HKSAR v. BAGUIO CLEANING SERVICES CO LTD

[English Translation – 英譯本]
HCMA 118/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 118 OF 2006

(ON APPEAL FROM ESCC NO. 17506 OF 2005)

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BETWEEN

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JUDGMENT

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Background

1. The Appellant, Baguio Cleaning Services Co Ltd, was charged by way of summons with the following offence: being the employer of one Lau Mei Bak (transliteration) (劉美八), without reasonable excuse failing to pay to the employee on 20 February 2005 a total sum of $1,591.70 being the employee’s salary for the period from 19 April 2004 to 30 April 2004, contrary to section 10(10) of the Employees’ Compensation Ordinance, Cap. 282 of the Laws of Hong Kong.

2. The Appellant company pleaded not guilty and was convicted after trial at the Tsuen Wan Magistracy. The Appellant appealed against conviction. After hearing, I dismissed the appeal and affirmed the conviction. I now set out the reasons for my judgment.

Prosecution case

3. PW1 and her husband (PW2) were both employees of the Appellant company. On 19 April 2004, PW1 was hit by a bus when she was performing cleaning work along the street. She was hospitalized until 25 April. The doctor issued a total of 12 sick leave certificates (Exhibits P3-P14). PW1 asked PW2 to hand to a manager surnamed Wong (hereinafter “Wong”) the first sick leave certificate (Exhibit P3) which certified sick leave from 19 April to 15 May 2004.

4. The Appellant company had also submitted to the Labour Department a Notice of Accident to an Employee dated 26 April 2004 (Exhibit P15).

5. It was not under dispute that, under the provisions of the relevant ordinance, PW1 was entitled to a sum of $1,591.70 being salary for the period from 19 to 30 April 2004. This sum should have been paid to PW1 no later than 7 May, but by 20 February 2005 the Appellant company had still not made payment. The Appellant company had duly paid the sums payable to PW1 from May 2004 onwards.

6. PW1’s evidence was that, in early May 2004, she telephoned Wong to inquire of him about the outstanding salary. He told her that the salary would not be paid until her claim for employees’ compensation was determined and suggested that she contact the head of the personnel section (i.e. the defence witness, DW). PW1 said DW had told her that the payment had missed the “payday” of that month and would therefore be made on the 11^th of the following month.

7. PW1 said that payment of the said outstanding salary had once and again been delayed. In February 2005, upon the suggestion of a social worker to whom PW1 looked for assistance, PW1 made a complaint to the Labour Department. It was only upon intervention by the Labour Department that the Appellant company made immediate payment of the outstanding salary.

Defence case

8. DW testified for the defence. She was the head of the personnel section at the material time and has already left the employ of the Appellant company. She said that the Appellant company released salaries on the 7^th of each month and had never failed to pay salaries which fell due. She never knew that a sum was being owed to PW1. She only knew about it when the Labour Department contacted her and she immediately went through the records. She then arranged for payment to be made.

9. DW said she did not receive the first sick leave certificate until the end of May. As the Appellant company had by that time paid out the salaries for the month of May, DW thought that the amount in respect of the month of April was already paid to PW1 in early May. She said she could not recall whether PW1 had ever inquired of her about the outstanding amount.

Reasons for verdict

10. In the written Reasons of Verdict, the magistrate made the following analysis and findings (Appeal Bundle, page 12).

Considerations

In the present case, there is no doubt that the Appellant company failed to pay, long after the statutory time limit, the amount due and payable to PW1.

The issue is whether the Appellant company had a reasonable excuse. If the Appellant company proves on a balance of probabilities that it had a reasonable excuse for failing to pay, the offence against it cannot be established.

I have considered the evidence as a whole, the submissions by both parties, as well as the relevant case law. The defence insisted that the Appellant company had only inadvertently failed to pay. I accept that the Defendant company had a good record and had established a system for paying out salaries or relevant amounts, and as far as PW1 is concerned, the Appellant company had duly paid her the sums for the period from May 2004 to March 2005 which were payable to her.

I do not make a finding on the question of whether there had in fact been a telephone conversation between PW1 and DW. I believe PW1 had indeed telephoned the personnel section of the company, but was it DW who answered the phone? PW1’s testimony was not entirely clear. Her level of literacy was apparently not high and she seemed unable to ascertain the other person’s identity. Nevertheless, I do accept as reasonable and credible her testimony that she had complained to the company. Given the large number of employees within the Appellant company, DW must have had an onerous personnel duty to discharge, and her claim that she has no recollection of the said telephone conversation which, if it did exist, took place more than one year ago, is not at all surprising. Nor does the claim mean that she is not a veracious witness.

In any event, soon after the accident to PW1, the Appellant company became aware of her work injury and reported the accident to the Labour Department. The records of the Appellant company contained the first sick leave certificate submitted by PW1. Even if DW’s evidence were accepted, the company had received this document latest by the end of May. On her testimony, the case is not that she was not aware of the receipt of this document; it is only that she thought the company had already paid the relevant amount.

DW obviously had not gone through the records. Nor did she testify that she had done so. Furthermore, had she done so, and had a proper system and complete records been in place in the company, she would certainly have noticed that the amount had not been paid.

An employer is under a duty to ensure payment of salaries and relevant amounts without an employee having to claim for payment or remind the employer to make payment. The employer cannot escape liability by simply saying that he believes payment has been made. A blind belief is different from a genuine belief. A belief may constitute a reasonable excuse, but a blind belief can never be a reasonable excuse. In the circumstances and not having looked into the matter, the Appellant company came to the belief that the relevant amount had been paid. This is hardly a genuine belief.

After careful consideration, I conclude that, for the above reasons, the Appellant company has failed to prove on a balance of probabilities that it had a reasonable excuse for failing to pay the relevant sum. The Appellant company is convicted of the offence accordingly.

Grounds of appeal

11. The grounds of appeal put forward by Ms Po, Counsel for the Appellant company, essentially concern the meaning of “reasonable excuse”.

12. Ms Po contended that, in interpreting the term “reasonable excuse” in the relevant provision and ruling that the Appellant company did not have a reasonable excuse, the magistrate failed to consider that the Employees’ Compensation Ordinance was not intended to be directed at companies such as the Appellant company, that is, as the magistrate put it, employers with a good track record and an established system of paying out salaries and relevant amounts.

13. Ms Po submitted that the Appellant company had a good record, had never been guilty of late payment or non-payment of salaries, and had in place a system of paying out salaries and relevant amounts; and that the Appellant company had on this particular occasion merely been “inadvertent”. In the exceptional circumstances involving the Appellant company, Ms Po submitted that such “inadvertence” was a reasonable excuse. Ms Po also contended that the magistrate erred in ruling that there was nothing to support a reasonable “genuine belief” on the part of the Appellant company.

14. Ms Po submitted that DW did not receive the first sick leave certificate until the end of May and that there was nothing which led her to suspect that the relevant amount had not been paid to PW1 as scheduled on 7 May 2004 so that DW had to check the relevant records. Therefore, the fact that DW had not checked the records did not mean that there was no basis upon which she “genuinely believed” that the Appellant company had paid the relevant amount to PW1. Ms Po argued that the said testimony – in particular, DW’s evidence that, when she paid on 7 June 2004 PW1’s salary for the month of May 2004, she did not hear any complaint by PW1 regarding unpaid salary – constituted a reasonable basis of DW’s “genuine belief”.

Respondent’s submissions

15. Ms Chan, Senior Government Counsel for the Respondent, responded by pointing out that the Employees’ Compensation Ordinance aimed at ensuring that an employee received the salary to which he was entitled within a specified period after he performed his work. An employee should receive specified wages within a specified time, and an employer could not delay payment of or withhold salaries or defer the time of paying wages.

16. Ms Chan submitted that, as the term itself suggested, a “reasonable excuse” meant an explanation that accorded with reason and sense. The magistrate had to determine whether the Appellant company failed to pay the salary under reasonable circumstances. In the present case, the crucial issue was whether the Appellant company had taken all reasonable measures to ensure that its employees received within the specified time the wages to which they were entitled. Ms Chan submitted that, as a representative of the employer, DW failed to check the records to ensure that the employee received during the sick leave period the wages to which she was entitled, and that there was no reasonable excuse for such failure.

17. Ms Chan further pointed out that the duty to pay salaries, which rested on the employer, was an important duty and the rationale behind section 10(10) of the Employees’ Compensation Ordinance. The employee was under no duty to remind the employer of any outstanding salary or claim for such salary. Ms Chan argued that, if “inadvertence” could also constitute a “reasonable excuse”, it would become an excuse which employers would rely on for deferring payment of salaries, as a result of which even more employees would be subjected to unfair treatment.

Judgment

18. With respect, I completely agree with Ms Chan’s submissions.

19. The magistrate had thoroughly and logically analyzed and considered the facts of the present case.

20. The first sick leave certificate covered a period of two months, from 19 April to 15 May. Given that DW said she did not receive that certificate until the end of May, what basis or ground would there be which led her to “think” that the salary for the month of April had been paid to PW1 in early May? The Appellant company would have no reason for hastily “releasing the salary” before it received the relevant sick leave certificate (i.e. where there was no document showing when the sick leave period would end and whether the employee was absent from work without reason). 

21. Even if it were the practice of the Appellant company to pay out salaries prior to receiving the relevant sick leave certificates, DW should, in light of an employer’s duty to ensure that his employees received salaries in time, not have failed to take action to ensure that the Appellant company had indeed paid PW1 her salary. DW “thought” that the money had been paid and hence did not take any follow-up action, but such a “blind belief” was simply groundless. As the magistrate pointed out, a blind belief could never be a reasonable excuse.

22. Furthermore, DW said that, upon being notified by the Labour Department, she “immediately” went through the records and came to know that the relevant amount had in fact not been paid. This shows that, had she checked the relevant records, she would have realized that PW1 had never been paid her salary.

23. The magistrate’s verdict is beyond reproach. There is nothing to show that the Appellant company’s conviction is unsafe and unsatisfactory. I therefore dismiss the appeal and affirm the conviction.