HCLA154/2003
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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BETWEEN
徐松煇
Claimant
(TSUI CHUNG FAI)
and
郭氏服装有限公司
Defendant
(KWOK’S FASHION COMPANY LIMITED)
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Before: Hon Chu J in Court
Date of Hearing: 13 August 2004
Date of Judgment: 17 August 2004
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J U D G M E N T
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1. This is the defendant’s appeal against the decision of the Presiding Officer of the Labour Tribunal made on 3 December 2003, dismissing the defendant’s application to review his earlier decision made on 4 November 2004. Leave to appeal was granted by Lam J on 21 May 2004. The leave to appeal is limited to only one ground that raises a point of the Labour Tribunal’s jurisdiction to deal with a claim where the contract of employment is to be performed wholly outside Hong Kong.
Background
2. The claimant was employed by the defendant as a senior quality controller at a monthly salary of $15,000. It is common ground that the claimant was employed to work and he had throughout the employment worked in Shanghai. At the Labour Tribunal, the defendant had referred to an undated written contract of employment signed by the claimant and a Mr Alan Kwok on behalf of a Sortel Far East Limited. The defendant contends that the contract governed the claimant’s employment with the defendant. The claimant in his statement, however, states that there was no written contract of employment between them.
3. On 30 November 2002, the defendant terminated the claimant’s employment orally.
4. By a written agreement signed by the parties on 22 November 2002, the defendant acknowledged that it owed the claimant a sum of $135,681 and agreed to pay the sum by way of 8 instalments. As appears from the written agreement, the sum of $135,681 represents wages and special bonus due from the defendant to the claimant, after deducting rental payments owed by the claimant to the defendant. The defendant had paid 4 instalments totalling $60,000 under the agreement, but failed to pay the balance.
5. On 26 August 2003, the claimant filed a claim in the Labour Tribunal claiming against the defendant the following:
(1) Arrears of wages for November 2002 in the sum of $15,000,
(2) Unpaid balance of wages for February to October 2002 in the sum of $99,000,
(3) End of year pay for the year 2001 and for January to November 2002 in the sum of $21,250, and
(4) Annual leave pay from January 2001 to November 2002 in the sum of $11,643.30.
The claimant was prepared to give credit for the $60,000 he had received. He was also prepared to allow a set-off of $11,212, being four months’ rent owed to the defendant. The net claim is therefore $75,681.30.
6. It appears from the statement of defence filed with the Labour Tribunal that the defendant does not that the sum of $75,681.30 remains unpaid. It also does not dispute the making of the written agreement and the contents of it. The defendant only claims an entitlement to withhold payment of the sum claimed on the basis that it is required by the PRC law to withhold income tax on the salary/ allowance/ benefits payable to the claimant, who was a foreign employee, for his services rendered in the PRC. According to the defendant, the tax liability of the claimant comes up to RMB 93,876. The defendant therefore argues that no further payment is due to the claimant.
7. At the hearing before the Labour Tribunal on 22 September 2003, the defendant was represented by a Miss Kwok, who is the sister of a director of the defendant, Mr Kwok Yiu Lun. The Presiding Officer considered that Miss Kwok had no right of audience under section 23 of the Labour Tribunal Ordinance, cap. 25. He proceeded with the hearing treating the defendant as being absent. Having considered the claim and the defence disclosed by the statement of defence and the documents submitted, the Presiding Officer held that there is no arguable defence and entered judgment for the claimant for the sum of $75,681.30.
8. On 30 September 2003, the defendant applied to set aside the judgment. At the hearing on 4 November 2003, the defendant was represented by its director, Mr Kwok Yiu Lun. Mr Kwok has also been given leave to represent the defendant in this appeal. After hearing the parties, the Presiding Officer ordered that the judgment be set aside on condition that the defendant paid into the court on or before 18 November 2003, the sum of $75,681.30 by way of security, and that in the event the defendant failed to make payment in as ordered, the judgment shall stand and the claimant shall be at liberty to levy execution on it.
9. On 11 November 2003, the defendant applied to review the Order made on 4 November 2003. One of the reasons advanced in support of the review application is that: “The employment contract was made in Shanghai, the services of the employee was rendered in Shanghai, the tax liabilities of the employee is subject to China Tax Law, the Claim by the employee is more appropriately[sic] judged in the Labour Tribunal in Shanghai instead of Hong Kong Labour Tribunal”.
10. At the hearing of the review application on 3 December 2003, the Presiding Officer rejected the above argument and other arguments raised by the defendant, and dismissed the review application.
The appeal
11. On 8 December 2003m the defendant filed the Application for leave to appeal. Although a number of grounds were put forward, Lam J only granted leave to argue the appeal on one ground in the following terms:
“The Presiding Officer erred in law in holding that the Labour Tribunal has jurisdiction to entertain the claim 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, cap. 78.”
The jurisdiction of the Labour Tribunal
12. The jurisdiction of the Labour Tribunal is governed by section 7 and the Schedule of the Labour Tribunal Ordinance. Section 7(1) provides that:
“The tribunal shall have jurisdiction to inquire into, hear and determine the claims specified in the Schedule”.
13. The Schedule to the Labour Tribunal Ordinance provides as follows:
“1. A claim for a sum of money which arises from-
(a) the breach of a term, whether express or implied, of a contract of employment, whether for performance in Hong Kong or under a contract to which the Contracts for Employment Outside Hong Kong Ordinance (Cap 78) applies;
(aa) the breach of a term, whether express or implied, of a contract of apprenticeship; or
(b) the failure of a person to comply with the provisions of the employment Ordinance (Cap 57) or the Apprenticeship Ordinance (Cap 47)
other than a claim specified in the Schedule to the Minor Employment Claims Adjudication Board Ordinance (Cap 453).
(a) the right of an employee to a severance payment under Part VA of the Employment Ordinance (Cap 57); or
(b) the amount of such payment,
other than a claim specified in the Schedule to the Minor Employment Claims Adjudication Board Ordinance (Cap 453).
5. Any question as to-
(a) the right of an employee to payment of wages by a person other than his employer under Part IXA of the Employment Ordinance (Cap 57); and
(b) the amount of such payment,
other than a claim specified in the Schedule to the Minor Employment Claims Adjudication Board Ordinance (Cap 453).
14. In Matheson PFC Limited v. Simon Jansen [1994] 2 HKC 250,
the plaintiff brought an action in the High Court to recover a sum of money it had advanced to the defendant during the course of the defendant’s employment. The plaintiff’s claim was struck out on the basis that it was within the exclusive jurisdiction of the Labour Tribunal. The plaintiff appealed to the Court of Appeal. Both parties accepted that the plaintiff’s claim was for a sum of money, which arose from the breach of a term of a contract of employment. The issue turns on whether the claim falls within paragraph 1(a) of the Schedule to the Labour Tribunal Ordinance. The Court of Appeal allowed the appeal on the basis that the defendant was employed to work and did work outside Hong Kong. The Court of Appeal held that Labour Tribunal’s jurisdiction under paragraph 1(a) of the Schedule is limited to two specific types pf employment: (i) a contract to be performed in Hong Kong, and (ii) an overseas contract that falls within the Contracts for Employment Outside Hong Kong Ordinance, cap. 78.
15. Under section 4(1) of the Contracts for Employment Outside Hong Kong Ordinance, the Ordinance covers “contract of employment entered into in Hong Kong … , by which a person in Hong Kong enters or agrees to enter into the service of another who is not in Hong Kong and not carrying on business in Hong Kong, where the contract is to be performed, whether wholly or partially, outside Hong Kong”. In other words, a contract for employment to be performed outside Hong Kong will not fall within the Contracts for Employment Outside Hong Kong Ordinance if the employer is in Hong Kong or is carrying on business in Hong Kong. According to the decision in Matheson PFC Ltd , such a contract does not come within the ambit of paragraph 1(a) of the Labour Tribunal Ordinance.
16. In William Barry Preen v. Industries Polytex Ltd . (unreported) HCLA 171 of 1995, the claimant was required under his employment to work and did spend time working in Macau. He claimed in the Labour Tribunal against the employer wages in lieu of notice, annual leave pay and other reimbursements. On an appeal by the employer against the award of the Labour Tribunal, Yeung J (as he then was) held that Matheson PFC Ltd only dealt with paragraph 1 (a) of the Schedule and had no application to the situation before him. He held that the Labour Tribunal had jurisdiction under paragraph 1(b) of the Schedule to hear the claim, being a claim that arises from the failure of a person to comply with the provisions of the Employment Ordinance.
Reasons for the determination of the appeal
17. In the present case, it is common ground that the contract of employment was performed outside Hong Kong. There is also no dispute that the defendant is a company incorporated in Hong Kong. In accordance with the Court of Appeal decision in Matheson PFC Ltd , a claim for a sum of money arises from the breach of the employment agreement between the claimant and the defendant does not come within the ambit of paragraph 1(a) of the Schedule to the Labour Tribunal Ordinance.
18. The issue that arises for determination under the sole ground of appeal is whether the claimant’s present claim must necessarily be a claim for a sum of money arising from the breach of an employment agreement. If it is, then the claim is outside the scope of paragraph 1(a) of the Schedule of the Labour Tribunal Ordinance, and the Tribunal will have no jurisdiction over it. On the other hand, if the claimant’s claim can come within the terms of the other paragraphs in the Schedule to the Labour Tribunal Ordinance, then the Labour Tribunal will have jurisdiction to adjudicate the claim.
19. As noted above, the claimant’s claim is for arrears of wages, end of year pay and annual leave pay. Under Part IIA of the Employment Ordinance, an employer is obliged to pay to an employee an end of year payment at the end of the payment period specified in the contract or at the end of a lunar year, and where the contract is terminated, the payment shall be paid on a pro rata basis. Under section 23 of the Employment Ordinance, an employer is obliged to pay wages to his employee within 7 days from the expiry of the wage period. Under section 41AA(1), an employee who has been employed under a continuous contract for not less than 12 months is entitled to paid annual leave. Section 41AA(8) provides that the employer shall pay to the employee an annual leave pay if the annual leave has not been taken by the employee.
20. In short, payment of wages, end of year payment and annual leave payment are all benefits protected by the Employment Ordinance. Section 25 of the Employment Ordinance further provides that all wages due and other sums due to an employee in respect of the contract of employment must be paid to the employee within seven days from the termination of the contract.
21. Section 2 of the Employment Ordinance provides that the Employment Ordinance applies to “any agreement, whether in writing or oral, express or implied, whereby one person agrees to employ another and that other agrees to serve his employer as an employee”. The Ordinance applies to all contracts for employment, irrespective of whether they are to be performed in or outside Hong Kong. Accordingly, the statutory benefits and protections relating to wages, end of year payment and annual leave payment are applicable to a contract of employment to be performed outside Hong Kong. It also follows that the Employment Ordinance and the benefits and protections under it apply to the claimant’s contract of employment.
22. Under paragraph 1(b) of the Schedule to the Labour Tribunal Ordinance, the Labour Tribunal has jurisdiction to adjudicate a claim for a sum of money, which arises from the failure of a person to comply with the provisions of the Employment Ordinance. Such a construction is consistent with the observations of Liu JA in Matheson PFC Ltd (at p255) that: “
“… statutory benefits and protection under the Employment Ordinance, even for a workman employed to work outside Hong Kong may be claimed in the Labour Tribunal under para 1(b), 4 and 5 of the Schedule of the Labour Tribunal Ordinance.”
“Good sense requires that a contract to be performed outside Hong Kong to be kept away from the Labour Tribunal unless the claims arising therefrom are well-defined and can be easily identified such as arrears of wages and statutory benefits and protection under the Employment Ordinance.”
23. The claimant’s present claim for wages, end of year pay and annual leave pay is without doubt a claim for a sum of money, which arises from the failure of a person to comply with the provisions of the Employment Ordinance. Accordingly, the Tribunal has jurisdiction to deal with the claim under paragraph 1(b) of the Schedule to the Labour Tribunal Ordinance. The sole ground on which the defendant has been given leave to appeal therefore fails.
24. At the appeal hearing, the defendant sought to argue that the Shanghai court is a more appropriate forum to deal with the dispute in that it involves issues of the PRC tax law, which the Hong Kong court is less familiar with. This is a reiteration of the argument put up by the defendant for the review application. It is a different point from the ground of appeal, and the defendant has not been given leave to argue it.
25. That aside, it is a point that has no merits. It is trite law that the Hong Kong court will be the natural forum to adjudicate the dispute if it has jurisdiction over a claim. In such a case, it is a matter of discretion for the Hong Kong court whether to decline jurisdiction in favour of a foreign court. The mere fact that the dispute involves examination, interpretation or application of foreign law is not, by itself, a ground that necessitates the Hong Kong court to decline jurisdiction. As a matter of fact, civil actions involving issues of foreign law, including PRC law, are not uncommon and the courts of Hong Kong, including the Labour Tribunal, have no difficulty adjudicating these cases.
Conclusion
26. For the reasons stated above, the defendant’s appeal is dismissed. At my invitation to make submissions on the costs order to be made, both parties have indicated that they do not seek costs against the other side in the event they were to succeed in the appeal. Accordingly, I make no order as to costs of the appeal.
(C Chu)
Judge of the Court of First instance
High Court
The claimant unrepresented, appeared in person.
The defendant unrepresented, appeared by its director Mr Kwok Yiu Lun.