HKSAR v. LI FUNG CHING CATHERINE

FAMC No. 4 of 2012

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 4 OF 2012 (CRIMINAL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM HCMA NO. 662 OF 2011)

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DETERMINATION

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Mr Justice Ribeiro PJ :

1.  We dismissed this application for leave to appeal for reasons which we now provide.

2.  The applicant was director of a company called Tonic Electronics Ltd (“TEL”) which faced serious financial difficulties.  Wages were not paid to the five complainant employees for the months of October and November 2009.  They then left their employment in December 2009.  TEL was wound up on 30 June 2010 and the employees have, even today, still not been paid.

3.  The applicant was convicted on 11 summonses for non-payment of wages in contravention of the Employment Ordinance.[1] Sections 23 and 24 require wages to be paid not later than 7 days after they fall due and section 63C makes it an offence if an employer wilfully and without reasonable excuse contravenes those sections.  Where the employer is a company and the offence is committed with a director’s consent or connivance or is attributable to the director’s neglect, section 64B(1) makes that director guilty of the like offence.

4.  The Magistrate[2] found that the company had deliberately failed to pay wages, deciding to meet other operating expenses instead in the hope of keeping afloat.  He found that this had been done with the applicant’s consent or connivance or was attributable to her neglect.  The failure to pay was held to be without reasonable excuse.  She was fined a total of $110,000.

5.  On appeal to the Judge[3] it was argued that the company had a reasonable excuse for its non-payment of the wages, namely its parlous financial condition and genuine attempt to salvage its business.  That was a hopeless argument and was rightly rejected.  A company which chooses to use its resources to meet other expenses instead of paying the wages owed to its employees is making a calculated decision to break the law designed to protect those employees – the very antithesis of a reasonable excuse for non-payment.  The application for leave to resurrect that argument before the Court must fail.

6.  It was also submitted before the Judge that the Magistrate had been wrong to find consent or connivance on the applicant’s part.  The Magistrate had noted her testimony that she had disagreed with her two fellow directors and voted against withholding the wages.  However, as the Judge pointed out, it does not follow that he accepted her evidence.  There was no formal board meeting or vote; her disagreement was not minuted and the Magistrate found that it “was obvious that she agreed to such a decision at the end of the day.” 

7.  The Judge found that in any event the convictions were amply justified on the footing that she had “connived” at the company’s non-payment of wages, adopting the Shorter Oxford’s definition of “connivance” as “assistance in wrongdoing by conscious failure to prevent or condemn; tacit permission”.

8.  The applicant submits that a suitably important question arises in this context as follows:

“Whether a dissenting director in a company’s board of directors meeting who voted against the decision in deferring payment of wages would (amount) to ‘consent, or connivance of, or to be attributable to any neglect’ on her part within the meaning of section 64B(1) of the Employment Ordinance, Cap 57.”

9.  We do not consider that a proper question to be referred to the Court.  In each case it is a question of fact whether a director connived in a company’s unlawful failure to pay wages.  The premise of the proposed question is that a director’s vote against deferring wages is capable of being decisive against a finding of connivance.  That premise is invalid. 

10.  Even assuming that the applicant had so voted, it was perfectly open to the Magistrate to find her connivance properly established on the evidence.  She had remained a director and was responsible, as the Magistrate and Judge found, for the company’s daily operation, personnel and finances.  She retained her position throughout November obviously knowing that the October wages had not been paid and that other expenses would be given priority so that the November wages would not be paid either.  As the Magistrate found, “she took no step at all in stopping the company” from pursuing its decided course.  In such circumstances, the Magistrate was entitled to find that it “was obvious that she agreed to such a decision at the end of the day.”   There is no basis for suggesting that there has been a substantial and grave injustice.

11.  The application for leave was accordingly dismissed.