LI PAN CHEUNG v. HONGPLUS PROFESSIONAL CONSULTANTS LTD

HCLA 22/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 22 OF 2012

(ON APPEAL FROM LABOUR TRIBUNAL

CLAIM NO. 1742 OF 2011)

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(Heard Together)

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D E C I S I O N

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1.  There are before this court 4 ex parte applications for leave to appeal against the decision of a Deputy Presiding Officer (“Officer”) sitting at the Labour Tribunal (“Tribunal”) made on 31 October 2012.  The 4 applications, involving a total of 17 applicants[1], were heard together.  Mr Au appeared for the applicant in HCLA 22/2012 (“Li”) and Mr Tse appeared for the 16 applicants in the other 3 applications (all the applicants will be referred to collectively as “Applicants” and, where it is necessary to refer to them with the exception of Li, as “Workers”).

Background 

2.  The background facts are as follows.

3.  The Applicants were casual workers in the construction field.

4.  The claim of the Applicants before the Tribunal concerned the construction and renovation work carried out at a place known as 28 Peak Road, Hong Kong (“Site”).  The Site was owned by South Hill (HK) Limited (“South Hill”), with one Mr Ho Shung Pun (“Ho”) as its director.

5.  On 26 February 2010, Hong Yip Service Company Limited (“Hong Yip”) entered into an agreement with South Hill to provide consultancy service for work to be carried out at the Site.

6.  Subsequently, on 12 March 2010, Hong Yip entered into an agreement with Hongplus Professional Consultants Limited (“Hongplus”), a subsidiary of itself, for the provision of services by the latter in relation to the construction and renovation work at the Site.

7.  The Applicants commenced work on the Site in October 2010.  Their wages were withheld since the 20 December 2010, and they were dismissed from the Site on 15 January 2011.

8.  Subsequently, the Applicants commenced their actions in the Tribunal to recover their unpaid wages.  The Workers’ actions were against Hongplus as their employer, and alternatively, against Li[2] and Hongplus, as employer/sub-contractor and main contractor respectively (“Alternative Case”).

9.  The case of Li was that Hongplus was his employer and he only acted as its agent in recruiting the Workers.

10.  On the other hand, the case of Hongplus was that Li was the employer of the Workers and that Li had a contract with South Hill, which acted through Hongplus as its agent.

11.  The hearing at the Tribunal commenced on 16 April 2012.  At the conclusion of the hearing, the Tribunal found that Li was the employer of the Workers and dismissed their claims (the Alternative Case having been withdrawn, see below).  The case of Li was also dismissed. 

12.  The Reasons for Decision of the Tribunal (“Decision”) is dated 27 December 2012.

13.  The Applicants now seek to appeal against the dismissal of their claims pursuant to s 32(1) of the Labour Tribunal Ordinance, Cap 25 (“Ordinance”).

Grounds of Appeal

14.  Two sets of Perfected Grounds of Appeal have been filed respectively by Li and the Workers.  Mr Au and Mr Tse have confirmed that with the exception of Ground 4, which applies only to the Workers, there is no material difference between the 2 sets of documents.  In summary, it is argued that the Tribunal had erred as follows :-

(i) In failing to investigate matters relevant to the claim against Hongplus (Ground 1);

(ii) In failing to evaluate evidence in accordance with the principles laid down by the Court of Appeal in Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 (Ground 2);

(iii) The conclusion that Li was the employer is perverse or irrational, and made by reference to irrelevant factors or without regard to relevant factors (Ground 3);

(iv) Further to Ground 1 or in the alternative, the Tribunal had failed to investigate matters relevant to the claim against Li before wrongly advising the Workers to withdraw the Alternative Case (Ground 4).

Applicable Principles

15.  Pursuant to s 32(1)(a) of the Ordinance, the Applicants must demonstrate that the Tribunal had erred in point of law.  Leave to appeal will be granted if the intended appeal is arguable (see Chan Kwok Hung v Hotel Panorama Co Ltd, unrep., HCLA 30/2009, 19 November 2009).

16.  Legal practitioners have no right of audience before the Tribunal (s 23 of the Ordinance).  To balance against the lack of legal representation, s 20(3) of the Ordinance imposes upon the Presiding Officer a duty to investigate relevant matters irrespective of whether they are raised or relied upon by any party.  Further, such duty may not be derogated from under any circumstances (see Chan Suk Bing v Harbour Phoenix Ltd [1992] 2 HKC 459 at 462B-D).

17.  Further, in Chan Suk Bing, at 463A, it was held that “not only is the total absence of investigation a ground for complaint, totally inadequate or useless investigation which amount to no investigation at all will also suffice”.

18.  The duty to investigate was further considered by the court in James Manuel Ho v Grand Pacific Vacation (HK) Ltd, unrep., HCSA 5/2004, 29 July 2005, paras 13-14.  In particular, the Presiding Officer has a duty to invite the parties to “comment on matters, or, if necessary, directing them to produce evidence or documents, relating to matters which the Tribunal discerns to be important”. The Tribunal is also duty bound to invite the parties to consider giving evidence when they appear to be in a position to do so on matters of importance.

19.  Some of the applicable principles had been conveniently summarised in Wai Mei Lai v Viya Pramita, unrep., HCLA 3/2010, 28 June 2011, para 16.  In particular :-

(i) Finding of facts by the Tribunal is generally immune from challenge as it involves no error of law, unless such is perverse or irrational, or where there is no evidence to support the decision or where the decision was made by reference to irrelevant factors or without regard to relevant factors;

(ii) Further, failure to discharge the statutory duty to investigate is a ground of appeal.  However, it is trite that not every failure to investigate a relevant matter will give rise to an appeal.  The appellate court has to be satisfied that the subject matter of the complaint must not only be relevant but be of such a nature that the lack of investigation will give rise to injustice, in that, a fair and proper determination of the claim cannot be attained.

20.  The leading authority on the determination of an employment relationship is Poon Chau Nam v Yim Siu Cheung [2007] 10 HKCFAR 156, at 167F-G.  It was held by the Court of Final Appeal that :

“The modern approach to the question whether one person is another’s employee is therefore to examine all the features of their relationship against the background of the indicia developed in the abovementioned case-law with a view to deciding whether, as a matter of overall impression, the relationship is one of employment, bearing in mind the purpose for which the question is asked. It involves a nuanced and not a mechanical approach …”.

21.  In Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at 480F to 483I, the Court of Appeal stressed the importance in a fact finding exercise (a) to test the evidence against contemporaneous documents and (b) to consider the inherent probabilities.

22.  With these principles in mind, I turn to consider the grounds of appeal.

Analysis

23.  First and foremost, the Decision has been scrutinised by this court.  Plainly, the Officer had evaluated the evidence before him with considerable care.  He did not adopt a mechanical approach. Instead, the evidence was considered from different angles with sound common sense, which is consistent with the guidance adumbrated in Esquire (Electronics) Ltd. 

24.  The first 3 grounds of appeal are, in truth, challenges to the Tribunal’s findings of fact.  With respect, I see nothing in the complaints. 

25.  Under Ground 1, there are 3 complaints. Firstly, it is said that the Officer ought not to have dispensed with the attendance of Ho as a witness.  Ho was subpoenaed as a witness by the Applicants at the hearing below.  However, he wrote to the Tribunal indicating that he had no knowledge of the matters concerning the employment of the Applicants at the Site and wished to be excused from the hearing.  With the consent of the Applicants, Ho’s attendance was dispensed with.  Neither Mr Au nor Mr Tse has managed to demonstrate to this court why Ho’s assertion that he had no relevant knowledge is wrong or that his evidence would have been of assistance to the Tribunal.  I reject this complaint.

26.  Secondly, it is contended that the Officer should have ordered the production of a Form 5, which was made pursuant to certain regulation under the Construction Sites (Safety) Regulations, Cap 59 sub. leg. I, and made inquiries relating to the same.  The significance of that document is that Hongplus was stated to be “Employer or Contractor”.  However, in para 66 of the Decision, this piece of evidence was indeed considered by the Tribunal.  Quite rightly, the Tribunal believed that the entirety of the evidence must be considered on the question of the identity of the Applicants’ employer and that the Form 5 was not conclusive.  I also reject this complaint.

27.  Thirdly, it is argued that the Tribunal had failed to consider whether Li was a sub-contractor of Hongplus.  The point of the argument is that a principal contractor is liable to pay the wages of the employees of its sub-contractors under s 43C of the EmploymentOrdinance, Cap 57.  I am not attracted by this argument because there was no suggestion by anyone, and no evidence to suggest, that there was such a relationship between Hongplus and Li. 

28.  For the reasons stated in para 23 above, I find no merit in either Ground 2 or Ground 3 (see paras 14(2) and (3) above). 

29.  Ground 4 does give rise to some concern.  On day 3 of the 12-day hearing before the Tribunal, the Officer asked the Workers whether they at any time believed that Li was their employer and that Hongplus was the main contractor.  Having confirmed with the Workers that none of them believed that Li was their employer, the Officer suggested to them to withdraw the Alternative Case.  To be fair to the Officer, he was at pains to ensure that the Workers were alive to the consequence of such withdrawal.  It appears that the Officer was motivated by the desire to narrow down the issues between the parties. 

30.  The finding eventually arrived at by the Tribunal is that Li (trading as Cheung Yau Engineering Co) was the employer of the Workers (see para 68 of the Decision).  The claim against Li having been withdrawn, the Workers are left with no remedy.  Regrettably, justice has not therefore been done. 

31.  Mr Tse argues with considerable force that the Officer should not have suggested the withdrawal of the Alternative Case on the basis of the Workers’ subjective belief as to who was their employer.  That mixed question of law and fact could only be decided after considering all the evidence.  I agree.  I should also point out that it is entirely possible that contractual arrangements are deliberate made opaque so that the employer may escape his liability to the workers when it suits him.  Hence, the employees’ belief as to who their employers was may be unreliable. 

32.  I would like to add 2 further points.  Firstly, the belief that the issues would be narrowed with the withdrawal of the Alternative Case was misguided because Hongplus was running the case that Li was the employer of the Workers and thus that issue will have to be considered at the end of the day.

33.  Secondly, in light of the Tribunal’s duty to investigate (see paras 16 to 18 above), the Officer could, and should, have invited the Workers to re-consider the withdrawal of the Alternative Case when it became clear to him that there was substance in that case. 

34.  However, although there clearly are merits in Ground 4, I am unable to see why the order made by the Tribunal, namely, the dismissal of the claim against Hongplus should be set aside.  There is no sustainable challenge to the findings in favour of Hongplus.  To set aside the order may constitute unfairness to Hongplus. 

35.  Further, Mr Tse accepts that the Workers are in the position to bring another claim against Li.  That brings into consideration whether this court should exercise its discretion (there is no dispute that the court has a discretion pursuant to the provisions of s 32(1) of the Ordinance) to grant leave, even assuming that the problems identified in the preceding paragraph can be overcome. 

36.  In answer, Mr Tse argues that if the Decision is not set aside, there is a risk of inconsistent finding by a different Tribunal. 

37.  Firstly, I accept that it is clearly right that a fresh claim by the Workers against Li should be tried by a differently constituted Tribunal.  However, it is not inconceivable that Li will be estopped from disputing the finding that he was the employer of the Workers (“Finding”) in the fresh proceedings.  Questions of res judicata, are rarely straight forward.  It is a point which might not have been considered by Mr Tse and he has made no submission on it. 

38.  However, whether Li will be so estopped will depend on the fulfilment of 3 conditions :

“Res judicata estoppels may operate between defendants. The principles were developed by the Privy Council in Indian appeals. In Munni Bibi v Tirloki Nath Sir George Lowndes said:

‘… three conditions are requisite: (1) there must be a conflict of interest between the defendants …; (2) it must be necessary to decide the conflict … to give the plaintiff the relief he claims and (3) the question between the defendants must have been judicially decided.’”

See Res Judicata by Spencer Bower & Handley,

4^th edn, §9.08

39.  It may be argued that condition 1 cannot be met because of the withdrawal of the Alternative Case which eliminated the conflict of interest between Li and the Workers. 

40.  If Li will not be constrained in arguing against the Finding in the fresh action (ie, there is no estoppel against him), then the risk of inconsistent finding cannot be discounted.  However, the significance of an inconsistent finding should be properly assessed.  It must be remembered that the Finding is not one made between Li and the Workers as opposing parties.  Instead, they were on the same side in the proceedings before the Officer.  Li had not had an opportunity to answer a claim by the Workers against him.  Once the Finding is considered in that light, the significance of an inconsistent finding by a different Tribunal is considerably reduced. 

Conclusion

41.  By reason of the aforesaid, these applications are dismissed.

42.  I am grateful to both Mr Au and Mr Tse for their assistance in these matters.