TSUI CHUNG FAI v. KWOK'S FASHION CO LTD

HCLA 154/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 154 OF 2003

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO. 7508 OF 2003)

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D E C I S I O N

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1. This is an application for leave to appeal against the order of Mr Simon Lo made on 3 December 2003 as Presiding Officer of the Labour Tribunal. By that order, the Presiding Officer dismissed the Defendant's application for review in respect of his decision of 4 November 2003. On 4 November 2003, the Presiding Officer ordered that the award of 22 September 2003 be set aside on condition that the Defendant paid into the Tribunal on or before 18 November 2003 the sum of $75,681.30 as security. The Presiding Officer further ordered on 4 November 2003 that if the Defendant failed to pay such sum into the Tribunal to satisfy the condition, the award of 22 September 2003 shall stand and the Claimant shall be at liberty to levy execution under the award.

2. The award of 22 September 2003 was made against the Defendant without hearing the Defendant. This is because the Defendant failed to appear by its proper officer or servant. The person who attended on behalf of the Defendant was Ms Kwok Sau-fan. She informed the Presiding Officer that she was neither an officer nor a servant of the Defendant company. Hence, she did not fall within the scope of Section 23(1)(d) of the Labour Tribunal Ordinance. The Presiding Officer did not make any error of law in refusing to hear her. It behoves a company to make sure that it has appointed a proper representative in accordance with the law to appear on its behalf.

3. Although under common law, a tribunal, like any other court, may have inherent power to regulate its own proceedings and permit any advocate to appear for a litigant if the exceptional circumstances of the case so warranted (see Arbuthnot Leasing Ltd v Havelet Leasing Ltd [1991] 1 All ER 591; Ho Lan Fong v. Lam Gook, HCLA 130 of 2003, 11 May 2004), given the statutory extension of the right of audience by Section 23(1)(d) in respect of corporate litigant in the Labour Tribunal, the common law power to grant leave to someone other than those provided for in the subsection to represent a corporate litigant in the Tribunal was arguably abrogated (see Kone Elevator v Senfield Ltd, CACV 216 of 2002, 24 February 2003, Para.11). However, I do not find it necessary to reach a final conclusion on this point. In any event, even assuming the Tribunal still retains its inherent power notwithstanding Section 23(1)(d), I do not think the circumstances of the present case warrants the Tribunal giving leave to Ms Kwok to address it on behalf of the Defendant. Section 23(1)(d) already confers a right on a company to appoint a representative from a very wide range of persons to represent it in proceedings in the Labour Tribunal. No good reason had been placed before the Tribunal as to why the Defendant's directors or other officers or servants could not represent it at the hearing of 22 September 2003. As a matter of fact, at the hearing before me on 24 February and 7 May 2004, its director Mr Kwok Yiu Lun, was quite capable of presenting the case of the Defendant forcefully and effectively. In short, no exceptional circumstances had been shown and therefore the Presiding Officer cannot be faulted.

4. In any event, as shown in his Reasons for Decision dated 3 December 2003, the Presiding Officer had already taken into account of the points relied upon by the Defendant in the material before the Tribunal in making the award. The only substantive defence is the set off with income tax payable by the Claimant. The Presiding Officer was of the view that Ms Kwok, not being an expert on the PRC tax law, could not assist the Tribunal in that regard. I agree.

5. In the circumstances, I cannot discern any error of law on the part of the Presiding Officer in making the award of 22 September 2003.

6. Coming to the decision of 4 November 2003, at the hearing of the application for leave to appeal, Mr Kwok repeated two main points raised by him at that hearing. The first is about the set off with income tax payable by the Defendant on behalf of the Claimant. The Presiding Officer was of the view that on the evidence before the Tribunal, he considered the defence weak and shadowy. Apart from reference to the lack of expert evidence in his Reasons for Decision, he also referred to the lack of reference to such set off in the agreement dated 22 November 2002 and the absence of any explanation for the omission. I fail to see how the Presiding Officer can be criticized for taking such a view, not to mention any errors of law to support the intended appeal.

7. The second point is the challenge to the Tribunal's jurisdiction on the ground that the Claimant worked for the Defendant outside Hong Kong. The Presiding Officer mistakenly referred to this in his Reasons for Decision as a new issue raised on 3 December 2003. The transcript shows that the point had been raised by Mr Kwok at the hearing of 4 November 2003). In any event, the Presiding Officer considered the point in Paragraphs 19 to 24 of his Reasons for Decision. He primarily rejected the contention of Mr Kwok by reference to William Barry Preen v Industries Polytex Ltd, HCLA 171 of 1995.

8. However, the Court of Appeal's decision in Matheson PFC v Jansen [1994] 2 HKC 250 might lend support to Mr Kwok's argument. He further contended that William Barry Preen v Industries Polytex Ltd is distinguishable because that case dealt with an employee partly worked overseas whereas the Claimant worked wholly outside Hong Kong during the contract of employment. I cannot say at this stage that this point is not arguable. I therefore grant leave to Defendant to appeal against the decision of the Tribunal on the following ground,

"The Presiding Officer erred in law in holding that the Labour Tribunal has jurisdiction to entertain the claims of the Claimant notwithstanding that the performance of his contract of employment took place wholly outside Hong Kong and it is not an overseas contract as defined in the Contracts for Employment Outside Hong Kong Ordinance Cap. 78."

9. Mr Kwok also complaint about the Presiding Officer not explaining to him the importance of filing expert evidence on the tax position in mainland China. In my judgment, this point is a red herring.

10. The transcript of 4 November 2003 showed that the Presiding Officer had commented on the lack of evidence as to payment of tax by the Defendant on behalf of the Claimant. In this connection, Mr Kwok admitted to this court at the hearing of 7 May 2004 that the Defendant had not yet made any payment of tax for the Claimant. However, he submitted that the Defendant was exposed to legal liability for the same.

11. There was no provision in the employment contract for the withholding of salary on account of potential tax liability. Nor is there any provision stipulating that the law of the mainland shall apply to the contract. Applying the correct test of substantial connection, the Presiding Officer held that the proper law of that contract is Hong Kong law. Given that the Claimant was a Hong Kong citizen, the Defendant a company incorporated in Hong Kong, the Claimant was recruited in Hong Kong, the contract was written in English, payment of the Claimant's salary was in Hong Kong dollars, settlement agreement of 22 November 2002 was also expressed in terms of Hong Kong dollars and several instalments were paid into the Claimant's bank account in Hong Kong, I do not think the Presiding Officer's conclusion in this respect could be challenged as having been erred on points of law. The fact that the Claimant performed his duties in mainland China is not conclusive on determining the proper law of contract (see Dicey & Morris, The Conflict of Laws, 11th Edn. p. 1296-1305; Re Anglo-Austrian Bank [1920] 1 Ch 69; contra. Coupland v Arabian Gulf Oil [1983] 1 WLR 1136 at p. 1151). Ultimately, it depends on how the tribunal of fact assessed the weight of each relevant factors and it is only when the weight given to a particular factor shows a self-misdirection in law that an appellant court will interfere (c.f. Lord Donaldson MR in O'Kelly v Trusthouse Forte Plc [1983] ICR 728 at p. 762C to E). Of course, if the decision of the Tribunal were eventually set aside for want of jurisdiction, it is open to another tribunal of fact to reach another conclusion in respect of the proper law of contract.

12. Under such circumstances, unless and until the Defendant makes payment of tax for the Claimant, the Defendant has no right to withhold the sum as far as Hong Kong law is concerned. Hence, it is neither here nor there whether the Defendant is legally liable to pay the tax of the Claimant in mainland China. For all we know, the Defendant could close down its business in Shanghai at any time without paying the tax on behalf of the Claimant.

13. Therefore, although the Presiding Officer mistakenly thought he had directed the Defendant to file expert evidence at the hearing on 4 November 2003 (the transcript of that hearing did not show that such direction had been made although the Presiding Officer did comment on Mr Kwok's lack of expertise), it is a matter of little moment. I should add that the Presiding Officer, as stated in his Reasons for Decision, had also observed about the lack of expertise on the part of Ms Kwok. Since the transcript of 22 September 2003 has not been produced, I do not know whether the Presiding Officer had mentioned about the need to have expert evidence on 22 September 2003.

14. For these reasons, I only grant leave to appeal on the basis of the jurisdiction point as set out in paragraph 8 above. The appeal shall be set down for hearing with an estimate length of half day. Costs of the application for leave to appeal shall be in the cause of the appeal.

15. As the question of right of audience of a corporate litigant in the Labour Tribunal may be of general interest, I shall hand down this decision in open court.