Li Lam v. Hoilung Group International Ltd

HCLA 26/2025

[2025] HKCFI 5896

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 26 OF 2025

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO 3033 OF 2024)

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BETWEEN

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D E C I S I O N

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Introduction

1.This is an application made by the Defendant (“Company”) for leave to appeal against the decision of the Deputy Presiding Officer of the Labour Tribunal (“Tribunal”) of 30 May 2025 (“Trial Decision”) and the review decision dated 13 August 2025 (“Review Decision”).

2.The proceedings before the Tribunal related to the Claimant’s claims against the Company for arrears in wages for $873,000 from 1 December 2022 to 31 May 2024. The Claimant claimed that the Company had ceased to pay salary since December 2022 because customers had delayed payment.

3.The Tribunal found that the Claimant and the Company were in an employment relationship at the material time and that the employment had ceased on 9 May 2024. The Tribunal recalculated the Claimant’s entitlement to arrears of wages and awarded her $838,580.64.

4.The Company now seeks leave to appeal against the Trial Decision and the Review Decision, on the grounds that:

4.1 The Tribunal made an error of law by failing its duty to investigate the existence and legal validity of an “Account and Finance Executive” employment contract;

4.2 The Tribunal made an error of law by failing to consider the evidence submitted by the Company in relation to the case files and decision in DCCJ 4237/2024 (“DC Action”) and to examine the matters in the DC Action; and

4.3 The Tribunal made an error of law by failing its duty to investigate whether the Claimant’s claim was “bogus” based on her conduct and other evidence.

5.Under section 32 of the Labour Tribunal Ordinance (Cap 25) (“LTO”), a party dissatisfied with an award of the tribunal may apply to the Court of First Instance for leave to appeal, on the grounds that the award is erroneous in point of law, or outside the jurisdiction of the tribunal. 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, and that there is an arguable ground of appeal: Chan Yeuk Lin and Others v Everbright Groups Limited [2024] HKCFI 1626 §5.

6.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. As the Court pointed out in Karchoud, Leila Bent Mohamed v The Incorporated Trustees of the Islamic Community Fund of Hong Kong (HCLA 61/2001, 30 January 2002) at §6, if a ground is dressed up as an error of law whilst in substance it was a challenge to a determination on questions of fact, leave to appeal should not be granted.

7.Given that challenges raised by the Company are primarily based on the Deputy Presiding Officer’s duty to “investigate any matter which he may consider relevant to the claim, whether or not it has been raised by a party” under LTO section 20(3), it is worth emphasizing the following principles concerning the duty to investigate:

7.1 The Courts have made it clear that such a duty is not absolute, and that the extent of the inquiry to be made by the Tribunal must depend on the individual circumstances of each case. Due regard should be given to the issues in dispute in the case, the materials placed before the Tribunal by the parties themselves, and any incontrovertible evidence before the Tribunal: Chan Suk Bing Angie v Harbour Phoenix Ltd [1992] 2 HKC 459 §7.

7.2 I agree with the following observation stated at §8 of the judgment in Chan Suk Bing Angie:

“8. It is obvious that not every failure to investigate a relevant matter will give rise to an appeal for a failure to discharge a statutory duty. The relevant matter forming 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. All the circumstances of the case as well as all other findings of fact must be given all due regard before such a complaint can be upheld. Further, not only is the total absence of investigation a ground for complaint, totally inadequate or useless investigation which amount to no investigation at all will also suffice. 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 officers 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 Shaukiwan to conclude that injustice has resulted in that a fair and proper determination of the claim cannot be attained.”

7.3 Despite the statutory duty of the Tribunal to investigate, the Court has explained that a litigant bears the primary responsibility in the preparation and 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) at §15.

8.Having read the written submissions of the Company and heard the submissions from Counsel for the Company, I am not satisfied that there are any arguable grounds based on errors of law. The grounds of appeal are in substance challenges against finding of facts, purportedly dressed up as a challenge on the law. For reasons given below, I dismiss the application for leave to appeal.

First Ground of Appeal

9.The first ground of appeal on the Tribunal’s alleged failure to investigate into the existence and legal validity of an “Account and Finance Executive” employment contract is a dry run of the same argument that was argued before the Tribunal.

10.In the Trial Decision (at para 6), the Tribunal rightly recognized that the dispute at trial is whether the Claimant was the employee of the Company. The Company’s main complaint is that the Tribunal did not properly consider the Company’s argument that the employment relationship between the Claimant and the Company was a “sham”, and that the Tribunal had not properly considered the various evidence, including inter alia the Claimant’s shareholding and directorship in the Company, and that the Claimant had signed tax documents cheques, and tax returns for the Company.

11.It is clear from the Trial Decision [para 5], and as confirmed by Counsel for the Company, that all of these matters had been placed and properly argued before the Tribunal. The issue of “sham” was also squarely raised before the Tribunal and dealt with in both Decisions [Trial Decision §11i; Review Decision §10i].

12.The Tribunal had considered all the relevant evidence and factors in reaching the conclusion that the Claimant was an employee of the Company, despite also being its director. The Tribunal had duly taken into account and made factual finding on, (i) whether the employment relationship was a “sham”; (ii) the existence of an employment relationship, despite the lack of a written employment contract; (iii) the Claimant’s scope of work; (iv) the documentary evidence, including tax returns of the Company, MPF documents, financial reports, etc; and (v) the arguments raised by the Company concerning the Claimant’s role as a director, and the Claimant’s alleged misappropriation of the Company’s funds, and had stated the reasoning why these arguments were rejected.

13.All of the above are finding of facts made by the Tribunal. I do not consider the Tribunal’s findings to be obviously wrong or perverse. There is no scope for this Court to disturb the Tribunal’s findings, on the basis that any such findings are not supported by the evidence, or that the evidence of one factual witness should be preferred over the evidence of another.

14.Specifically on the question of “sham”, I do not consider that the Tribunal had failed to act in accordance with any duty to investigate the “subsequent conduct of both parties”, as Counsel suggested. The Tribunal had considered and clearly referred to all of the relevant circumstances, including the shareholding and directorship of the Company, the actual working relationship between the Claimant and the Company, the Claimant’s scope and nature of work, the MPF arrangements, and the tax returns. There is no scope for the Company to argue that the Tribunal had “[overlooked] the possibility of a sham arrangement” when the question of “sham” had been raised by the Company, and squarely and properly considered, but rejected, by the Tribunal.

15.Counsel also relied on the fact that the Claimant had, on her own case, worked for 17 months without pay, which defies common sense and suggests that there was no genuine employment relationship between the parties. The length of period of the arrears in wages was clearly in the mind of the Tribunal, as the Tribunal had to calculate her entitlement to arrears in wages. I do not consider that the Tribunal had to, but had failed to investigate the matter further.

16.In all the circumstances at this case, the Tribunal cannot be criticised for having failed its duty to investigate, bearing in mind the fact that it is for the litigants to take carriage of the preparation and procurement of evidence in support of their cases, and in this case, all the relevant matters and any pertinent issue arising from the evidence had been raised, placed and argued before the Tribunal at trial.

17.Having regard to the issues in dispute in this case, and the manner in which the Tribunal had considered and dealt with the documentary and oral evidence at the hearing, there is no basis for the claim that the Tribunal had failed to discharge its statutory duty to investigate any relevant matter, and the Company has failed to demonstrate how the Tribunal had erred in law in making the findings and conclusions which it did on the face of the evidence adduced by the parties.

18.Counsel also alleged that the Tribunal had misdirected himself on the law concerning the test for an employment relationship and sham. These matters have no connection to the ground of appeal, which is based on the Tribunal’s duty to investigate. In any event, I do not consider that the Tribunal had misunderstood or misapplied the law.

Second ground of appeal

19.I do not consider the second ground of appeal to be arguable or well founded in law.

20.First and foremost, Counsel’s submission that the Tribunal had failed to consider and investigate into the matters concerning the DC Action, and had erred by failing to accept the new evidence submitted at the review hearing, was made on the premise that such evidence “form[ed] part of the substance of the claim and [were] of sufficient importance to affect the outcome”. Without placing such evidence which the Company alleges to be important before this Court, I am unable to assess how such evidence can be said to be important, or can affect the outcome.

21.In any event, taking the Company’s assertion at its highest, I do not see how the “new evidence” could be of relevance.

22.The Company’s case is that the DC Action was a claim brought by the Company against the Claimant for breach of fiduciary duty based on the Claimant’s misappropriation of US$460,700 from the Company. The Company obtained summary judgment against the Claimant in this action. The Company submitted that the matters that transpired in the DC Action should have affected the credibility of the Claimant, and that the present action was the Claimant’s way to try to “set off” her liability in the DC Action.

23.There is no merit in this contention.

24.First, it is not enough to show that there is only little or insufficient evidence to support the judge’s finding, or that the finding was contrary to the weight of the evidence. The Court on appeal will not disturb the judge’s findings of primary fact where they are based on the credibility of the witnesses, because the trial judge had enjoyed the advantages of receiving the evidence at first hand. The judge is entitled to prefer the evidence of one witness over another: Mulakh-Raj v Balaji Group Limited t/a Tulsi Indian Restaurant [2021] HKCFI 2334 §§8, 11. There is no room for this Court to question the credibility of the Claimant, and whether the Tribunal should have believed the Claimant’s evidence, as a result or by reason of the DC Action, or otherwise.

25.Second, I agree with the Tribunal’s assessment that the matters in the DC Action have no connection with the issues in dispute in the proceedings before the Tribunal. As I pointed out at the hearing, the fact that the Claimant was found liable for breach of her fiduciary duties for misappropriating Company’s funds (whether she was wearing the hat of a director or an employee at the material times) is quite irrelevant to the finding of an employment relationship between the parties. The Tribunal was clearly aware of the existence of the DC Action and had correctly reasoned, in the Trial Decision [para 12ii], that the issues in the DC Action did not affect the question of the Claimant’s status as an employee of the Company.

26.If the Company had suffered further loss due to the Claimant’s misappropriation of funds (despite the Claimant having fully repaid her judgment debt in the DC Action), the Company may well bring further action against the Claimant. However, the Claimant’s liability in the DC Action does not determine the issue in the proceedings before the Tribunal, of whether the Claimant was an employee of the Company.

27.Third, Counsel also submitted that the finding of the Court in the DC Action must mean that the Company “could have” summarily dismissed the Claimant as of 5 July 2021 when the misappropriation happened. This submission is clearly misconceived. The fact remains that the Company did not dismiss the Claimant and the employment relationship remained valid, as the Tribunal correctly pointed out in the Trial Decision [para 12ii].

28.In any event, for a separate reason not mentioned by the Tribunal nor addressed by Counsel, I consider that the Tribunal had made the correct decision not to admit the decision in the DC Action into evidence. It is well-established that that a judgment and factual finding of another court or tribunal in earlier proceedings, whether civil or criminal, is inadmissible in subsequent proceedings, unless the party against whom the finding is sought to be deployed is bound by it by reason of an estoppel per rem judicatam: Capital Century Textile Co Ltd v Li Dianxiao [2018] HKCFI 729 §23 (per Lisa Wong J), following Hollington v F Hewthorn & Co [1943] KB 587. The rationale for the rule in Hollington is that the decision at that trial is to be made by the judge appointed to hear it, and not another. The trial judge must decide the case for himself on the evidence that he receives: Capital Century §28.

29.It would not have been appropriate for the Tribunal to admit the judgment in the DC Action into evidence and to rely on the factual findings therein without independently coming to its own conclusions on the issues in dispute. Thus, the submissions that the factual findings in the DC Action concerning any breach of fiduciary duties and misappropriation of funds or the Claimant’s credibility could be relied on by the Tribunal is misconceived and wrong in law.

Third Ground of Appeal

30.This ground of appeal can be disposed of quickly.

31.It is not understood what was meant by a “bogus claim”. Whether the Claimant had ulterior motives in bringing the action before the Tribunal is not relevant and does not deny her entitlement to arrears in wages, so long as she had a valid claim (as the Tribunal had found).

32.All of the matters raised under this ground are entirely attacks against the finding of facts of the Tribunal. There is no scope for this Court to disturb such finding of facts.

Disposition

33.In the premises, I cannot see that the Company has any ground for appeal on any question of law. There is no reasonable prospect of success on the intended appeal. The application for leave is accordingly dismissed.

Mr Jackson Chow, instructed by Franki Ho & Associates, for the appellant