GADIAN ANNA PEARL ARCETA v. BULLEN CHRISTIAN ANTHONY

HCLA 1/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO HCLA 1 OF 2016

(On appeal from Labour Tribunal Claim No LBTC 2245 of 2015)

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D E C I S I O N

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1. The Labour Tribunal ordered the applicant (“the employer”) to pay the amount claimed by the claimant (“the employee”) into court as a condition for setting aside the award made in his absence. This is the employer’s application for leave to appeal against the order.

Legal principles

2. For leave to appeal to be granted, an applicant has to show that there are arguable errors on points of law, or that the Tribunal has acted outside its jurisdiction: section 32 of the Labour Tribunal Ordinance, Cap 25 (“the Ordinance”).

3. An appellate court will not normally interfere with the exercise of the judge’s discretion except on grounds of law: Chan Pan Sang & ors v Kin Yen Lung Trading Co Ltd, HCLA 42/1987, DHCJ Saied, 2 February 1988, page 3.

Facts

4. The employee sued the employer for arrears of wages, wages in lieu of notice (“wilon”), annual leave pay, food and travelling allowance and air ticket costs.  The bases was that the employer failed to pay the employee full wages for over a month during the claim period, which gave rise to constructive dismissal.

5. The employer did not appear at the first call-over hearing (14 August 2015) and did not file a defence.  Judgment was entered in his absence for $13,769.07 claimed by the employee.

6. The employer subsequently applied to set aside the award.  He explained that he could not attend the call-over due to work commitment that he could not put off.  He only received short notice of the call-over hearing.  He had informed the Tribunal Officer that he could not attend at least 24 hours before the same.  He said that the employee had misled the Tribunal in failing to mention certain matters and he had a meritorious defence to the claim.

7. The employer had filed the defence and counterclaim. His case was premised on (a) the employee being absent from work amounting to a total of 60 days; (b) wilon; (c) $3,000 for disbursements for food for the employee’s brother and daughter during their stay at the employer’s house; and (d) quantum meruit of $500 for storage of the employee’s belongings during her employment and beyond termination of her employment.  The total amounted to $15,520.  He claimed that the employee had used up her annual leave and had returned to the Philippines at least once.  The employer seeks to set off the travelling and food allowance and costs of air ticket.

8. After hearing the application for setting aside the award, the Presiding Officer (“the PO”) ordered (“the order”) that the award be set aside on condition that the employer do pay the amount of $13,769.07 into the Tribunal “as security”.

9. In his reasons for decision (“the Decision”), the PO noted that the employer had notice of the call-over hearing.  He had informed the Tribunal Officer on 11 August 2015 that he could not attend the hearing on 14^th, but he made no formal application to postpone the hearing.  The PO, correctly, explained to the employer at the hearing that unless there were truly exceptional circumstances, litigants should make attendance of court hearing a priority.

10. Since it was apparent that the employer had notice of the call-over hearing, the PO considered that the key consideration for setting aside the award was whether the employer had a meritorious defence.  He took into account the following legal principles:

(a)   The award is to be set aside where the employer has an arguable case: Tam Shu Po v Ng Chor Biu & Ors, HCLA 38/1988, Mayo J (as he then was), 5 January 1989.

(b)   The Tribunal has power to impose a condition for setting aside an award made in default: Chan Pan Sang at §14.

(c) The power to impose conditions was not confined to cases where the defence appeared shadowy or the defendant’s credibility was in doubt, but even where there was a good arguable defence. The purpose was not to punish the defendant for non-compliance with procedural rules, but to encourage the proper conduct of the litigation and to provide a measure of security for the claimant: Ma Po Ching v Charmine Beauty SPA, HCLA 110/1999, DHCJ To (as he then was), 20 April 2000.

11. The PO assessed the merits of the defence and counterclaim.  He told the employer, correctly, that the claim for storage fees and disbursements was beyond the jurisdiction of the Tribunal.

12. The allegation of absence from work was disputed.  But the PO noted that there was no suggestion in the defence and counterclaim that the employee had been summarily dismissed for that.

13. In assessing the merits of the defence, the PO made enquires as to the periods and dates of alleged absence from work but the employer refused to answer on the ground that the PO should not conduct a mini-trial in the application to set aside the award. 

14. The PO considered the defence shadowy.  He informed the employer that he would consider imposing the condition.  After hearing the employer, he rejected the employer’s argument that the imposition of the condition would be a breach of the Hong Kong Bill of Rights Ordinance, Cap 383.

15. The PO considered that the employer had the means to satisfy the condition and the employer had confirmed at the hearing that he did have the means.  The PO accordingly made the order.

16. The employer’s review was dismissed.

Some general observations on the PO’s approach

17. Although the PO has not spelt it out in his Decision, he had apparently relied on section 21A(1) of the Ordinance to impose the condition.  That section provides as follows:

“Any award or order made by the tribunal under section 21 in the absence of a defendant at a hearing may be set aside by the tribunal, on the application of the defendant, on such terms as it thinks just.”

18. Although the facts in Chan Pan Sang and Ma Po Ching are distinguishable, the principles cited above are nevertheless applicable.  The PO has guided himself on the proper legal principles to apply.  It was correct for him to first take into account the regularity of the award and, secondly, consider whether there were arguable grounds of defence.  If the defence was not even arguable, there would not be a basis to set aside an award; there would be no need to impose a condition.  Ascertaining arguability is not equivalent to a mini-trial or trial.  I can see no error of law in the approach of the PO. 

19. The employer refers to section 30 of the Ordinance.  In my view, notwithstanding that the PO had used the term “security” in his order, he was not applying section 30.  That provision is appropriate to the circumstances where there is a real risk of payment of the award being obstructed or delayed (eg by a defendant employer dissipating assets), or where a party has conducted the proceedings in a manner that delays the determination of the case or has abused the process: s.30(4).

Intended grounds for appeal

20. The employer has 9 intended grounds of appeal framed as points of law. They are mostly re-run of the arguments before the PO.  Are they arguable?

21. Ground 1 complains that the PO breached the rules of natural justice, especially the audi alteram partem rule by ordering the defendant to pay the full amount claimed into court without all the evidence, without discovery, witness statements from the employer and without giving him an opportunity to examine the employee.  The employer submits that the award carries criminal ramifications as he might be prosecuted for not paying wages on time.

22. It is fundamental to fair procedure that both sides should be heard: audi alteram partem, ‘hear the other side’.  This is the more far-reaching of the principles of natural justice, since it can embrace almost every question of fair procedure, or due process.  (See Administrative law, 11^th Edition,  by H.W.R. Wade and C.F. Forsyth, page 405)

23. The employer was clearly conflating 3 different stages in the proceedings.  One stage was the making of the award.  There could not be any complaint of the breach of the audi alteram partem rule.  The employer was given the opportunity to appear at the call over.  He did not appear and there was no defence filed.  The PO duly made the award in accordance with section 21 of the Ordinance.  The PO had explained his reasons as set out in paragraph 9 above.  He was dealing only with the civil aspect of the non-payment of wages and not any criminal charge.

24. The second stage was the setting aside of the award. Again there cannot be complaint of the breach of the audi alteram partem rule.  The PO expressly informed the employer of his intention to impose a condition and gave the employer the opportunity to make representation before the order was made.  The imposition of the condition was in accordance with the legal principles set out above.  It was not a trial or mini-trial.  There was evidence that that condition could be met by the employer and would not have stifled his chance of pursuing his defence and counterclaim.

25. The third stage would be the trial of the claim and counterclaim itself.  The PO had not deprived the employer of the opportunity to be heard at the trial.  The trial was not even fixed. 

26. Ground 1 is not arguable.

27. Ground 2 asserts that the PO misapplied section 30 of the Ordinance and exceeded his jurisdiction.  That section was clearly inapplicable in this case for reasons given in paragraph 19 above.

28. Ground 3 and 4 assert that the PO had not properly considered or investigated the instructions given by the Tribunal Registry via Form 19 of the Labour Tribunal Rules which only required the employer to proffer a reasonable explanation for his absence and not prepare for a trial or mini-trial.  The PO had conducted a trial or mini-trial.

29. As the PO has explained in his Decision, Form 19 was a statutory form which was beyond his power to change.  In considering the application for setting aside the award, the PO did not stop at considering the employer’s reasons for absence.  The PO also rightly pointed out in §31 of his Decision that the employer had in fact gone further to set out his defence, which the PO had considered in terms of arguability.  I can see no error of law or procedure in it.  Ground 3 and 4 are not arguable.

30. Ground 5 asserts that the PO erred in practicing a contradicting standard in acknowledging that the employer had contacted the Tribunal Officer informing her that he was not able to attend the upcoming hearing but concluded that the employer had not done so formally. 

31. The employer claims that the DARTS record of proceedings showed that the PO might not have been aware that the employer had told the Tribunal Officer that he was not able to attend the call-over hearing. Even accepting that, the fact remained that the employer had admittedly failed to write to the Tribunal seeking an adjournment and no defence was filed then. Ground 5 is not arguable.

32. Ground 6 asserts that the PO has apparently concluded that there were no triable issues on matters about the employee’s conduct that the employer had raised. 

33. In §29 of the Decision, the PO had stated that the employer was unwilling to provide further information on the employee’s absence from work as requested.  The employer said that he did not refuse to provide the information.  It was just that he got on the wrong foot with the PO and he did not want to give information without the supporting evidence.

34. Absence from work for effectively 2 months was a startling period and yet the employee was not summarily dismissed for that. The PO was entitled not to rely on a bare assertion but ask the employer for more particulars.  Whatever the employer’s explanation was, the fact remained that no further information was given to the PO. 

35. The PO did not consider that the employee’s admission that she could not properly perform her household duties had any direct relevance to the claim for arrears of wages and wilon “based on the information available”.  That was a view open to the PO.  He was not making a final decision on either side’s case.  I see no error in his approach.

36. Ground 7 claims that the PO erred in not considering an order for costs instead of making the order for security.  Like the PO, I am unable to understand this ground as the PO has actually ordered costs in favour of the claimant to be assessed.  This is part of the exercise of his discretion and this court can see no error of law to justify interfering with that exercise.

37. Ground 8 asserts that the PO erred in failing to consider the fact that the employee had not applied for entering of default judgment, and failed to investigate any prejudice to the employee if there was a short adjournment as a result of the defendant’s absence. 

38. Under section 21 of the Ordinance, the power of the Tribunal to enter default judgment is not dependent on an employee’s application.  The Tribunal has the discretion to make the award based on the evidence then before him.  Ground 8 is not arguable.

39. Ground 9 asserts that the PO erred in not applying the principle that justice must not only be done but should also be done when he entered judgment in default and imposed a condition for setting aside the judgment and declaring in open court that the HK Bill of Rights has no place in his court room.

40. Having regard to the matters set out above, not only had the PO done justice but the procedure adopted was impeccable.  There is no evidence that he had made the alleged declaration in open court.  What the PO stated in his Decision, rather, was that he did not see how the Bill of Rights Ordinance was engaged.  The employer has not shown me how either.  The employer was not denied his right to defend the claim and the order made was within the powers of the Tribunal.

41. In summary, none of the intended grounds are arguable. The intended appeal is devoid of merits.  I therefore dismiss this application.