Chu Yeut Lin and Another v. Everbright Groups Ltd

HCLA 9/2024

[2024] HKCFI 1626

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 9 OF 2024

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO 462 OF 2024)

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REASONS FOR DECISION

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Background

1.This is an application made by the Defendant (“Employer”) for leave to appeal on a question of law against the Order dated 21 March 2024 (“Order”) made by the Presiding Officer (“Officer”) of the Labour Tribunal (“Tribunal”), whereby the Employer was ordered to pay security into Court of $231,166.37, in respect of the claims made by the Claimants in proceedings instituted against the Employer for severance and long service payments under the Employment Ordinance.

2.The application is made under section 32 of the Labour Tribunal Ordinance (“Ordinance”), on the ground that the Order is erroneous in law, in that the Officer had (in essence) wrongly taken into account the merits of the case, had formed a preliminary view on the merits of the employer’s case before the filing of its Statement of Defence (“Defence”), had erred in his finding of the Employer’s delay and in failing to give sufficient weight to the Employer’s explanation for seeking an extension of time to file its Defence.

3.It was argued that under section 30 of the Ordinance, the Officer should only exercise his power to order security where there is undue delay or abuse of process, and that the Officer had erred in law in ordering security when there was no abuse of process on the part of the Employer. According to the Employer, the Officer should not have regard to the merits, or lack of merits, of the defence, when security is ordered under section 30.

4.At the end of the hearing on 6 June 2024, I dismissed the application for leave to appeal. This sets out the reasons for my decision.

Leave to appeal

5.Under section 32 of the Ordinance, any party dissatisfied with an award, order or determination by the Tribunal on the ground that the award, order or determination is erroneous in point of law, or outside the jurisdiction of the Tribunal, may apply to the Court of First Instance for leave to appeal. In considering whether to grant leave to appeal, the Court must be satisfied that the intended grounds of appeal are genuine grounds based on errors of law, for which leave can be given (Karchoud, Leila Bent Mohamed v The Incorporated Trustees of The Islamic Community Fund of Hong Kong HCLA 61/2001, 30 January 2002), and that there is an arguable ground of appeal (Chan Kwok Hung v Hotel Panorama Company Ltd, HKCL 30/2009, 19 November 2009).

6.On behalf of the Employer, Counsel highlighted the meaning of a question of law, by reference to the classical explanation contained in Edwards v Bairstow [1956] AC 14, which was referred to by the Court in Cunnington Guillaume Serge Charles v Qantex Capital Markets Limited [2023] HKCFI 1374:

“The main authority on appeal on a point of law is Edwards v Bairstow [1956] AC 14, which has been explained by Lord Millett in Runa Begum v Tower Hamlets LBC [2003] 2 AC 430, 462 para 99:

‘Where, however, the jurisdiction of the court to entertain an appeal depends on whether it involves a question of fact or law, there is no need to refer to the supervisory jurisdiction of the court in judicial review. The controlling authority is Edwards v Bairstow [1956] AC 14, which explains the scope of an appeal on a point of law. It is accurately summarised in Bryan v United Kingdom [1995] 21 EHRR 342, 349-350, paras 25, 26. A decision may be quashed if it is based on a finding of fact or inference from the facts which is 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. It is not necessary to identify a specific error of law; if the decision cannot be supported the court will infer that the decision-making authority misunderstood or overlooked relevant evidence or misdirected itself in law…’” (Emphasis added)

7.In Edwards v Bairstow itself, Lord Radcliffe explained:

“If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the Court must intervene. It has no option but to assume that there has been some misconception of the law. So there, too, there has been error in point of law.”

8.However, when the question as to whether the Order is one which no reasonable or properly instructed tribunal could have made, to be irrational or perverse, it has to be borne in mind that the decision of the Officer in ordering security is one of the exercise of the Tribunal’s discretionary power. It is trite, that in an appeal against the exercise of discretion, the Court will not interfere unless it can be shown that the judge had exercised his discretion under a mistake of law, or in disregard of principle, or under a misapprehension as to the facts, or that he had taken into account irrelevant matters or failed to exercise his discretion, or that the conclusion which the judge reached in the exercise of his discretion was outside the generous ambit within which reasonable disagreement is possible (see para 59/0/54 Hong Kong Civil Procedure 2024).

9.All the above show that the Employer in this case has a high threshold to meet, in persuading the Court that there is a clear error which no judge/decision maker could have made, for there to be an arguable ground of appeal to warrant leave to appeal being granted.

The power to order security under s 30

10.I do not accept the submissions made for the Employer as to the limited and constrained construction of the Tribunal’s power under section 30 of the Ordinance.

11.Section 30 deals with orders for security to be made in proceedings before the Tribunal, and states as follows:

“(1) The tribunal may order a party to give security for the payment of an award or order that has been or may be made if the tribunal considers it just and expedient to do so.

(2) The tribunal may make the order either of its own motion or on the application of a party.

(3) The order may require security to be given—

(a) by payment into the tribunal a sum of money that the tribunal considers sufficient; or

(b) in any other form and manner that the tribunal considers appropriate.

(4) Without limiting subsection (1), the tribunal may make an order under that subsection against a party if—

(a) the tribunal is satisfied that there is a real risk that the payment of an award or order that has been or may be made will be obstructed or delayed because—

(i) the party has disposed of, removed from Hong Kong or lost control of assets belonging to the party;

(ii) the party is about to dispose of, remove from Hong Kong or lose control of assets belonging to the party; or

(iii) there is a real risk of the party disposing of, removing from Hong Kong or losing control of assets belonging to the party;

(b) the tribunal is satisfied that—

(i) the party has conducted the proceedings in a manner that delays the determination of the case; or

(ii) the party’s conduct otherwise constitutes an abuse of the process; or

(c) the tribunal is satisfied that the party has, without reasonable excuse, failed to comply with any award, order or direction.

(5) If a party fails to comply with an order under subsection (1), the tribunal may—

(a) dismiss the party’s claim;

(b) stay the proceedings; or

(c) enter judgment on the claim against the party.

(6) On a party’s failure to comply with an order under subsection (1), the tribunal may exercise the powers referred to in subsection (5) without further hearing or considering the party’s case if the order expressly indicates the tribunal’s intention to do so on such non‑compliance without further hearing or consideration.”

12.Section 30(1) clearly and expressly states that the Tribunal may order a party to give security for payment of an award that may be made if it considers that it is “just and expedient” to do so. That is the ground on which security may be ordered, and it is expressed in general terms, so long as justice and expediency can be shown.

13.Section 30(4) states the various circumstances in which an order for security may be made, including where the Tribunal is satisfied under subsection (4)(a) that there is a real risk that payment of an award will be obstructed or delayed, because of (inter alia) a real risk of dissipation, or where the tribunal is satisfied (under subsection 4(b)) that a party has conducted the proceedings in a manner which delays the determination of the case, or his conduct otherwise constitutes an abuse of process. The circumstances stated in section 30(4)(a), (b) and (c) are expressly stated to be “without limiting” the provisions of section 30(1).

14.Notwithstanding such clear language as used in section 30(1) and (4), Counsel for the Employer argued that section 30(1) should be construed in light of section 30(4), and that in order to give effect to section 30(4), the tribunal should only exercise his power under section 30(1) when there is conduct on the part of a party which causes undue delay or which amounts to abuse of process. It was contended that this is to “strike a balance” between section 30(4) and the purpose and intent behind the subsection.

15.For such purpose and intent, Counsel sought to argue that section 30 of the Ordinance was amended by the Administration of Justice (Miscellaneous Provisions) Ordinance 2014 on 24 December 2014, and relies on the Legislative Council Brief dated 22 April 2014 in relation to the amendments. The said Brief stated that the Judiciary saw the need to enhance the case management powers of the Tribunal to minimize undue delays or abuses of the adjudication process, and that the changes proposed for the Ordinance were “to better guard against the risk of undue delays or abuses of adjudication processes”.

16.Counsel also sought to rely on the Explanatory Memorandum of the Administration of Justice (Miscellaneous Provisions) Bill 2014, whereby the legislature had explained that section 30 of the Ordinance was amended so that “the power of the Labour Tribunal to require security for payment of an award or order is no longer confined to the occasion of adjournment and new grounds for requiring security are added (including the defendant removing assets from Hong Kong, a party abusing the process or failing, without reasonable excuse, to comply with an award, order or direction)”.

17.I fail to see how the Brief and the Memorandum relied upon by Counsel can justify the construction he sought to place on section 30(1) and (2) of the Ordinance. Far from assisting his construction, I consider that they support the case that section 30(1) should be read to confer a wide power on the Tribunal to order security, for the general and overall purposes of avoiding delay in the adjudication process, and that section 30(4) should not be read to confine or restrict section 30(1) precisely because of the purpose and intent of the amendment.

18.At paragraph 16 above, I have emphasized the words in the passage sought to be relied upon by Counsel, which in my judgment clearly indicate that the powers sought to be conferred on the Tribunal were not intended to be confining in nature, and the new powers were not intended to be exclusive.

19.In any event, it would be directly contradictory to the express provisions of “without limiting subsection (1)”, if one was to construe section 30(1) to be limited and confined to the matters set out in section 30(4). On its face, the plain meaning of section 30(4) is that the matters set out in (a) to (c) are only occasions when it would be just and expedient for the Tribunal to exercise the power to order security under section 30(1), but these are not the only circumstances which would trigger the exercise of the Tribunal’s powers, as section 30(4) was not intended and expressed not to limit the power of the Tribunal under section 30(1).

20.There is accordingly no reasonable ground of appeal, that the power to order security can only be exercised when there is abuse of process or undue delay amounting to abuse.

Consideration of the merits

21.As in any case when the Court or Tribunal is called upon to exercise its power and discretion where it considers it “just and expedient”, or “just or convenient”, or “just” to do so, the Court or Tribunal would take into consideration all the relevant circumstances of the case, to weigh the justice or injustice of granting the order to be made. In the case where security is sought to be ordered, it would be perfectly within the proper exercise of the Tribunal’s power and discretion to consider the merits of the claims made in the proceedings to which the order relates. Clearly, it cannot be said that an appellate court would take the view that it was perverse, or irrational, for the Officer to take account of the merits of the claims made against the Employer and any defence which the Employer may have, when the power to order security and whether any justice or injustice would result is considered.

22.The degree of scrutiny of the merits made by the Court or Tribunal may vary depending on the nature and type of the order to be made, but the Tribunal is entitled to take a preliminary view of the claims made by or against the party, on the basis of the information available to the Tribunal. This is what the Officer did, as explained at paragraph 25 of the Reasons for Decision.

23.In this case, Counsel repeatedly emphasized that the Employer had not been guilty of any delay in the conduct of the defence, that the Officer did not have knowledge of the Employer’s Defence at the time of the hearing on 28 February 2024 as the Defence had not been filed by then, and that the Employer had already on 15 February 2024 (before the hearing) applied for an extension of time to prepare the documents for submission to the Tribunal and to seek legal advice, in view of the intervening Lunar New Year holidays. It was argued that there had been no undue delay in the filing of the Defence, good explanation for the delay in the filing, and that the Employer should not have been penalized when it did not have the opportunity to present its full Defence at the hearing before the Officer on 28 February 2024.

24.In my judgment, and as explained in the earlier parts of these Reasons, the Tribunal’s power to order security is not confined to cases where there is abuse of process. Nor do I accept Counsel’s submission, that the Tribunal had no grounds to find that there was delay in the Employer’s conduct of its defence to the claims made in the proceedings. It is pertinent that prior to the hearing on 28 February 2024, the Tribunal had already issued a letter to the Employer on 1 February 2024 (“2/1 Letter”), notifying it of the claims made against the Employer, and requesting the Employer to send to the Tribunal before 15 February 2024 documents which include:

(1)  the statement of the defendant;

(2)  copies of statements of any witnesses;

(3)  copies of contracts of employment;

(4)  copies of wages record;

(5)  copies of the evidence to rebut any items of claims which are disputed;

(6)  copies of any other documents which are relevant to the matter to substantiate its defence.

25.The Employer was also notified in the 2/1 Letter to submit, for its defence to the claim for severance pay: the Employer’s manpower table and monthly turnover for 12 months before, and 3 months after termination of employment, audited reports for the 2 years prior to termination, recruitment advertisements for replacement workers, and if replacement workers had already been employed, the statements of the replacement workers and the related documents.

26.The provision of the above documents to the Tribunal in time for the hearing on 28 February 2024 is of course necessary for and essential to the Officer’s understanding of any defence which the Employer may have in law to the claims which are made by the Claimants in the labour proceedings before the Tribunal. This is particularly so when parties are not permitted to have legal representation and it is for the Officer to investigate the claims made by the employees and any issues raised by, or are relevant to, the defence of the Employer. It is also essential to bear in mind the nature of the claims made in the Labour Tribunal, and that it would be in the interests of justice and the parties to have the proceedings relating to labour disputes and payments allegedly outstanding under employment contracts to be dealt with as expeditiously as possible, without unnecessary delay and without legal representation.

27.The indisputable fact remained, that by the time of the hearing on 28 February 2024, the Employer had failed to produce any of the documents set out in the Tribunal’s 2/1 letter. According to the Officer’s Reasons for Decision dated 23 May 2024, when the Employer’s representative at the hearing was asked to explain the basis of its Defence to the employees’ claims, she was unable to give any details, and only asked for an adjournment of the hearing.

28.This was obviously unsatisfactory and in my judgment, is sufficient evidence of conscious and deliberate delay in the conduct of the defence.

29.The Employer referred to the fact that it had made an application, on the deadline specified in the 2/1 Letter, 15 February 2024, to extend the time for the submission of the documents. As the Officer pointed out in the Reasons for Decision, this was wishful thinking on the part of the Employer, that an extension of time and an adjournment would inevitably be granted. The fact that there were holidays between the time of receipt of the 2/1 Letter and the hearing cannot by itself mean that the Employer was entitled to and would be granted an extension of time for the provision of documents relevant to its defence. A balance has always to be made between the diligent and responsible conduct of legal proceedings, and the desire of a party to have a leisurely holiday despite being faced with legal proceedings. It should not be forgotten that public funds and resources are in play and would be squandered if the time of the Tribunal is wasted.

30.Counsel for the Employer sought to argue that the Employer should not be compelled, at the hearing on 28 February 2024, to address the Tribunal on the merits of its defence, and on the legal issues raised in the proceedings. This is the wrong emphasis. A litigant in person may not be expected to address the Tribunal on law, but the Tribunal is entitled to expect the party to inform the Tribunal and the Claimants of the facts on which the Employer relies to substantiate its opposition to the claims made in the proceedings. Any litigant in person is able, and is under the duty to present, the facts of its own case on which it relies. This is irrespective of and notwithstanding any duty on the part of the Officer to investigate the case brought before him, as a litigant bears the primary responsibility in the preparation of his case and the procurement of evidence in support of his case (Le Thi Bich Thuy Kitty v Sheraton International (Hong Kong) Ltd trading as Sheraton Hong Kong Hotel & Towers HCLA 34/2004, 4 June 2004, citing Tong Pun Chung v Top Express Engineering Ltd HCLA 71 of 2002, 21 October 2002).

31.The Tribunal is of course entitled to take into consideration and to form a preliminary view on the merits of the claims made against the Employer, on the basis of the Claim Form and the statements already filed by the Claimants before the hearing. The employees’ claims are for severance and long service payments payable upon termination of their employment. The Officer referred to the employees’ prospects of success in their claims, at paragraphs 11 to 24 of the Reasons for Decision. This included consideration of the possible defence which the Employer may have under section 31S of the Employment Ordinance, and whether the capacity and place of employment under the new offer of employment were the same as those under the original employment contracts.

32.Having considered the substance of the employees’ claims and the law relevant to their claims, the Officer is entitled to take account of the fact that on his preliminary review, the employees have merits in their causes of action, and that in view of the Employer’s failure to provide the documents and details of its defence, it would be just and expedient to order security to be furnished by the Employer.

33.In Ha Hau Kwan Fong Mary v IO of Golden Plaza [2002] HKCU 645, which was a case on leave to appeal on a question of law arising out of an award, Ma J (as he then was) made a pertinent observation:

“In my view, while it is possible to classify as a question of law arising out of an award, an argument that the arbitrator has made a finding without any evidence to support it (and therefore no reasonable arbitrator could have made such a finding: cf Edwards v Bairstow [1956] AC 14), the following must firmly be borne in mind:

(1) ...

(2) In most, if not in all, such cases, it will simply not be sufficient for the applicant merely to demonstrate that on the preponderance of evidence, the arbitrator should or should not have made the relevant findings. The finding must really be so bizarre that no reasonable arbitrator could have made it, such as, for example, when there was simply no evidence or reason for the finding of fact to be made. ...”

34.Viewed in the proper light of the authorities, I fail to see how it can be said that the Officer in the present case was wrong in his finding that there was delay or conduct and reason which justified the making of an order that the Employer should give security for payment of an award which may be made against it in the proceedings before the Tribunal. The fact that the appellate court, if asked to exercise the discretion, might not have ordered security or security of the amount ordered, does not mean that the Order should not have been made, or that it was made under an error of law, or was an order which no reasonable tribunal could have made.

35.The other complaints/alleged grounds of appeal do not assist the Employer. This is not a case of whether the Employer had the opportunity to present its case at the hearing. It had been duly notified of the date of the hearing and the necessity to provide the documents and information referred to in the 2/1 Letter, and it was given the opportunity at the hearing to present its defence, but the Employer failed to prepare for and provide the documents, and failed to explain to the Tribunal the facts of its defence to the claims made. Such failure and delay are relevant facts which the Tribunal was entitled to take into consideration, when deciding whether it would be just and expedient to order security. The fact that an extension of time was granted at the hearing for the Employer to file its Statement of Defence does not mean that there was no delay or justifiable inactivity prior to 28 February 2024.

Disposition

36.For all the above reasons, I considered that there was no arguable ground for appealing against the Order, and declined leave to appeal.

Mr Anthony Wong, instructed by YC Lee, Pang & Kwok, for the defendant (appellant)