CHEUNG YUEN YEE AND OTHERS v. ROCK TRADING CO LTD

HCLA2/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 2 OF 2010

(ON APPEAL FROM LBTC NO. 5821 OF 2009)

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JUDGMENT

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The ex-parte application

1.  This is the defendant’s application for leave to appeal in respect of the decision of the learned presiding officer Ms Chui Yee Mei on 19 January 2010.  The three claimants claimed for annual leave and statutory holidays.  The defendant contended that all three of them were independent contractors and not employees of the defendant’s company. 

2.  The learned presiding officer relied on the landmark case of the Court of Final Appeal in Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951 in which Ribeiro PJ, listed out eight criteria or indicia in determining whether the contract is one of contract of service or contract for service. 

The basis of the application

3.  At the outset, Miss Queenie Ng of counsel representing the defendant stated that :

“The general test which the court applies in deciding whether or not to grant leave to appeal is this : leave will normally be granted unless the grounds of appeal have no realistic prospects of success. [Smith v Cosowrth Casting Processes Ltd (Practice Note) [1997] 1 WLR 1538]”

4.  This is not the criteria for granting or refusing leave in an application for leave to appeal from the Labour Tribunal to the Court of First Instance.  The only ground in this case should be the one provided in s. 32(1)(a) of the Labour Tribunal Ordinance, Cap. 25 :

“If any party is dissatisfied with an award, order or determination by the tribunal on the grounds that the award, order or determination is –

(a) erroneous in point of law; or

(b) outside the jurisdiction of the tribunal,”

5.  The only ground that an intended appellant can put forward is that the presiding officer erred in law.  Appeal on finding of fact is not allowed in labour tribunal appeals.

The findings of the labour tribunal

6.  In this case the learned presiding officer followed closely with the aforesaid eight criteria as laid down in the case of Poon Chau Nam.  She found that the more important indicia would be: the control of the defendant over the three claimants, the fact that the claimants did not have to take any economic risk in the performance of their duties, and they were not running a business of their own but rather they were selling the defendant’s goods at a price and at a place, being various department stores as determined and directed by the defendant.  She also found that the defendant also provided the tools and instruments for the claimants. 

7.  On the other hand, she found the trade custom is only neutral (i.e.: some sales persons are employees while some are independent contractors).  Further there was indication that the relationship is a contract for service rather than contract of service in that the claimants signed contracts titled in Chinese “推廣顧問協議” stating clearly that the claimants were independent contractor rather than employee of the defendant’s company.

8.  Furthermore the defendant did not pay for the MPF of the claimants and instead the defendant reminded them they should pay MPF themselves.  They would not be provided with employees’ insurance and they should take out the insurance policy themselves.  The defendant did not report to the Inland and Revenue Department for their income and they should report the same to that department themselves. 

9.  Taking all the evidence together, the learned presiding officer placed more weight on the first two points, i.e. the matter of control and the actual economic relationship between the two parties and decided that the claimants were employees of the defendant.  In respect of the written contract and the label they put to that contract, the learned presiding officer considered that it is only one of the considerations but not an absolute one.

Liability

10.  To my mind, I consider the learned presiding officer was perfectly entitled to make the aforesaid findings as she did.  In particular the relationship between the two parties is a matter of substance and not a matter of labelling i.e. not what the two parties have stated or even agreed to be the case.  The relationship depends on, in substance, how the relationship was established and operated. 

11.  I do not, in this case, find any arguable point of law that the learned presiding officer has erred. 

Quantum

12.  The defendant further appealed against the quantum found by the learned presiding officer.  From the written reasons for judgment it is true that the learned presiding officer found in respect of the 2^nd claimant that there was no breaking of the continuous service in the period between 20 October 2005 (Thursday) and 27 October 2005 (Thursday) (8 days).  It is provided in the Employment Ordinance that every week should start from Sunday and the learned presiding officer relied on Cap. 57, schedule 1, paras. 1(a)(d), 2 and 3. 

13.  This is usually referred to as the “4-18” principle and that is the contract of service would only be broken if for any period of 4 weeks immediately preceding the relevant date and within any one of these 4 preceding weeks, the employee work for less than 18 hours.  In fact, it is provided in the positive way that in any of the 4 preceding weeks, if the employee has worked for 18 hours or more, then that week would not be counted as breaking the continuity of the employment.

14.  Now, in respect of the 2^nd claimant, it is clear that in the week of 20 October 2005 being a Thursday, she has worked in the previous Wednesday, Tuesday, Monday and Sunday for four days.  For that week therefore there would be much more than 18 hours.  In respect of the week of 27 October 2005 being a Thursday she would have worked for Friday and Saturday and it is common ground that the 2^nd claimant would have worked for at least 9 hours a day.  Thus the required 18 hours of work would also have been fulfilled.  The presiding officer was perfectly correct in finding that the continuous service was not broken. 

15.  The trouble is in respect of the 1^st claimant, for a similar period of absence between 27 September 2007 (Thursday) to 4 October 2007 (Thursday) there was also an absence of 8 days.  The continuity of service of the 1^st claimant was found by the presiding officer to be broken.

16.  However there are two considerations here.  First, from the papers before me, the tribunal officer reported that the 1^st claimant was saying that she did not work from 27 September 2007 (Thursday) to 5 October 2007 (Friday) and not 4 October (Thursday).  If that is the case, then for the week beginning 30 September (Sunday) she would have worked for 6 October (Saturday) for one day only, i.e. at the most 9 hours or so.  I do not know whether the learned presiding officer made a typo there.  Clearly the two considerations for the 1^st claimant and the 2^nd claimant does not match.  If she made a typo there, then it would explain why the two considerations were in different footings. 

17.  However more importantly and secondly, assuming that she did not make a typo or mistake in her judgment, then she would have made a mistake in respect of the 1^st claimant only.  The defendant is not allowed to submit that since she made a mistake in respect of the 1^st claimant, she should also make a “mistake” for the 2^nd claimant and decide that the 2^nd claimant should also have a breakage of the continuous service.  This, to my mind, is a perverse argument and cannot stand.  In other words, only the 1^st claimant has a ground of appeal but not the defendant.

Final ground

18.  The last ground of appeal is also in respect of the 2^nd claimant.  The defendant submitted that the 2^nd claimant did not work after 24 December 2008 but did not give an one-month notice in lieu of wages and thus she should pay one-month wages in lieu of notice (“wilon”). 

19.  In the court below, the main bone of contention is whether each of the claimants was employed by the defendant or they were independent contractors.  The defendant had never put forward a counter-claim that if they were employees, then the 2^nd claimant should give one month notice, failing which she should pay one month wages in lieu of notice. 

20.  The 2^nd claimant explained in the court below that the reason why she was not working for the defendant was because the defendant did not send a vehicle to collect the goods on 24 December (Christmas eve) and she had been waiting in the street for 2 to 3 hours.  She was very annoyed and therefore thereafter they did not contact each other for some time.  When the defendant eventually contacted her and asked her to work for them, she said she had already been engaged in another company.  The failure to counterclaim is fatal because when this was not the defendant’s defence by way of set-off, the learned presiding officer made no finding of facts here.

21.  There was no submission or contention from either party to the presiding officer as to whether this termination was important in the determination of the case.  The presiding officer understandably did not make any finding of fact as to how the 2^nd claimant’s contract of employment had come to an end.  In fact originally from the papers before me, the 2^nd claimant claimed 7 days of wilon but decided to withdraw that claim.  Therefore how the 2^nd claimant’s employment had come to an end was no longer an issue for the tribunal. 

22.  It is not permissible for the defendant, at the stage of appeal, to ask for “wilon” by way of set-off when there was no determination of fact as to how the contract of service came to an end.  The 2^nd claimant said one thing and the defendant said something to the contrary.  Whether it is a case that the 2^nd claimant considered the defendant was in repudiation of the contract and she had accepted the repudiation by not continuing to work for the defendant, or the defendant’s version should be believed, is a fact-sensitive issue.  It is too late for the defendant to raise this issue at the appeal stage.

23.  Further, at the trial the defendant did not pursue its entitlement to dismiss the 2^nd claimant summarily under s. 9 of the Employment Ordinance.  This should be the end of the matter.  All in all I do not consider that the learned presiding officer has made any error of law in this respect.  

Conclusion

24.  By reason of the aforesaid matters, there is no arguable point of law in respect of all the grounds of appeal put before me.  I therefore dismiss the application for leave to appeal.  In this ex-parte application, I make no order as to costs.