DOCK BRIAN v. PACIFIC GOURMET HOLDINGS LTD

HCLA 14/2021

[2022] HKCFI 444

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 14 OF 2021

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO. 3110 OF 2021)

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J U D G M E N T

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A. Introduction

1.  By my Decision dated 16 December 2021, [2021] HKCFI 3780, I granted the claimant (“Employee”)  leave to appeal under section 32 of the Labour Tribunal Ordinance Cap 25.  I reserved the appeal to myself.

2.  Leave to appeal was granted from the decision dated 18 October 2021 of Ms Eleanor Yeung, Presiding Officer of the Labour Tribunal (“Tribunal”), by which she maintained her earlier decision and order dated 23 September 2021, adjourning the Employee’s claim sine die with liberty to restore, on the basis that the Tribunal had no jurisdiction to hear the claim.

3.  The basis for my grant of leave to appeal is explained in the Decision.  In short, I thought it at least strongly arguable that the Tribunal does have jurisdiction to hear the claim, and even that there are necessary questions that must be determined in the exercise of that jurisdiction.

4.  Following the Decision, the defendant (“Employer”)  wrote to the Court on 19 January 2022, saying that, after considering all matters, it did not wish to oppose nor appear at the Appeal, and would not object to the matter being remitted back to the Labour Tribunal for re-consideration and determination. The Employer also asked to be excused from attending the appeal, which attendance I did excuse.

5.  Shortly before the date fixed for the Appeal, Mr John Wright, Counsel for the Claimant, lodged a suitably succinct skeleton argument stating: (1) the Employer does not contest the appeal and its attendance has been excused; (2) the Claimant adopts Counsel’s previous written submissions, and those made orally at the hearing on 9 December 2021; and (3) the Claimant respectfully adopts the reasoning in my Decision.

6.  In the circumstances, it appeared to me that the Appeal might appropriately be dealt with by way of paper disposal.  I so ordered, and vacated the fixed hearing.

7.  This is my Judgment on the Appeal.

B.  Background Facts

8.  The Employee was employed by the Employer as a member of food service staff from 16 December 2016 until his employment was terminated on 30 April 2021.  After termination, he lodged a claim with the Labour Tribunal claiming against the Employer a sum of approximately $142,700 under the Employment Ordinance Cap 57 (“EO”).

9.  The Employee claims that he was dismissed because in March 2021 he refused to sign an agreement to increase his work hours from 9 to 10.  On 1 April 2021, he was given a one-month notice of the termination of employment.  No reason for termination was given up to his last day on 30 April 2021.  He claims that he was dismissed with no valid reason or by reason of redundancy which entitled him to severance payment, terminal payment and/or damages under the EO.

10.  At the same time as the Employee was given a pay cheque for his last month’s salary and accrued holiday pay, he was also asked to sign a document dated 28 April 2021 (“28/4/2021 Document”)  which stated that:

I checked the above calculation and hereby confirmed the final payment of my remuneration is correct and also confirmed there is no other outstanding amount owing to me by the company.

11.  In his statement filed with the Tribunal, the Employee said that (1) he had taken legal advice that the 28/4/2021 Document was a waiver which sought to extinguish his rights under the EO and is void under section 70 of the EO; and (2) he was also advised that, in common law, payment of a lesser sum could not discharge a greater debt.  In the hearing on 23 September 2021, he further said that when he was asked to sign that document, a staff member of the Employer deliberately covered the relevant sentences quoted above (but that point was not pursued or relied upon in the application for leave to appeal, and hence on this Appeal – perhaps on the basis that the point is unnecessary for the analysis on the Appeal).

C.  The Decision

12.  The Tribunal’s rationale for ordering the adjournment of the claim sine die for want of jurisdiction is to be found in §6 of the Reasons:

This Tribunal pointed out that the 28/4/2021 Document was prima face a valid settlement agreement.  This Tribunal has no jurisdiction to declare void and set aside a settlement agreement.  Unless and until it is declared void and set aside by a higher court, the existence of settlement agreement prevents the Tribunal from adjudicating on the matters settled.  See Minarni v Ho Ho Fan Ivy [2018] HKCFI 852 at §§9-10 (as per Madam Justice Wong)  and Poon Kwok Leung Lenny v Swett (China)  Limited, HCLA 19/2012, unreported, 19 December 2012 at §§12D [sic] and 15 (as per Madam Justice Au-Yeung).

13.  From this short paragraph, it appears that the Tribunal was of the view that (1) the 28/4/2021 Document, being a valid settlement agreement, has the effect of preventing the Employee from claiming under the EO, such that (2) the 28/4/2021 Document would have to be declared void/set aside first before the Employee could proceed with his claim in the Tribunal, and that (3) the Tribunal has no jurisdiction to declare a settlement agreement void or to set it aside.

D.  Grounds of appeal

14.  Under section 32(1)  of the LTO, a party may apply to the Court of First Instance (“CFI”)  for leave to appeal against the decision of the Tribunal on the grounds that the decision is either erroneous in point of law or outside the jurisdiction of the Tribunal. I gave leave to appeal on the error of law limb, because the Employee satisfied his burden of showing that the intended appeal is arguable.

15.  Mr Wright relied on two main errors of law.  He submitted that: (1) the Tribunal erred in ruling that it had no jurisdiction over the claim, and (2) the Tribunal erred in ruling that the 28/4/2021 Document, unless set aside, could defeat the Employee’s claim under the EO. As I previously stated, those two grounds are intertwined; the effect of the 28/4/2021 Document was the basis leading to the Tribunal’s conclusion that it had no jurisdiction over the claim.

E.  The Tribunal’s Jurisdiction

16.  The Employee’s claim for a monetary award comprised three heads: (1) severance payment of $65,589.04, (2) terminal payment of $65,589.04 or to be assessed, and (3) damages of HK$77,100 as an alternative to terminal payment.

17.  Head (1)  is claimed on the basis that he was dismissed by reason of redundancy which would entitle him to a severance payment.  This head is based on Part VA, sections 31B(1)(a)  and 31G of the EO.

18.  Head (2)  and Head (3)  are claimed on the basis that he was dismissed other than for a valid reason which would entitle him to a terminal payment and, if not, to monetary compensation (termed as “damages” by the Employee).  These two heads are based on Part VIA, sections 32A(1)(c), 32M, 32O and 32P of the EO.

19.  Claims based on Parts VA and VIA of the EO are expressly listed in the Schedule to the LTO and so on the face of it fall within the Tribunal’s jurisdiction pursuant to sections 7(1)  and 7(2)  of the LTO.  The relevant paragraphs are §§4 and 7 of the Schedule, which provide:

4.  Any question as to – (a) the right of an employee to severance payment under Part VA of the Employment Ordinance (Cap. 57); or (b) the amount of such payment, other than a claim specified in the Schedule to the Minor Employment Claims Adjudication Board Ordinance (Cap. 453).

7.  A claim for remedies under Part VIA of the Employment Ordinance (Cap. 57).

20.  However, it is settled that claims can be excluded on certain bases, including that the relief sought includes non-monetary awards such as injunctive relief.

F.  The Merits of the Appeal

21.  The Tribunal considered that the 28/4/2021 Document had somehow taken the claim outside of the Tribunal’s jurisdiction.  The approach seems to have been that existence of the 28/4/2021 Document has turned the Employee’s claim into one that makes it necessary for the Employee to seek some non-monetary relief.

22.  Indeed, from §6 of the Reasons (quoted above), it seems that the Tribunal thought that the 28/4/2021 Document had made it necessary for the Employee to seek relief which the Tribunal had no power to order, namely declaratory relief that the 28/4/2021 Document is void and an order to set it aside.  This itself seems to have been premised on the assumptions that the 28/4/2021 Document was (a) a “settlement agreement” and (b) effective in disentitling the Employee from what he may otherwise be entitled to claim under the EO.  This demonstrates the intertwining of the two suggested errors of law.

23.  I agree that there was an error of law.

24.  The starting point is that the Tribunal has jurisdiction over “any question as to … the right of an employee to severance payment under Part VA of the [EO]” and over “a claim for remedies under Part VIA of the [EO]”.

25.  In this case, the Employee sought monetary relief under Parts VA and VIA of the EO.  He did not seek – and he does not need to seek – a declaration that the 28/4/2021 Document was void or that it be set aside. Whilst he referenced the 28/4/2021 Document (which he admittedly signed)  and said that it should not have the effect of defeating his claim under the EO, this was really a reply in anticipation of one part of the defence that the Employer had already mentioned in correspondence.

26.  In view of such a possible defence, the Tribunal will have to decide if the defence could be made out.  But this is part and parcel of the wider inquiry of whether the Employee’s claim under the EO could ultimately succeed. It is to be remembered that the Tribunal acts inquisitorially.  Whether the claim has somehow been “settled” or is otherwise barred is simply one of the “any question[s]” as to the Employee’s right to a severance payment under Part VA, and an issue arising on his claim for remedies under Part VIA of the EO.

27.  Indeed, there is also the prior question as to what was the proper effect of the 28/4/2021 Document.  Though the Tribunal described it as a “settlement agreement”, there was no analysis as to why it might be properly described as settling or compromising a claim, and if so what claim, or why it perhaps amounts to a waiver of a claim, and if so what claim – even before considering whether that was legally possible under the EO (and in particular in light of section 70).

28.  That such a question might arise on the claim is not the same as saying that the Employee had to seek the relief of setting aside the 28/4/2021 Document or declaring it void.  The 28/4/20221 Document contains no ingredients which the Employee must prove in order to establish his claim under Parts VA and VIA of the EO.  Rather, it might be a necessary ingredient to the Employer’s defence that the Employee is disentitled from making further claim under the EO or otherwise.  If pleading rules were applicable in the Tribunal, the Employee would not have to include in his prayer a claim to any declaratory relief or a setting aside order to complete his monetary claim.

29.  As to the two authorities relied upon by the Tribunal to support its decision, and – even assuming the facts of those cases were on all fours with the facts in this case – and with respect to the two Judges who decided them, I think the two cases were wrongly decided, in accordance with my above analysis.

30.  Therefore, in my view, the Tribunal does have jurisdiction to hear the claim.  Further, it seems to me that in the exercise of that jurisdiction there are necessary questions which relate to the proper effect of the 28/4/2021 Document that must be determined.

31.  I would also echo the following point made by me when granting leave to appeal.  If the Tribunal really has no jurisdiction over the claim, an adjournment of it sine die is counter-intuitive. If the Tribunal has no jurisdiction over the claim, ordinarily that would lead to the dismissal of the claim.  On the other hand, if there is something to be adjourned with the idea of it being restored, there must be jurisdiction, so the Tribunal could and should just go ahead and decide the claim.  What the Tribunal in this case seemed to have in mind was the possibility that the claim over which the Tribunal thought it (at that time)  had no jurisdiction might later, at some indeterminate future time, become a claim over which the Tribunal would have jurisdiction.  I do not think that leaving a claim effectively ‘in limbo’ can be correct, and this point also supports my analysis on why the Tribunal has jurisdiction.

32.  Whilst I have previously also noted, and can again note, the other points which can be distilled from Mr Wright’s submissions on why the Tribunal erred in finding that the 28/4/2021 Document had the effect of preventing the Employee from making further claims, I do not think I need to decide those matters for the purposes of this Appeal.  Those other points are that:

(1)  the 28/4/2021 Document is not supported by fresh consideration since the cheque received by the Employee was only the performance of the Employer’s existing duty owed to the Employee;

(2)  the 28/4/2021 Document was void under section 70 of the EO for purporting to extinguish the Employee’s rights under Parts VA and VIA;

(3)  under the common law, the 28/4/2021 Document, being a private agreement between parties, would not trump statutory protections provided by the EO.

33.  These three points seem to me to have real force.  It is difficult to see any fresh consideration provided for the 28/4/2021 Document, and at least at first blush the document seems simply to confirm the calculations rather than settle or waive some other claim, which was not mentioned and perhaps not even yet raised.  If the 28/4/2021 Document purported without consent to extinguish the Employee’s true rights under the EO, that would be void under section 70.  That point also seems to me to be tied to the question of common law not trumping contrary statutory protections.

34.  But, I think those points might be subject to some degree of fact sensitivity in individual cases, so that they are best left to be addressed on the facts in this particular case by the Tribunal.

G.  Conclusion

35.  The Appeal is allowed.

36.  I remit the Employee’s claim back to the Tribunal for re-consideration and determination in accordance with the above stated principles.

37.  When granting leave to appeal, I reserved the question of costs to the Appeal.  Although the question of costs was not addressed by the Employer in its letter dated 19 January 2022, in light of my conclusions and the Employer’s own stance, I see no reason why costs should not follow the event.  Therefore, the Employer is to bear the costs of the Appeal, including the application for leave to appeal.  The costs will be payable forthwith, on the party and party basis to be taxed if not agreed.