CHAN CHEUNG FONG v. NG WING KWOK

Employment - appeal from Labour Tribunal on award of unpaid wages, wages in lieu of notice, double pay and severance pay - whether claimant may in Labour Tribunal proceedings abandon time barred part of claim for period preceding statutory 12 month claim period and recover wages and other sums due within limitation period - interpretation of agreement - whether there was evidence that respondent was an employee between 1.4.86 and 30.3.87 - Held: 1. A claimant may bring proceedings in the Labour Tribunal for only that part of a claim which is not time barred under Section 9; 2. The remuneration paid by the appellant to the respondent was wages; 3. The respondent continued to be an employee of the appellant from 1st April 1986 to 30th March 1987; 4. Appeal dismissed and award of $95,139.80 upheld.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

Labour Tribunal Appeal No. 1 of 1988

________________

_______________

J U D G M E N T

_______________

1. This is an appeal from the judgment of Presiding Officer Mr. G. Chan in the Labour Tribunal who on 17th December 1987 ordered the appellant to pay the respondent the sum of $95,139.80. That sum was made up of 1 month's wages in lieu of notice of $6,000, unpaid wages from 1st May 1986 to 30th March 1987 of $65,806.50, double pay of $6,000 for 1986 and severance pay of $17,333.30.

2. In the Labour Tribunal the respondent had claimed he was an employee of the appellant from 1st December 1982 to 30th March 1987. The appellant had carried on a construction business and it was undisputed that from 1st December 1982 the respondent was first employed mainly in relation to costing construction projects. The respondent stated that towards the end of his employment he was also engaged in recovering for the appellant, large sums due by the appellant's principal debtor, Technic Construction Co Ltd.

3. The appellant maintained that he ceased to employ the respondent on 31st March 1985 The appellant stated that thereafter in consideration of payment of a service fee, the respondent independently contracted to recover the sums due to the appellant by Technic Construction Co. Ltd. The learned Presiding Officer at the beginning of his detailed judgment, recorded that the main issue in the proceedings before him, was whether during the period from 1st April 1985 until 30th March 1987, the respondent continued to be an employee of the appellant. After reviewing all the evidence the learned Presiding Officer held that the respondent did continue to be an employee until 30th March 1987. From that judgment, including the incidental findings which resulted in the sum of $95,139.80 being awarded, the appellant now appeals.

4. The first two grounds of appeal were based on jurisdictional issues and related to the time limitation provisions of Section 9 of the Labour Tribunal Ordinance, Cap. 25. The first ground of appeal was that the Tribunal had no jurisdiction to determine the claim as the cause of action arose more than 12 months before the date the claim was filed. The second ground was that the learned Presiding Officer erred in law in finding that he might, without the consent of the parties, sever part of the claim over which he had no jurisdiction and hear the part over which he had jurisdiction.

5. Section 9 contains threefold time limitation provisions. Sub-section 9(1) generally limits the Tribunal's jurisdiction to claims where the cause of action arose, no longer than 12 months before the date on which the claim is filed. Sub-section 9(2) exceptionally provides that where a claim arises partly before and partly after the 12 month limitation period, the Tribunal may, subject to the consent of all the parties, sever the claim and hear that part which falls within the 12 month limitation period. Clearly, if the parties do not so consent, the Tribunal may not unilaterally sever a claim. Finally, Sub -section 9(3) contains residual provisions which enables claims, time barred under Sub-section 9(1), to be instituted in the High Court or District Court. In the latter event it would be the limitation periods of those courts and not Section 9, which would govern a claim.

6. Counsel for the appellant submitted that the claim for wages originally covered the period from 1st April 1986 to 30th March 1987 and was filed on 11th May 1986. If that were the position, the first 10 days of that period would be time barred. I accept that at no stage did the appellant consent to severance of those 10 days under Section 9(2). I also find that at no stage during the hearing before the Tribunal did the respondent apply for severance, nor did the Tribunal make any severance order.

7. However, after Counsel for the respondent pointed out that the original claim made under Form 2, was only for the period from 1st May 1986, Counsel for the appellant conceded that was the position and that he had been misled by the evidence of the respondent recorded at page 13 of the notes of proceedings. It is there recorded that wages had been unpaid since April 1986 but that because of the time limitation provisions, wages were only being claimed from 1st may 1986. Having inspected Form 2 I find that is the position and that from the beginning the respondent only claimed wages from 1st May 1986. Accordingly no question of severance arose at the hearing and there was no requirement for the Tribunal to exercise its limited powers under Section 9(2) nor did it purport to do so. The appellant's original criticism of the Tribunal on this ground was therefore misconceived.

8. Notwithstanding the appellant's factual misunderstanding of the position, he went on to maintain his first ground of appeal but on an alternative basis. His Counsel submitted that as a matter of fact the cause of action arose no later than 1st May 1986 when the prior month's wages remained unpaid. The submission continued, that under Section 9, a claimant was not able to abandon the time barred part of his claim and elect only to pursue the balance of the claim. It was pointed out that otherwise it would be open to a claimant to pursue the latter part of his claim in the Labour Tribunal and still institute proceedings in the High Court of District Court for the time barred portion of claim. Section 9, it was submitted, was designed to avoid such a fragmentation of a claim. In such circumstances, a claimant required the consent of the other party or alternatively, without such consent, had to bring the whole of his claim in the appropriate Court. Otherwise a claimant could bring part of his claim in the Tribunal without having to waive his right to bring, at a later date, the earlier part of his claim in a Court.

9. Counsel for the respondent submitted that where the recovery of part of the wages unpaid to an employee, were time barred, he could elect to claim merely the remaining wages which were not time barred. It was submitted that was precisely what the respondent had done since the inception of the proceedings and thereafter consistently throughout them. Accordingly, from the very beginning of the Labour Tribunal proceedings, the claimant was within the limitation period. Counsel also referred to the what he described as the similar principle contained in Section 34 of the District Court Ordinance, Cap. 336 under which a plaintiff may abandon any excess over the maximum monetary jurisdiction of $60,000 and the Court then has jurisdiction to hear the action as to the balance not exceeding $60,000. Counsel for the appellant replied that there was however no similar express provision in the Labour Tribunal Ordinance.

10. Counsel were unable d to refer me to any Hong Kong authority on this issue, although Counsel for the appellant cited the English Court of Appeal decision Read v. Brown (1888) 22 QBD 128 on the definition of a cause of action and part of a cause of action. I find the question whether a claimant in the Labour Tribunal, has the right to abandon the time barred part of a claim and recover the balance, to be one of some difficulty. The common law is well settled that where there are continuing contractual defaults, they may give rise to separate causes of action, so long as they continue. A similar position exists in tort. If non-payment of April wages was outside the limitation period, then at common law a claim would not be time barred for the separate causes of action, relating to May and subsequent months. A claimant might institute an action for the remaining months and no limitation defence could be raised in a Court under the Limitation Ordinance, Cap. 347 or at common law, to a claim for the non-time barred balance.

11. The difficulty which arises in the present appeal stems from the particular limitation provisions enacted in Section 9 to govern proceedings in the Labour Tribunal. The principle applicable in our Courts supports the respondent's submission that it is open to a claimant to claim merely that part of his claim not time barred under Section 9 Such an approach, facilitating claims by unrepresented employees before the Tribunal, rather than more formally to a Court, would also appear to be consistent with the general intent of the Ordinance.

12. On the other hand, if the scheme of Section 9 is analysed the appellant's contrary submission is not without merit. The appellant's short submission is that a claimant may only being a claim to the Tribunal where the whole of his claim is within the special statutory 12 month period. If, by mistake or otherwise, he brings it for a longer period he may, subject to the other party's consent, abandon the time barred portion and apply to the Tribunal for severance. Where the other party so consents, the Tribunal then has a discretion to order severance. The only other alternative open to a claimant where his claim exceeds the 12 month period, is to elect not to proceed in the Labour Tribunal at all but have recourse to the Courts. The appellant's submission, it is arguable, is strengthened by the fact that his interpretation of the Section, would result in an employer being protected from the expense and delay of a multiplicity of hearings before different forums.

13. In the absence of authority on Section 9, the issue resolves itself into a narrow question of statutory interpretation. The general intent of the Ordinance is to provide an informal tribunal, where parties may not be represented by solicitors or Counsel, to resolve employer-employee disputes. The proceedings may be conducted in the language of the parties; the strict rules of evidence are relaxed; appeals are limited to points of law and jurisdictional matters. The Ordinance particularly enhances the position of the employee. After considering the contents of Section 9 in the context of the Ordinance as a whole, I am satisfied that Counsel for the respondent's submission on the interpretation of Section 9, is the correct interpretation and better achieves the object of the Ordinance according to its true intent, meaning and spirits. I therefore hold that a claimant has the right, in compliance with Section 9, to bring proceedings in the Labour Tribunal for only that part of any alleged unpaid wages, not time barred under the Section. It follows that the first two grounds of appeal fail.

14. The remaining third, fourth and fifth grounds of appeal are more concerned with factual issues. The third ground related to the interpretation of an agreement signed by the parties in relation to the recovery of the monies due by Technic Construction Co. Ltd. The appellant submitted that the Tribunal erred in interpreting the material words in the agreement as meaning that a basic salary remained payable, if the service fee fell below a certain level. Counsel for the respondent correctly pointed out that the written grounds of appeal incorrectly quoted from the agreement which in fact instead refers to "... the service charge (including wages) ...."

15. The learned Presiding Officer obviously considered the agreement with care. The agreement confirmed the parties prior oral arrangement. The learned Presiding Officer had the advantage of seeing and hearing witnesses on both sides and was in no doubt that the agreement corresponded with the respondent's oral evidence. With respect, I share the learned Presiding Officer's conclusion, that the respondent continued as an employee with a minimum wage of $6,000 subject to it being increased at the agreed rate, depending on the amount of money recovered from Technic Construction Co. Ltd. This ground of appeal also fails.

16. The fourth ground of appeal was that the termination clause in the agreement was held by the Tribunal to be a wages remuneration clause. The learned Presiding Officer's conclusion on this point was based on his interpretation of the agreement in the light of the oral and other evidence adduced. I am well satisfied that this clause was not merely an authority to the respondent to collect debts due to the appellant but was evidence the Tribunal was entitled to accept, that for that work, the respondent was to continue to be employed and paid wages, subject to the payment of a service charge. The service charge I am satisfied, in the circumstances, was similar to a bonus calculated on the basis of the employee's success in recovering the debts owing to the appellant. The practical position was that he was going to be paid a minimum of $6,000 per month. This ground of appeal must also fail.

17. The final ground of appeal was that no reasonable Tribunal properly directed in law, could have made the finding that the respondent worked for the appellant between 1st April 1986 to 30th March 1987. The appellant submitted that there was no evidence that the respondent worked for the appellant during that period. However, that submission is expressly contradicted by the notes of proceedings. These show, at page 5, that the respondent called Mr. Tam Hung who read out the witness statement produced as Exhibit C8. He has been the caretaker front 1983 down until the present time, of the building where the appellant's offices were situated. His evidence was that except for one of two days, the respondent went to work during the material time from 9 a .m. to 5 p.m. every day.

18. The appellant elected not to cross-examine Mr. Tam on this evidence. The learned Presiding Officer was entitled to accept that evidence. There is no legal or factual basis on which the Tribunal's finding that the respondent worked for the appellant from 1st April 1986 to 30th March 1987 could be held to be perverse. On the evidence that was a wholly reasonable finding for the learned Presiding Officer to make. The fifth ground of appeal also fails.

19. The appellant's appeal must therefore be dismissed. There will be an order nisi for the appellant to pay the respondent's costs of and occasioned by the appeal to be taxed if not agreed, to become absolute, unless application is made to the contrary, within 14 days of the delivery of this judgment. The respondent's own solicitor and client costs shall also be taxed in accordance with the Legal Aid Regulations.