VOAHANGINIAINA AIMEE CHANTAL v. LEUNG MAN KAI

HCLA 27/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 27 OF 2016

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO 163 OF 2016)

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J U D G M E N T

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Introduction

1.  This is an appeal by the defendant against an award of the Labour Tribunal over underpayment of wages to the claimant, a domestic helper from Madascagar.

2.  The claimant (“C”) lodged a claim in the Labour Tribunal in January 2016 against the defendant (“D”) for the amount of HK$37,781.17, being (A) wages in lieu of notice; (B) arrears of wages; (C) annual leave pay; (D) air ticket; (E) food and travelling allowance for returning to home country; (F) underpayment of wages of HK$24,640.

3.  D had counterclaimed one month wage in lieu of notice, alleging that it was C who terminated the contract of employment without notice.

4.  C’s claims in (B) and (E) were dealt with by consent on 1 April 2016[1].

5.  The trial on the other claims took place before Deputy Presiding Officer Daniel Chan (“Officer”), who on 24 November 2016 dismissed C’s claims in (A), and also D’s counterclaim for one month wage in lieu of notice, and  the Officer  allowed C’s claims in (C), (D) and (F), totaling HK$30,365.39, plus interests and costs (“Award”)[2].  Reasons for the Award were later handed down on 6 January 2017 by the Officer (“Reasons”)[3].

6.  On 18 January 2017, this court granted leave to D to appeal against that part of the Award in relation to item (F), that is the sum of HK$24,640, being alleged underpayment of wages.

7.  Counsel Mr Jason Yu appeared for D, and Mr Kay Chan appeared for C.

Brief Background

8.  According to D, he and his wife are ordinary workers and they employed C as a helper to help them care for their young daughter, in order that  D’s wife could work[4].  D said he had paid a sum of HK$8,200 to Win Dragon Employment Limited /永隆 (印菲傭) 有限公司 (“Win Dragon”) in September 2014 as agency fee and later signed a contract with C on 25 November 2014, at a monthly salary of HK$4,110. 

9.  C is a Madagascar national.  According to her statement filed with the claim form on 18 January 2016 in the Labour Tribunal (“1^st Statement”), she applied to work as a domestic worker in China through an employment agency in Madagascar called East Asia Agency (“East Asia”), but this did not materialize and she then told East Asia that she would like to work in Hong Kong.  

10.  C said she arrived in Hong Kong on 20 February 2015 and was taken by an Indonesian representative of the employment agency Raharja Groupd Limited (“Raharja”) to the offices of the agency where C’s passport was taken away.  After 3 days, another Indonesian woman came and took her to the office of Win Dragon where C was required to stay until 14 March 2014.  C said she saw her passport was given to a representative of Win Dragon.  On 14 March 2014, C was then taken to D’s home, to begin working for D on that day. 

11.  It was not disputed that the employment contract was signed by the parties on 25 November 2014, and C started working for D on 14 March 2014 and her contract was terminated on 19 December 2015 (“Termination”).

12.  According to C, at the office of Win Dragon, she was asked to sign some papers and she was told they were her contract although she believed they were not.  She was also asked to sign and affix her thumbprint on a record of receipts, but she said she could not verify this as she could not read English[5]. She said she noticed that there were some blank receipts with the months of the year that she later recognized as the same receipts D asked her to sign when she received her salary.  C said she signed because she just wanted to start working.

13.  C said she received her first salary on 14 or 15 April 2015 in the amount of HK1,030 in cash, and D’s wife told C that she would be paying the balance to her agency.  D’s wife asked C to sign a receipt.  C said she signed because she was ordered to, and she did not look at the details.  C said she was not surprised that there was a deduction because East Asia had warned her that she would need to pay the Hong Kong agency but C said she was surprised it was such a large amount[6].

14.  It was further C’s evidence in her 1^st Statement that at the time she signed the receipt, she noticed that there were a total of 8 receipts for her to sign, so she knew that the deductions would continue.  She had also said D paid a total of HK$24,229 of her salary to Win Dragon[7].  She said she regularly saw envelopes around the flat with the address of Win Dragon and although she never looked inside, she assumed that each letter enclosed a cheque to Win Dragon for the money deducted from her wages, and on one occasion, D’s wife had asked her to post the envelope to Win Dragon, and on another occasion, C delivered the envelope by hand.

15.  On the other hand, D’s evidence was that it was C who had requested him to issue 8 cheques of HK$3,080 each, dated each month from 14 March 2015 to 16 November 2016, in favour of a finance company called 東洋財務信貸有限公司/ Toyo Finance and Credit Limited (“Toyo Finance”) for the repayment of a loan (“Loan”) on her behalf.  D had produced various documents signed by C in relation to the Loan from Toyo Finance. 

16.  In C’s 2^nd statement dated 12 February 2016 (“2^nd Statement”) filed as defence to C’s counterclaim, she said she had never seen the document with the title  “Debt Statement” (“Debt Statement”)[8] and did not remember signing it.  She said she was asked to sign many documents but did not know what they were and she confirmed that she never knowingly entered into a loan agreement for the Loan.  She also said she had never seen the letter from Toyo Finance dated 27 February 2015[9], or the Toyo Finance Payment Summary Report[10].  

17.  On the other hand, what was clear from C’s statements was that:

(1)  When C received her first salary in the amount of HK$1,030, she knew there was a shortfall and indeed expected part of her salary to be deducted and paid to a third party.

(2)  C had continued to sign receipts every month for 8 months with the knowledge that the deductions of her salary, which she said amounted to HK$24,229, would continue.

18.  On 18 November 2015, C had an operation at the Pok Oi Hospital for the removal of a small tumour[11].  She returned to work on 25 November 2015[12].

19.  After 8 months, on 16 December 2015, C was paid the full amount of HK$4,110.

20.  Then on 17 December 2015, C sent D’s wife an SMS that she would not go back to her residence for work[13].  Although C seemed to change her mind later, her employment was terminated on 19 December 2015.

The Officer’s reasons for deciding against D on the underpayment

21.  From the Reasons, the following can be seen:

(i) The Officer accepted C’s evidence and version, that she did not request D to issue cheques on her behalf to the agency East Asia, nor to the finance company Toyo Finance and she only signed the receipts on the instructions of her employer;

(ii) He did not believe nor accept D’s evidence that he had paid the wages to C in full in cash, and then at C’s request, C paid him back HK$3,080 for him to issue the relevant cheque for repayment of the Loan on her behalf;

(iii) D had himself confirmed that as the employer, he was under no duty to repay the Loan on behalf of C;

(iv) Even if C had incurred the liability to repay the Loan, there was no reason why C could not have arranged for repayment herself, rather than going through D.

22.  D had said during the trial that at the time of his first payment of the wage to C, he did not know that C needed to repay the Loan, and he had asked C what cheque to write.  The Officer found that his evidence not credible, as this was inconsistent with D’s own evidence during the trial that on C’s first day of work, D was already aware of a document indicating that C had borrowed money.  The Officer was of the view that D did not disclose the whole truth, in particular his relationship and agreement with Win Dragon and Toyo Finance.

23.  The Officer pointed out that the amount of the Loan stated in the Debt Statement ie HK$20,400 was different from the amount of HK$24,640 on an authorization dated 23 January 2015 (“Authorisation”) which was signed by C and bore her thumbprint[14]. Yet, although D had received both the Debt Statement and the Authorisation on C’s first day of work, D did not query or investigate into the discrepancy in the two amounts.  Further, D had deliberately referred to the representative of East Asia, a Mr Ng, to be a driver.

24.  The Authorisation authorized D to help C to repay the Loan to Toyo Finance, which was stated to be a loan incurred by her in Madagascar for “personal requirements”, by issuing a crossed cheque for HK$3,080, being part of her monthly wage.  On the Debt Statement, the amount of HK$20,400 was stated to be for C’s “placement, training and processing to Hong Kong”.  

25.  The Officer had cast doubt on the existence of the Loan, but in any event, he had pointed out that even if there was existence of the Loan which had to be repaid, there was no reasonable ground for D’s deduction of C’s wages[15]. He then went on to say he did not see any evidence that C had borrowed the Loan in Madagascar from Toyo Finance, or how the Loan was incurred, or any evidence of the payment of the Loan to C.  He further was of the view that the date of 23 January 2015 on the Authorisation could not have been correct as C only entered Hong Kong on 20 February 2015.  The Officer was also of the view that all the documents were arranged by Win Dragon and that Win Dragon had made C sign those documents when C started work, and that the handling of the matter by Win Dragon was improper and unacceptable.

26.  The Officer accepted C’s evidence that she was arranged by Win Dragon to sign all those documents and that she had no knowledge of the contents and nature of those documents, particularly the Authorisation which was in Chinese, and that C had no alternative but to sign those documents at the request of the agent.  The Officer said he did not believe that D had no discussion with Win Dragon prior to receiving those documents, as otherwise, why would Win Dragon prepare the Authorisation and the Debt Statement in advance.

27.  What was clear was that the Officer was of the view that the exceptions for deducting wages set out in s 32 of the Employment Ordinance, Cap 57 (“EO”) did not apply.

Grounds of Appeal   

28.  There were 11 grounds of appeal, but as summarized by Mr Yu, the Officer erred by :

(i) Finding that D’s non-payment of the amount HK$ 24,640 to C, which was instead paid to Toyo Finance to discharge the Loan, amounted to an unlawful deduction of wages (“Unlawful Deduction Ground”);

(ii) Failing to find, investigate or consider that the legal significance of the contractual documents signed by C was that the amount of HK$ 24,640 was used to repay the Loan owed by C to Toyo Finance at her request and this equated to a direct payment to C (“Failing to Investigate Ground”).

Unlawful Deduction Ground

Section 32 of the Employment Ordinance

29.  Section 32 of the EO provides as follows:

“(1) No deductions shall be made by an employer from the wages of his employee or from any other sum due to the employee otherwise than in accordance with this Ordinance.

(2) The following deductions may be made by an employer from the wages of his employee—

(a) deductions for absence from work: Provided that—

(i) in the case of a contract of employment under which wages are calculated on a basis of time, no such deduction shall exceed a sum proportionate to the period of time during which the employee was absent from work;

(ii) no such deduction shall be made for the purpose of defraying or partly defraying the cost of holiday pay or sickness allowance which the employer has paid or may be or may become liable to pay to the employee;

(b) deductions for damage to or loss of goods, equipment or property belonging to or in the possession or control of the employer or expressly entrusted to an employee for custody, or for loss of money for which an employee is required to account, where such damage or loss is directly attributable to his neglect or default: Provided that—

(i) the total amount recoverable by deduction in any one case shall not exceed the equivalent in value of the damage or loss suffered by the employer or $300, whichever is the less; and

(ii) the total of such deductions in any one wage period shall not exceed one quarter of the wages payable to the employee in respect of that wage period;

(c) deductions in respect of meals supplied by the employer at the request of the employee not exceeding the cost to the employer of such meals including expenses of production and service;

(d) deduction for accommodation provided by the employer for the employee or his family made in respect of the period such accommodation has been in the occupation of the employee or his family;

(e) deductions for the recovery of any advance or over-payment of wages made by the employer to the employee: Provided that—

(i) except with the approval in writing of the Commissioner, no such deductions shall be made by way of discount, interest or any similar charge in consideration of such advance or over-payment; and

(ii) the total of such deductions in any one wage period shall not exceed one quarter of the wages payable to the employee in respect of that wage period;

(f) deductions, with the written consent of an employee, for the recovery of any loan made by the employer to the employee;

(g) deductions made at the request in writing of the employee in respect of contributions to be paid by him through the employer for the purpose of any medical benefit scheme, superannuation scheme, retirement scheme or thrift scheme lawfully established for the benefit of the employee or his dependants;

(ga) deductions permitted by section 15L(4);

(h) deductions which are required or authorized under any enactment to be made from the wages of an employee;

(i) other deductions made at the request in writing of the employee and with the approval of the Commissioner, which may be signified in respect of any particular case in writing or in general by notice in the Gazette.

(3) Except with the approval in writing of the Commissioner, the total of all deductions, excluding deductions in respect of absence from work or any deduction pursuant to an attachment order made under section 20(1) of the Guardianship of Minors Ordinance (Cap. 13), section 9A(1) of the Separation and Maintenance Orders Ordinance (Cap. 16) or section 28(1) of the Matrimonial Proceedings and Property Ordinance (Cap. 192), made under this section from the wages of an employee in any one wage period shall not exceed one half of the wages payable to the employee in respect of the wage period.

(4)   Nothing in this section shall be construed as preventing an employer from paying to an employee at any time before the due date the amount of wages and other remuneration proportionate to work done and adjusting any amount so paid against the total amount payable at the end of the wage period.”

Definition of “deduction”

30.  There is no definition for the word “deduction” in the EO.

31.  Mr Yu submitted that on a true construction, section 32 does not prohibit an employer from paying an employee’s wages to a third party in discharge of the employee’s obligations to that third party.

32.  Mr Yu had referred to Alsop v Star Vehicle Contracts [1990] ICR 378 which was in relation to the jurisdiction of the industrial tribunal where an employee, who had received nothing from his former employers, made an application for unpaid wages pursuant to the Wages Act 1986. Wood J referred to section 1(1) of the Act which provided general restrictions on unauthorized deductions made by employers, and had said that the Act was designed to deal with “deductions” and not with “non-payments”, and that an industrial tribunal only had jurisdiction to deal with “deductions”[16].  Wood J then said it was only if there was proved to be (a) an amount admitted or found due as “wages” (section 7) of £X and (b) an amount which the employer claimed  was  due from the employee of £Y and (c) the employer sought to recover that amount by deducting it from wages which would otherwise be due that the tribunal had jurisdiction, and the issue was legality of the deduction[17].

33.  Mr Yu relied on what was said by Wood J in the above case to argue that there can only be a “deduction” if there is an amount the employer claims is due from the employee, and the employer seeks to recover that amount by deducting it from wages otherwise due. 

34.  However, as pointed out by Mr Yu himself, there were contrary views from Nicholls LJ in Delaney v Staples [1991] 2 QB 47 to Wood J’s definition of “deduction” in Alsop, and Nicholls LJ had said he did not think that it could be right to attempt to define “deduction” in any such limited way by Wood J.  Nicholls LJ had pointed out that there was no definition of “deduction” in the Act even though it occupied a key place in the scheme of the Act and that oversight could not have been an oversight. Nicholls LJ was of the view that Parliament must have intended that the word should not have a carefully circumscribed meaning and if that was so, and “any deduction” in section 1(1) was intended to have an extended rather than a confined area of application, this would cut away much of the ground on which the suggested distinction between deductions and non-payments[18].

35.  Nicholls LJ had also said that section 1(1) of the Wages Act 1986, or an unauthorized deduction, envisaged that an employee was owed wages and that from those wages an employer had made and retained a “deduction”, and that by way of contrast, would be a case where an employer simply refused or failed to pay an employer’s wages and in such a case, it was not one in which the employer had made a deduction from an employee’s wages, and this would be a case of non-payment[19]. 

36.  Mr Chan has referred this court to the definition of “deduction” in The Oxford English Reference Dictionary, 2^nd Ed which states:

“‘Deduct’ means ‘subtract, take away, withhold’

‘Deduction’ means in noun form (a) the act of deducting and (b) an amount deducted” 

37.  Mr Yu however argues that there had not been any subtraction taking away or withholding, as the employee or C was paid the full value of her wages, albeit not directly.  Mr Yu submits that where an employer pays his employee in full by other means, he has not “made and retained” a deduction as said by Nicholls LJ in Delaney.  In other words, in the present case D had not “retained” the deduction, as he had paid it to Toyo Finance on behalf of C.

38.  Mr Chan however submits that any deduction which does not fall within the statutory exceptions is unlawful.  He submits that EO was enacted for the purpose of protecting the rights of employees and sets out the basic terms of employment contracts in Hong Kong.  In particular, section 70 of the EO states as follows: -

“Any term of a contract of employment which purports to extinguish or reduce any right, benefit or protection conferred upon the employee by this Ordinance shall be void.”

39.  Mr Chan further submits that section 32 (2) of EO sets out an exhaustive list of what deductions are permitted.  In particular, all the permitted deductions are for the employer to retain part of the wages, except section 32(2)(g) under which an employer pays the deductions to third parties, which are made at the request in writing of the employee in respect of contributions to be paid by him through the employer for the purpose of any medical benefit scheme, superannuation scheme, retirement scheme or thrift scheme lawfully established for the benefit of the employee or his dependants.   There is also a catch all provision in section 32(2)(i), namely an employer needs to seek the approval of the Commissioner for any other deductions made at the request in writing by the employee.

40.  On the other hand, Mr Yu has argued that there is nothing in the EO to encompass the present situation, on the basis that:

(i)   Under common law, a payment by a debtor to a third party on the direction or request of a creditor is equivalent to a payment direct to the creditor, and there is nothing in the stature to deviate from this;

(ii)   The policy of EO is to provide protection of the wages of employees, and cannot extend to situations equivalent to the making of a direct payment of wages to an employee;

(iii)   Nothing in section 32 demands the result for which C is contending, namely that whatever does not fall within the exceptions in section 32 is a deduction, and this puts the cart before the horse because the court will first need to decide if section 32 is engaged before it considers the applicability of the exceptions.

41.  Mr Yu submits that section 32(2)(g) does not assist C, as those schemes referred therein may well be established by the employer itself, and thus the deduction may constitute a retention and deduction by the employer.

42.  Mr Yu also refers to section 26 of EO which provides for the manner and place of payment of wages, and section 26(2)(c) provides that with the consent of an employee wages may be paid to his duly appointed agent.

43.  In particular, Mr Yu relies on Hewlett v Allen [1894] AC 383 in arguing that a payment made by an employer, at the instance of an employee, to discharge some obligation of the employee, or to place the money in the hands of some person in whose hands the person employed desires it to be placed, is a payment to the employee as much as if the money has been placed in his/her hands.

44.  In the above case, the employee had signed an agreement to conform to all the rules and regulations of the employer’s and one of the regulations was that all employees were to become members of the sick and accident club.  In accordance with the rules of this club, weekly payments were made to the club, and from the fund thus established relief was given to the members in case of sickness or accidents.  The weekly payments were deducted from the employee’s gross amount of wages.  The employee never required and never received any relief from the fund.  After leaving her employment, the employee brought an action under the Truck Act (1 & 2 Will 4 c 37) to recover the amount of weekly payments deducted from her wages.  It was held by the House of Lords that within the meaning of sections 3 and 4 of the Truck Act the entire amount of the wages payable to the employee had been actually paid to her in the current coin of the realm, and that she was not entitled to recover from the employer the amount of the deductions.

45.  In Hewlett, reference was made to an earlier case Ex parte Cooper.  In re Morris (1884) 26 Ch D 693.

46.  In Ex parte Cooper, by an arrangement between employers and their workmen certain deductions were made from the workmen’s wages (which were paid monthly) for a “doctor’s fund”, which was established for the purpose of paying a doctor, who attended the workmen and their families and supplied them with medicines in case of illness, and for another “reading-room fund” for maintaining a reading-room for the use of the workmen.  The sums thus deducted were handed over by the employers to the doctor and the treasurer of the reading-room respectively from time to time. 

47.  There was no contract in writing between the employers and the workmen authorizing the employers to make the deductions nor was there any evidence that the doctor had accepted the liability of the employers in respect of his attendance on the workmen and there was no contract as to the reading room.  The employers filed a liquidation petition, and at this time there was a sum of £149 standing to the credit of the “doctor’s fund” and a sum of £63, which had arisen from deductions made from the workmen’s wages, and not yet been paid over to the doctor or to the treasurer of the reading-room.  It was held that there had been no valid payment within the Truck Act of £149 and £63 to the workmen and that they were entitled to be paid the amount in full out of the employers’ estate as unpaid wages.

48.  As Cotton LJ said in Ex parte Cooper, the Truck Act provided that payment of wages were only to be made in cash, and those two particular sums deducted from the workmen’s wages had never in fact been paid over by the employers to the doctor or to the treasurer of the reading room, and therefore payment in cash of those sums had never been made under the Truck Act.  Cotton LJ then went on to say :

“But we do not in any way encourage the idea that our decision would apply (I desire to guard myself in this way, and I understand that the Lord Chancellor intended to do so) to any deduction made from the wages and in fact applied by the employers by the direction of the workmen, or in pursuance of an arrangement made with them in discharge of a debt for which they were liable. That might possibly amount to a payment in cash, not to them, but to their agent, or a person appointed on their behalf to receive it. If again there were evidence that the employers had made themselves liable to the doctor, and he had accepted their liability, and had consequently no claim at all against the men, the case might have stood very differently. But I cannot find any evidence of that[20].”

49.  Part of the above passage was cited in Hewlett[21].  Mr Yu also referred to the hypothetical opinion of the Lord Chancellor Earl of Selbourne in Ex parte Cooper, that if certain sums were payable by the workmen under contracts to the doctor and for the purposes of the reading-room, and that by arrangement with the employers those sums were to be paid out of that part of the wages which had not been paid to the men and a settlement upon that footing had taken place, he was not prepared to say that such a settlement could have been treated as a nullity by reason of the Truck Act[22].

50.  Both the case of Ex parte Cooper and the case of Hewlett concerned the then Truck Act 1831 (1 & 2 Will 4 c 37), which provided for the wages of artificers of any labour in any of the stipulated trades to be paid in the current coin of the realm only and not otherwise.  As seen in those relevant sections set out in Ex parte Cooper, the statute was primarily to prevent the payment of the workers by their employers in any manner other than by cash.  

51.  Further, as said by Davies J  in Williams v Butlers [1975] 1 WLR 946, the Truck Act 1831 was passed in order to deal, inter alia, with two types of mischief, one a practice on the part of employers to pay employees’ wages partly in coin of the realm and partly in goods and the other was a practice on the part of employers to insist that employees should spend part of their wages in shops owned or controlled by the employers[23].

52.  In the case of Williams, there was a tripartite agreement between the employers, the employee who was an artificer within the meaning of section 3 of the Truck Act 1831, and the trade union of which the employee was a member.  Under the agreement, on receipt of notification from the union, deductions were made from the employee’s weekly wages and paid to the union for the employee’s contributions.  The deductions were to be terminated on receipt of written instructions from the union.  The employee then, without asking the union to instruct the employers to terminate the deductions, requested the employers in writing and orally forthwith to cease making the deductions. The employers continued to make the deductions and they were charged. 

53.  The issue in the above case was whether the employers were in contravention of the provisions of the 1831 Act, on the ground that a deduction made after the employee withdrew his consent was illegal, null and void, since the entire amount of wages payable to him was not actually paid to him in the current coin of the realm and the agreement was similarly illegally.

54.  It was held, on appeal, that the magistrate was correct in dismissing the charge against the employers.  Davies J had considered the various sections in the 1831 Act and had also referred to the Hewlett case being a leading authority for the proposition that if an employer deducted part of the wages of an employee for the purpose of paying them over to a third party, and did so with the consent and by the authority of the employee, then the employer did not contravene section 3 of the 1831 Act[24].

55.  Davies J further observed that in cases decided since Hewlett, “a very clear line has been drawn between contracts and deductions made to benefit the employer and those relating to payments to a third party”[25], and came to the view that the case before him fell on the Hewlett side of the line[26]. Davies J further said that the real basis for contention in the Williams case was whether the deductions by the employers were illegal after the employee withdrew his consent, and he came to the view that the employers committed no offence under the 1831 Act.

56.  In Williams, Davis J accepted that the 1831 Truck Act was passed in the first half of the 19^th century and that the legislature did not in 1831 contemplate the situation which arose in the case before him but he was of the view that the conclusion reached was not only consistent with the provisions of the Truck Act itself as interpreted by the courts but was consistent with recognition of the present day conditions and sensible practices. 

57.  Williams was a case decided in 1975 and in 1996 the Employment Rights Act was introduced in England and Wales (“1996 Act”).  Section 13 (1) provides that an employer shall not make a deduction from wages of a worker employed by him unless (a) the deduction is required or authorized by virtue of a statutory provision or a relevant provision of the worker’s contract, or (b) the worker has previously signified in writing his agreement or consent to the making of the deduction. Section 13 (2) then sets out what “relevant provision” means, and section 13 (3) further sets out as follows:

“Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker’s wages on that occasion.”

58.  Further, section 14 (4) of the 1996 Act provides as follows:

“Section 13 does not apply to a deduction from a worker’s wages made by his employer in pursuance of any arrangements which have been established —

…

(b) otherwise with the prior agreement or consent of the worker signified in writing,

and under which the employer is to deduct and pay over to a third person amounts notified to the employer by that person as being due to him from the worker, if the deduction is made in accordance with the relevant notification by that person.”

59.  Mr Yu thus submitted in applying sections 13 and 14 of the 1996 Act a court will need to first decide how much wages were paid, including such wages previously deemed to be paid directly to the employee under the Hewlett principle and now being excluded from section 13 by section 14 (4) before it can decide whether there is any deduction under section 13.

60.  Mr Chan accepted Mr Yu’s submissions in respect of Hewlett and of the 1996 Act, but submitted that the employment law regime in Hong Kong is different from that in England and Wales.

61.  In Hong Kong, the EO first came into effect on 27 September 1968 and the purpose was to provide  for the protection of the wages of employees, to regulate general conditions of employment and employment agencies, and for matters connected therewith[27].

62.  Part VI and section 32 of EO concerned “Deductions in Wages”.  There have been amendments to various subsections of section 32 since 1968.  In particular, section 32 (2)(g) was introduced in 1990:

“(g) deductions made at the request in writing of the employee in respect of contributions to be paid by him through the employer for the purpose of any medical benefit scheme, superannuation scheme, retirement scheme or thrift scheme lawfully established for the benefit of the employee or his dependants;

  (Amended 41 of 1990 s 17)”

63.  Further in 1997, section 32(3) was introduced, as follows:

“Except with the approval in writing of the Commissioner, the total of all deductions, excluding deductions in respect of absence from work or any deduction pursuant to an attachment order made under section 20(1) of the Guardianship of Minors Ordinance (Cap 13), section 9A(1) of the Separation and Maintenance Orders Ordinance (Cap 16) or section 28(1) of the Matrimonial Proceedings and Property Ordinance (Cap 192), made under this section from the wages of an employee in any one wage period shall not exceed one half of the wages payable to the employee in respect of the wage period.

(Amended 69 of 1997 s 34)”.

64.  There was also a new section 32(2)(ga) added in 2014, in relation to deductions permitted by section 15L(4).

65.  As submitted by Mr Chan, the EO was enacted significantly after the cases of Ex Parte Cooper and Hewlett. Yet, there are no provisions in EO incorporating the principle set out in Hewlett.

66.  Further, notwithstanding there have been various amendments to section 32 of the EO since 1996, the provisions of sections 13 and 14 of the 1996 Act have clearly not been incorporated in EO.

67.  It thus appears that it was not the legislative intent to include those provisions of the 1996 Act and section 32 in the EO in Hong Kong is clearly differently worded from those relevant provisions in the Truck Act 1831 or the present 1996 Act in England and Wales.

68.  As pointed out by Mr Chan, which I agree, the exceptions in section 32 are restrictive and section 32 (2)(i) is a catch all provision.  In a case where the employer is requested by the employee in writing to make other deductions not authorised under subsections (a)-(h), the employer can seek the approval of the Commissioner under section 32(2)(i). Further, it is clearly stated under section 32(3) that any deductions made under section 32 from the wages of an employee in any one wage period, unless with the approval in writing of the Commissioner or otherwise excluded in that subsection, shall not exceed one half of the wages payable to the employee in respect of the wage period.

69.  Mr Yu has argued that if Mr Chan’s submissions were accepted by this court, there could be serious ramifications, and this would mean, say in a case when a worker requests her employer to make deductions to pay her ailing mother, such a deduction will not be allowed.

70.  I do not see why in the example given by Mr Yu, the employer cannot seek the approval of the Commissioner under section 32(2)(i).  There was also no evidence, nor was it D’s case that C had consented and/or appointed Toyo Finance as her agent to receive the sum of HK$24,640, which would be permitted under section 26 of EO.

71.  As there is a specific provision in our statute to provide for consensual deductions, other than those specifically set out, to be approved by the Commissioner, I have come to the view that this provision should prevail over the principle in the Ex Parte Cooper and Hewlett cases.  I have also come to the view that there had been deductions by D and such deductions were not lawful under section 32 of the EO.

Failing to Investigate Ground

72.  Mr Yu submits that the Officer failed to find, investigate or consider that the legal significance of the contractual documents signed by C was that the amount of HK$24,640 was used to repay the Loan owed by C to Toyo Finance at her request and this equated to a direct payment to C.

73.  The Officer had said in the Reasons that he was unable to see among the exhibits that C had borrowed the Loan from Toyo Finance in Madagascar, and further that there was no loan agreement nor proof that the amount of HK$24,640 was paid/handed over to C, and that was why he doubted the existence of the Loan mentioned in the Authorisation and the Debt Statement. He had further said that the Authorisation was dated 23 January 2015 which was before C arrived in  Hong Kong[28].

74.  As Mr Yu has pointed out, the Officer had failed to mention certain documents and statements in the Reasons. In particular, there was a written statement by Mr Cheng Chi Ming, the President of Madagascar Agences de L’emploi Association (MALA) dated 31 January 2016[29], and 2 written statements by Mr Chan Yu Mei dated 1 February 2016[30].

75.  Mr Cheng and Mr Chan have both filed affirmations on 12 January 2017 to support D’s application for leave to appeal, in which they confirmed that prior to the trial, at the request of a Labour Tribunal Officer Mr Poon Fat Tik, they had sent their respective statements to Mr Poon.  Mr Cheng further confirmed that he had sent supporting documents for the Loan, including 3 supporting documents: (i) a letter issued by Toyo Finance on 29 January 2016 confirmation that C had settled all repayments for the Loan (“Confirmation Letter”)[31]; (ii) a copy of the loan agreement made between Toho Finance and C (“Loan Agreement”)[32]; and (iii) a copy of the personal loan application form on Toyo Finance’s letterhead signed by C (“Loan Application Form”)[33].

76.  Upon enquiry by C’s solicitors and search of the Tribunal files, the statements of Mr Cheng and Mr Chan and the three documents were confirmed by Mr Poon to have been received by the Tribunal before the trial and were made available to the Officer before the trial.

77.  Mr Chan had declared in his statement that the Authorisation was written by him on behalf of C, at C’s request, on 23 February 2015, which C then signed and also affixed her thumbprint and that the Authorisation was handed to D by Mr Chan on C’s first day of work.  Mr Chan had further said that as he did not know the language of Madagascar, and C did not understand English, and so Mr Chan decided to use Chinese and English for the Authorisation.

78.  It was Mr Cheng’s evidence that all domestic helpers from Madagascar have to undergo training under the regulations of Madagascar and that a helper will normally borrow a loan to pay the local training school for the training fee, and will then repay by instalments from her wages in Hong Kong.  According to Mr Cheng, when he was approached by D’s wife for assistance in the present case, he approached the training school and the finance company and had obtained supporting documents for D’s wife.

79.  So far as Mr Chan’s evidence was concerned, there was no explanation in his statements as to why the Authorisation was dated 23 January 2015.  Even if it were an error (although no such evidence), as Mr Cheng had said that it was a usual practice that a helper would repay by monthly instalments of HK$3,080, there was no explanation why such an authorization could not have been prepared in French (Madagascar language) or signed by C in Madagascar at the same time when the Loan Agreement or the Loan Application Form was signed.

80.  It was also not clear from Mr Cheng’s statement as to what documents were obtained from the training school, and what supporting documents were given to D’s wife since the Loan Agreement and the Loan Application Form were sent by Mr Cheng to the Tribunal and not by D/his wife. 

81.  I accept that there was no mention in the Reasons of the statements of Mr Cheng and Mr Chan, and neither was called by D to give evidence. There was also no mention by the Officer of the Confirmation Letter, the Loan Agreement and the Loan Application Form. 

82.  However, both the Loan Application Form and the Loan Agreement were undated.  There was also inconsistency among the two documents, in that the Loan Agreement indicated that the Loan was for expenses for “departure documents” and “placement fee”, and there was no mention that the Loan was for any training as stated by Mr Cheng.  In the Loan Application Form, the Loan was only stated to be a “personal loan”.   Even though there was a receipt signed by C and affixed by her thumb print on the Loan Agreement of the sum of HK$24,050 in the presence of East Asia, there was no evidence that the sum, or any part therefor, was ever paid to C personally or directly.

83.  The Officer had pointed out in the Reasons that there was no evidence/proof that the Loan amount was paid or handed over to C.

84.  In fact, there was no evidence/proof that the amount of HK$24,050, or any part thereof, was paid to any training school in Madagascar for C’s training.

85.  Notwithstanding the lack of mention of those statements by Mr Chan and Mr Cheng, or the other supporting documents sent by Mr Cheng, the Officer had said even if there was a genuine loan, the deduction by D was not supported by reasonable grounds and in any event the Officer had clearly stressed that any deduction would only be lawful if such a deduction fell within those exceptions set out in section 32.  The Officer was clearly of the view that the deductions by D did not fall within those exceptions[34].Thus, whether the Loan was genuine or not was in fact immaterial.

86.  I have earlier indicated that I have come to the view that there was an unlawful deduction of HK $24,640.   Thus, even if there was failure on the part of the Officer to investigate or make proper enquiries, there is no reason why the matter should be remitted to the Tribunal for full investigation/enquiry into (i) existence of the Loan and (ii) C’s agreement and/or consent and/or request to D for the deductions.

87.  Mr Yu has also raised the issue of estoppel, in that the Officer had erred in law in failing to find that C was estopped from denying that she had received the amount of HK$24,640.  In this respect, I accept Mr Chan’s submission that the estoppel argument is unsustainable as unlawful deduction of wages cannot be an enforceable or exercisable right, duty or power in the employment relationship between C and D.

Conclusion 

88.  In light of what I have said above, I have come to the conclusion that D’s appeal should be dismissed.

89.  I see no reason why costs should not follow the event.  I order D to pay C’s costs of the appeal.

90.  Lastly, I thank Counsel for their submissions and their assistance to this court.