Lam Lap v. Lee Tang-wan and Another
Read the full judgment text of CACV 29/1981 on BabelCite. This Court of Appeal judgment.
1. The appellant, LAM Lap, presented a petition in bankruptcy against LEE Tang-wan and CHU Kan-chi trading as the Tung Loi Restaurant Co. The appellant professed to be an employee of that restaurant who had been informed by Mr. Lee that he and his fellow workers could not be paid their wages as no monies were available for such payment. It is common ground that these facts if proved would constitute an act of bankruptcy within section 3 paragraph (h) of the Bankruptcy Ordinance in that they cons
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CACV000029/1981 Petition presented under Bankruptcy Ordinance-alleged act of bankruptcy within paragraph (h) of section 3(1) of the Ordinance - request for receiver - petition opposed - debt alleged to arise from refusal to pay wages under contract of employment - petition opposed on ground that respondent was not the employer of petitioner - Held (Li, J.A. dissenting) - judge at first instance rightly refused to hear petition - claim within Schedule to Labour Tribunal Ordinance and Tribunal has exclusive jurisdiction to determine not merely the amount of such action but also whether the contractual relation exists.
----------------- Coram: McMullin, V.-P. Li, J.A. & Baber, J. Date of Judgment: 14th April, 1981. ----------------- JUDGMENT ----------------- McMullin, V.-P.: 1. The appellant, LAM Lap, presented a petition in bankruptcy against LEE Tang-wan and CHU Kan-chi trading as the Tung Loi Restaurant Co. The appellant professed to be an employee of that restaurant who had been informed by Mr. Lee that he and his fellow workers could not be paid their wages as no monies were available for such payment. It is common ground that these facts if proved would constitute an act of bankruptcy within section 3 paragraph (h) of the Bankruptcy Ordinance in that they constituted a notice of suspension of payment of debt. 2. The petition came on for hearing before Liu, J. on the 7th of November. Counsel for the parties consented to an order whereby issues were framed for determination by a single judge without a jury. The petitioning creditor was to be the plaintiff for the purpose of this determination and Mr. LEE Tang-wan the defendant. The issues were framed in the following terms:
3. Notwithstanding the consent order for framing these issues, at the hearing of the petition counsel for the defendant took the point that the court did not have jurisdiction to try the matter. He relied on the provisions of section 7 of the Labour Tribunal Ordinance which is in the following terms:
It is common ground that the plaintiff's claim, which included unpaid wages and money in lieu of notice of termination, constitutes a claim for a sum of money within the meaning of the Schedule to the Labour Tribunal Ordinance and as such is justiciable under section 7. In the contention of counsel that section confers an exclusive jurisdiction in such claims upon the Labour Tribunal the effect of which is to oust the jurisdiction of the High Court in the bankruptcy proceedings. 4. Mr. Comerford who then appeared for the petitioning creditor resisted this contention by arguing that a distinction ought to be drawn between the substance of a "claim for a sum of money arising from a contract of employment" and a denial of the existence of any such contract of employment. This denial was the primary ground upon which the defendant had proposed to oppose the petition in bankruptcy. This argument found no favour with the judge who declined jurisdiction in the matter and adjourned the petition sine die with liberty to restore. 5. The argument has ranged somewhat more widely before us than it did before the judge at first instance. Mr. Lane for the appellant relies upon sections 97 and 9(5) of the Bankruptcy Ordinance. Section 97(1) is as follows:
This, counsel says, is the current manifestation of a venerable provision in closely similar terms extending back through the Bankruptcy Act of 1914 and its predecessors. His primary argument is that it was open to the judge to deal with the petition under these wide powers and notwithstanding the provisions of section 7 of the Labour Tribunal Ordinance. 6. Alternatively, he says that the court court have acted under subsection 5 of section 9. That provision is in the following terms:
7. Mr. Lane puts his argument to two ways. Firstly, he says (and this is the stronger contention) that section 97 gives full unlimited power to the court to entertain the petition and to adjudicate the issues raised upon it. One must assume that the court is not asked to answer these questions in vacuo. If both the issues are resolved in the petitioner's favour he will presumably press for the making of the order which he seeks and which is the immediate purpose of the petition viz.: an order appointing a receiver. That would mean hearing the petition in accordance with the provisions of section 9(2) which obliges the court to require that proof of a debt be given by the petitioning creditor. This bolder assertion presupposes that once facts are presented before the Bankruptcy Court which prima facie constitute and act of bankruptcy then the court is obliged to deal with it notwithstanding an apparent collision between those provisions and the clear words of section 7(1) of the Labour Tribunal Ordinance. This way of putting the matter is supported upon the general contention that wide power is given to a court of superior jurisdiction which should not be circumvented by narrower, if more recent, legislation intended for a more specific purpose. The Labour Tribunal counsel says is intended to deal in an informal way with disputes between employer and employee and the dispute in relation to wages is merely one of many possible acts of bankruptcy which could come within the purview of a bankruptcy court. 8. Alternatively, and this is the weaker sense of his argument, he argues that subsection 5 of section 9 gives powers which entitle the court at least to conduct some degree of inquiry in order to satisfy itself whether there is sufficient substance in the allegation made by the petitioner to justify the court in using the useful powers contained in that subsection. 9. The reasoning here, as I understand it, is that even if section 7 gives an exclusive right to the tribunal to adjudicate the claim, the Bankruptcy Court retains under section 9(5) salutary powers at least to inspect the claim and to make a consequential order short of adjudication for the interim protection of the alleged creditor. 10. Mr. Lane points out that claims for wages rank ahead of all other claims except for statutory debts due from a bankrupt to the Crown under the provisions of section 38 of the Bankruptcy Ordinance. This high degree of priority is an indication, he says, of the concern of the Legislature to see that such claims are not defeated, as they might be, by delay such as is necessarily involved in proceeding first for adjudication to the Labour Tribunal. The paramount need in genuine cases is for swift action to prevent the dissipation of available assets. 11. To both of these contentions Mr. Ma for the respondent returns the answer that the words of section 7(1) of the Tribunal Ordinance are simply too clear to allow any interpretation other than that the Legislature has conferred exclusive jurisdiction to deal with all claims which may fairly be said to fall within the prescription of the schedule to that Ordinances. He accepts that the phrase "the court has no jurisdiction" is susceptible of different meanings, as Mr. Lane pointed out when referring us to the decision of Pickford, L.J. in Guarantee Trust Co. of New York v. Hannay & Co(1). At page 563 the learned judge points out that the true and proper sense of the phrase is that
He goes on to say that
He illustrated the distinction by reference to the cases of Barraclough v. Brown(2) and Westbury-on-Severn Rural Sanitary Authority v. Meredith(3). Mr. Ma relies upon the former case as a good illustration of the proper meaning of the term. It is a case which strongly supports him. A local authority which had power under a local act of parliament to recover, from the owner thereof, expenses incurred by it in raising a sunken vessel from a river bed sought to pursue its remedy in the Queen's Bench Division both as an action at common law and under the terms of the special statute. The case eventually went to the House of Lords which upheld the decisions of the lower courts in dismissing the appeal. The point as to jurisdiction had not, apparently, been taken in the lower courts but in the House of Lords it was held that the claim had not been justiciable in the High Court. Although the relevant words of the statute said no more than that the local authority was entitled "to recover such expenses from the owner of such vessel in a court of summary jurisdiction", those words were held to confer an exclusive jurisdiction upon the inferior tribunal. The appellant in this case, counsel says, is merely seeking to press a wages claim in the guise of a bankruptcy petition and he should not be allowed to do so. 12. Now so far as Mr. Lane's wider contention is concerned it seems to me that Mr. Ma is clearly right. Whether or not the possibility of a collision between these separate provisions was in contemplation at the time that the Labour Tribunal Ordinance was passed (1972) it appears to me to be beyond doubt that the intention then was to confer an exclusive right upon the tribunal to adjudicate all claims of the kind falling within the schedule. That must included adjudication as to the existence of a debt and not merely as to its quantum. 13. I do not think that Mr. Lane has succeeded in distinguishing Barraclough. The words with which we are dealing stand against his contention far more strongly than did the words under consideration in that case by the House of Lords. 14. We are told that many such petitions have been presented in the past and that more are likely to be presented in the future. Hitherto, it would appear, no doubt has attached to the validity of that manner of procedure. But considerations of public policy, however weighty in themselves, cannot be allowed to weigh with us in deciding the point as to jurisdiction. However convenient it might be, if there is no sense in which the words of the two ordinances can be expounded so as to avoid a collision between them then I have no doubt that the plain words of the later provisions must prevail. 15. I have been much attracted by Mr. Lane's argument in what I have called its weaker sense. The need, in a proper case, to preserve assets from dissipation and to protect the rights of wage earners, and at the same time to preserve the exclusive jurisdiction of the tribunal in wages claims, might legitimately be served if one could interpret the words in paragraph 2 of section 7 "no claim ... shall be actionable ... etc." in some restricted or limited sense as meaning triable or possibly recoverable. 16. The intention of the Legislature to provide an exclusive forum for the adjudication of wages claims is clear enough. Is that intention necessarily in conflict with the intention, expressed elsewhere in other provisions, to at least permit the inspection of such claims? 17. Of the many grounds which may sustain the advancing of a petition in bankruptcy notification of the suspension of payment of a debt due for wages is only one. Subsection 5 of section 9, gives the court power to dismiss the petition or else to stay the proceedings for such time as may be required for trial of the question relating to the debt. That the subsection envisages the trial of that issue being taken in a tribunal other than the Bankruptcy Court which makes the order is plain from decisions in cases taken under the identical provisions of the 1914 Act. We have not been referred to any of those decisions nor have we been referred to any decision relating to the interpretation of subsection 1 of section 7 of the Labour Tribunal Ordinance. Because there is no similar legislation in the English jurisdiction comparable with the latter ordinance, we are to some extent in the territory of analogy in looking at the English cases. 18. In ex parte Yeatman(4) a petition under the equivalent English section had been founded upon a judgment debt obtained by the petitioning creditor in a court of first instance. The petition had been stayed by the Registrar pending the result of those proceedings. The petitioner upon recovering judgment sought to pursue the petition before the Registrar but in the mean time the respondent had appealed the decision of the court of first instance. The Registrar proceeded to hear the petition. Upon appeal it was held that although the Registrar had a discretion to continue with the hearing of the petition prior to the conclusion of the appeal he ought not to have exercised his discretion to do so if he were satisfied that a bona fide appeal was pending. In those circumstances it was said he ought to have adjourned the petition until the appeal had been disposed of. 19. Under the English law therefore the rule of practice would seem to be that so long as the facts before the Registrar disclose a bona fide appeal then, even though a debt has actually been adjudged due, the bankruptcy proceedings must be stayed. 20. It would appear that where the existence of the debt is disputed and another court has proper seisin of the claim, that is enough to deprive the Bankruptcy Court of the right to proceed with the petition. 21. Correspondingly it might be argued that where, under the local jurisdiction, the court is precluded from adjudicating upon the validity of a disputed debt, and where the existence of that debt is the basis upon which the petition rests, the court is nevertheless left with a discretion whether to dismiss the petition or stay the proceedings. The trouble with this view is that if one pursues Mr. Lane's comparison between section 9(5) and the Order 14 procedure one must grant the possibility that the court upon an inspection of the circumstances might form the opinion that the facts said to support the existence of the debt were wholly illusory or frivolous so that the petition ought to be dismissed. 22. No difficulty would arise where the court found an arguable claim for then without deciding the matter it would be incumbent upon the court to stay the proceedings until the claim arising from the alleged debt had been adjudicated in the tribunal. But if the petition were dismissed on the grounds which I have mentioned and if the petitioner thereupon sought to have his claim adjudicated before the tribunal he would confront a formidable barrier in the form of an estoppel deriving from the decision in the superior court. I do not think that barrier could be surmounted by showing that the claim for debt and the alleged act of bankruptcy were not of one substance. 23. With some reluctance therefore (for, like the judge below I think the practicalities of the situation would be well suited by interpreting these two different pieces of legislation conformably with the argument of Mr. Lane) I find myself unable to interpret the language of section 7(1) of the Labour Tribunal Ordinance in the restricted way in which I have suggested. 24. In the end, it appears to me that, whether by intention or otherwise, the Legislature has provided that the Bankruptcy Court is not to have the power to inspect these scheduled claims even to such a superficial degree as counsel has suggested. Removing such claims from the realm of what is "actionable" before any tribunal other than the Labour Tribunal deprives the Bankruptcy Court of the exercise of any such discretion as is conferred upon it by section 9(5) of the Bankruptcy Ordinance. I would dismiss the appeal. Baber J.: 25. I agree with the Vice-President that the appeal should be dismissed. The Appellant by his bankruptcy petition is in my view substantially making a claim within the Schedule to the Labour Tribunal Ordinance (Cap. 25) and therefore under section 7 of that Ordinance the Labour Tribunal has exclusive jurisdiction in the matter. The Labour Tribunal Ordinance is of course a much more recent piece of legislation than the bankruptcy legislation of Hong Kong. It seems to me in the clearest terms to oust the bankruptcy jurisdiction of the High Court in such claims. I regret this result. I greatly doubt that the legislature intended it. In all probability the possibility of such a result was never within its contemplation. There is much to be said for employees being able to petition in bankruptcy for their remuneration. It is apparently a step that has very frequently been taken in the recent past especially by the Director of Legal Aid acting on their behalf. Unfortunately it is in my view an impermissible step as the law now stands. It is for the legislature to deal with the matter if it thinks that the protection of employees so requires. I would dismiss the appeal.
Representation: William Lane instructed by Director of Legal Aid for the appellant. G. Ma instructed by Robertson Double & Boase for the respondent. (1) (1915) 2 K.B. 536. (2) (1897) A.C. 615. (3) 30 Ch. D. 387. (4) (1880) 16 Ch. D. 283.
Coram: McMullin, V.-P., Li, J.A. & Baber, J. Date of Judgment: 14th April, 1981 ----------------- JUDGMENT ----------------- Li, J.A.:- 26. On the 2nd October, 1980 one Lam Lap (hereinafter refer to as the petitioner) presented the petition for a receiving order against two persons trading in the name of Tung Loi Restaurant; one of whom was Lee Tang-wan (hereinafter refer to as the debtor). 27. The grounds for the petition were that the alleged debtors were truly indebted to the petitioner
and that on the 12th August, 1980 the said debtor Lee Tang-wan told the petitioner that no money were available for such payment. 28. By Notice to Oppose dated the 3rd November, 1980 the debtor denied
29. At the hearing of the petition, by consent of the parties, the Bankruptcy Court ordered that the following issues to be framed for determination by a judge in Chambers:-
30. Pursuant to the said order the framed issues were tried on the 7th March, 1981. At that trial the debtor demurred to the court's jurisdiction on the submission that the validity and extent of the petitioner's claim fell within the exclusive jurisdiction of the Labour Tribunal. S. 7 of the Labour Tribunal Ordinance provides:-
31. The Schedule to the Labour Tribunal Ordinance reads as follows:-
32. S.9(2) of the Bankruptcy Ordinance provides as follows:-
33. S.9(5) provides as follows:-
34. It was contended on behalf of the debtor that in view of the fact that the debt was contested the trial judge should have no option but to remit the case for trial before the Labour Tribunal in view of the provisions in s.7 of the Labour Tribunal Ordinance. 35. In this decision the learned trial judge said:-
36. With due respect to the learned trial judge it appears to me that he has looked beyond the framed issues but before him. In my opinion, the issues as framed have nothing to do with the terms of contract. Nor are they concerned with a claim for a sum of money. Indeed, these questions may, in due course, arise after the determination of the framed issues. 37. The 1st issue raises a question of fact whether a contract of service existed between the petitioner and the debtor. No question on the terms of contract or the breach thereof arise unless and until there is a contract. Unless the debtor is an employer there is no question of any term of contract. The 2nd issue raises another question of fact whether the debtor is responsible for the wages payable to the petitioner. It is a separate question. Whether the debtor is a person responsible for payment of wages to the petitioner does not depend on any contract of service at all. Third parties, very often, without any contract with an employee, may undertake to pay the wages of an employee of another person. That is no novelty in law. In framing the issues the petitioner has carefully avoided any reference to the terms of employment. Our attention is drawn to the provisions of s.97 of the Bankruptcy Ordinance which was not cited in the court below. S.97 provides that:-
S.97 gives the Bankruptcy Court an extremely wide power in order to do complete justice to the parties. It is contended by learned counsel for the debtor that since the provisions in s.97 is a general power and the provisions of s.7 in the Labour Tribunal Ordinance, enacted much later, are more specific it must be the intention of the legislature to curtail the power of the Bankruptcy Court as provided in s.97 of the Bankruptcy Ordinance. I do not think so. The enactments of the Labour Tribunal Ordinance are to facilitate workers for their claim for wages. I cannot find that it is the intention of the legislature, whether deliberately or by mistake, to create a stumbling block so as to frostrate the workers right to have a question determined whether a contract of service exists by the Bankruptcy Court. If a debtor, by serving Notice to Oppose, can force the petitioning worker to resort to the Labour Tribunal the worker would have to wait for a determination by the Presiding Officer of the Tribunal before the petition can ever be heard. On the other hand if the Bankruptcy Court's jurisdiction is not ousted a judge at the hearing of the petition may well adjourn the matter to Chambers or in open Court to have that preliminary issue tried at once and then carry on with the hearing of the petition. In this way no time need be lost. It must be appreciated that in matters like these time is a very important factor. 38. Even if the success or failure of the petition ultimately depends on the terms of contract, I am of the opinion that the trial judge can, pursuant to s.97 of the Bankruptcy Ordinance, determine the two framed issues of facts without offending against the provisions of s.7 of the Labour Tribunal Ordinance. If, after having heard the parties on the preliminary issue, the judge finds in favour of the debtor that will be the end of the petition. If, on the other hand, the judge finds in favour of the petitioner then he can, in his discretion, act in accordance with the provisions of s.9(5) of the Bankruptcy Ordinance, stay the proceedings subject to a condition that the debtor pays security into Court and refer the matter concerning terms of contract to the Labour Tribunal. In that way he can assure that the assets of the debtor may be preserved for the benefit of the petitioner in case the petitioner is successful before the Labour Tribunal. 39. I do not find the case of In re Hutton reported in 1969 2 Ch.201 to be of assistance to me. That was a case on a point whether a plaintiff in the matter of bankruptcy may commence an action in another court without leave of the Judge in the Bankruptcy Court. In the event the decision of Goff, J. in that case was that the judge in the Bankruptcy Court had the discretion whether to grant leave to do so or not. 40. In conclusion, however, it is my opinion that the legislature has not caused the jurisdiction of the Bankruptcy Court under s.97 of the Bankruptcy Ordinance to be ousted by enactment of s.7 of the Labour Tribunal Ordinance. A worker who claims to have wages due to him in arrears has two causes of action. There are cases where no act of bankruptcy has been committed or alleged to have been committed. He of course must follow the provisions of the Labour Tribunal Ordinance by bringing an action for a sum of money arising from breach of contract before the Labour Tribunal. In other cases where not only there are arrears of wages due to him but in addition an act of bankruptcy has been committed by the employer; he is entitled to present a petition for a receiving order. In the former cases the jurisdiction falls exclusively on the Labour Tribunal. In the latter cases the petition must be heard by the Bankruptcy Court. His petition is not a claim for a sum of money. It is a claim for a receiving order. The sum of money involved in the from of a debt is a question of fact incidental to the petition. For the purpose of the present appeal it is not necessary for me to decide whether the judge may determine sum of arrears of wages due. Had that been necessary I would be of the opinion that a judge of the Bankruptcy Court has jurisdiction to try and determine such incidental questions of law and fact in order to do complete justice to the parties. I fully appreciate that under s.9(5) of the Bankruptcy Ordinance the learned trial judge has a discretion to decline jurisdiction, stay the proceedings on the petition for trial of the question relating to the debt. He may even refer such question to another tribunal. But that does not mean that he has no jurisdiction to try the question of fact. 41. For these reasons I am of the opinion that the appeal must be allowed and that the framed issues must be remitted to the court below for determination by the learned judge.
Representation: W. Lane (D.L.A.) for appellant G. Ma (Robertson, Double & Boase) for respondents |