LAI LUNG HON EROS AND OTHERS v. NATIONAL HOLDINGS GROUP LTD

[English Translation — 英譯本]

HCLA 25/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 25 OF 2009

(ON APPEAL FROM LBTC 4014 OF 2009)

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BETWEEN

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J U D G M E N T

Background

1.  The present case is on appeal from LBTC 4014/2009. The Appellant, National Holdings Group Limited(“NHG” hereafter), is the Defendant in the case. The 1^st to 5^th Claimants, i.e. the 1^st to 5^th Respondents in the appeal, are all ex-employees of NHG. The 1^st to 5^th Claimants (“C1to C5” hereafter), issued proceedings in the Labour Tribunal against NHG to recover arrears of wages, long service payments, payments in lieu of notice and so on. The first call-over hearing of the case was held on 10 July 2009. After many adjournments, the respective Claimants and Defendant eventually signed two settlement agreements on the same day. The Presiding Officer issued findings / orders pursuant to the agreements entered by the parties. The Appellant now appeals against the findings / orders made by the Presiding Officer of the Labour Tribunal on 10 July 2009.

2.     NHG is a limited company incorporated and having its registered office in Hong Kong. NHG’s Board of Directors consists of only one director, namely, Ms Sze Li Man (transliteration) (“Ms Sze” hereafter). At the first hearing on 10 July 2009, Ms Sze did not appear as the representative of NHG. NHGwas represented by a Mr. Mak Kwok Ngai (“Mr. Mak” hereafter) at the first hearing. According to the transcript of audio recording of the hearing, at the beginning Mr. Mak appeared as the personal assistant of Ms Sze Li Man, the director of the defendant company. The Presiding Officer did not readily accept Mr. Mak as the representative of NHG. After explaining the provisions in Section 23(1)(d) of the Labour Tribunal Ordinance, Cap 25, the Presiding Officer gave direction that Mr. Mak could not represent NHG at the hearing in that capacity. The Presiding Officer also directed Mr. Mak to notify the director, Ms Sze Li Man, or arrange for a representative who complied with the requirements of the provisions in the Ordinance, to appear at the hearing. The Presiding Officer then proceeded to adjourn the case briefly to allow Mr. Mak time in making the proper arrangements.

3.  The hearing of the case was resumed at around 12:30 p.m. on the same day. A document named “Letter of Authorization” showed up in the court file. The “Letter of Authorization” was issued in the name of the defendant company, affixed with the company stamp and signature of the director, Ms Sze Li Man, and sent to the court at 10:54 a.m. by facsimile via Messrs Au & Associates, a law firm.

4.  The contents of the “Letter of Authorization” stated that the defendant company authorized Mr. Mak, Senior Corporate Secretary of the defendant company, to represent it at the hearing of the case and deal with all relevant matters. In the meantime, there was also a settlement agreement in the court file which was signed by C2, C4, C5 and Mr. Mak, on behalf of the defendant company. Stamp of the defendant company was also affixed on the settlement agreement.

5.  The Presiding Officer had reservation on whether the “Senior Corporate Secretary of the defendant company” mentioned in the “Letter of Authorization” was equivalent to “an officer or servant of a company” provided in Section 23(1)(d) of Cap 25, for Mr. Mak said to the Presiding Officer earlier that day he was the “personal assistant” of Ms Sze Li Man, the director, and responsible for handling all the correspondence and documents of the defendant company filed with the Company Registry, the Presiding Officer therefore queried if the phrase “Corporate Secretary” mentioned in the Letter of Authorization might mean Company Secretary instead of an employee or a staff member of the defendant company (Secretary employed by the company).

6.  Hence, the Presiding Officer indicated that he would not approve the settlement agreement signed by C2, C4, C5 and Mr. Mak, on behalf of NHG, for the time being. He also reiterated to Mr. Mak that he must make proper arrangements and have a suitable person attending the hearing, otherwise, the Presiding Officer would not rule out the possibility of dealing with the case in the absence of the defendant company. With no objection from the Claimants, the Presiding Officer further adjourned the case to 3 p.m. on the same day.

7.  The case was resumed at around 3 p.m. on the same day. Another document named “Employment as Senior Corporate Secretary of National Holdings Group Limited” showed up in the court file. It was a letter in English issued to a Mr. Mak Kwok Ngai (i.e. Mr. Mak) in the name of the defendant company, NHG, dated 1 June 2009 (“Employment Letter” hereafter). Stamp of the defendant company and signature of the director, Ms Sze Li Man, were appended on page 5 of the “Employment Letter”, dated 1June 2009. The Mr. Mak Kwok Ngai in the letter also signed and accepted the contents thereof on the same day, i.e. 1 June 2009. The document was also sent to the court by facsimile via Messrs Au & Associates, the time was 2:09 p.m..

8.  The Presiding Officer requested Mr. Mak to give evidence under oath in respect of NHG’s “Letter of Authorization” and “Employment Letter” Mr. Mak provided to the court. Mr. Mak confirmed under oath that the Mr. Mak Kwok Ngai in the “Employment Letter” was himself, he signed and accepted all contents of the letter, and the ID Card No. in the “Employment Letter” was the same as that of Mr. Mak in court (record). Given the contents of the “Letter of Authorization” and “Employment Letter”, the Presiding Officer was satisfied that Mr. Mak met the requirements of Section 23(1)(d), Cap 25, he could represent NHG at the hearing and deal with all relevant matters, including signing the settlement agreement with C2, C4 and C5 on behalf of NHG. As a result, the agreement was approved to become an order by consent.

9.  Later that day, C1 and C3 also settled with Mr. Mak in respect of the items of “arrears of wages” and “paid annual leave” in the claim, an agreement related thereto was also signed. An order by consent pursuant to that was also subsequently made by the Presiding Officer.

The appeal

10.  In NHG’s application for appeal, the grounds set out are that Mr. Mak did not have the authority to sign those settlement agreements and the Presiding Officer should not have accepted that Mr. Mak had the relevant authority, therefore he erred in law. Mr. Wong, Counsel for the Appellant, submitted that Mr. Mak did not have the authority to sign the settlement agreements on behalf of NHG. The arguments he put forward may be summarized as follows:

(1) The case was fixed for the first Call-over hearing instead of for Trial on that day. Mr. Mak was not in possession of NHG’s board resolution authorizing him to negotiate settlement or settle with the respective Claimants on behalf of NHG. The “Letter of Authorization” did not expressly say that Mr. (Mak) had the authority. “To deal with all relevant matters” mentioned therein referred to the directions to be given by the court in the first hearing held on that day, which did not include settling the matter.

(2) Mr. Mak was the “personal assistant” of the company director but not an employee of NHG. As a result, pursuant to Section 23(1)(d) of Cap 25, and Chan Mei Yi (transliteration) and other v Clinic Holistic Limited and other (unreported, HCLA 43/2008, 22 January 2009, Yam J., paras 2&3), Mr. Mak did not have the right of audience or the authority to sign those two settlement agreements on behalf of NHG.

(3) At that time, the Presiding Officer of the Labour Tribunal did query whether Mr. Mak had the authority to represent NHG. However, the Presiding Officer later, for unknown reasons, suddenly accepted that Mr. Mak had the right of audience in law and the authority to represent NHG to sign the two settlement agreements.

(4) Pursuant to the provisions of Section 20(3) of the Labour Tribunal Ordinance, the Presiding Officer shall make enquiry of the defendant company, NHG, or Ms Sze Li Man. If he has anydoubt,heshould adjourn the case and should not accept Mr. Mak’s authority and power to represent NHG. Additionally, the amount claimed by the Claimants was HK$1,036,921.91, while the settlement amount was HK$712,499.51. NHG made serious allegations against the Claimants as it suspected that they were in connection with the substantial loss of property and documents suffered by NHG. Mr. Mak did not have the authority to negotiate settlement or agree to settle with the Claimants on behalf of NHG.

(5) At no stage had NHG the intention to settle the matter. NHG had also applied to court to hold the findings and settlement agreements null and void. (See the Writ of Summons in HCA 554/2010).

(6) The Appellant urgesthe court to allowthe appeal or give such directions asthe court deems fit including the direction to remitthe case to the Tribunal for retrial.

11.  The 1^st Respondent (C1) appeared in person. Ms Shum, Counsel for the 2^nd Respondent (C2), made submissions on his behalf. The 3^rd Respondent (C3) also appeared in person in the appeal today. As in the case of the 4^th and 5^th Respondents (C4 & C5), the Appellant had earlier applied for withdrawal of the appeal against them. This Court granted the application. In the appeal hearing, C1 and C3 mainly relied on the arguments submitted by Ms Shum. The principal arguments put forward by her are as follows:

(1) The court already received an employment contract in English provided by Mr. Mak on the day of the hearing. (i.e. the above “Employment Letter”). The document stated expressly that Mr. Mak was employed by NHG instead of by Ms Sze. Mr. Mak was not only the personal assistant retained by Ms Sze. Having regard to the contents of the “Employment Letter”, Mr. Mak had met the requirements of Section 23(1)(d), Cap 25.

(2) On the day of the hearing, the court also received a “Letter of Authorization” issued in the name of the defendant company, with the signature of Ms Sze, the director, and the company stamp affixed thereon. The contents of the “Letter of Authorization” are: “Our company now authorizes Mak Kwok Ngai, holder of HKID Card No. KXXXXXX(X), Senior Corporate Secretary of the company, to represent the company at the hearing of the above case and deal with all relevant matters.”

(3) In the “Letter of Authorization”, NHG did not limit Mr. Mak’s power to deal with all relevant matters on the day of the hearing. To deal with “all relevant matters” at the hearing includes reaching settlement and signing the settlement agreements with the Claimants.

(4) The court also received a settlement agreement signed by C2, C4, C5 and Mr. Mak, on behalf of NHG. The company stamp of NHG was also affixed on the settlement agreement to certify that the agreement was entered into with the consent and authorization of NHG at that time.

(5) The facts of the present case are similar to those of Lam Tung Hei v Bright Charter (Hong Kong Ltd) and other, HCLA 149/2003, but different from those of Chan Mei Yi and other v Clinic Holistic Limited and other. Ms Shum also relied on Chan Ching v Kwok Wing Newspaper and Magazines Co. Ltd. [2006] 1 HKLRD 479.

(6) The Presiding Officer had clearly considered whether Mr. Mak had the authority to sign the settlement agreements on behalf of the defendant in his Reasons for Decision. Viewed as a whole, the conclusion reached by the Labour Tribunal based on the matters it had considered had legal basis and irrebuttable or unquestionable presumptions. The Presiding Officer was not wrong at all in law.

Discussion

12.  The first principal argument put forward by Mr. Wong, is that Mr. Mak did not have “the right of audience” on that day. Therefore, this Court has to first study the provisions of Section 23(1)(d) of Cap 25:

“23. Right of audience

(1) The following persons shall have a right of audience before the tribunal –

(d) An officer or servant of an unincorporated or incorporated company or a member of a partnership, if the company or partnership is a party; …”

13.  The English version of Section 23(1)(d) of the Ordinance provides that the person who shall have the right of audience before a court on behalf of a limited company is an “officer or servant”. Under Common Law and general ordinances, “servant” has exactly the same meaning as “employee”. [See Hong Kong Legal Dictionary and Black’s Law Dictionary, 9^th edition for the definition given to the word “servant”.] This can also be seen in the Chinese version of the Ordinance. In the Chinese version of the Ordinance, the word “servant” is translated as “僱員” (“employee”). The word “servant” is not construed as having a special meaning in the Ordinance. However, a definition of the word “employee” is given in Section 2. The translation of the word “employee” given in the Chinese version of Section 2 is also “僱員”. Hence we can see that “servant” and “employee” have the same meaning in the Labour Tribunal Ordinance.

14.  Mr. Wong argued that the word “servant” in Section 23(1)(d) of the Ordinance should be construed as meaning “senior employee”. He took the view that it was a matter of importance whether someone could represent a company in a hearing. It is impossible that the Labour Tribunal Ordinance means to suggest that general junior staff could also represent a company in a hearing. Therefore, Mr. Wong took the view that the Chinese version of the Ordinance should be construed as meaning “a senior officer or senior employee”.

15.  This Court does not agree to this argument. First of all, “a senior officer or employee” in the Chinese version of the Ordinance is the translation of “an officer or servant” in its English version. The two categories of people in the English version are joined with the conjunction “or”; while the conjunction “or” is used to join “senior officer” with “employee” in the Chinese version. Hence, it is very apparent that the word “senior” is only used to modify the word “officer” but is unrelated to the word “employee”. This Court sees no basis for imposing the concept of the word “senior” on the two words “servant” and “employee”. This Court takes the view that Section 23(1)(d) of the Ordinance only sets out the category (and) nature of people who shall have the right of audience before the court, which does not necessarily mean that should he be an employee of the company, he must be able to represent the company in a hearing and have the right of audience. Generally speaking, the Presiding Officer will request the employee to produce a Letter of Authorization issued by the company or Warrant of Attorney to certify that he has truly been authorized by the company before he could appear in the hearing on behalf of the company and address the court. For instance, in the present case, despite the fact that Mr. Mak was able to provide a “Letter of Authorization” from NHG to certify that he was authorized by NHG to represent NHG at the hearing, he did not produce an “Employment Letter” at the beginning and hence was unable to certify his status type and nature. Consequently, the Presiding Officer could not accept that Mr. Mak had the authority to represent NHG in the hearing and address the court.

16.  Mr. Wong submitted that “The Presiding Officer, for unknown reasons, suddenly accepted that Mr. Mak had the right of audience in law and the authority to represent NHG.” This Court takes the view that there is no basis for the complaint. Clearly, the Presiding Officer’s change in attitude was wholly because Mr. Mak was finally able to produce an “Employment Letter” to certify his status being an employee of the company. This Court takes the view that the English “Employment Letter” that Mr. Mak provided to the Tribunal on the day of the hearing was an employment contract in which the clauses expressly pointed out that Mr. Mak was employed by NHG. Mr. Mak’s job title, being “Senior Corporate Secretary”, also indicated that he was the corporate secretary retained by NHG and its subsidiaries.

17.  This Court takes the view that, having regard to the above employment contract, the Presiding Officer’s understanding of Mr. Mak was that: he was officially employed by NHG. As to Mr. Mak’s earlier description of himself as the personal assistant of Ms Sze, the Presiding Officer also dealt with this carefully after perusing the employment contract. After his perusal of the above employment contract, the Presiding Officer requested Mr. Mak to give evidence under oath, during which he asked Mr. Mak why he described himself as the personal assistant of the director, Ms Sze, earlier on. Mr. Mak explained that he was indeed employed by NHG to provide secretarial services. Besides, he also worked in the capacity of the director’s personal assistant. He described that he received only one salary but had two job titles. This could be seen from Page 8 of the transcript of the audio recording of the proceedings.

18.  This Court takes the view that the above employment contract, together with the Letter of Authorization mentioned earlier, are sufficient to satisfy the requirements of Section 23(1)(d) of the Ordinance. On the basis of the information above and the evidence, there is no doubt that Mr. Mak had the authority to represent NHG on the day of the hearing.

Mr. Mak’s authority

19.  According to NHG’s Memorandum and Articles of Association, the Board of Directors of the company has the authority to negotiate settlement in court proceedings. The authority can certainly be delegated while board resolution is only one of the ways to delegate such authority. Moreover, for NHG, Ms Sze was the only member of the Board of Directors. As a result, the “Letter of Authorization” signed by her was no different from a formal board resolution. As for whether the authorization given to Mr. Mak by NHG includes the authority to sign settlement agreement on behalf of NHG, this Court takes the view that it depends on the Court’s legal interpretation of “Letter of Authorization”. We may refer to Bowstead and Reynolds on Agency, 9^th ed., para. 3-013 to 3—15 in respect of the relevant legal principles:

“Where the authority of an agent is given by an instrument not under seal, or is given orally, it is construed liberally, with regard to the object of the authority and to the usages of trade or business.”

20.  Although it was the first call-over hearing of the case on that day, it did not mean that Mr. Mak did not have the authority to discuss settlement, or proceed to sign the settlement agreements reached with the Claimants on behalf of NHG. The “Letter of Authorization” was very broadly worded when describing Mr. Mak’s authority. He was authorized to deal with “all relevant matters in respect of the hearing”. This Court takes the view that it must include the authority for Mr. Mak to negotiate settlement and sign the settlement agreement on behalf of NHG. As a matter of fact, at the appeal hearing when being asked by this Court, Mr. Wong conceded that it was common for parties to a proceeding to settle in the first hearing. In Chan Ching v Kwok Wing Newspaper and Magazines Co. Ltd, the settlement agreement of the parties was reached in the first hearing of the case. Chu J of the Court of First Instance of the High Court said:

“The finding made by the Presiding Officer of the Labour Tribunal in the present case was based on the agreement, it is also proof of the agreement. Under common law, an order by consent is tantamount to a legally binding contract between the parties. Unless there are circumstances amounting to a valid discharge of contract, the court would not set aside or interfere with such an order, nor would it discharge the obligations of either party under the order. ”

21.  This Court agrees to the argument submitted by Ms Shum that NHG did not limit Mr. Mak’s authority to deal with all relevant matters on the day of the hearing in the “Letter of Authorization”. The authorization in the “Letter of Authorization” was rather broadly worded: to deal with “all relevant matters” at the hearing. Ms Shum contended that “all relevant matters at the hearing” must include to reach and to sign settlement agreement with the Claimants. This Court agrees that the facts of the present case are very similar to those of Lam Tung Hei v Bright Charter (Hong Kong Ltd) and other. In that case, during the hearing, the representative of the first defendant also produced a Letter of Authorization issued by the company which was generally and broadly worded, authorizing its employee to represent the company at the hearing. Chu J said:

“On the contrary, by nominating Mr. Kwan as the company’s representative in the statement of defence and by authorizing him to represent the 1^st Defendant in the Tribunal proceedings, there is no doubt that the 1^st Defendant had held Mr. Kwan out as having full and unqualified authority to act on its behalf. It matters not that the 1^st Defendant had in fact not authorized Mr. Kwan to settle the claim with the Claimant.”

22.  First of all, this Court takes the view that Mr. Mak’s authority given by NHG is embodied in a legal document. As noted above, a wide interpretation of the document should be adopted in respect of the wording, nature and purpose of authorization. After analyzing the “Letter of Authorization” by applying the principle above, this Court takes the view that the authority given to Mr. Mak by NHG includes those of reaching and signing of settlement agreement(s) with the Claimants. Mr. Mak did obtain the ACTUAL AUTHORITY given by NHG to discuss and to sign settlement agreement(s). The conclusion is based on the legal interpretation of “Letter of Authorization”. It is purely a legal inquiry which will not and cannot involve Ms Sze’s subjective understanding of the “Letter of Authorization” or wish.

23.  Moreover, if analyzed by the legal principle of APPARENT AUTHORITY, this Court takes the view that the final conclusion reached would also be the same pursuant to Lam Tung Hei v Bright Charter (Hong Kong Ltd) and other. Other than providing a broadly-worded “Letter of Authorization” to Mr. Mak, NHG also provided him with the company stamp. And before that, Mr. Mak had given witness statement(s) to the Tribunal on behalf of NHG with the authority of NHG. Having regard to all the conduct above, it is reasonable to believe that Mr. Mak did have the authority of the company to deal with all relevant matters in respect of the hearing, including the reaching and signing of settlement agreement(s) with the Claimants. As Chu J said above, even if NHG had in no stage the intention to settle the matter, and subsequently applied to court to hold the findings and settlement agreements null and void, it could not change the above conclusion. This Court even takes the view that Mr. Wong was wrong to rely on Akai Holdings Ltd. (in liquidation) v. Thanakharn Kasikorn Thai Chamkat (Mahachon) aka Kasikornbank Public Co. Ltd. [2001] 1 HKC 357. The facts of that case are not in any way the same as those of the present case. The relevant authorization documents in that case were fabrications; in other words, there was in fact no valid authorization document in that case (See para.10.) Akai only involves APPARENT AUTHORITY, and in that regard, the conduct of the company does not involve providing the other party with an apparently full and valid Letter of Authorization.

24.  In the circumstances above, this Court takes the view that the Presiding Officer had absolutely sufficient grounds to accept that Mr. Mak had the authority to discuss settlement and proceed to sign the settlement agreements with the Claimants. As a matter of fact, the Presiding Officer had dealt with the issue of Mr. Mak’s representation very carefully. This Court disagrees with the argument that the Presiding Officer had to make enquiry of Ms Sze. Furthermore, this Court takes the view that on the issue of Mr. Mak’s authority, the Presiding Officer was not in breach of the requirements of Section 20(3) of the Labour Tribunal Ordinance; and the way the Presiding Officer handled the matter did not result in any injustice. (See Chan Ching v Kwok Wing Newspaper and Magazines Co. Ltd.)

Conclusion

25.  For the above reasons, this Court dismisses this appeal and orders that the Appellant, NHG, shall pay the costs of C1, C2 and C3 in respect of this appeal (costs shall be taxed, if not agreed, by a Master of the High Court). This Court also grants Certificates for Counsel. The above is a costs order nisi and shall become absolute automatically in the absence of any application made by the parties within 14 days to vary the same.

Translated by the Judgment Translation Unit of the Judiciary and approved by Mr. P. Y. Lo, Barrister-at-law.