VERMEERBERGEN PETER ALFRED v. SWISSTRIBE LTD

HCLA 36/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 36 OF 2015

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO LBTC 1570 OF 2014)

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D E C I S I O N

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Introduction

1.  The defendant carried on business of design and production of displays and retail fixtures mainly for watch/jewellery brands.  The claimant commenced employment with the defendant as its custom relation manager on 1 February 2013.  Disputes arose between the parties following the termination of the claimant’s employment with the defendant.

2.  On 26 May 2014, the claimant filed a claim at the Labour Tribunal.

3.  On 24 July 2014, it was ordered by consent that the defendant do pay $3,377.00 to the claimant in full and final settlement for his claim for arrears of wages and expenses.

4.  The parties proceeded to trial in respect of the dispute over inter alia the claimant’s (i) entitlement to commission, and (ii) claim for wages in lieu of notice.  After a 6-day trial that took place in February, May and July 2015, the Presiding Officer:

(a) dismissed the claimant’s claim for wages in lieu of notice, and entered judgment in favour of the claimant against the defendant in the sum of $6,586.61 being $2,197.00 for commission under clause 2.2 of the employment contract and $4,389.61 for commission under clause 7.2 thereof with interest on such commission pursuant to section 39(3) of the Labour Tribunal Ordinance Cap 25 (“Ordinance”) from the date of the award until satisfaction;

(b) dismissed the defendant’s counterclaim against the claimant for wages in lieu of notice and for return of notebook computer;

(c) granted no order as to costs;

(d) ordered the award sum to be paid to the claimant out of the security paid into court by the defendant, and the balance of the security be refunded to the defendant (“Determination”).

5.  On 16 August 2015, the claimant applied to the Labour Tribunal for review of the Determination and the Review Determination.  On 20 August 2015, the payment out of the security was stayed until further order of the court.  On 7 September 2015, the claimant’s application for review was heard.  On the same day, the Presiding Officer dismissed the claimant’s application for review with no order as to costs, and it was further ordered that the award sum be paid out of court to the claimant, and the balance of the security be refunded to the defendant (“Review Determination”).

6.  On 14 September 2015, the claimant filed an application for leave to appeal against the Determination (“Leave Application”) on the ground that the Presiding Officer erred in law by failing to give any or any sufficient weight to the evidence adduced by the claimant “and such perfected grounds to be settled”.

7.  The Presiding Officer gave brief oral reasons at the hearings on 12 August and 7 September 2015 for the Determination and Review Determination (“Brief Reasons”), and handed down formal Reasons for Decision on 29 October 2015 (“Reasons”).  It was apparent from the Brief Reasons and Reasons that:

(a) the parties disputed over terms of the claimant’s employment contract, and the Presiding Officer concluded that the written contract adduced by the claimant was the correct version;

(b) the Presiding Officer allowed commission under clauses 2.2 and 7.2 of the employment contract based on the actual sales figures provided by the defendant that were less than the amount claimed by the claimant;

(c) the Presiding Officer rejected the claimant’s claim for commission in respect of the Casio and Arab accounts based on an alleged oral contract made with Mr Genoud for the defendant.

8.  The claimant was granted legal aid.  On 4 November 2015, the claimant’s assigned solicitors filed Notice to Act under the Leave Application.  The hearing of the Leave Application originally scheduled on 5 November 2015 was vacated and re-fixed to be heard on 19 February 2016.  On 27 January 2016, the claimant filed Amended Grounds of Appeal.

9.  At the adjourned hearing of the Leave Application on 19 February 2016, Mr Shum, counsel for the claimant, referred to a letter dated 6 October 2014 from the applicant to the Labour Tribunal in relation to the inspection of invoices on 4 October 2014 (see C42). However, it transpired at such hearing that Mr Shum was unaware of certain correspondence between the parties and the Labour Tribunal and certain applications/directions during the period from 15 September 2015[1] to the date of trial (“Documents”) in relation to the inspection of documents concerning the claim for commission. I therefore adjourned the hearing to 4 March 2016, and granted leave for the claimant to inspect and take copies of the Documents, which the claimant’s solicitors did on 22 February 2016.

Legal principles: leave to appeal

10.  The onus is on the applicant to show that the intended appeal has arguable grounds.[2] Whilst an appeal against a determination by the Labour Tribunal is on point of law,[3] leave to appeal will also be granted if the determination was made without regard to relevant factors, was made without evidence, or there was failure to discharge the statutory duty to investigate and such failure has given rise to injustice, in that a fair and proper determination of the claim cannot be attained.[4]

Legal principles: duty to investigate

11.  Section 20(3) of the Ordinance prescribes that the presiding officer shall investigate any matter which he may consider relevant to the claim, whether or not it has been raised by a party.  In Chan Suk Bing Angie v Harbour Phoenix Ltd & anor, DHCJ Jerome Chan said “…… Presiding Officers should not allow themselves to derogate from this statutory duty under any circumstances, if a fair and just disposition of the claim is to be ensured. The requirements of justice in a judicial system such as the tribunal is such that, the Presiding Officers are required to assume an active inquisitorial role in the proceedings.  ……” (my emphasis)[5]

12.  It has been said that “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: ……”[6]

13.  Chan Suk Bing Angie went on to say at pp 462-463 that:

“…… Further, not only is the total absence of investigation a ground of complaint, totally inadequate or useless investigation which amount to no investigation at all will also suffice. It is however, never sufficient for the appellate court to conclude that it would have preferred to approach the matter differently or that there is a better way to investigate the claim. It is not open to the appellate court to prefer its own views to that of the Presiding Officer’s as to the manner of investigation. To suffice, it must be a clear and obvious case that the inadequacy of the investigation will render an ordinary reasonable man on the tram to Shaukeiwan to conclude that injustice has resulted in that a fair and proper determination of the claim cannot be attained.

…… The insufficiency of evidence to support a finding or the inconsistency of a finding with the evidence, are matters that the appellate court can properly take into account to determine whether there has been a failure to conduct any or any adequate investigation of material facts relevant to such a finding. …… They are only matters which may give rise to a need for further investigation before a determination should be made. If there has been a proper and adequate investigation of the claim, no complaint can be made against any such findings of fact.” (my emphasis)

14.  In Chan Yat San v Future Luck (296) Ltd,[7] Mimmie Chan J said as follows:

“14. Further, the inquisitorial role of the Presiding Officer under s.20 of the Ordinance involves the duty to investigate relevant matters. Incidental to its performance of such a role and its duty to ensure a fair trial, in cases where there are disputes on facts and the credibility of witnesses is essential to the Presiding Officer’s determination, the Presiding Officer has the duty to raise with a party matters that require its clarification or elaboration, on which the Presiding Officer has queries and which may be determined against the party. This is in order to give the party an opportunity to deal with these matters and to all evidence on such matters.”

Legal principles: discovery

15.  Hong Kong Civil Procedure 2016 states that “Order 24 [of the Rules of the High Court] applies as much to Labour Tribunal proceedings as other courts: Wong Yin Fong & Others v. ISS Hong Kong Services Ltd [2005] 2 H.K.L.R.D. 648, CFI).”[8]

Legal principles: duty to give reasons

16.  There is in general a requirement that a tribunal of fact must give adequate reasons for its decision.  In Zhou Cui Hao v Tng Fung Yee, it was held that:[9]

“Generally speaking, a professional judge is under a duty to analyse in his judgment the material points in the evidence of the case and give reasons as to why he had reached a particular conclusion or decision. This is the only way to make people understand why their evidence is not accepted by the court and why they lose in a case. Only by this can justice be seen to be done. Furthermore, the losing party needs to be clear on whether there is any error in the reasons for the decision given by the court before he can decide whether to appeal or not, and, at a later stage, submit to the Court of Appeal his grounds of appeal in order to seek to set aside the original decision. A professional judge is under a duty to give adequate reasons for any decision which he has made. This is a principle of paramount importance in the common law system. ……”

17.  But important that it is for the Labour Tribunal to give reasons for its decision, it does not have to address every issue that has been raised as long as it has set out sufficient reasons in addressing the substantial issues before it and showing why it has come to its decision.  Further, the reasons may not require great elaboration and they may be brief.  It is only when they are defective in substance that they should be considered inadequate.  Ultimately, what are adequate reasons in the circumstances of a particular case has to be approached sensibly.[10] As explained by the Court of Appeal in Re Profit Success Development Limited,[11] “[whether] adequate reasons have been given in a particular case is, in other words, a fact sensitive question”.

Leave application

18.  Mr Shum submitted that the claimant clearly had at least an arguable case that the Presiding Officer had committed errors of law in failing to discharge his statutory duty to investigate in a material way and to give sufficient reasons for his decision so that leave to appeal ought to be granted accordingly.

19.  As seen below, the Amended Grounds of Appeal seek to attack the findings made by the Presiding Officer, but Mr Shum was careful to frame the claimant’s intended grounds of appeal on the basis that the findings by the Presiding Officer were liable to be impugned in the senses set out in paragraph 10 above, which he contended would not infringe the restriction in section 35(2) of the Ordinance. 

20.  I now turn to the Amended Grounds of Appeal, which could broadly be divided as challenge against the Presiding Officer’s decision to dismiss the claimant’s claims (a) for commission and (b) for wages in lieu of notice.

Claim for commission

21.  The claimant’s intended appeal on the dismissal of his wider claim for commission focused on the calculation/quantum of commission to which the claimant was entitled.  Mr Shum reminded that as a starting point the Presiding Officer accepted the claimant’s version of the employment contract, which meant the claimant was entitled to 3% commission and residual commission of sales amount on all accounts managed, co-managed or approached by him leading to sales, and any outstanding commission or residual commission for accounts managed, co-managed or approached by him leading to future sales for a period of 24 months after termination of employment.

22.  Mr Shum referred to the Brief Reasons and submitted that the Presiding Officer dismissed the claimant’s claim for commission on the sole basis that he “failed to support his claim with solid evidence”, and that “[a] substantial part of his claim is purely based upon speculation” and he found it “difficult to rely on speculation and unsupported assertions made by the [claimant]”.  Mr Shum argued that all documents relating to the sales records of business introduced/approached by the claimant were in the possession of the defendant, and in the course of the trial the claimant complained that some relevant invoices were missing,[12] and yet the Presiding Officer repeatedly claimed he could not do anything “because we do not have discovery procedure like High Court, unless you want to do it somewhere else, that’s what you have got”.[13] Since the Presiding Officer was under a duty to inquire/investigate, Mr Shum submitted that as a result of the Presiding Officer’s misunderstanding of his powers of discovery and his active inquisitorial role, he failed to exercise his statutory power to investigate into crucially relevant matters and to order discovery of pertinent documents.

23.  Secondly, Mr Shum contended that the Presiding Officer failed to make proper inquiry and finding in relation to the accounts listed in the claimant’s claim for commission, and noted there was no mention of the same at all in the Presiding Officer’s decision.  Further, Mr Shum complained the Presiding Officer only made a casual finding that “some of the customers were actually not the direct customers of the defendant” before proceeding to dismiss the claimant’s claim for commission under clauses 2.2 and 7.2 of the employment contract.  Mr Shum argued that under such provisions, being “direct customers” was not the only criterion for the claimant’s entitlement to commission and the claimant was entitled to commission even if the sales resulted from the claimant’s “approach”.  In the circumstances, it was suggested that the Presiding Officer erred in law in failing to make proper enquiry and findings in relation to the accounts listed in the claimant’s claim as to whether they resulted from the claimant’s approach, and he failed to apply the corrective alternative criteria provided and agreed in the employment contract to determine whether the claimant was entitled to commission under clauses 2.2 and 7.2 in the employment contract.

24.  Mr Shum referred to the following matters which were apparent from the Labour Tribunal’s case file:

(a) it appeared that at a hearing on 15 September 2015 (ie at the pre-trial stage) before the Presiding Officer, an understanding was reached between the parties for the claimant to inspect the invoices (see D43 – letter from the claimant to the defendant dated 16 September 2014);

(b) the claimant requested sight of the invoices specified in a list of accounts for the period from 1 February 2013 to 1 October 2014 that he prepared (see D43 – letter from the claimant to the defendant dated 16 September 2014);

(c) the defendant claimed the understanding reached at the hearing on 15 September 2015 was for inspection of invoices for the period from 1 February 2013 to 31 March 2013 (and not 1 October 2014), and it also disputed the scope and extent of the inspection (see D44 – letter from the defendant to the claimant dated 22 September 2014);

(d) the defendant wrote to the Labour Tribunal to complain that the claimant was unable to provide “an exact list of clients and so call related companies” (see letter from the defendant to the Labour Tribunal dated 30 September 2014);

(e) the claimant wrote to the Labour Tribunal to complain that (a) when he attended the defendant’s office on 4 October 2014 the defendant limited the invoices up to end of March 2014 and failed to allow physical inspection at the latter’s office, and (b) the small quantity of invoices as alleged by the defendant for the period from February 2013 to 1 April 2014 was impossible (see C42 - letter from the claimant to the Labour Tribunal dated 6 October 2014);

(f) the defendant wrote to inform the Labour Tribunal that the meeting on 4 October 2014 between the claimant and the defendant ended with the police being called, but “[the] requested client’s list with their respective turnovers and invoice numbers, will be send by post tomorrow” (see letter from the defendant to the Labour Tribunal dated 6 October 2014);

(g) the claimant claimed he only saw the defendant’s list of invoices and inspected certain invoices at the pre-trial hearing on 3 November 2014 (see C44 – letter from the claimant to the Labour Tribunal dated 4 November 2014);

(h) the defendant wrote to inform the Labour Tribunal that the “report on invoicing requested last mention on November 3^rd, 2014 for the above claim” was delayed due to business trip, but it would be ready by end of the following week (see letter from the defendant to the Labour Tribunal dated 3 December 2014);

(i) the claimant wrote to the Labour Tribunal on inter alia 5 invoices which had “[double] invoice numbers” and requested “to subpoena these 5 invoices for evidence” (see C45 – letter from the claimant to the Labour Tribunal dated 22 December 2014);

(j) the claimant replied on various documents produced by the defendant, and complained inter alia that the defendant submitted incomplete invoice totals under clause 2.2 of the employment contract that failed to include invoices from 1 February to 23 July 2013 for AD Works and/or invoices for “sales to Casio entities direct in July 2013 to March 31^st 2014” (see C46 – reply by claimant dated 22 December 2014 on various documents produced by the defendant);

(k) the claimant wrote to the Labour Tribunal with copy to the defendant on (i) 5 specified invoices (which invoice numbers he observed to be duplicated during physical inspection of the invoices in court in December 2014), which he regarded as “crucial evidence” and (ii) his intention to apply for a subpoena for such invoices “at the soonest”, but to save time and cost he requested the defendant to provide such invoices before 21 January 2015 or alternatively inform the Labour Tribunal immediately if it was unwilling to do so (so the claimant could apply for relevant subpoena sooner) (see letter from the claimant to the Labour Tribunal with copy to the defendant dated 15 January 2015);

(l) on 19 January 2015, the claimant applied for subpoena against Mr Patrick Daniel Mottet of the defendant to produce the aforesaid 5 invoices;

(m) on 23 January 2015, the Presiding Officer directed that “[claimant’s] application for subpoena is too late and cannot be considered as no sufficient time is available for issue of subpoena”;

(n) the claimant wrote to the court to state that he only just received the Presiding Officer’s directions, and he explained that he had applied for the subpoena at the earliest opportunity on 19 January 2015 (see letter from the claimant to the Labour Tribunal dated 27 January 2015).

25.  It appeared that some steps had been taken pre-trial for the claimant to inspect the invoices in the possession of the defendant.  However, it is also plain that even at the pre-trial stage the claimant did assert there were missing invoices, and he regarded at least 5 of them were “crucial evidence” since they had duplicated invoice numbers.  When the application for subpoena was declined, the claimant appeared to maintain his complaint of missing invoices at the trial hearing.  But when the trial was adjourned part-heard, the matter of a subpoena for the aforesaid 5 invoices was not revisited. 

26.  In my view, Mr Shum’s criticisms were directed at the Presiding Officer’s statutory duty to investigate in relation to the alleged missing invoices as to their materiality to claimant’s complaint and the reliability of the actual sales figures provided by the defendant.  I note the Presiding Officer eventually relied on the actual sales figures provided by the defendant, and criticised the claimant for being unable to raise solid grounds of objection concerning such actual sales figures by the defendant in coming to his view on the quantum of commission he eventually awarded and in rejecting the claimant’s wider claim.  I find this to be an arguable ground of appeal on point of law in the senses set out above. 

27.  As regards Mr Shum’s next complaint that the Presiding Officer erred in making proper enquiry and finding in relation to the accounts listed in the claimant’s claim for commission, it appeared the Presiding Officer approached the matter on a global basis that the claimant’s estimation of the commission was based on unreliable projection or forecast of business that was “nothing more than speculation and without support”.  In paragraph 33 of the Reasons, the Presiding Officer also gave examples of why the claimant’s list was unreliable, eg projection for AGSA business which ceased in December 2012, and projection based upon orders by reference to photographs and/or belief.  In my view, since I have found there is arguable basis to suggest that the Presiding Officer’s reliance on the actual sales figures provided by the defendant might be impugned on point of law, it follows that question might arise over the proper basis for ascertaining the quantum of commission to which the claimant was entitled. I am satisfied it is arguable whether the Presiding Officer did make sufficient enquiry and finding in relation to the claimant’s list of accounts/commission.

28.  Mr Shum next argued that the Presiding Officer adopted a wrong criterion in ignoring, say, commission from sales that resulted from the claimant’s “approach” when the Presiding Officer accepted the claimant’s entitlement should be based on sales according to the employment contract.  Mr Shum rested his argument on the Brief Reasons that showed the Presiding Officer disregarded certain customers who were not direct clients of the defendant, and suggested that was tantamount to ignoring consideration as to whether sales from such customers resulted from the claimant’s “approach”. Mr Shum submitted that the Presiding Officer’s error was also illustrated by paragraphs 28-29 of the Reasons as follows:

“28. There were orders made by AD Works (“ADW”) and Time Management Services (“TMS”) and MS Retail (“MSR”) for products which ultimately supplied to Casio and Al Homaidhi. The Claimants said ADW and TMS/MSR were agents only. In my view, even though the products might be ultimately supplied by the [Defendant], it was only a resale, ADW and TMS/MSR should be the customers. Like the Claimant said, Casio said business would only be done with ADW for political reasons. ADW and TMS/MSR all denied the involvement by the Claimant by letters.

29. In the circumstances, the Claimant did not manage or co-mange directly or indirectly the Casio and Arab accounts. Even if there were visits or discussion with them, that was not enough as said be managing or co-managing and for existing customers like them, the Claimant could not be considered approaching them that led to business either.”

29.  It seemed that what had fallen from the Presiding Officer in the Brief Reasons was an acceptance that whilst the claimant was entitled to commission on all accounts managed, co-managed or approached by him that led to sales, such sales were limited to those made to customers of the defendant and not re-sales by such customers to their own customers.  Thus, the Presiding Officer explained in the Brief Reasons that one of the reasons why he considered the claimant’s list of accounts speculative was the claimant’s disregard of the fact that some customers listed in the claimant’s list were actually not the defendant’s direct customers but were only customers of the defendant’s own customers. Hence, the Presiding Officer said as follows:

“Even if there are some brand names that might, through a customer of the defendant, got the defendant’s products, it was only a resale. That did not make those brands direct customers of the defendant.”

30.  Mr Shum submitted that the Presiding Officer misunderstood the essence of the claimant’s case on his claim for commission.  Using the Casio account as an example, it was the claimant’s case that he was the one who “approached” Casio, but whilst Casio was prepared to place orders it insisted that business would only be done via ADW “for political reasons”, which therefore resulted in Casio’s intermediary ADW acquiring products from the defendant (either as agent for Casio as the claimant alleged or as principal for resale to Casio as the defendant claimed), and which explained why ADW (being Casio’s intermediary) said it did not deal with the claimant. However, it was the claimant’s case that whatever might have been the conduit/channel that Casio nominated for effecting the purchase of products from the defendant, he was the one who “approached” Casio which led to the purchases placed via ADW “for political reasons”.  In the circumstances, Mr Shum submitted that the Presiding Officer failed to properly understand the claimant’s case and erred in ignoring commission from sales that resulted from the claimant’s “approach”.  Indeed, Mr Shum reminded that whilst the Presiding Officer in paragraph 29 of the Reasons dealt with the issue of whether the claimant managed or co-managed the Casio and Arab accounts, he did not address the issue of whether sales under such accounts were the result of the claimant’s “approach” under clauses 2.2 and 7.2 of the employment contract. 

31.  In my view, although at first blush the claimant’s above complaints appeared to be attacks on the Presiding Officer’s findings of fact, further review of Mr Shum’s submissions showed that his criticisms arguably came within the potential errors that are liable to be impugned in the senses discussed above. At this stage of considering whether to grant leave to appeal, it is inappropriate for me to analyse Mr Shum’s arguments in any great detail and/or to come to any definitive view, but having reviewed the Brief Reasons and Reasons, and bearing in mind my conclusions in paragraphs 26-27 above in relation to the proposed grounds of appeal in relation to the award for commission, I am persuaded this proposed ground of appeal is also arguable.

Claim for wages in lieu of notice

32.  The claimant claimed that on 1 April 2014 the defendant terminated his employment without payment in lieu of notice as provided in clause 7.1 of the employment contract.  Mr Shum submitted that although the Presiding Officer seemed to have given some reasons why he rejected the claimant’s claim for wages in lieu of notice, he failed to analyse material points raised by the claimant and evidence relating thereto in respect of the Notice of Termination which was allegedly issued on 8 April 2014, ie 7 days after the alleged day of termination of the claimant’s service on 1 April 2014, and thus he failed to give any reason at all as to why he reached his decision on the termination issue, ie the defendant terminated the employment of the claimant by way of notice, and it was the claimant who failed to show up afterwards that led to the subsequent summary dismissal.  It was further suggested that the date of issuance of the written Notice of Termination (ie 8 April 2014) supported the claimant’s case that on 1 April 2014 the defendant terminated the claimant’s service without any proper reason/notice and that such written Notice of Termination (subsequently made up the defendant) was not served on the claimant at all.

33.  However, both in the Brief Reasons and Reasons, the Presiding Officer found and accepted that the defendant had tried to contact the claimant by telephone, text messages, emails and letters between 9 and 18 April 2014 to urge the claimant to carry out his duties, which communications the claimant ignored.  That being the case, the Presiding Officer found it unbelievable that the defendant summarily dismissed the claimant without notice on 1 April 2014 (because if that were the case, it would have been pointless for the defendant thereafter to ask the claimant to carry out his duties), and he also found the claimant’s explanations as to why he failed to respond to the defendant’s overtures unreasonable and unnatural.  The Presiding Officer also found that the claimant’s non-response “was because what the Defendant alleged was indeed accurate”. 

34.  I disagree that the Presiding Officer failed to give reasons for accepting the defendant’s version of events and rejecting the claimant’s version.  In any event, the written Notice of Termination of 8 April 2014 would not assist the claimant since it was not consistent with his case (that he was summarily dismissed on 1 April 2004), but consistent with the defendant’s case (that the claimant ceased to perform his duties thereafter, that the defendant chased the claimant to carry out his duties between 9 and 18 April 2014, and that eventually the defendant summarily dismissed the claimant for his continued abandonment of work and neglect of duties).  As explained above, it is not necessary for the Presiding Officer to give reasons on each and every issue that has been raised, and I am satisfied he had set out his reasons on the substantial issues before him and showed why he came to his decision on the mode of termination.  I am not satisfied there is any merit to this intended ground of appeal.

Conclusion

35.  So under the Leave Application, I grant leave for the claimant to appeal against the Determination and Review Determination on the grounds specified in paragraphs 1-3 (but not paragraph 4) of the Amended Grounds of Appeal.  As for costs, I also make a costs order nisi that 75% of the costs of the Leave Application be costs in the cause of the appeal, and there be no order as to costs in respect of 25% of the costs of the Leave Application. I also order that the claimant’s own costs be taxed in accordance with Legal Aid Regulations.