Chan Kam t/a Kam Shing Construction Co v. Lee Lok and Otheres
Read the full judgment text of DCMP 14/1977 on BabelCite. This District Court judgment.
1. This is an appeal against an award of wages in lieu of notice to a number of employees. Certain other awards were made by the Labour Tribunal in the same actions but these are not the subject-matter of the appeal.
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DCMP000014/1977 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT KOWLOON APPELLATE JURISDICTION LABOUR TRIBUNAL APPEAL NOS. 13, 14 & 15 OF 1977 ----------------- LABOUR TRIBUNAL APPEAL NO. 13 OF 1977
----------------- LABOUR TRIBUNAL APPEAL NO. 14 OF 1977
----------------- LABOUR TRIBUNAL APPEAL NO. 15 OF 1977
----------------- Coram: D.A. Davies, D.J. Date of Judgment: 30th March 1978. ----------------- JUDGMENT ----------------- 1. This is an appeal against an award of wages in lieu of notice to a number of employees. Certain other awards were made by the Labour Tribunal in the same actions but these are not the subject-matter of the appeal. 2. As briefly as I can summarize the position, all the claimant respondents were originally employed by a sub-contractor (1st defendant in the court below) to work at a particular construction site. 3. For reasons which do not fully emerge from the evidence given in the court below, 1st defendant at some stage ceased to function and the appellant (2nd defendant in the earlier proceedings), who was the principal contractor, finished the site-work himself, but using the same labour force as hitherto - i.e., the respondents 4. Mr. Mok, for the appellant has elected to proceed on only the first three of the original seven grounds of appeal, and Mr. Lei for the respondents has confined his reply to the matters encompassed by those three grounds. 5. The lengthy and detailed arguments both sides have canvassed the subject very thoroughly indeed, and the issues have been considerably narrowed. 6. Before I advert to them however, it is perhaps desirable to set out what I conceive to be my function in this appeal. The basis of appeal is that the award, order or determination is erroneous in point of law (Labour Tribunal Ordinance, section 32(1)(a)). 7. This places the issues wider than mere error in law in the learned President's written decision. 8. I take the position to be that if the award is correct in law, it is immaterial that it was made for the wrong reasons, or despite oversights by the learned President. 9. In other words, my function is to take cognizance of the evidence in the court below, and then decide whether or not the award is erroneous in law. 10. Now both counsel are agreed, and I with them, that the crux of the case in the court below was the question of continuity of employment and the application of paragraph 2 of the First Schedule of the Employment Ordinance, and of particular importance in that connection, the effect of paragraph 5 of the First Schedule. 11. Unfortunately these aspects of the matter do not appear to have exercised the mind of the learned President at all. His attitude to the evidence is expressed in the final paragraph of page 4 of the Decision:
12. The sweeping generalization of the statement takes no account whatever of the complexity of this case. In the first place, the learned President does not mention upon what basis he found a continuous contract was ita positive finding based on the evidence, or was he relying upon the presumption provided for in paragraph 2 of the First Schedule? 13. In either event, the significance of paragraph 5 of the First Schedule appears to have been completely overlooked, since there is no reference to it anywhere in the Decision. 14. For the purposes of this appeal, both counsel are agreed, and I with them, that paragraph 5 goes to the heart of the matter. 15. Continuity of employment is an essential to the case of the respondents, since that and only that, will give the respondents the right to notice of termination, and it follows, to wages in lieu of such notice. 16. Paragraph 5 reads:
17. Thus, it has been possible in this appeal to narrow down the issue to that of whether there was "transfer of a trade, business or undertaking" within the meaning of paragraph 5, as between 1st defendant and the appellant. 18. No Hong Kong authority has been cited to me, and I am certainly unaware of any. 19. The wording of paragraph 5 is however identical to that of paragraph 10(2) of the First Schedule to the Contracts of Employment Act 1963, from which it was no doubt "borrowed", and written into our own legislation. 20. There are certain cases, to which I have been referred, which turn on the meaning of the phrase "transfer of trade business or undertaking", and it is immaterial that the ultimate issue in those cases was elegibility for redundancy payment rather than for wages in lieu of notice. 21. Mr. Mok relies upon Woodhouse and Another v. Peter Brotherhood, Ltd.(1), whereas Mr. Lei's principal authority is Lloyd v. Brassey(2). He did refer me to other authority, but this was in relation to a point which Mr. Mok later made clear that he in any event conceded. 22. I think that it is undeniable that there are clear distinctions between the present case and both Brotherhood and Lloyd v. Brassey. These latter cases are more valuable for their expression of principles than for factual similarity to the present case. 23. In the court below, the facts which emerged were, as I have earlier stated, that the appellants subcontracted work on a construction site to 1st defendant. (The situation was one in many ways peculiar to, but by no means untypical of, Hong Kong). 1st defendant employed the respondents to do the work. A stage was reached where 1st defendant was unable to continue seemingly by reason of lack of finance. An agreement was reached between principal and subcontractor whereby the former would complete the work, employing the respondents as his labour force, on the same terms and under the same conditions, as hitherto. There is no dispute that if there was continuity of employment, the respondents would be entitled to notice of termination or wages in lieu, whereas if not, then by reason of the length, or rather brievity, of their employment under the appellant alone, they would not be so entitled. 24. In Lloyd v. Brassey, there was a complete sale of a farm, as a going concern, with land and all stock-in-trade. This was held to be "transfer of a trade, business, or undertaking." 25. In the Brotherhood case, the original employers sold a factory, which was transferred to a different place, together with the machinery therein. 26. In both cases, the transferee employed the same labour-force as had been in the employ of the vendor. In the latter case it was held that there was no "transfer of a trade, business or undertaking". 27. I trust that counsel will not regard it as any mark of disrespect when I say that, having heard their extremely persuasive arguments, I am now able quite briefly to decide upon which side of the fence the present case falls. 28. The facts in the court below do not indicate any transfer of business - no transfer of premises, goodwill, or stock in trade. Indeed there is no evidence of any sale. The appellant claimed that he provided money for 1st defendant to pay his workers their arrears of wages, but that aside, there were nofinancial considerations. 29. Furthermore although the evidence is not entirely clear, there appears to have been a gap in time between the end of the respondents' work for 1st defendant and their re-employment by the appellant. 30. Mr. Lei has emphasized the evidence that the erstwhile foreman of 1st defendant was present when the respondents were in the process of transfer from the one employer to the other, but with great respect, I do not find that this fact has any significant bearing on the issue. Precisely what that man's (D.W.1) functions were do not emerge clearly, but one thing is clear, namely that he told the respondents that the appellant was "taking over the project". 31. In my view, that expression aptly describes what took place; the appellant took over a project, nothing less and nothing more. 1st defendant was still at liberty to (and for all we know did even at the current time) carry on business elsewhere. All that the appellant did was to re-employ the respondents, who had previously worked for 1st defendant. The respondents were, in the terms used by Buckley L.J. in Brotherhood (page 540, paragraphs A-C inclusive) a "production unit" which had been transferred from one employer to another. 32. My finding is that even if they had not been out of work for a single day (although the evidence, although confused, suggests that this might have been so), there was contractually a break in their employment. It is not my function to decide whether or not the respondents are entitled to redundancy payment from 1st defendant. 33. I am obliged, however, to decide whether the award in the court below, to the respondents against the appellant, of wages in lieu of notice can or cannot be upheld. 34. For the reasons hereinbefore set out, with what I hope is sufficient clarity, my ruling is that the learned President's finding of continuous employment (whether based on paragraph 5 of the First Schedule or not) cannot be sustained. 35. Accordingly his award of wages in lieu of notice is erroneous in law, and must be set aside. 36. The sum of $7,224.00 paid into court by the appellant is to be repaid to the appellant, and he is granted his costs of this appeal, to be taxed on the Upper Scale. 37. I would add in conclusion that I am most grateful to counsel on both sides for their most valuable research and argument in what is perhaps the first appeal of its kind in Hong Kong on an extremely finely-balanced point of law. This 30th day of March, 1978.
Representation: (1) (1972) 2 Q.B., 520 (2) (1969) 2 Q.B. 98 |