investigate the defence.

Conditions for appeal

19.  This was a case where there was valid service but Ecrent HK did not appear.  On Ecrent HK’s own case, Ecrent Worldwide was managing Ecrent HK.  If it was Ecrent Worldwide who failed to deal with the claim on behalf of Ecrent HK, it was not the fault of Ms Chan.  Ecrent HK did not even suggest that its management arrangements with Ecrent Worldwide were known to Ms Chan.  In addition, there was a Settlement Agreement purportedly with the chop of Ecrent HK which Ecrent HK had not attempted to explain before the Presiding Officer. There are good reasons to impose a condition for leave to appeal.

Orders

20.  Taking the matters in the preceding paragraph into account, I order as follows:

(a)   There be leave to Ecrent HK to appeal on condition that it pays the awarded amount of $40,600 into court within 7 days. 

(b)   Ecrent HK shall file and serve the notice of appeal on Ms Chan within 7 days of the payment in.

(c)   For the hearing of the appeal, the hearing bundle used for this leave application shall be reused with necessary updating, to include documents like this decision, all necessary documentary evidence and Mr But’s written submission for today’s hearing.

21.  It so happens that Ms Chan has turned up at this hearing for leave.  I have informed her that in the event the appeal is allowed, the matter may be remitted to the Labour Tribunal for retrial with only Ecrent HK but not Ecrent Worldwide as defendant.  It was up to her to seek legal advice and legal aid.

22.  I have also reminded both parties that the grant of leave to appeal would not bar them from discussing a settlement so as to avoid an appeal and all risks attendant upon a retrial.

23.  I thank Mr But for his assistance.