OWYANG LOONG SHUI IVAN v. WINCO PAPER PRODUCTS CO., LTD

HCLA 13/2017

[2018] HKCFI 1228

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 13 OF 2017

(On appeal from Labour Tribunal Claim No LBTC 224 of 2015)

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J U D G M E N T

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A. BACKGROUND

1.  This is an appeal by the defendant (“the Company”) against part of the award of the Labour Tribunal (“the Tribunal”) concerning salary adjustment and costs for expert reports.

2.  The claimant (“Mr Owyang”) was the former CEO of the Company from 1 August 2003 to 30 September 2014.  The employment relationship terminated on 30 September 2014 with immediate effect by the chairman of the defendant, Mr Wong Yu Hong (“Mr Wong”).

3.  On 19 November 2014, the Company caused its solicitors to deliver a Termination Payment Cheque of $492,901.71 to Mr Owyang as termination payment together with a schedule of calculation.

4.  Mr Owyang disagreed with the calculation and brought a claim at the Labour Tribunal for balance of salary in lieu of notice, annual leave pay, long service pay and balance of salary adjustment. 

5.  After trial, the Tribunal essentially accepted the case of Mr Owyang.  The material findings were as follows:

(i)   The monthly salary of Mr Owyang prior to termination of the employment was $150,000.  Clause 7 of the employment contract dated 30 April 2011 provided that there were 2 parts of the salary, ie the basic salary and consultancy fee.  The latter was paid separately by the Company to Auloong Limited, a company wholly owned by Mr Owyang, in 2 instalments every year.

(ii)   Although the basic salary was stated to be $50,770, the actual monthly salary received by Mr Owyang from the Company was $80,000 in 2003, which was subsequently increased to $120,000 in 2010 and $150,000 in 2011.

(iii)   The reason for this arrangement of paying the monthly salary to Mr Owyang in two portions was to avoid causing embarrassment to Mr Owyang’s predecessor in the Company.

(iv)   The arrangement was supported by a series of salary adjustment documents signed by Mr Wong (“Salary Adjustment Documents”).

6.  It was the Company’s case before the Tribunal that, even on Mr Owyang’s calculation of monthly salary by reference to the Salary Adjustment Documents, the Company had actually overpaid a sum of $270,460 (“the Sum”).  The Sum formed part of a cheque for $400,920 dated 20 September 2012 to Auloong Limited (“the Cheque”).

7.  The Tribunal, however, held that it could not deduct the Cheque amount from the amount due to Mr Owyang.  It was for the Company to bring another claim for the Sum in another court.  The reasons were that:

(i)   It was unfair for the Company to raise a counterclaim or set-off at the end of the trial;

(ii)   The Company would not have paid in advance in September 2012 the salary of Mr Owyang in August and September 2014;

(iii)   It was Auloong Limited who received the Sum but Auloong Limited was not a party to these proceedings; and

(iv)   The Tribunal had no jurisdiction to deal with a tort dispute. 

8.  In the end, the Tribunal awarded Mr Owyang, amongst others, a sum of $200,460 for salary adjustment and $131,987.10 for costs.

9.  Pursuant to leave granted by this court on 5 July 2017, the Company now appeals against the Tribunal’s decision on 2 grounds:

(1)   That the Tribunal erred in law in failing to investigate and had misunderstood the true nature of the Company’s case regarding the Sum (Ground 1);

(2)   That the Tribunal erred in principle and/or in the exercise of discretion in awarding costs of a handwriting expert report in the amount of $120,000 to Mr Owyang (Ground 2).

B. LEGAL PRINCIPLES ON LEAVE TO APPEAL FROM THE TRIBUNAL

10.  Section 32(1) of the Labour Tribunal Ordinance (Cap 25) (“LTO”) provides that a party dissatisfied with an award may apply for leave to appeal to the Court of First Instance on the grounds that the award is (a) erroneous in point of law or (b) outside the jurisdiction of the Tribunal.

11.  The Presiding Officer has a statutory duty to investigate any matter which he may consider relevant to the claim, whether or not it has been raised by a party: section 20(3) LTO.  Failure to discharge this duty is a ground of appeal: Wai Mei Lai Stella v Viya Pramita, HCLA 3/2010, 28 June 2011, §16(3), Au J:

“Further, failure to discharge the statutory duty to investigate is a ground of appeal. However, it is trite that not every failure to investigate a relevant matter will give rise to an appeal. The appellate court has to be satisfied that the subject matter of the complaint must not only be relevant but be of such a nature that the lack of investigation will give rise to injustice, in that, a fair and proper determination of the claim cannot be attained: Chan Suk Bing Angie v Harbour Phoenix [1992] 2 HKC 459 at 462A to 463F; James Manuel Ho v Choy Kwei Ling Vionnon (unrep., HCSA 5/2004, 29 July 2005) at para 14 per Chung J.”

C.  GROUND 1 – FAILURE TO INVESTIGATE THE SUM

12.  For the purpose of this appeal, the Company does not challenge the finding that Mr Owyang’s monthly salary was $150,000 at the time of termination of employment and that there had been salary adjustments on the basis of the Salary Adjustment Documents from 2003 to 2014.

13.  The Sum comprised 2 parts: $200,460 and 2 payments totalling $70,000.

C1.  Nature of the Sum

14.  The Company claims that Mr Owyang had received a total of 10 payments for $400,920 between 2011 and 2015 but he omitted to include the Cheque for $400,920 in his calculations.  Had he included that payment, subsequent payments would accordingly be moved downwards by one entry:

Period	Amount	Deposit date	For adjustment period
2011-12	HK$400,920 HK$400,920 HK$400,920	28 Nov 2011 31 May 2012 09 Jul 2012	2011-12 part 1 2011-12 part 2 2011-12 part 3
2012-13	HK$400,920 HK$400,920 HK$400,920	24 Sep 2012 25 Apr 2013 21 May 2013	2012-13 part 1 2012-13 part 2 2012-13 part 3
2013-14	HK$400,920 HK$400,920 HK$400,920	02 Dec 2013 11 Apr 2014 11 Apr 2014	2013-14 part 1 2013-14 part 2 2013-14 part 3
2014-15	HK$400,920	14 Apr 2014	2014-15 part 1

15.  Applying $400,920 towards item D (salary adjustment of $200,460), there was thus an overpayment of $200,460.  In the premises, Mr Ho SC submits that no outstanding salary was owing to Mr Owyang in respect of August and September 2014 and item D should have been dismissed by the Tribunal.

16.  Mr Owyang admits receiving the Cheque but alleges at this hearing that it might have been a bonus.  He refers this court to Exhibit D15 which was a statement from the chartered accountants (HH Lam & Co) for the Company dated 9 February 2015.  It confirmed that “based on our audit evidence”, the Company has paid Mr Owyang “annual salary and Auloong Limited’s agency fees” for the years between 2007 and 2014. It then set out 9 payments of $400,920 which Mr Owyang was said to have received for the financial years ending 31/3/2012 to 31/3/2014.

17.  HH Lam & Co continued to state that:

“We also confirm that as at close of business on 31^st March 2014, according to our records, there were no outstanding balances between [the Company] and [Mr Owyang] or Auloong Limited regarding respectively Mr Owyang’s annual salary and Auloong Limited’s agency fee payment.”

18.  Exhibit D15 tallied with the Tribunal’s finding that Mr Owyang’s salary was raised to $150,000 since 2011.

19.  Mr Owyang asserts that when his employment was terminated, he was not allowed to return to his office to collect his belongings.  Accordingly, he was not able to show the purpose of the Cheque.

20.  Moreover, Mr Owyang asserted that the Company had been “flip-flopping” at the Tribunal.  I agree because:

(a)   The Company’s initial case in its Statement was that Mr Owyang’s salary was only $50,700. The Termination Payment Cheque had fully covered his entitlement and there was no salary owing.  The Company did not know what Mr Owyang meant by his claim for salary adjustment.

(b)   The Company’s case in the Supplemental Statement was that Mr Owyang had been paid “unused consultancy fee” for the period from October 2014 to March 2015 equivalent to $601,380 which Auloong Limited should repay.

(c)   Neither the Statement nor the Supplemental Statement of the Company (both filed in the Tribunal in February 2015) raised the issue of overpayment as now advanced by Mr Ho SC.

(d)   It was only in the statement of Mr Lee Yak Mau (Group CFO of the Company) dated 11 February 2015 that Mr Lee alleged overpayment of the Sum to Auloong Limited as agency fee.

21.  Mr Ho SC, however, submits that the payments of $400,920 was so regular as to form a payment pattern.  He invites this court to exercise its power under section 35(2)(a) LTO to draw the inference that the Cheque was really an “overpayment” which should have been taken into account in computing the total amount owed to Mr Owyang.

22.  In my view, Exhibit D15 did show “regularity” in the amount of each payment and the total paid for basic salary and agency fees matched the agreed terms.  However, the time interval between payments and the number of payments in each financial year varied and could hardly give rise to a “pattern”. 

23.  More importantly, I find there to be a dispute of fact as to the nature of the Cheque.  Given the alleged financial difficulty of Mr Wong and the irregular payments of the agency fees, it was not clear how the Company could have paid agency fees to Auloong Limited in advance or bonus to Mr Owyang.  HH Lam & Co, as an independent third party, did not find there to be a 10^th payment representing salary or agency fees.  Mr Owyang’s belated suggestion (made for the first time in his oral submission at this hearing) that the Sum was a bonus or the Company’s “flip-flopping” may affect each party’s credibility, but that is a matter for the Tribunal and not for this court.

C2.  Error of law in the Presiding Officer’s handling of the Sum

24.  The way the Presiding Officer dealt with the Cheque as set out in paragraph 7 above was erroneous as a matter of law.

25.  Firstly, the Company did not just raise the issue at the end of the trial but did so as early as 11 February 2015 in the statement of Mr Lee Yak Mau.  The Cheque was amongst Exhibit D28.

26.  Secondly, the Presiding Officer misunderstood the Company’s case on the Cheque as a payment in advance of Mr Owyang’s salary for August and September 2014.  Properly understood, the Company’s case was that the Cheque amount ought not to have been left out in the calculation of the termination pay.

27.  Thirdly, the Presiding Officer held that the Cheque amount could not be deducted from Mr Owyang’s claims because Auloong Limited was not a party to the proceedings in the Tribunal.  This holding was flawed and contradicted her express finding that Auloong Limited was an agent receiving salary on behalf of Mr Owyang. 

28.  Mr Ho SC rightly drew this comparison: Auloong Limited was no different from any family member or bank who received salary in accordance with the instructions of Mr Owyang.  It would not be necessary to bring in the family member or bank in order to decide if Mr Owyang had been overpaid by the Company.

29.  Fourthly, the Presiding Officer failed to appreciate that the Sum should be considered as a defence of set-off, which would have the effect of extinguishing the claim in whole or in part.

30.  In Karpex (HK) Ltd v Yasmine Printing (China) Ltd [2008] 1 HKLRD 199, the Court of Appeal held at §§9-10 that set-off is a well-recognised defence and summarised the 3 categories of set-off as follows:

(a)   set-off at law or legal set-off, involving mutual liquidated debts or money demands ascertainable with certainty at the time of pleading;

(b)   a defence in reduction of the claim that the chattel, by reason of non-compliance with the warranty, or the work in consequence of the non-performance of the contract, was diminished in value.

(c)   equitable set-off, which arose particularly where a cross-claim related to the subject matter of the claim and there were factors which would have rendered it unjust to enforce the claim without regard to the cross-claim.

31.  The question as to what is a set-off is to be determined as a matter of law and not by the form of pleading: Hanak v Green [1958] 2 QB 9 at 26 (cited with approval in Karpex at §9).

32.  The Presiding Officer failed to appreciate that the Cheque amount (being a liquidated amount) fell within the first category of set-off and could amount to a defence in law to all of Mr Owyang’s claim.

33.  Failure to investigate that defence amounted to an error in law: 陳漢訴祥興建造有限公司, HCLA 31/2003, 17 September 2003, §§6-8.

34.  Fifthly, the Presiding Officer mischaracterized the Company’s case on the Sum as a counterclaim.  At the trial, the Company’s primary position was that Mr Owyang failed to establish his claim for salary adjustment; alternatively, the Sum constituted a defence of legal set-off.  Either of these contentions sought to reduce or extinguish Mr Owyang’s claims but neither of them were meant to seek any money award for the Company.  The lack of a counterclaim or a demand (as suggested by Mr Owyang) did not mean that the Company could not rely on overpayment as a defence of set-off.

35.  At this hearing, Mr Owyang relies on the authority of 律政司司長訴李錦志, HCSA 5/2011, 2 September 2011, §§3-6, To J, for the proposition that the Tribunal had no jurisdiction to deal with a claim for overpayment of salary by an employer to an employee as it was not a claim which arose from the breach of a term of a contract of employment: paragraph 1(a) of the Schedule to LTO.

36.  The “overpayment” in that case was a stand-alone claim.  In view of my ruling that the Presiding Officer had mischaracterized the Company’s reliance on the Cheque as a counterclaim (as opposed to defence), 律政司司長訴李錦志has no application. 

37.  Sixthly, the Tribunal mischaracterized the Company’s case on overpayment as a claim in tort.  If the Company really had a counterclaim, the cause of action was for money had and received or unjust enrichment.  It was never the Company’s case that Mr Owyang committed any civil wrong for which the Company sought damages in tort.  The Tribunal plainly had jurisdiction to deal with the Company’s defence on the overpayment.

C3.  Defence of set-off for $70,000

38.  The Company says that a sum of $30,000 and $40,000 (both forming part of the Cheque) were mistaken payments arising from wrong computation stated in 2 of the Salary Adjustment Documents.  The table of Second Reconciliation (p 455 of the hearing bundle) set out clearly the basis of the calculation.

39.  The mistaken payment of HK$40,000 arose as follows:

(a)   According to Salary Adjustment Document for the period of 2009 to 2010, the monthly salary of Mr Owyang was increased from HK$80,000 to HK$120,000 with effect from April 2010.

(b)   The calculation stated in that document was as follows: “from Aug 2009 to Mar 2010, 7 months x [HK$80,000 – HK$49,770] = HK$211,610.  Apr 2010 to Aug 2010, 5 months x [HK$120,000 – HK$49,770] = HK$351,150.”  The total amount paid to Auloong Limited in this year was accordingly HK$562,760.

(c)   That calculation was incorrect.  In fact, there were 8 months (instead of 7 months) from August 2009 to March 2010.  The period of adjustment should also end in July 2010 instead of August 2010.

(d)   The correct calculation should be: 8 months x [HK$80,000 – HK$49,770] and 4 months x [HK$120,000 – HK$49,770].  The total sum that should have been paid to Auloong Limited was HK$522,760.

(e)   The Company had therefore mistakenly paid Auloong Limited HK$562,760 - HK$522,760 = HK$40,000.

40.  The mistaken payment of HK$30,000 arose as follows:

(a)   According to the Salary Adjustment Document for the period of 2011 to 2012, Mr Owyang’s monthly package was increased from HK$120,000 to HK$150,000 effective from 1 September 2011.

(b)   The increase in salary took effect from September instead of August of that year.

(c)   The correct calculation for the year of 2011-2012 should be 1 month x [HK$120,000 – HK$49,770] + 11 months x [HK$150,000 – HK$49,770] = HK$1,172,760. 

(d)   Instead, the Company paid Auloong Limited HK$1,202,760 (HK$400,920 x 3 instalments) in that year.

(e)   The Company had therefore mistakenly paid Auloong Limited HK$1,202,760 - HK$1,172,760 = HK$30,000.

41.  A payment made under a causative mistake is prima facie recoverable by the payor on the basis of restitution for unjust enrichment: Goff & Jones: The Law of Unjust Enrichment(9^th ed 2016), §9-131.

42.  Mr Owyang submits that the issue on these 2 sums was not raised at the trial and there was no evidence to suggest that those 2 payments were made by mistake.  I do not think so.  The issue was raised in the statement of Mr Lee Yak Mau.  The Presiding Officer failed to deal with it as part of the issue of overpayment.

43.  For the same reasons given in Section C2 above, the Presiding Officer erred in law in failing to consider these 2 payments in the defence of set-off.

44.  The proper order is to allow the appeal in relation to the issue of overpayment of the Sum as a defence of set-off and remit the issue to the Tribunal for investigation.

D.  GROUND 2 – WRONG AWARD OF COSTS FOR A HANDWRITING REPORT

D1.  Legal principles for awarding costs in the Tribunal

45.  According to section 28(1) LTO,

“(1) Subject to subsection (2), the tribunal may award to a party costs and expenses, which may include - (a) any reasonable expenses necessarily incurred and any loss of salary or wages suffered by that party; and ...” (emphasis added)

46.  Costs are in the discretion of the Tribunal and cannot be appealed against unless the Tribunal has erred as a matter of principle: Yung Mei Chun Jessi v Merrill Lynch (Asia Pacific) Ltd, HCLA 22/2011, 11 January 2012, §67, Au-Yeung J.

D2.  Relevance of the expert evidence

47.  A party can only adduce expert evidence if it is relevant to an issue and the issue is something that requires expert opinion on.

48.  The expert report examined the genuineness of Mr Wong’s signature on an agreement dated 22 June 2010 (“the Agreement”) concerning the sale of the Company’s share in a company called Himmer Winco. The Salary Adjustment Documents and Board Minutes dated 22 June 2010 were, together with other documents, used as samples for the expert’s comparison. 

49.  Mr Owyang explained in this way:

(i)   The Company had wrongly accused him of mismanagement in, amongst others, operating an enterprise in Beijing without the Company’s knowledge when, in fact, the Board Minutes signed by Mr Wong spoke to the contrary.  Mr Wong disputed, amongst others, whether the board meeting was held at all (“reason 1”);

(ii)   Mr Wong stated in his witness statement that “some of the signatures on [the Salary Adjustment Documents] may appear to be mine”; that he never queried the content of those documents when they were presented to him for signing by Mr Owyang, in whom Mr Wong placed trust and confidence. (“reason 2”)

So Mr Owyang adduced an expert report to defend his own reputation, to rebut Mr Wong’s denial of his signatures and to show that Mr Wong knew about the joint venture.

50.  Mr Ho SC submits that the Company never alleged that the Salary Adjustment Documents were not signed by Mr Wong in the proceedings.  He also refers to the fact that the Presiding Officer obtained express confirmation from Mr Chung, the Company’s representative, that the Salary Adjustment Documents were signed by Mr Wong. 

51.  With respect, when viewed in the context that Mr Owyang was suddenly terminated, faced unfounded allegations of misconduct and the Company’s denial of his salary being $150,000 per month, reason 2 would reasonably give rise to Mr Owyang’s concern that Mr Wong was disputing the authenticity of the Salary Adjustment Documents.  Mr Owyang could not be blamed for thinking that he had to strictly prove Mr Wong’s signatures.  I place little weight, however, on the confirmation of Mr Chung at the trial because it came after the expert evidence was adduced.

52.  But was the expert report relevant to any issue?

53.  Firstly, Mr Owyang was dismissed by the Company with payment of salary in lieu of notice.  All of his claims (paragraph 4 above) evolved around a core issue: whether or not the basis for computation should be Mr Owyang’s basic salary of $50,700 or $150,000 per month.  Neither the Company’s Statement nor Supplemental Statement raised any issue as to Mr Owyang’s mismanagement of the Company, still less an issue in connection with the Agreement.

54.  Secondly, the expert received instructions on 17 November 2015, long before issues of misconduct were first raised in the witness statement of Mr Wong filed on 9 January 2017.  Mr Owyang explains that back in October 2014, the Company was already challenging his relationship with Ting & Co, which was tantamount to challenging the authenticity of the Board Minutes.  This explanation plainly shows that the expert report did not relate to any issue.

55.  Thirdly, it was not Mr Wong’s signatures on the Board Minutes or Salary Adjustment Documents that were examined by the handwriting expert.   These documents were only used as samples for comparison and the signatures thereon were presumed to be Mr Wong’s.

56.  Accordingly, the expert report was not relevant to any issue, reason 1 or reason 2.

57.  However, the Tribunal had used the expert evidence.  In §26 of the Judgment, the Presiding Officer found that the expert had confirmed that the Salary Adjustment Documents and the Board Minutes were both signed by Mr Wong.  She had plainly misunderstood the matter in dispute and the true subject matter of the expert report.  That amounted to an error of law.

58.  For lack of relevance and error of law, the award of costs relating to the expert evidence must be set aside.

59.  Mr Ho SC has properly pointed out to this court that at one point at the trial, Mr Chung for the Company apparently indicated that he had no objection to the invoice of HK$120,000 (Transcript/100N). However, that indication could hardly bear any weight given my findings on lack of relevance and error of law on the part of the Presiding Officer.

60.  As a reminder to the Tribunal, it is important for the Presiding Officer to define, at a pre-trial hearing, the issue for an expert (eg an aspect of foreign law) or, where handwriting expert evidence is required, to identify the relevant document to be examined, before permitting a party to adduce expert evidence.  The other party should be given the opportunity to file an expert report as well.

61.  Further, although there is no ceiling imposed by the Ordinance in terms of costs of an expert report, proportionality of expert costs to the amount at stake ought to be taken into account when exercising discretion to decide the amount of costs.

E.  CONCLUSION

62.  I order as follows:

(1)   The appeal is allowed and the award is reduced to the extent of $270,460 under Ground 1 and $120,000 for costs under Ground 2. 

(2)   In respect of Ground 1, the matter is remitted to the Labour Tribunal for re-trial, before the same Presiding Officer, if possible.

F.  COSTS

63.  As a matter of principle, costs of an appeal should follow the event and be to the successful party.  However, the court may, in a labour appeal exercise discretion not to order costs against a respondent employee even if the appellant employer is wholly successful and is without fault.  This applies where eg the employee is unrepresented on appeal and has not put forward a case in bad faith (ie a false, frivolous or vexatious claim or false evidence) and has not misbehaved himself in the conduct of the litigation; or he is a passive respondent in the appeal.  To the contrary, if he is legally represented on appeal, he knows of the consequence of costs and he no longer litigates with the expectation of low-costs adjudication. The rationale has been set out in Ali Shoukat v Hang Seng Bank Ltd. at §§21-24, 20 June 20015, Deputy Judge To (as he then was).

“21.   Though costs is a matter of discretion for the court, appeals from decisions of the Labour Tribunal involving an unrepresented party often raise difficult questions of costs. The Appellant is wholly successful and was utterly without fault. On the other hand, but for the Presiding Officer falling into error, the Claimant would have his claim dismissed without costs. Cases of this kind often attract great sympathy from the courts. An employee who files an employment claim, succeeds before the Labour Tribunal or the Minor Employment Claims Adjudication Board (the “MECAB”), but loses on appeal will end up with the consequence of a costs order in the appeal which is far in excess of his claim. The same could happen to an employer of a very small business who losses an appeal by a legally aided employee. Their only hope under such circumstances is that the appellate court will tamper justice with mercy.

22.   I think appeals from the Labour Tribunal and the MECAB stands out from other civil litigation as a special class of their own. The purpose of the Labour Tribunal and the MECAB is to provide a speedy, efficient and cheap means of adjudication of employment claims. Usually, the disputes are resolved with no order as to costs. If costs are awarded, they are not substantial as the parties are not legally represented. Litigants have a reasonable expectation that their disputes will be resolved on a low-costs basis both at first instance and on appeal. In my view, this benefit of low-costs employment dispute adjudication should be extended to appellate proceedings if in all the circumstances it is just to do so. However, it is impossible to set out the circumstances when it would be just to exercise the discretion of making no order as to costs as each case depends on facts of its own. I think the following considerations should usually be taken into account in the exercise of this discretion. The primary consideration is whether the unsuccessful party has been guilty of unmeritorious conduct in the litigation both at first instance and on appeal. Of secondary importance are whether the unsuccessful party is legally represented in the appeal, whether he is the appellant or the respondent and balance of hardship the order of costs may have to the parties.

23. If the unsuccessful party to an appeal has not put forward a claim or a defence in bad faith and has not misbehaved himself in the conduct of the litigation, the appellate court should be slow in ordering costs of the appeal against him. Bad faith in this context means putting forward a false, frivolous or vexatious claim or defence and giving false evidence which is disbelieved. On the other hand, if he misled the Presiding Officer and obtained a judgment in his favour which led to the appeal, there is no reason why he should not bear the consequence of costs, even if such costs far exceeds his claim or the value of the claim against him. He only has himself to blame for his misfortune. Generally the discretion to make no order as to costs should lie in favour of the unsuccessful party who cannot afford legal representation. This is because if a party is legally represented on appeal, he knows of the consequence of costs and he no longer litigates with the expectation of low-costs adjudication. Likewise, the discretion should also be exercised in favour of the unrepresented respondent as he is a passive party to an appeal, provided that he has not been guilty of any unmeritorious conduct in the litigation.”

64.  The Company “flip-flopped” before the Tribunal in its case on the overpayment, but this appeal was wholly fought on legal issues.  The Company did not achieve the full objects of the appeal in respect of Ground 1.  It insisted on having its appeal on Ground 1 allowed instead of agreeing to a re-trial as raised by the court.  It was wholly successful on Ground 2 though. 

65.  The Company’s costs for the most important part of identifying arguable points of law and deciding to engage senior counsel would have been incurred before Mr Owyang was served with notice of the appeal.  The grounds of appeal and submission were very comprehensive right from the leave stage.

66.  However, whilst counsel’s thorough preparation and succinct arguments have greatly assisted this court, the amount of costs claimed was double the amount at stake in this appeal.  There was absolutely no justification for incurring such disproportionate costs and having 2 counsel. It was oppressive to an ex-employee.

67.  On the other hand, there is nothing to show that Mr Owyang conducted his trial or this appeal in bad faith.  But for the Tribunal falling into error, each party could have his/its case processed with little costs. 

68.  Mr Owyang was initially legally represented.  He explained that with limited experience in litigation and not being fully informed of the nature of the appeal, he had instructed his ex-solicitors to accept service.  No work was rendered by his solicitors.  When he received the written submission of the Company, he was informed of the potential costs of the appeal, so he decided to act in person. 

69.  However, his appointment of solicitors would have given the other party expectation that he would be legally represented.  So he could not have expectation of low-costs adjudication.  He could not be said to be a passive respondent either.  He had admittedly received legal advice in preparing his own written submission.  He made no concession after receiving the Company’s submission for the appeal. That said, he conducted the appeal in person with proper focus and wasted no time of the court.  He was partly successful in respect of Ground 1.

70.  Taking all circumstances into account, Mr Owyang should not bear costs of the appeal in relation to Ground 1.  On a nisi basis, I order him to bear costs of $20,000 in relation to Ground 2.

71.  I thank Mr Ho SC and Mr Jeff Chan for their able assistance.