YU TAK FU v. GOLD GAIN (HK) LTD

HCLA11/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO.11 OF 2004

(ON APPEAL FROM LBTC4244/2000, 7094/2000,

8281/2003 AND 10250/2003)

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R E A S O N S  F O R  D E C I S I O N

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1. The claimant was employed under a written contract of employment for a term of three years from 18 December 1998.  The contract was terminated by notice dated 23 March 2000 effective from 31 March 2000.  It was the claimant’s case that his employment began in 1994 and that he was jointly employed by the 1^st and 2^nd defendants.

2. This is the 1^st defendant’s appeal.  There are five grounds of appeal.

Was the 1^st defendant the employer of the claimant?

3. The 1^st defendant denied that it was the employer of the claimant.  The 1^st defendant’s case was that the claimant was solely employed by the 2^nd defendant.  It is not in dispute that the 1^st and 2^nd defendants were associate companies and that they had common directors and management.  Nor that the management of the 1^st and 2^nd defendants namely, Mr Chiu Ka Yan and Mr Lu Sai Shing had assigned jobs to the claimant which related to both the 1^st and 2^nd defendants.  The contract of employment referred to above bore the chops of both the 1^st and 2^nd defendants.

4. This is essentially an issue of fact.  There is no appeal on fact.  The tribunal officer had ample evidence to support her conclusion that the 1^st defendant was a co-employer.  Such evidence included a statement signed by Mr Chiu Ka Yan who was the chairman of both 1^st and 2^nd defendants at the time of the contract of employment confirming that the claimant was employed by both 1^st and 2^nd defendants.  This ground of appeal cannot possibly succeed.

Duty to investigate

5. The 2^nd and 3^rd grounds of appeal can be dealt with together.  Basically they involved the argument that the tribunal officer had failed to properly investigate, on her own initiative, the following :

(1)     failing to consider whether the 1^st defendant and/or 2^nd defendant would have been justified, in all the circumstances, to summarily dismiss the claimant on 23 March 2000;

(2)     the impact of the claimant’s resignation in December 1998 on the 1^st and 2^nd defendants’ liability to pay severance paid.

6. Before the Labour Tribunal, the 1^st defendant’s only defence was that it was not the employer.  That was decided against the 1^st defendant.  Mr Leo, who appeared on behalf of the 1^st defendant, argued that the tribunal officer should have ascertained from the 1^st defendant whether the 1^st defendant had any other defence.  Mr Leo relied on the judgment of Waung J in Leung Wan Kee Shipyard Limited v. Lik Shau Foo [1995] 3 HKC 229 :

“      There is a duty on the presiding officer to investigate all matters on his own volition and direct the parties to the right issues and seek from them the relevant material and evidence.  I, of course, appreciate that this is an onerous duty but this is what the law demands and bearing in mind that lay people with very little or no knowledge of the law are regularly before the Labour Tribunal, I do not see how the law can demand any less from the Tribunal.”

and Flying Goose Factory Limited v. Cheung Chun Chu [1989] 2 HKC 388 at 391G-392A :

“      In Umar v Piastar (supra) Browne-Wilkinson J had this to say at p 731:

      … although an industrial tribunal’s job is to adjudicate on the matters brought before it by the parties, in cases such as this where there is a history of name-changing and employer-changing without affecting the substance of the job and where there are proved connections between successive employers, the industrial tribunal should be astute to see that it gets through to the true facts of the case so far as is possible in the difficult circumstances that exist.

In Hong Kong, where the tribunal’s function is not limited to adjudicating on the matters brought before it, but is largely inquisitorial, this dicta applies with greater force.  The presiding officer is required by s 20(3) of the Labour Tribunal Ordinance (Cap 25) to investigate any matter which he may consider relevant to the claim, and he was ample powers to enable him to do this.”

7. Mr Leo submitted that there was evidence before the Labour Tribunal which should have prompted the tribunal officer to investigate.  He referred to the 1^st defendant’s defence in LBTC4244/2000 :

“6.    由於申索人擅自利用第一被告的名義向一間公司El Vette (China Trade) Ltd. 購貨，而使第一被告無端被追討一律港幣498,152的貸款，並在2002年5月8日被該公司於香港區域法院案件編號DCCJ2292/02取得缺席勝訴令，故第一被告向申索人反控追討該筆港幣498,152的損失。”

8. Mr Leo said that in a District Court action namely, DCCJ16567/2000 commenced by the claimant against the 1^st and 2^nd defendants, a similar defence, but pleaded in greater detail, had been raised by both the 1^st and 2^nd defendants against the plaintiff’s claim for damages for the early termination of his contract of employment.  DCCJ16567/2000 was ordered by Her Honour Judge H.C. Wong to be transferred to the Labour Tribunal on 10 January 2003.  However, the pleadings in those proceedings were not put before the Labour Tribunal.  Mr Leo accepted that it had never been expressly pleaded or raised on behalf of either defendant that on the basis of such defence the defendants were entitled to summarily dismiss the claimant.  But Mr Leo submitted that the tribunal officer ought to have investigated into this complaint and decided whether or not it entitled the 1^st defendant to summarily dismiss the claimant.

9. I do not believe, on the material before me, the tribunal officer was under any duty to do so.  What investigation, if any, is required of a tribunal officer must depend on the circumstance.  Moreover, on an appeal based on the allegation that the tribunal officer had failed to investigate, I believe it is necessary for the appellant to satisfy the court that such investigation would or at least might have made a difference.  There is nothing before me to show that this defence has substance.  So I do not think I should send the matter back to the Labour Tribunal for a re-hearing in any event.  Mr Leo made the point that the 1^st defendant was unrepresented and that the nature of the proceedings was inquisitorial before the Labour Tribunal.  No legal representation is permitted in the Labour Tribunal, but that does not mean that parties, especially employers, might not have legal assistance.  I would be very slow to accept this kind of complaint in the absence of a full explanation why the supposed available defence was not put before the Labour Tribunal.  Was it because the appellant was unaware that it had such a defence or that it deliberately wanted to wait and see whether its chosen defence was successful?  If the latter, I do not see why the appellant should have a second chance.

10. It was suggested that after the tribunal officer had decided against the 1^st defendant on his defence namely that he was not the employer, the 1^st defendant should be asked whether it might have other defences.  I believe such procedure would give rise to great mischief.  Although proceedings before the Labour Tribunal are inquisitorial in nature, the parties should be encouraged, indeed required, to put their whole case forward at the first opportunity.  Mr Leo had referred me to Slaughter v. C Brewer & Sons Limited [1990] IRLR 426 :

“      A tribunal is of course master of its own procedures.  A practice has grown up — no doubt with sound administrative reasons — of deciding liability and then adjourning and asking the parties to reach agreement on compensation.  In order to help in this process it is desirable for the parties to know of any intended reduction in such compensation.  This is usually expressed in percentage terms as ‘a contribution’.  When beginning a case — especially a long one — it may not always be easy to see whether arguments on compensation issues are going to be possible before deciding liability and therefore a tribunal may not know how it will proceed at the close of the evidence.”

But I do not believe that case has any application here.  I do not believe, and it has not been suggested to the contrary, that it was the practice of the Labour Tribunal to ask, after deciding against a defendant on his pleaded defence, whether the defendant has other defences.  Nor was it the practice to ask the claimant before dismissing his claim whether he had any other basis for his claim.  Such a practice would be wholly unsatisfactory.

Resignation by the claimant

11. The only material is to be found in two paragraphs of the Supplementary Statement by the claimant dated 14 September 2000 :

“11.      I therefore tendered my resignation to the Defendants and told them that I had a new offer from HK Kam Chuen.  Since I was the only person to look after the Defendants’ interests and business in Hong Kong, the Defendants wanted me to continue my service with them.

12.        I then negotiated with the Defendants for a new contract with similar terms as the offer by HK Kam Chuen.  I told the Defendants that I need job and income security.  Knowing my concern, the Defendants agreed to pay me the same salary as HK Kam Chuen.  They also agreed that if I was terminated by them before the expiration of the three years term, they are willing to compensate me by paying me the balance of the salary for the remaining term of contract.”

12.  But this was never pursued at the hearing which lasted three days.  I do not believe the tribunal officer could reasonably be expected to investigate into this matter or be required to decide whether the claimant’s employment had been terminated by the resignation.  Indeed, a tribunal officer with her experience and common sense would know that such “resignation” followed by a new employment contract on better terms normally would be regarded by the parties as writ in water.  There was no evidence that the claimant’s employment was ever broken off by any resignation.  Surely the tribunal officer was entitled to assume that there was nothing in the point.  Nor is there any material before me which would enable me to conclude otherwise.

Damages for wrongful termination

13. The 4^th and 5^th points can be dealt with together.  The 4^th point relates to payment in lieu of notice and the 5^th relates to the claimant’s claim for liquidated damages.

14. The claim for liquidated damages is based on the following term in the employment contract :

“…

4.      解除合約：乙方需三個月前通知甲方.

                              甲方需要補償工資至本合約聘請年期滿.”

The claimant claimed the remuneration for the unexpired term of his contract of employment. 

15. Mr Leo made the point that clause 4 was a penalty and not a genuine pre-estimate of loss.  The tribunal officer found that it was not a penalty.  However she went on to deduct from the liquidated sum the actual income of the claimant for the period.  Also, she deducted the amount she awarded for payment in lieu of notice.  So effectively, the tribunal officer awarded unliquidated damages to the claimant based on the early termination of the employment contract.  That being the case, I do not need to consider whether she was right to have awarded payment in lieu of notice, although I accept that Mr Leo’s argument to the contrary was powerful.  Nor do I need to consider whether she erred in law in concluding that clause 4 did not provide for a penalty.

16. The Labour Tribunal has jurisdiction to award unliquidated damages for breach of the employment contract, see the recent decision of Chung J in Samulde Ma Violeta Cabaya v. Kwan So Han Sandy,HCLA93/2003.

17. Mr Leo also made the point that the 1^st defendant did not have an adequate opportunity to deal with the claim for damages.  As I have said the hearing ranged over three days and the claimant’s evidence of income during the unexpired term of his contract was supported by his MPF contribution.  It is not the practice in Hong Kong to determine liability first and then to adjourn to enable the parties to deal with quantum.  That being the case, I do not believe the authority referred to above namely, Slaughter v. Brewer has any application. 

Conclusion

18. For the above reasons, at the conclusion of the hearing, despite the interesting arguments of Mr Leo, I came to the conclusion that the appeal should be dismissed with costs in favour of the claimant, assessed at $800 to be paid forthwith.