CHEUNG FOR t/a SHEUNG MEI KNITTING & GARMENT FACTORY v. TSOI LAI HUNG AND OTHERS

Labour Tribunal Appeal No. 29/88

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an appeal from a decision of Mr Wahab, a presiding officer of the Labour Tribunal, made on the 28th June 1988, when he entered judgment in default in favour of the respondents' total claims amounting to $101,328.40 following the appellant's failure to comply with an order for security.

2. The claims of the respondents related to wages in lieu of notice, severance pay and other benefits under the Employment Ordinance.

3. When the parties came before the presiding officer on the 6th June 1988, he indicated that apart from an arguable point on a claim for maternity leave by the 7th respondent, there was no defence to the other claims. At the hearing one of the respondents said that the appellant was moving his assets to China which allegation was not denied. Although none of the parties sought an adjournment, the presiding officer decided of his own volition to adjourn the hearing, and made orders for the appellant to pay into Court security of $100,000 on or before the 27th June 1988, and to produce wages records relating to the 1st and 6th respondents. In default of compliance with either order, the presiding officer stated that judgment would be entered for all the claimants in their claims.

4. The appellant did not object to the order made for security but sought three weeks in which to make payment which application was granted. Subsequently, the appellant requested in a letter dated the 16th June 1988 addressed to the Registrar of the Labour Tribunal that the security be reduced. On the 21st June 1988 the presiding officer in chambers, in the absence of the parties, reduced the figure to $50,000, and that in default, judgment would be entered for the respondents for all their claims. By another letter dated the 25th June 1988 to the Registrar of the Labour Tribunal, the appellant requested a further extension for payment until the 12th July 1988, but this request was refused by the presiding officer on the 27th June 1988. On the following day, the 28th June 1988, as the order for security had not been complied with, judgment was entered in default in chambers for the total sums claimed by the respondents. The adjourned hearing date that had been fixed for the 28th July 1988 was also vacated. The appellant sought a review of the decision, but this was refused on the 10th August 1988.

5. In his reasons for decision, the presiding officer said that he made the order for security under section 30 of the Labour Tribunal Ordinance which reads: -

"The tribunal may, if it is of the opinion that an adjournment of the hearing of a claim may result in prejudice to a party because of the disposal or loss of control of assets by a defendant, grant an adjournment only on payment into the tribunal of such sum of money, or the giving of such other security for the payment of the amount of any award, as the tribunal may think sufficient."

6. The presiding officer conceded that there was no provision permitting judgment to be entered by default in the Labour Tribunal Ordinance, but invoked the provisions of section 46 to be read in conjunction with section 30. Section 46 provides: -

"In any matter of procedure for which no provision is made by this Ordinance or by rules made pursuant to section 45 the procedure applicable shall be such as the presiding officer may determine"

7. The presiding officer contended that the combined effect of sections 30 and 46 implied that he could order a "penalty" if the security was not paid. By virtue of section 18 of the Ordinance, the hearing of a claim must be in public unless the presiding officer considers that in the interests of justice that the hearing should be in private, while section 21 deals with the hearing of a claim in the absence of a defendant. Section 21 provides:

"If a defendant who has been duly served with a copy of the claim and a notice of hearing fails to appear at the hearing, by himself or by a person authorized by the tribunal to appear on his behalf, the tribunal may, if it is of the opinion that the facts relating to the claim are sufficiently established, hear and determine the claim and make such award or order as it may think fit, notwithstanding the absence of the defendant."

8. The Labour Tribunal is a creature of statute so the references by Miss Kwan, counsel for the respondents, to other Ordinances concerning other jurisdictions such as the District Court and the Small Claims Tribunal have no relevance.

9. The only issue that I have to decide is whether the presiding officer had jurisdiction to enter judgment in default if the order for security was not obeyed. There were grounds for ordering security as a condition for granting the adjournment, but in fact, there does not appear to have been a justifiable reason for an adjournment in this case in any event.

10. The only occasion when the presiding officer can determine a claim in the absence of a defendant is under section 21 of the Ordinance which does not apply in this case. The presiding officer had no jurisdiction to deal with the case summarily under the Ordinance, but should have proceeded to hear the application in the normal way. A defendant cannot be deprived of his right to be heard on the question of liability and quantum by virtue of his failure to comply with an order for security. If an adjournment is required, terms can be imposed for security under section 30, if it is appropriate, and if security is not provided within the time allowed, the adjourned hearing date should be brought forward. However, the imposition of a penalty for failure to comply with an order for security cannot be implied from the wording of section 30.

11. The presiding officer clearly erred in exercising the jurisdiction that he did, so that the appeal must be allowed. The case will be remitted for hearing under section 35 (1) (c) to the Labour Tribunal with a direction that there be a new hearing before another presiding officer.

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