YUNG MEI CHUN JESSI v. MERRILL LYNCH (ASIA PACIFIC) LTD

HCLA22/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO.22 OF 2011

(ON APPEAL FROM LBTC 1670 OF 2009)

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BETWEEN

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J U D G M E N T

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1.  The applicant was the former employee of the defendant. She claimed against the defendant employer for (A) wages for restricted period; and (B) underpayment of wages caused by exchange rate difference. Her claims were dismissed with costs and she now seeks leave to appeal against 7 orders of the Presiding Officer:

Date	Order
23.2.10	Application for discovery of Office of the General Counsel’s Report (“OGC Report”) refused (“the 1st Order”)
17.1.11	Refusal to let applicant add evidence; application for review not dealt with (“the 2nd Order”)
23.3.11	Claims dismissed; question of costs adjourned (“the 3rd Order”)
9.6.11	(in applicant’s absence) PO refused to recuse himself; application for review of 23.3.11 decision dismissed; applicant to pay costs of $194,053.99 to D (“the 4th Order”)
25.7.11	PO dismissed application to have him recused; decision of 9.6.11 affirmed; parties were not to submit further evidence or statement without further direction; originals of any document to be submitted must be produced at a later stage (“the 5th Order”)
29.7.11	Applicant’s review of costs allowed; amount of costs reduced to $191,068.99 (“the 6th Order”)
16.8.11	(by letter from PO) Applicant’s application for review against 25.7.11 order refused (“the 7th Order”).

BASES OF CLAIM AND DECISION BELOW

2.  The applicant was employed by the defendant as a Director of Investment/Private Wealth Manager from 16 May 2007.  She was interviewed by Mr Victor Tan who orally agreed that the annual compensation for the first year was to be US$140,000.  However, the employment contract stated that the base compensation for the first 12 months was HK$1,085,000 (instead of US$140,000), payable at a monthly fixed amount of HK$90,416.67.  Clause 8 (“clause 8”) of the employment contract provided as follows:

“You (the applicant) agree that:-

(a) From a date that a party gives notice to terminate this agreement (“the Notice Date”) for any reason, for a period of 3 months from the Notice Date (“the Restricted Period”) you shall not within the Territory, directly or indirectly and in any capacity, solicit … the account of any person whom you serviced …

(b) During the Restricted Period, you shall not … render services to … any … entity whose business is the same ... with any business being carried on by the Company (the defendant)…

(c) The Company may at its sole discretion decide not to enforce your undertakings set out in paragraphs 8(a) and (b) above (the “Undertakings”) … If the Company decides to exercise the discretion, it will notify you in writing on the Termination Date.

(d) If the Undertakings are enforced and you do not breach any of the Undertakings, the Company will continue to pay to you the Monthly Amount during the Restricted Period.”

Clause 9 stated the notice period to be 7 days in writing. There was no probation period.

3.  The applicant claimed that when she was interviewed by the Human Resources Manager (Octavia), she raised specific questions on:

(i) why the guaranteed annual basic salary was HK$1,085,000 and not US$140,000;

(ii) why the enforcement of clause 8(c) rested solely with the defendant and not both parties;

(iii) why the notice period was 7 days and not 3 months according to industry practice;

(iv) why there was no probation.

4.  In reply, Octavia allegedly represented to the defendant that:

(i) The applicant could choose to be paid basic salary in HK$ or US$;

(ii) It was the defendant’s practice to enforce clause 8(c) and it was only a standard term to say that the defendant had sole discretion;

(iii) 7 days’ notice was industry practice; the enforcement of clause 8(c) was equivalent to a notice period of 3 months;

(iv) Probation was not necessary as the enforcement of clause 8(c) was equivalent to 3 months’ salary; if the defendant terminated the employment contract, it would enforce the undertaking.

It was allegedly in reliance on such representations by Octavia that the applicant signed the contract. The defendant denied these allegations.

5.  On 17 August 2007, without notifying the applicant, the defendant intercepted, opened and damaged confidential mail addressed to the applicant, c/o the defendant.  The mail contained legal documents from a solicitors’ firm in one of the applicant’s case and was not work related.  All the legal documents were scanned into the computer.  The applicant complained to the Privacy Commissioner who eventually found that the defendant had breached privacy principles.  Meanwhile, the applicant’s employment was terminated by the defendant by 7 days’ wages in lieu of notice on 24 September 2007 on the ground of material non-disclosure.  On the following day, the defendant informed the applicant by letter that it had elected not to enforce the undertakings under clause 8(a) and (b).  The defendant had not so enforced them.  The applicant claimed that the defendant breached the contract, hence claim (A). 

6.  Further, the applicant knew that other employees were paid by the exchange rate of HK$7.8.  She raised it with Victor Tan a few days before she left.  That resulted in claim (B).  She alleged that Victor Tan had agreed to and confirmed adjustment of the exchange rate for her salary as requested, which was denied by Victor Tan.

7.  After trial, the learned Presiding Officer found in favour of the defendant’s witnesses (Octavia, Daisy Lee and Victor Tan) on credibility.  In his written reasons (“the Decision”) he held that on claim (A), the defendant had the sole discretion to determine whether to enforce clause 8 and the defendant’s grounds for exercising its discretion not to grant the wages for restricted period were not irrational or perverse. He therefore declined to interfere with the exercise of the discretion.  On claim (B), he held that the contract had clearly stated the annual and monthly wages in HK dollars and there was no room for seeking underpayment due to difference in exchange rates.  

THE APPLICATION FOR LEAVE

8.  In this application, the applicant has put in a 78-page submission containing 117 paragraphs of very detailed and minute arguments on every single point she could address. I have asked her to identify (by marking against the margin of that submission) those matters that she had put before the Tribunal.  It transpired that all but less than 20 of those paragraphs (principally introductory in nature) had been rehearsed before the Tribunal, including her fierce attack on credibility of the defence witnesses and allegations of bias against the learned Presiding Officer.  In addition, there were 2 bundles of documents comprising 852 pages.  The applicant’s submissions were lengthy, repetitive, frivolous and with lots of irrelevant stuff (just as what the learned Presiding Officer had described).  Even at and after the hearing before me, she had put in 3 sets of written submission which did not add much in substance.  I have gone through all of these, hence the time taken for this decision. 

9.  Notwithstanding the lengthy written submissions, it is important not to miss the wood because of the trees.  The core claims were for wages for restricted period and underpayment, not damages for wrongful dismissal.  All other complaints of the applicant were directed towards a fair trial and review of those 2 core claims.  I shall not, therefore, follow the track of the applicant in dealing with every fine detail (although I have read through them) that might not have any bearing on those core claims. 

10.  In this application, it is for the applicant to show that the learned Presiding Officer had erred in law: section 32(1) of the Labour Tribunal Ordinance (“LTO”). 

11.  Findings of facts are usually not appealable unless they are perverse or irrational, or there was no evidence to support it; or it was made by reference to irrelevant factors or without regard to relevant factors.  In an appeal on law only, the appellate court must bear in mind what scope the circumstances provide for reasonable minds to differ as to the conclusion to be drawn from the primary facts found.  If the fact-finding tribunal’s conclusion is a reasonable one, the appellate court cannot disturb that conclusion even if its own preference is for a contrary conclusion.  But if the appellate court regards the contrary conclusion as the true and only reasonable one, the appellate court is duty-bound to substitute the contrary conclusion for the one reached by the fact-finding tribunal.  See Kwong Mile Services Ltd v Commissioner of Inland Revenue [2004] 3 HKLRD 168, para 31-37.

12.  I shall analyze this application in accordance with the Orders the applicant intend to appeal against.

1^st ORDER – REFUSAL TO ORDER DISCOVERY OF OGC REPORT

13.  The applicant claimed that the OGC Report contained the true reasons for dismissing her.  The defendant refused to disclose it because it was made for seeking legal advice and was protected by legal professional privilege.

14.  The learned Presiding Officer held that the reasons for dismissing the applicant had been stated in the letter of termination.  The OGC Report was just the process for considering the termination.  The reasons for termination were the same as what the applicant alleged.  The applicant was not suing for damages for wrongful termination. The OGC Report was irrelevant to the claims.

15.  The applicant argued that the OGC Report mentioned the true reasons for termination.  It could help to prove that because the applicant complained the defendant for breach of the Personal Data (Privacy) Ordinance that the defendant changed its stance and treated the oral agreements personally covering Octavia’s representations and Victor Tan’s agreement on adjustment of exchange rate as if they did not exist.  It was to cover up its wrongdoings that the defendant terminated the employment and made up excuses for the termination. 

16.  The applicant was dismissed by payment of wages in lieu of notice, which an employer had a right to do under sections 6 and 7 of the Employment Ordinance and could do so even if he did it for an ulterior motive.  When exercising the statutory right to terminate, neither party was required to give reasons for termination.  See Sun Zhongguo v. BOC Group [2003] 2 HKC 239, Recorder Edward Chan SC.  There was therefore no need to investigate the reasons for termination.  There was also nothing to correlate the contents of the report to the alleged oral agreements. 

17.  The learned Presiding Officer’s decision as regards the 1^st Order could not be faulted and there is no merit in the intended appeal.

2^nd ORDER – REFUSAL TO LET APPLICANT ADDUCE EVIDENCE ON 6.1.11

18.  According to the applicant, she had wanted to adduce:

(i) A report from the Privacy Commissioner (“the PCR”) to show that the defendant had breached principles of privacy in relation to the applicant’s documents. Allegedly, it would show background knowledge to see if the termination was correct and whether it affected the defendant’s stance on the oral promises.

(ii) Transcript of audio and video taped records showing that Octavia was not a credible witnesses;

(iii) Evidence of the exchange rate for US dollars;

(iv) 2 sets of newspaper cuttings.

(i) The Privacy Commissioner’s Report

19.  It was the applicant’s own stance initially that it was not necessary to wait for the results of the Privacy Commissioner’s investigation. Anyway, I have read the PCR, which found that the defendant had breached privacy principles.  That could not affect the outcome of this case.  The PCR dealt with the system by which the defendant dealt with confidential mail and the way it handled the applicant’s confidential mail.  Assuming it was before the learned Presiding Officer and that the defendant had terminated the applicant without valid reasons, the fact was that the applicant had received wages in lieu of notice and she was not seeking damages for wrongful termination (para 27(1) of the Decision).  The learned Presiding Officer had no power to deal with a claim for damages for breach of privacy principles.  He rightly held that the PCR was irrelevant to the 2 claims before the Tribunal. 

20.  The learned Presiding Officer dismissed the application for review as he was of the view that section 31(2)(b) LTO did not apply to the applicant’s then situation; the decision was not an “award” or “order”.

21.  With respect to the learned Presiding Officer, whilst his decision was not an award, it was certainly an order that was capable of being reviewed.  However, the failure to review could not cause any prejudice to the applicant because, as I have held, the PCR was irrelevant to the claims. 

(ii) Transcript of the Audio and Video Tape Records

22.  The learned Presiding Officer was of the view that the quality of those records was poor, the date of the photo was odd and the transcript was incomplete.  Even if the applicant’s transcript was correct, the Tribunal could not find Octavia as lying based on one remark, “痴綫,憑乜野啫,講大話嘛,會拉呀!”  (See para 27(4) of the Decision.)  That was a finding open to the learned Presiding Officer and I can see no ground for interfering with it.   It would be dangerous to act on isolated remarks without context to find that a witness had lied or perverted the course of justice. 

(iii) Evidence of the Exchange Rate for US Dollars

23.  The evidence was to show that the market never hit the exchange rate of US$1.00 to HK$7.70 at all since 1985.  That could well be true but with regard to the applicant, that was irrelevant.  Throughout this claim, there were only 2 exchange rates for US dollars mentioned – HK$7.75 and HK$7.80, both above HK$7.70.

(iv) Two Sets of Newspaper Cutting

24.  The learned Presiding Officer’s findings were that the information in the newspaper that the defendant had been penalized had nothing to do with the applicant’s contract (para 27(3) of the Decision).  I agree. 

25.  The intended appeal against the 2^nd Order has no merits. 

3^rd ORDER – CLAIMS DISMISSED; QUESTION OF COSTS ADJOURNED

Claim (A) on Wages for Restricted Period

26.  With regard to the facts in support of claim (A), the learned Presiding Officer had accepted the evidence of the defendant’s witnesses and disbelieved the applicant (para 30 of the Decision). 

27.  The applicant renewed her attack on credibility of the defence witnesses in the present application, to the extent of alleging that there had been collusion and perverting of the course of justice, which was essentially a re-run of her arguments before the Tribunal. 

28.  The learned Presiding Officer had given full reasons on why he preferred the defence witnesses to the applicant (para 28-30). It was incorrect to say that the learned Presiding Officer decided against the applicant because of her character.  Whilst he was entitled to take into account her character, he had not overlooked the need to analyze the relevance, reasonableness and logicality or each side’s evidence and the applicant’s manner of conducting the litigation.  He had the advantage of hearing the witnesses and observing them first-hand.  There was ample evidence to support his views.  An appeal court will not disturb his findings as irrational or perverse or otherwise in breach of the Kwong Mile principles. 

29.  With regard to the law, in paragraphs 32-34 of his Decision, the learned Presiding Officer relied on the case of Clark v. Nomura International Plc [2000] IRLR 766 to show that the court should only interfere with an employer’s exercise of discretion in the case of irrationality or perversity.

“I do not consider it right that there be simply a contractual obligation on an employer to act reasonably in the exercise of his discretion, which would suggest that he court can simply substitute its own view for that of the employer. My conclusion is that the right test is one of irrationality or perversity (or which caprice or capriciousness would be a good example), i.e. that no reasonable employer would have exercised his discretion in this way (at p.744).”

30.  The defendant’s evidence was that the applicant had only worked for a few months at the medium level; that she was not a very experienced financial adviser; that she was subject to training during her employment; and that she had not been able to get in even one customer before her employment was terminated.  Her contribution to the defendant was very little.  In deciding whether to enforce the non-competing clause, the defendant considered whether an employee would join a competitor, whether non-enforcement of the restrictive period would cause the defendant to lose its customer and hence business.  The learned Presiding Officer had not overlooked that such reasons (“the defendant’s reasons”) existed in the context of dismissing the applicant for her failure to disclose her litigation.  (See para 35, 36 & 38 of the Decision.) 

31.  The learned Presiding Officer also considered the defendant’s company practice on how to exercise its discretion under this clause (schedule Exhibit D30 and related D31-35).  The findings were that out of the 44 employees listed in the Exhibit D30, only 4 of them (including the applicant) had a similar clause 8.  With those 4, the defendant had not enforced the undertakings or paid the wages for restricted period.  The learned Presiding Officer considered that that revealed an exercise of discretion.  He found that the way the defendant interpreted clause 8 was what any wise employer would have and was in accordance with the factual circumstances.  Considering the defendant’s reasons, it was not irrational or perverse for it not to exercise its discretion in the way it did with regard to the applicant. 

32.  The applicant claimed that the defendant acted against directions of the Tribunal with intention to mislead it and had conducted the action in bad faith by including samples of employees who did not have clause 8 in their contracts.  She claimed that the defendant had tried every single means to cover up their usual company practice on termination of staff.  Essentially she alleged that there were so many errors in the Exhibits and lacked contracts in support that they were not reliable.  The applicant also submitted that the Exhibits were irrelevant to her claim and was only produced at the request of the learned Presiding Officer.  She had already informed the learned Presiding Officer.  He nevertheless asked her to cross-examine the defence witnesses but turned round to blame her for cross-examining on irrelevant material.

33.  In my view, the learned Presiding Officer was correct in considering company practice because of the alleged representation of Octavia that the defendant would enforce the undertakings as if across the board with no discretion involved.  He was not misled, as upon investigation he identified 4 employees for comparison purpose.  Those 4 employees damaged the applicant’s case.  Clearly not all employees leaving employment would get the wages for the restricted period. 

34.  Even if the company practice was irrelevant to claim (A), as the applicant submitted, or the applicant could successfully dispute the reliability of Exhibit 30, the application of clause 8 was one of law and examination of the defendant’s reasons.  The applicant has failed to demonstrate how the learned Presiding Officer had erred in law.  The bases on which the learned Presiding Officer found that there was no error in the defendant’s exercise of discretion was a view open to him on the evidence.  The applicant has not pointed to objective facts that could challenge the defendant’s reasons. 

35.  The applicant referred to market practice or what Victor Tan described as “guardian leave” in the securities field.  She had received $1,000,000 in the past for termination of her past employment and the present claim for wages for restricted period in the amount of $200,000 was a small sum for her.  In my view, any market practice could not be inconsistent with the express term of the contract which provided for the sole discretion of the employer. 

36.  The intended appeal against the findings as regards wages for restricted period has no reasonable prospect of success.

Claim (B) for Underpayment Due to Difference in Exchange Rates

37.  It was not the applicant’s case that Octavia had discussed with her about the exchange rate before the applicant signed the contract. Her case, rather, was the “agreement” of Victor Tan to adjust the exchange rate. 

38.  On this claim, the applicant faced an uphill task.  The employment contract expressly stated her base compensation in HK dollars at the annual and monthly rates.  By a simple calculation, it would reveal an exchange rate of HK$7.75 to the dollar.  The applicant had taken the contract home to consider for 3 days but made no suggestions for amendment before signing it.  The defendant had been consistently paying her the contractual monthly amount up to termination of employment.  It had never deceived the applicant. 

39.  If the applicant’s version was to be believed, namely, that Octavia told her that she could have the option to have payment in US$ or HK$, the applicant had never opted for US$ until almost the last day of her employment. 

40.  The applicant had to rely on a meeting with Victor Tan in which she expressed her concern that for other employees holding a similar position, their wages were calculated at the rate of HK$7.80 to US$1.00.  On 23 and 24 September 2007, the applicant allegedly requested Victor Tan to adjust to that exchange rate for her and he agreed.  She relied on a 3-second transcript of a conversation between her and Victor Tan whereby he “confirmed” something unspecified as follows:

Applicant: Confirm 未?

Victor Tan: Confirm 咗,叫佢地處理緊!

41.  Not trusting him, she wrote an email to Victor Tan on 24.9.2007 that raised a question rather than put his confirmation on record:

“The exchange rate used to translate my US$ annual compensation is 7.75. Market data shows that the FX market did not hit this rate at all since May 07. I understand that Merrill has been using 7.8 to translate FA’s PC over the past ten years. Is it possible to have an adjustment?”

42.  Tan Victor’s reply on the same date was in these terms:

“This was sent by [applicant] this morning and subject to following-up.”

43.  There followed a reply from an unknown person to unknown recipient(s), presumably including Victor Tan:

“As we discussed, I believe what happened is that in the Producer Movement you entered USD140k and HKD1085k. [Name blacked out] then generated the offer letter based on the HKD amount. Whatever might or might not have been discussed at the offering stage (i.e. might have said USD 140k instead of quoting the HKD) is less important, the signed offer letter is the final, which I believe did not mention any amount in USD. Let’s leave it for now and see how the whole thing develops.”

44.  According to the applicant, this meant that Victor Tan was asking someone to adjust the exchange differences as agreed.  His evidence was clearly false when he said he needed to check if it was HK$7.75 in the applicant’s case.  There was no need to check at all because the applicant had already told him so. 

45.  Victor Tan’s evidence was that he had all along used HK$7.75 to US$1 as the exchange rate for the base salary.  On a day in September 2007, the applicant asked him for the exchange rate for base salary and she told him it was HK$7.75.  The applicant left but returned to ask the same question.  Victor Tan thought that the accounts department had used a rate different from HK$7.75 so he said he would follow up.  The same rate had applied to all staff of the same grade recruited by him.  When asked whether he had confirmed, Victor Tan thought that the applicant was asking him if he had made enquiries with the accounts department about the applicable exchange rate.  Therefore, he replied stating that he had asked colleagues to follow up. He could not confirm the contents of the recorded conversation produced by the applicant, nor that it was his voice.  The email on 24 September was to ascertain if the accounts department had followed the rate of HK$7.75. 

46.  Having considered the evidence from both sides, the learned Presiding Officer accepted Victor Tan’s evidence (para 30(2)(b) on page 22-23 of his Decision).  The view taken was not irrational or perverse.  In my view, the transcript and emails were equivocal and lacked the details of the context of the discussion between the applicant and Victor Tan to establish an “agreement” to adjust the exchange rate. 

47.  The applicant also referred to Victor Tan’s evidence that it was company practice to convert commission into Hong Kong dollars at the exchange rate of HK$7.8 to US$1 for payroll purposes.  Since the applicant’s claim was for underpayment of base compensation, not commission, Victor Tan’s evidence in that respect did not assist her.

48.  The intended appeal against the decision on claim (B) has no prospect of success.

4^th ORDER – REFUSAL TO RECUSE; APPLICATION FOR REVIEW OF JUDGMENT DISMISSED; COSTS QUANTIFIED

49.  This order was made in the applicant’s absence despite her having original medical certificates to prove her inability to attend the hearing.  (I will come back to the reasons for this Order when I come to analyze the 5^th Order.) 

50.  Paragraphs 42-54 of the Decision dealt with what happened in correspondence between the date of the judgment on 23 March and review hearing on 9 June 2011.  There had been 5 applications by the applicant for adjournments on medical grounds and 1 application by the defendant, also on medical ground of its representative.  In that period, the learned Presiding Officer had been transferred to work at the Coroner’s Court.  He had described the difficulties in dealing with such constant correspondence from the applicant and why some of the correspondence was dealt with by the learned Principal Presiding Officer and the Tribunal Officer in charge. 

51.  It is not necessary to go into the details of why the Principal Presiding Officer and the learned Presiding Officer gave different directions on different occasions to adjourn or refused to adjourn the hearing.  Suffice to say that, for the purpose of this application, I shall accept that the applicant’s absence from the hearing on 9 June 2011 was due to medical reasons. 

52.  Notwithstanding that the applicant was “deprived of” a chance to make representation before the 4^th Order was made, she admitted to me that at the hearing on 25 July 2011 (which resulted in the 5^th Order) she did do what she could have done at the previous hearing (which resulted in the 5^th Order).  In fact, before those 2 hearings the applicant had not shrunk from filing as much written submission as she had wanted.  There was thus no prejudice to her.  The intended appeal against the 4^th Order has no prospect of success.

5^th ORDER - REFUSAL TO RECUSE; 4^th ORDER AFFIRMED

53.  The ground for the Applicant’s application for recusal was that she discovered that after the judgment was given, the learned Presiding Officer had been unfair to her. 

54.  A review is usually done by the presiding officer who handled the trial.  A presiding officer may rule against a party but that is no indication that he was unfair to or prejudiced against that party.  The learned Presiding Officer had dealt with the allegations of bias in paras 55 and 56(A), 68-72.  He rightly identified that the allegations of bias arose after the decision on merits (“the judgment”) of the claims was given.  He aptly explained the difficulties encountered in answering the letters of the applicant while he was dealing with work at the Coroner’s Court.  There was nothing to show he had favoured one party to another or that he secretly communicated with the defendant as alleged.  The reasons relied on by the applicant to assert that the learned Presiding Officer was unfair were not sufficient to have him recused. 

55.  The learned Presiding Officer had reviewed the reasons as to why the applicant was said to be prevented from illness from attending the hearing.  He also referred to the authority submitted on granting adjournment for illness of a party.  He came to the view that the applicant deliberately (paragraphs 76-82 of the Decision) refrained from attending the hearings on 9 June and before.  That was a view open to him on the evidence. 

56.  Even if the learned Presiding Officer did not do his job properly on 9 June (which I do not agree), he had done the right thing on 25 July by giving the applicant a full hearing for a whole day, well beyond the Tribunal’s sitting hours.  He referred to the fact that before the hearing on 9 June, the applicant had already given very full written submission on her application for change of the Presiding Officer and review of his decisions.  When the applicant applied to restore the review, she produced additional written submission and lengthy oral submission which were of similar contents.  The learned Presiding Officer considered that even if the reasons for absence were accepted by him, there was no reasonable prospect of success in her application for review of the judgment (para 81).  I agree with him. The challenges to credibility of witnesses and findings of facts have no substance.  They cannot show the findings to be irrational or perverse. 

57.  The applicant claims that the learned Presiding Officer wrongly accused her of deliberately delaying the hearing so as to deprive the defendant to receive the judgment debt plus interest.  She said that she had settled the judgment debt and interest on 26 July 2011.  Even if what the applicant said was true, I see no problem with the view of the learned Presiding Officer.  He was referring to deliberate delays before the hearing on 25 July which led to the 5^th Order.  The applicant only settled the judgment debt and interest on the following day.

58.  The applicant submitted that the submissions had been given to the learned Presiding Officer but he had not read it.  He said he would not set aside his decision and would not consider the merits. This submission has no foundation.  Paragraphs 68-82 of the Reasons for Decision showed that the learned Presiding Officer had considered the grounds for review. 

6^th ORDER – REVIEW ON COSTS ALLOWED; COSTS REDUCED

The Grounds for Review

59.  The applicant wanted the costs to be further reduced.  Her attack was both on the incidence of costs and the quantum allowed.  Her grounds can broadly be categorized as follows:

(i) The learned Presiding Officer should have ordered “no order as to costs” or low costs (ground (i)).

(ii) Specifically for the hearings on 13, 15 and 29 July 2011, the complaint was that the learned Presiding Officer wrongly ordered “no order as to costs” instead of costs to the applicant (ground (ii)).

(iii) There had been a lot of repetition in the costs claimed by the defendant. Moreover, the defendant did not do sufficient preparation on documents so that the hearing on costs had to be adjourned. It should bear part of the costs. (ground (iii))

(iv) The applicant queried whether or not the defendant had deceived the Tribunal; there had been lack of proof concerning its claim for costs (ground (iv)).

The Legal Principles

60.  Section 28(1) of the Labour Tribunal Ordinance, Cap. 25, provides as follows:

“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

(b) any reasonable sum paid to a witness for the expenses necessarily incurred and any loss of salary or wages suffered by him,

in attending a hearing of the tribunal or in being interviewed by a tribunal officer.”

61.  The costs are thus awarded to a party and not to a witness.  It is only when a party has incurred or will incur costs on calling a witness will that party be given the costs in relation to a witness. 

62.  Generally, a presiding officer will take a broad brush approach on costs and should not follow the taxation procedure as in the High Court and District Court proceedings.  A presiding officer may take judicial notice of the costs of travel locally by public transport from one place in Hong Kong to another.  Air fares may, as a matter of principle, be claimed as costs depending on the circumstances. 

63.  The applicant submits that the learned Presiding Officer should not have relied on authorities on appeal from the Small Claims Tribunal but only those from the Labour Tribunal.  With respect to the applicant, the provisions on costs under the Small Claims Tribunal Ordinance and Labour Tribunal Ordinance are very similar.  Authorities decided under one Ordinance can be used as reference. 

Ground (i)

64.  The applicant relied on the case of Ali Shoukat v. Hang Seng Bank Ltd, HCLA 112 of 2004, Deputy Judge To, to show that the proper order for costs should be no order as to costs or “low cost”. In paragraph 22 of his judgment there were references that “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.”  Here the costs awarded were disproportriate, being 70% of the claimed amount. 

65.  With respect to the applicant, Deputy Judge To was dealing with a situation of appeal on points of law from a decision of the Labour Tribunal.  The references in his judgment to trial costs might be applicable to simple disputes at the Labour Tribunal but could not be treated as taking away a presiding officer’s statutory powers under section 28(1) of the LTO to award costs. 

66.  In the present case, the learned Presiding Officer was dealing with the costs of proceedings from start to finish at the Tribunal.  The learned Presiding Officer correctly adopted the principle of “costs follow the event”.  He also rightly excluded costs incurred on lawyers. “Low costs” or “no order as to costs” was not appropriate having regard to the extent of discovery, heavy correspondence, the number of hearings and time involved, the repetitive and lengthy cross-examination on relevant and irrelevant issues by the applicant. 

67.  Costs are in the discretion of the learned Presiding Officer and not appealable unless it is shown that he had erred as a matter of principle.  I cannot see how the learned Presiding Officer had erred as a matter of principle. 

Ground (ii)

68.  Re hearings on 13, 15 and 29 July 2011, the learned Presiding Officer held that each party was successful on certain items.  The time spent in the hearings and some of the submission overlapped, therefore he made no order as to costs.  (See para 102 of the Decision.)  The applicant submitted that he had erred in that he had invited the parties to calculate their costs based on hourly rate.  She had spent 10 hours plus photocopying cost and the defendant had spent 7 hours.  He then found out himself the start and finishing time of the hearings to calculate the total hours that the defendant was entitled to.  He erred in not awarding costs to the applicant.  

69.  The learned Presiding Officer had correctly taken into account the fact that each party was successful and the time spent. It was not uncommon for a presiding officer to check against the Tribunal’s own record of time spent before exercising his discretion on costs.  Making an order that has the effect of setting off each party’s costs against the other was within the power of the learned Presiding Officer.  There was no error in principle disclosed in his order. 

Ground (iii)

70.  The applicant submits that it was always the defendant who had used excessive time for checking and vetting of their documentation.  When the data went wrong, the defendant re-submitted the documents.  Examples included the General Conditions of Employment (“GCE”), the various versions and amended versions of schedules (Exhibits D28 to D43).  Much hearing time was spent on identifying the discrepancies and checking the contents of those schedules.  The defendant also submitted a costs schedule which purported to include legal fees which were expressly disallowed by the learned Presiding Officer before the hearing on costs.  All of such wasted time should be borne by the defendant but the learned Presiding Officer ignored the applicant’s request.  The application added that the total time spent for all hearings were 46 hours, of which 36 were used on cross-examination of Daisy on Schedules D30 and related exhibits.  She also submits that the duty of case management was on the learned Presiding Officer and she should not be blamed instead.  He ordered the production of the GCE and Exhibits D28 to 43.  He did not follow the aim of setting up the Labour Tribunal as a low cost Tribunal and therefore erred.  To allow a party to charge time cost was not in accordance with the legislative spirit of the LTO and outside the jurisdiction of the Tribunal. 

71.  These complaints were as regards quantum and was within the discretion of the learned Presiding Officer.  No error in principle was disclosed. 

72.  The learned Presiding Officer adopted, rightly, a broad brush approach in assessing costs, taking care to give brief reasons for each head of costs claimed by the defendant (para 60-67 of the Decision).  Re item 1(a) and (b) of the costs claimed, the applicant’ complaint is unnecessary as the learned Presiding Officer had already disallowed the same (para 60[1] of the Decision).  Re items 2 to13 (except items 11 and 12 on witness expense and air fares of Victor Tan), the learned Presiding Officer had given reasons for cutting down the costs for certain items.  He made broad percentage deductions of 1/2 or 1/3 of certain items of costs which would have taken care of the applicant’s complaints on quantum under ground (iii). 

73.  Nevertheless, there are arguable grounds of appeal raised by the application:

(i) The applicant claims that time costs of the defence witnesses were not recoverable as they were not employees of the defendant by the time of trial. Whether or not they attended the hearings, the defendant had to pay them salary. Further, Victor Tan had left the defendant. When he left the defendant was an important factor to determine his costs. If he only left after 10 May 2010 (after giving evidence), his situation was similar to that of Daisy’s time cost. If he had left the defendant before giving evidence, then according to section 28(1) LTO, witness expenses would not be recoverable for him but for the defendant only if the defendant had paid him. There was no proof that he was so paid.

(ii) The applicant complains that there was no salary proof of the company representative’s salaries except an internal document of the defendant. This clearly was a matter overlooked by the learned Presiding Officer.

Ground (iv)

74.  By way of example of “deception” by the defendant in its claim for costs, the applicant pointed to the claim for costs of Octavia who had by the time of the trial left the defendant’s employment. After the applicant queried whether the defendant had paid witness fees to Octavia, the defendant waived that item of costs.  Similarly, the defendant withdrew its claim for costs of correspondence with the Tribunal involving 51 documents.  In addition, the applicant also queried whether Victor Tan had paid for the air ticket or redeemed a ticket from air miles earned as the invoice details from Bank of America showed that the air ticket was “an exchanged ticket”.  The defendant was said to have asked for proof from him but could not get it.  There was also query as to whether or not his trip to Hong Kong from the USA was for the purpose of the Labour Tribunal proceedings as he spent only 2 days at the Labour Tribunal out of 10-days’ stay in Hong Kong. 

75.  The learned Presiding Officer had shown himself not to have been misled by the defendant’s claim for costs.  As an example, he did not just rely on the hours spent at the hearings put forth by the defendant but exercised the discretion independently based on court records: para 60[9] and [13].  He did disallow the costs of Octavia and did not consider the 51 documents. 

76.  As for the air fares, he took into account the fact that Victor Tan was the superior of the applicant who worked in the United States.  He specially flew back in business class to give evidence.  The exchange rate was adopted as US$1.00 to HK$7.75 (para 60, item [12]).   Further, he was of the view that to come back to give evidence was part of his business duties.  His evidence was relevant to the claim for underpayment.  With his grade, he was entitled to use business class.  In the course of the proceedings, the applicant had been told that if she failed in the claim, she had to bear the relevant expenses (para 92 of the Decision).  He was correct in holding that the business class air fares of Victor Tan was recoverable as a matter of principle. 

77.  The learned Presiding Officer was of the view that “any reasonable expenses necessarily incurred” in section 28(1)(a) LTO did not require the expenses to have been paid.  Victor Tan was still the employee of the defendant and he disbursed the costs of air ticket on behalf of the defendant. Even if the defendant had not yet paid then, the liability of the defendant to reimburse had been incurred.  

78.  In the light of the applicant’s open challenge to require proof of disbursement, it may be an error in law for the learned Presiding Officer to proceed to make an award without sufficient proof.  As the applicant rightly submitted, the trip was taken well before the hearing for assessment of costs.  The applicant raised the issue of proof as early as she could have. It was impossible for there to be no evidence of payment by Victor Tan and reimbursement by the defendant.  In addition, the applicant’s argument that Victor Tan was in Hong Kong for 10 days whereas his evidence was only required on 2 warranted investigation and/or apportionment.  I find that the Applicant’s complaints as regards the air fares of Victor Tan as disclosing arguable points which may have some prospect of success on appeal. 

7^th ORDER – REFUSAL OF ANOTHER APPLICATION FOR REVIEW ON PAPER WITHOUT AN ORAL HEARING

79.  The applicant sought to review the decision of 25 July 2011 so as to disqualify the learned Presiding Officer and to set aside or restore the action due to her sickness.  Without hearing her, the learned Presiding Officer dismissed the application. 

80.  In paragraph 105(2) of the Decision, the learned Presiding Officer stated that he considered the applicant’s application to change Presiding Officer and to review the refusal to restore the review was an abuse of process.  The learned Presiding Officer was of the view that the applicant sought to review every decision that was against her and put forth repetitious grounds.  According to section 31(b) LTO, a presiding officer has the discretion to review or not.  According to 張建明v. 源昌棧紙業有限公司HCLA109/2003, at para 24 a presiding officer may review the whole or part of his decision; and the Ordinance did not prescribe how he should deal with it.  According to 周廣華v. Paschehans-Joachim HCSA2/2010, at para 37, a presiding officer has the discretion to decide whether or not the review should be conducted by way of an oral hearing.  In the learned Presiding Officer’s view, the grounds relied on by the applicant for review was repetitious.  There had been ample opportunity for her to address them at previous hearings before a decision was made.  Repeating her case would not give rise to any prospect of success but would only be an abuse of process unjust to the defendant.  The review on costs was completed on 29.7.2011.  Restoring the hearing on costs had no meaning. 

81.  The applicant submitted that the learned Presiding Officer erred in considering the review applications and the request for change of presiding officer as an abuse of process.  Review was a fundamental right of the parties, not an abuse, especially since the review were all on different subjects.  The learned Presiding Officer erred in law and fact on all such review applications and failed to put the case back to the right track. 

82.  In my view, the learned Presiding Officer had correctly directed himself on the law.  As analyzed under various Orders, there were not many sustainable grounds of appeal.  Even if the hearing in the absence of the applicant was wrong in the first place, the learned Presiding Officer had given the applicant another chance to address him in full.  Reviews on adducing evidence, the substantive award and costs have been separately dealt with.  Looking at the 4-page grounds for this review, it was apparent that there was a lot of repetition attempting to re-run arguments on decided issues.  Not even a prima facie case for a fresh review was disclosed. I do not see why the defendant should be repeatedly vexed by the same issues.  The learned Presiding Officer had correctly applied the legal principles. 

83.  As I have said, we should not miss the wood for the trees.  Even if all the attacks on procedure or allegations of bias were established, they were events after the main decision on merits.  The weight of the evidence was such that the applicant could not reverse the result of her claims (except on those issues I shall identify in the next paragraph) if all proper procedures had been followed. 

CONCLUSION

84.  The intended appeal against the 7 orders have no prospect of success except for the following issues, namely, whether the learned Presiding Officer had failed to investigate:

(A) The salary of the company’s representatives.

(B) Re Victor Tan, (i) whether and when Victor Tan had left the employment of the defendant when he gave evidence for the defendant; and (ii) if he had left before giving of evidence, whether the defendant had paid for his witness expenses so as to entitle the defendant to recover from the applicant; (iii) if witness expenses of Victor Tan had to be paid, how it should be computed.

(C) Whether or not the air fares had been paid by Victor Tan/the Defendant;

(D) Whether or not the air fares of Victor Tan were incurred for his attendance at the Labour Tribunal.

I give leave to appeal on these issues only.

85.  I remind the applicant that even if her appeal is successful, one of the orders that the Court may make is to remit the matter to the Tribunal for further investigation: section 35(1)(c) LTO.  It will be in both parties’ interest to consider discussing alternative methods of resolution to save time and costs of yet another round of legal proceedings.