SUEN LAI SUET AND OTHERS v. OWNFIELD GARMENT MANUFACTURING CO. LTD.

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 29 OF 1996

(L.T. Claim No. E4283 of 1995)

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J U D G M E N T

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1. This is an appeal against an award made by the Presiding Officer, S.C. Poon Esq., in the Labour Tribunal. The Appellant, Ownfield Garment Manufacturing Co. Ltd., was the employer and the Respondents (Claimants) the employees. They claimed in the Labour Tribunal that the Appellant had failed to pay to them the statutory sum in accordance with s.31E(1)(a) of the Employment Ordinance, Cap.57 which provided as follows :

"31E. Lay-off

(1) Where an employee is employed under a contract on such terms and conditions that his remuneration thereunder depends on his being provided by the employer with work of the kind he is employed to do, he shall for the purposes of section 31B(1) be taken to be laid off where the total number of days on each of which such work is not provided for him by the employer exceeds-

(a) half of the total number of normal working days in any period of 4 consecutive weeks; or

(b) one-third of the total number of normal working days in any period of 26 consecutive weeks,

and he is not paid a sum equivalent to the wages which he would have earned if work had been provided on the days on which no work was provided"

In other words, the Respondents worker said and accepted by the Tribunal below that the employer had not provided any work to them for half of the total number of normal working days in the stipulated period of four consecutive weeks and they were not paid therefor accordingly. The workers accordingly claimed to be entitled to be treated as being laid off and constructively dismissed and they asked for and was awarded with 7 days' wages in lieu of notice, annual leave payment, and severance pay.

2. It was the Appellant's case that in early May 1995 after seeking advice from the Labour Department, the Appellant had offered to pay to the workers the statutory sum. Since the Appellant was then in financial difficulties, it had asked for indulgence from the workers so that the statutory sum would be paid to them by installments, i.e. at the rate of $120 per day first and the remaining balance sum to be paid later after payment had been received by the Appellant from its customers.

3. According to the Appellant's witnesses DW1, the director, DW2, the manageress, DW3, a group supervisor and DW4, another group supervisor for production, it was also made clear to the workers there and then that if the arrangement was not acceptable to them, they would be paid in full according to their strict legal or statutory right. DW2-4 were called to give evidence at the hearing to confirm that efforts were made to put forward the aforesaid proposal to the workers. In particular, they all said that on 11 May 1995, the 1st, 5th and 6th Respondents were told about the same in the presence of two other workers. They were Madam Yan Lai Fong and Madam Ho Moon Siu.

4. The Respondents have not responded to the aforesaid proposal at all, i.e. they have not objected nor accepted the same.

5. The Presiding Officer did not accept the evidence of DW1-4 and he found that no such offer had been made by the Appellant to the Respondents. In his findings he said :-

"The main factual dispute between the parties was whether the Claimant had been told that if they refused the Defendant's offers, the Defendant agreed to pay them at the rate of the full amount of the average daily wages for 12 days in 4 consecutive weeks in which no work was provided. I did not find the Defendant's version credible. First, the Defendant was in financial difficulty. I did not believe that it would in those circumstances suggest to the Claimants that it would pay them at the full rate if they so desired. It simply did not have enough money to pay if they so elected. Further, by allowing the Claimants to choose, it would defeat the purpose of making the offers in the first place. And there was no reason why the Claimants did not elect payment at the full rate."

I should note here that there was no dispute that more than 40 workers agreed to the arrangement and collected the balance of their pay for those non-working days in full after the factory resumed work in mid-June, i.e. they accepted the offer of $120 per day for 12 days in these four consecutive weeks period and the balance in mid-June 1995 when payment was received by the Appellant from its clients.

6. The Presiding Officer did not deal with this aspect or this piece of evidence in the court below, i.e. if there was no such offer, why there were other workers who had accepted such a modus operandi which apparently enabled the Appellant Company to live through this financially difficult period. However, it is not the duty or right of this Court in its appellate jurisdiction to reverse the finding of the Presiding Officer as far as finding of facts are concerned. This is however relevant to the first ground of appeal of the Appellant which will be apparent hereinbelow.

7. After the Presiding Officer heard the evidence of DW2-4, he learned that such an arrangement or offer was mentioned to three Respondents on 11 May 1995 in the presence of two other workers. However, he did not make any enquiry about the identity of those two other workers. They were the aforesaid Madam Yan and Madam Ho and they were one of those 40 odd workers who had accepted the arrangement.

8. The Appellant complained in this appeal that it had never been advised that it should call Madam Yan or Madam Ho to corroborate the evidence of DW2-4. Mr Johnson Lam, counsel for the Appellant submitted that if the evidence of all the witnesses were considered as a whole, together with the evidence of these two independent witnesses, there would be a real possibility that the balance could be tilted and a different outcome would be achieved. Thus, the Presiding Officer has failed to discharge his statutory duty by not advising or inviting the Appellant to call Madam Yan and Madam Ho to give evidence. As the parties were not legally represented before him and his role in the Tribunal was an inquisitor, he should investigate all relevant points and call potential witnesses if necessary pursuant to s. 20 of the Labour Tribunal Ordinance, Cap.25.

9. In the case of Chan Suk Bing Angie v. Harbour Phoenix Ltd. & Anor. [1992] 2 HKC 459 Deputy Judge Jerome Chan (as he then was) held that :

"(1) Hearings at the tribunal were inquisitorial rather than adversary in nature. In view of the lack of legal representation and the informal nature of the hearings, Presiding Officers had the duty to investigate relevant matters irrespective of whether they were raised or relied upon by any party.

(2) The statutory duty was not an absolute one in that, Presiding Officers did have a 'discretion' in the matter. They were only bound to investigate matters they 'might consider relevant'. However, such discretion was susceptible to interference by an appellate court.

(3) Not every failure to investigate a relevant matter would give rise to an appeal. The relevant matter forming the subject matter of the complaint must not only be relevant but of such a nature that the lack of investigation would give rise to injustice, in that, a fair and proper determination of the claim could not be sustained. Further, not only was the total absence of investigation a ground for complaint, totally inadequate or useless investigation which amounted to no investigation at all would also suffice."

In reply to Mr Lam's submission, Mr Sammy Hui, Counsel for the 4th and 6th Respondents submitted that the High Court in hearing appeal from the Labour Tribunal should not reverse or vary any determination made by the Tribunal on questions of fact or receive further evidence as provided in s.35 of Cap.25.

10. The last part of this submission relates to two affirmations filed by the Appellant in this appeal of Madam Yan and Madam Ho. Whilst I accept these affidavits are not admissible on appeal by way of adducing further evidence, the intention of the Appellant is not, in my view, to urge upon me to accept their evidence or to receive any further evidence; they are just affirmations to show the irregularities of the procedure (see R. v. Secretary of State for the Environment ex parte Powis [1981]1 WLR 584) and to demonstrate that if the Presiding Officer had advised the Appellant and the Appellant, upon that advice, had called these two witnesses, the evidence would be in the form of these two affirmations. They would in the end corroborate DW2-4 and would affect the balancing exercise of the Presiding Officer. In any event, these two affirmations would not be taken as any evidence before this Appellate Court.

11. Mr Hui submitted that the said arrangement was an offer only and there was no acceptance of the offer from the Respondents. Thus it was not "a contract" for the purpose of s.31E of the Employment Ordinance. Therefore, so submitted by Mr Hui, a mere offer of the arrangement could not discharge the Appellant's statutory obligation to pay in full of 12 days average daily wages in 4 consecutive weeks in which no work was provided.

12. However, the offer was obviously not accepted and it was not the Appellant's case that it was enforcing a contractual right. The issue is whether such an offer included an alternative offer that the Respondents would receive in full the aforesaid daily wages, which the Presiding Officer had rejected. If that was so, the Respondents would not be entitled to claim that they were laid-off under s.31E.

13. Mr Hui submitted further that the offer was made conditional upon the event that when the Appellant got payment from its customers then the Respondents would receive their full statutory sum or the balance thereof. It is submitted that the additional term did not rectify the true nature of a "just" offer and there was also uncertainty pertaining from the offer which could hardly constitute a "contract" in the circumstances. There was no legalistic sense of obligation imposed by the Ordinance upon the Respondents in not exercising their strict statutory entitlement.

14. However, as I have said the issue was not whether the offer was accepted, whether the offer being conditional was an offer or just offer, or whether the offer was capable of being accepted with uncertainties. The issue first of all is whether the offer had been made which the Presiding Officer has rejected. In my view, I accept the submissions of Mr Lam for the Appellant that the disclosure of these two other workers who were present when the said arrangement was mentioned to the aforesaid three Respondents on 11 May 1995, it is incumbent on the Presiding Officer to make further enquiry and to advise the Appellant that these two other workers would give relevant evidence for the Tribunal to consider whether such an arrangement or offer had been made to the Respondents. This will certainly assist the Tribunal in its inquisitorial proceedings or process.

15. Further, apparently the rationale for rejecting the Defence version as being not credible were twofold. First, the Appellant was in financial difficulty and it could not fulfill the other promise of paying the Respondents the full rate even if they so desired when all workers or the Respondents herein elected to be paid fully according to s.31E. Further secondly, by allowing the claimants to choose, there would be no reason why the Claimants did not elect payment at the full rate and that would defeat the purpose of giving the Claimants a choice as to which offer they would accept.

16. Although I am not empowered to reverse a finding of facts of a Presiding Officer, yet I consider that it is within my jurisdiction to comment on those finding of facts when the Presiding Officer erred in law in not advising the Appellant to call relevant witnesses which would then corroborate its version in the circumstances of this case when the Presiding Officer was saying this version was inherently incredible. In my view the commercial situation is this:-

(1) the Appellant was in financial difficulty as there were not enough work and payment for all the workers;

(2) if the Appellant did not pay the workers according to s.31E, as surely advised by the Labour Department beforehand, then the workers would be taken to be laid off and they would be entitled to seven days' wages in lieu of notice, annual leave pay and severance pay;

(3) in that event, the Appellant Limited Company would end up in paying more money and might be wound up if no injection of finance could be done;

(4) if however the workers or a substantial number of workers would accept the offer of the Appellant in receiving only $120 per day with the full balance to be paid later on, then the Company could survive through this short period of time and the workers would not be laid off;

(5) consequently the workers would not lose a job which is also a reality and consequence the workers would have to face;

(6) if they have lost the job, they would of course be entitled to the statutory payments but they would have to find another job in the garment production market or otherwise.

17. It is therefore not a case that there is no reason why workers would not elect payment at the full rate. In fact, as pointed out by the Presiding Officer, more than 40 workers accepted the arrangement and the factory must have survived through this period of time by resuming production by mid-June.

18. Further the evidence was that the Company was in financial difficulty and could not pay all the workers at full rate. One of the ways of getting round this difficulty was by asking for the indulgence of the workers. If a substantial number of them would grant that indulgence, there is no evidence that the Appellant Company could still not, in the circumstances, pay the full rate to those (i.e. the Respondents) who did not grant the indulgence. Further on the bare fact that 40 odd workers accepted the alternative indulgence, the Presiding Officer had not inquired whether there and then the Company would still be in a position to pay the full rate to these Respondents if they had so elected. The Appellant had already said that if they, i.e. these 8 Respondents, had so elected, the Appellant would have paid them the full rate.

19. In other words, the unsoundness of the aforesaid two reasons as put forward by the Presiding Officer being the reason for disbelieving the Appellant's version has contributed to the seriousness of not calling or advising the Appellant to call the other two workers who would shed light on the actual arrangements offered to the aforesaid three Respondents and in turn the other five Respondents as well. It was decided in Chan Tak Wei v. Tse Lam et.al. [1997] HKLD para.D43 by the late J. Chan, J. that :

"A matter was of significant effect on a presiding officer's judgment or finding of fact if it would give cause to a reasonable presiding officer to have some doubt about it or to reconsider it."

20. In respect of the second ground of appeal, Mr Lam for the Appellant submitted that there is no stipulation under s.31E as to the manner and time for the payment of the statutory sum. The Presiding Officer decided that the wording of s.31E(1) is strict. I take it to mean that it is a strict statutory liability. He said : "If the employee is not paid a sum in accordance with the section, then the employer is caught. And it was not in dispute that none of the Claimants had been paid such a sum."

21. However, it is the complaint of the Appellant that after the offer was made, they had not go back to the factory and elected which of the two arrangements they would choose. The second alternative of full payment had been made clear to them and if that was believed to be the case, it is incumbent on the workers to elect and communicate their election to the employer. Further, it is incumbent on them to come forward and demand the payment according to s.31E. The place of payment would obviously be the place of work and the time would be when payment was due. The evidence is that despite efforts to contact them, the Respondents simply did not show up after 11 May 1995. Letters were sent to each one of them dated 24 June 1995 onwards stated in capital letters that :-

"OWING TO SOME RECENT MISUNDERSTANDING ON YOUR PART AND DESPITE OUR REPEATED NOTICES, YOU HAVE REFUSED TO RECEIVE YOUR WAGES IN RESPECT OF THE PERIOD FROM 15^TH APRIL 1995 UP TO AND INCLUDING THE 15^TH JUNE 1995. THIS IS TO GIVE YOU NOTICE ONCE AGAIN THAT YOUR WAGES HAVE BEEN READY FOR COLLECTION AT OUR ACCOUNT OFFICE. TO AVOID FURTHER MISUNDERSTANDING ON YOUR PART, WE WISH TO REASSURE YOU THAT THE WAGES HAVE BEEN COMPUTED IN STRICT ACCORDANCE WITH THE RELEVANT PROVISIONS IN THE EMPLOYMENT ORDINANCE. (CAP.57).

FURTHERMORE, DESPITE OUR REPEATED NOTICES, YOU HAVE FAILED TO RETURN TO THE WORKPLACE TO RESUME WORK. WE HEREBY GIVE YOU NOTICE THAT YOU SHALL REPORT TO DUTY AND RESUME WORK ON THE 29^TH JUNE 1995. AT THE LATEST. PLEASE NOTE THAT YOUR CONTINUING FAILURE TO RESUME WORK HAS CONSTITUTED WILFUL NEGLECT TO DUTY AND IF YOU DISREGARD THIS NOTICE, WE SHALL BE OBLIGED TO TAKE SUCH LAWFUL DISCIPLINARY ACTIONS AS ARE APPROPRIATE.

FINALLY, WE WISH YOU WOULD CONTINUE TO RENDER YOU GOOD SERVICE TO US ON THE BASIS OF MUTUAL TRUST, SINCERITY AND CO-OPERATION AS IN THE PAST."

22. The aforesaid letters were sent by registered post and some of them were returned to sender unclaimed and some of them were received by the Respondents. Thus I agree with Mr Lam for the Appellant that the Respondent's non-committal attitude had given the Appellant the impression that they were considering the offer and it would be unfair and inequitable to hold that the Appellant had failed to make payment in compliance with s.31E(1) notwithstanding that it had every intention to do so.

23. Accordingly this appeal is hereby allowed. The award made by the Presiding Officer on 1 February 1996 be set aside and the case is remitted back to the Labour Tribunal to be heard by another Presiding Officer. There shall also be an Order nisi for costs to the Appellant against all the Respondents to be taxed if not agreed¹ and the 4^th and 6^th Respondents' own costs be taxed according to the Legal Aid Regulations.

1 footnote: This order of costs against all the Respondents will have grave effect on all Respondents in the sense that they shall be called upon to pay the Appellant's legal costs in the appeal. If they disagree to this Order, they should, according to the Rules, apply within 14 days hereof for a contrary decision and state their reasons therefor.

Epilogue

In this judgment, I have heavily relied on the two distinguished judgments of the Hon Mr Justice Jerome Chan in 1992 when he was sitting as a Deputy High Court Judge and a recent one delivered in the Chinese language on 5 March 1997. However between the date of the hearing of the case before me and the date of handing down this judgment, i.e. in the course of writing this judgment, J. Chan, J. has unfortunately passed away on 25 July 1997. The whole Judiciary is of course saddened by his sudden departure. The aforesaid two judgments of J. Chan, J. are, with respect, both outstanding and distinguished. They laid down very precise and concise principles to be applied in Labour Tribunal appeals. I would take the liberty here to respond, by way of obiter, to a report of his death in Ming Pao the next day on 26 July 1997. It was reported that during J. Chan, J.'s office, he had no outstanding or distinguished judgment. I entirely disagree. In my respectful opinion, even these two judgments (which no doubt represent only a very small portion of his works) are both distinguished and admirable. A simple research in the Library will certainly confirm my view.