Zielona Transport Ltd v. Au Sou Lin

Case No.HCLA 46/2008[2010] 3 HKLRD 555

Court

HCLA

Date05 Feb 2010

Judge—

Case Document

100%Judiciary

[English Translation – 英譯本]
HCLA 46 / 2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 46 OF 2008

(ON APPEAL FROM LBTC NO. 364 OF 2008 & COUNTERCLAIM)

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BETWEEN
	Zielona Transport Limited (龍達運輸有限公司)	Appellant company / Defendant company
	and
	AU Sou Lin（區修年）	Respondent / 6^th Claimant

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Before : Hon To J in Court

Date of Hearing : 29 and 30 September 2009

Date of Judgment : 5 February 2010

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J U D G M E N T

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Background facts

1.This is an appeal by the employer against the decision of the Labour Tribunal. The Appellant company (i.e. the Defendant company in the original claim) is the former employer of the Respondent (i.e. the 6^th Claimant in the original claim). The 6^th Claimant and another 14 claimants were the dock truck drivers previously hired by the Defendant company. They filed claims with the Labour Tribunal for annual leave pay, statutory holidays’ pay, severance payment or long service payment against the Defendant company. On the other hand, the Defendant company lodged a counterclaim against them on the basis of unjust enrichment. All the parties agreed that the Labour Tribunal should first deal with the claim of the 6^th Claimant and the counterclaim of the Defendant company as a test case, and adjourn sine dine the hearing involving the other claimants’ and the Defendant company. After trial, Deputy Presiding Officer Mr. K K Pang made a decision on 3 July 2008 in favour of the 6^th Claimant and ordered that the Defendant company should pay the 6^th Claimant annual leave pay of $67,089.25, statutory holidays’ pay of $52,046.98 and long service payment of $157,895.60, the total amount of compensation being $277,031.83 with interest. He also decided in favour of the counterclaim of the Defendant company and ordered that the 6^th Claimant should pay the Defendant company an amount of $164,790.18 as restitution. Subsequently both parties applied for a review of the decision. After the review hearing, the Deputy Presiding Officer on 28^th November 2008 maintained his decision in favour of the 6^th Claimant, but he dismissed the counterclaim of the Defendant company. Aggrieved by the decision on the review application, the Defendant company lodged an appeal.

Findings of fact by the Deputy Presiding Officer

2.The Defendant company runs a dockyard transportation business and employs about 80 truck drivers. When it started its business in 1980, all the drivers were hired as employees (“employee drivers”). In 1996, the Defendant company introduced a contractor or labour contract system. Some drivers opted to work as contractors or labour contractors (“contractor drivers”); they would earn about 15% more than employee drivers but would neither be entitled to the benefits of employee drivers nor any other benefits and protection conferred to employees under the Employment Ordinance. Among all the 80 odd drivers working for the Defendant company in 2008, about two-third were employee drivers and one-third were contractor drivers.

3.The 6^th Claimant voluntarily opted to be hired as a contractor driver. From 23 August 1996 to 31 March 2008, he signed a “Contractor (Labour Contractor) Agreement” with the Defendant company every year. Each “Contractor (Labour Contractor) Agreement” has the same terms and provisions. It is stipulated in the provisions in the “Applicant’s Letter of Intention to Provide Container Haulage Services” that he signed on 1 March 2006 that:

“Zielona Transportation Limited gives the following option to anyone who is interested in becoming a container haulage service provider: to be employed on a contract basis or to be hired on a contractor (labour contractor) basis. The applicant should read the provisions carefully before signing in confirmation of his option.”

He also signed a “Contractor (Labour Contractor) Agreement” which stipulates that:

“(F) STATUS OF PARTY B

Having carefully read the Letter of Intention of an Applicant for provision of Container Haulage Services, Party B opts to sign this Agreement in the capacity as a contractor (labour contractor), meaning that Party B clearly understands that his status is not an employee, agent or lawful representative of Party A. Party B is an independent contractor and is not entitled to any benefits arising by reason of employment or any benefits conferred by the labour laws. Party A shall pay to Party B service charges higher than the sums it pays to a contract employee, and the difference in amount will cover all the benefits stipulated by the labour laws. If the laws provide that an independent contractor shall pay tax as a self-employed person and make contribution to his own mandatory provident funds as a self-employed person, Party B is responsible for all such payments.”

4.The Deputy Presiding Officer found that the Defendant company provided an option to the 6^th Claimant so that he could choose to enter into an employment contract or a contractor contract, so both parties clearly understood that the “Contractor (Labour Contractor) Agreement” was not an employment contract. The 6^th Claimant voluntarily chose to be hired as a contractor driver because of remuneration better than that of an employee driver. He knew that the remuneration was inclusive of the compensation for the employee’s benefits he had renounced. Although the common intention of the 6^th Claimant and the Defendant company at the time of signing the Agreement was to establish a contractor relationship, the Deputy Presiding Officer found on the bases of objective factors and legal principles that the true relationship between the two parties was one of employer-employee relationship. The Defendant company agreed that during the period between 23 August 1996 and 31 March 2008, the 6^th Claimant had worked continuously for the Defendant company. If their relationship were an employer-employee one, the 6^th Claimant would have fulfilled the definition of continuous employment as stated in the Schedule 1 of the Employment Ordinance.

5.As the 6^th Claimant was not given paid annual leave or statutory leave with pay during his period of employment, the Deputy Presiding Officer decided in favour of his claim for annual leave pay and statutory holidays’ pay. Moreover as the Defendant company refused to renew its contract with the 6^th Claimant, he also ordered that the Defendant company should pay the 6^th Claimant long service payment.

6.Regarding the counterclaim by the Defendant company, according to paragraph 70 of the Reasons for Decision, the Deputy Presiding Officer at the trial thought that if he found in favour of the 6^th Claimant’s claim for annual leave pay, statutory holidays with pay and long service payment, the 6^th Claimant would receive double benefits. Therefore, the Deputy Presiding Officer found in favour of the counterclaim by the Defendant company and held that the 6^th Claimant should pay $164,790.18 to the Defendant company. After the review hearing, the Deputy Presiding Officer confirmed his findings of fact. However he considered that in view of Clause (F) of the “Contractor (Labour Contractor) Agreement”, the difference in remuneration between a contractor driver and an employee driver covered not only the compensation for the benefits and protection conferred to an employee under the Employment Ordinance, but also other rights and benefits under other legislations, for example the Employees’ Compensation Ordinance and the Mandatory Provident Fund Schemes Ordinance. He listed out a number of employees’ protection and benefits under those legislations. He considered that the Defendant company could not specify how much of the difference in remuneration between a contractor driver and that of an employee driver went towards the 6^th Claimant’s compensation for the annual leave pay, statutory holidays’ pay and long service payment. Therefore, he found that the Defendant company’s argument of double benefits could not stand and he dismissed the counterclaim by the Defendant company.

Defendant company’s Grounds of Appeal

7.The Defendant company did not dispute that the 6^th Claimant was its employee and did not object to the Deputy Presiding Officer’s decision that it had to pay annual leave pay, statutory holidays’ pay and long service payment to the 6^th Claimant. The appeal was against the Deputy Presiding Officer’s decision to dismiss its counterclaim and the calculation of annual leave pay. It was granted leave by this Court to appeal against both decisions. Its grounds of appeal are as follows:

(1) The Deputy Presiding Officer failed to consider or properly consider the equitable remedies regarding unjust enrichment;

(2) The Deputy Presiding Officer erred in law when he, on the basis that the Defendant company could not specify how much was paid to the 6^th Claimant as compensation for his annual leave pay, statutory holidays’ pay and long service payment, held that the assertion that the 6^th Claimant had obtained double benefits could not be proved, and thereby dismissed the Defendant company’s counterclaim; and

(3) When calculating the annual pay leave, the Deputy Presiding Officer erroneously applied section 41C(2) of the Employment Ordinance.

Deputy Presiding Officer’s Reasons for Decision

8.At the trial, the Deputy Presiding Officer made reference to the cases of Hang Fook Lau Seafood Restaurant v Kwok Sik Yuen [2001] 2 HKC 69 and Yam Yui Wai & 9 others v Wanchai Hsin Kuang Restaurant Co. Ltd. [2003] HKLRD 793 and considered that if he ruled in favour of the claim of the 6^th Claimant, the 6^th Claimant would receive double benefits. Therefore he ruled in favour of the counterclaim of the Defendant company. However at the review hearing, the Deputy Presiding Officer made the same findings of fact, but he re-considered the application of the legal principles laid down in Hang Fook Lau and Hsin Kuang Restaurant. After consideration, he dismissed the Defendant company’s counterclaim. The Deputy Presiding Officer said in paragraphs 80 to 89 of his Reasons for Decision that:

“80. Over the years, both parties signed a number of “Contractor (Labour Contractor) Agreements” which, except in the last two agreements dated 1 March 2006 and 1 April 2007 respectively, included the following Clause (F): -

“Status of Party B

Party B is not an employee, agent or lawful representative of Party A. Party B is an independent contractor and is not entitled to any benefits arising by reason of employment or any benefits conferred by the labour laws. Party A is under no obligation to grant Party B any employee’s benefits or compensation such as holiday, sick leave, bonus, double pay or mandatory provident funds. If the laws provide that an independent contractor shall pay tax as a self-employed person or pay any other tax, Party B is solely responsible for making such payments.”

81. In accordance with the abovementioned provision, the service charges that the Defendant company paid to a contractor driver did not include statutory holidays’ pay, annual leave pay, mandatory provident fund, or any other compensation for employees’ benefits. Therefore I am of the view that the Defendant company cannot now turn it the other way round to say that the service charges included statutory holidays’ pay, annual leave pay, severance payment and long service payment.

82. Clauses (F) of the “Contractor (Labour Contractor) Agreements” that the 6^th Claimant signed on 1 March 2006 and 1 April 2007 respectively were amended to read:

“(F) STATUS OF PARTY B

Having carefully read the “Applicant’s Letter of Intention to Provide Container Haulage Services”, Party B opts to sign this Agreement in the capacity as a contractor (labour contractor), meaning that Party B clearly understands that his status is not an employee, agent or lawful representative of Party A. Party B is an independent contractor and is not entitled to any benefits arising by reason of employment or any benefits conferred by the labour laws. Party A shall pay to Party B service charges higher than the sums it pays to a contract employee, and the difference in amount will cover all the benefits stipulated by the labour laws. If the laws provide that an independent contractor shall pay tax as a self-employed person and make contribution to his own mandatory provident funds as a self-employed person, Party B is responsible for all such payments.”

83. Those labour laws that the Clause referred to, in my view, include not only the Employment Ordinance (Cap. 57); they may also include the Employees’ Compensation Ordinance (Cap. 282) and the Mandatory Provident Fund Schemes Ordinance (Cap. 485). Under these legislations, an employee is entitled to quite a number of benefits. For example, an employee is entitled to employees’ compensation under the Employees’ Compensation Ordinance. Under the Employment Ordinance, an employee is entitled to maternity protection, rest days, protection against discrimination for joining a labour union, payment of salaries and wages, severance payment, long service payments, employment protection, sickness allowances, paid leave, annual leave with pay, etc. The question is: of the extra remuneration that the Defendant company paid to a contractor driver than it paid to an employee, how much was attributable to the statutory holidays’ pay, annual leave pay, severance payment or long service payment that the 6^th Claimant is now claiming against the Defendant company. The Defendant company is unable to provide any answer to the above question.

84. The above observation shows that if one analyses the facts in the present case, one can see that this case is different from the case of Hsin Kuang Restaurant in several aspects. Firstly, in Hsin Kuang Restaurant, the Restaurant admitted that the claimant was an employee but the Defendant company in the present case did not admit that the 6th Claimant was an employee. Secondly, in Hsin Kuang Restaurant, the Restaurant specifically added to the monthly salary a payment in lieu of holidays to purchase the holidays. But in this case, the Defendant company could not specify how much it had paid as compensation to the 6th Claimant for his annual leave pay, statutory holidays’ pay, severance payment or long service payment.

85. Therefore, in so far as the facts in the present case are concerned, I think the facts can at most be said to be similar to those in Hang Fook Lau. Of course in Hang Fook Lau, the employer did not dispute the employee status of the claimant therein. Contrary to the Hsin Kuang Restaurant case, the Restaurant in the Hang Fook Lau case did not specifically add to the monthly salary a payment in lieu of holidays to purchase the holidays. Clause 6 of the employment contract between the claimant and the employer in that case reads:-

“Holidays: Two days statutory holidays monthly for the employee, whilst the other two days statutory holidays are included in the calculation of the basic salary.”

86. In the Hang Fook Lau case, Yuen J held that the above contract term was void as it was contrary to Section 70 of Employment Ordinance. I am of the view that for the same reason, Clause F in the “Contractor (Labour Contractor) Agreement” that the 6^th Claimant signed on 1 March 2006 and 1 April 2007 was void because it contravened Section 70 of the Employment Ordinance.

87. I make a finding of fact that the 6^th Claimant voluntarily chose to work as a contractor employee. He understood that the difference in remuneration given by the Defendant company to a contractor employee and that to an employee driver was a compensation to any contractor driver who chose to give up his employee’s status and lost his employee’s benefits. However in view of the decision in Hang Fook Lau, the above arrangement was void because it contravened section 70 of the Employment Ordinance.

88. That said, in accordance with the decision in Hsin Kuang Restaurant, I still need to consider whether the 6^th Claimant will receive double benefits if I rule that the Defendant company should pay the whole sum of the 6^th Claimant’s claim. The Defendant company does not admit that the 6^th Claimant is an employee. It also cannot specify how much has been paid to the 6^th Claimant as compensation for his annual leave pay, statutory holidays’ pay, severance payment or long service payment. I am of the view that on the facts of this case, the remuneration of the 6^th Claimant was not related to the number of days that he had worked in a month, and in accordance with the decision in Hang Fook Lau case, I rule that the double benefits argument cannot stand.

89. I have previously decided that the Defendant company cannot rely on the legal principle of estoppel as his defence.”

9.As shown in paragraphs 84 and 88 of the Deputy Presiding Officer’s Reasons for Decision, he compared the facts in the present claim with the facts in the two cases of Hang Fook Lau and Hsin Kuang Restaurant. He distinguished the present case from Hsin Kuang Restaurant on two grounds: (1) the Defendant company did not recognize the employee status of the 6^th Claimant; and (2) the Defendant company could not specify how much had been paid to the 6^th Claimant as compensation for his annual leave pay, statutory holidays’ pay, severance payment or long service payment. He considered that the present claim was different from Hsin Kuang Restaurant, but similar to Hang Fook Lau. He then ruled that in accordance with Hang Fook Lau, Clause (F) of the “Contractor (Labour Contractor) Agreement” was void as it contravened section 70 of the Employment Ordinance. The Defendant company did not challenge this part of the Deputy Presiding Officer’s ruling. Its appeal was only against the Deputy Presiding Officer’s ruling that the Defendant company’s double benefit argument could not stand by reason of the above two factors. Paragraph 88 shows that the Deputy Presiding Officer ruled that the double benefit argument could not stand in view of the following principle: any party alleging that there was double benefit must prove not only that he paid a benefit, but also that the benefit was a double payment that went towards the annual leave pay, statutory holidays’ pay and long service payment, i.e. some of the employer’s monetary liabilities. And this legal principle came from Hang Fook Lau.

10.I will first summarize the legal principles on double benefit and unjust enrichment, analyze the factual background in the two cases of Hang Fook Lau and Hsin Kuang Restaurant and the legal principles laid down therein. Then I, in accordance with the Defendant company’s grounds of appeal, will consider whether the Deputy Presiding Officer has erred in law when he made his decision.

Legal Principles on Double Benefit or Unjust Enrichment

11.The legal principles on double benefit or unjust enrichment are one of the foundations of the legal remedy of restitution. The law of restitution deals with the question as to whether a benefit previously given by the plaintiff to the defendant can be restored to him, and not whether he can claim damages for any loss caused by the defendant. In Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, Lord Wright of the House of Lords laid down the legal principles on the remedy of restitution by reason of unjust enrichment. He said,

“It is clear that any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining money of, or some benefit derived from another which it is against the conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution.”

To put it briefly, if a person has unjustly obtained a benefit that he should not have obtained from another, the unjust enrichment should be restored to the other person. An example is the double payment of salary to an employee by his employer by mistake. The legal remedy of restitution is applicable to the scenario of a defendant being unjustly enriched, as well as that of a defendant obtaining a benefit from another through a civil wrong, or that of a plaintiff having the right to restore ownership of his property.

12.In Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221, Lord Hoffmann of the House of Lords set out in page 234 that: If a plaintiff seeks a restitutionary remedy on the ground of unjust enrichment, he must prove four elements: firstly, that the defendant has received a benefit or obtained an interest or enrichment; secondly, that the plaintiff has given the interest or enrichment; thirdly, that it will be unjust to allow the defendant to retain the interest or enrichment; and fourthly, that the defendant has neither a reason to stop the plaintiff from seeking a restitutionary remedy nor a defence. As the plaintiff is seeking a restitutionary remedy and not claiming damages for the losses caused by the defendant, the plaintiff is only entitled to seek restoration of the benefit that the defendant has obtained, and not damages for the consideration he gave or the losses he suffered. For example, the plaintiff may have part with a consideration of a hundred dollars, but the double benefit the defendant gained may only have been a few tens of dollars. In such a case, the plaintiff is only entitled to a few ten dollars as restitutionary remedy. Whether the consideration the plaintiff gave was greater than, equal to or less than the double benefit received by the defendant is irrelevant. The legal principles established by Banque Financiere are that: The plaintiff only needs to prove that he has given a consideration and as a result of which the defendant was unjustly enriched. The plaintiff does not need to prove that the enrichment given to the defendant was double payment for a monetary obligation of the plaintiff. Therefore, as a matter of legal theory, when seeking a restitutionary remedy, the plaintiff does not have to prove the correlation between the amounts he gave in consideration and the double benefit the defendant received.

Interpretation of the two cases of Hang Fook Lau and Hsin Kuang Restaurant and the legal principles relied upon by the Deputy Presiding Officer

13.In the cases of Hang Fook Lau and Hsin Kuang Restaurant, the employers and the employees were all aware of their employer-employee relationship. By the clauses in the employment contracts, the employers ‘purchased the holidays’ from the employees. Yuen J (as she then was) said in the judgment of Hang Fook Lau that the clause in the employment contract deprived an employee the right to choose not to work on a rest day. Therefore she took the view that the clause was void under s.70 of the Employment Ordinance as it purported to extinguish or reduce a right conferred upon the employee by the Ordinance. She further found that since the employee was employed on a monthly salary and on account of the employee’s entitlement to rest days with pay for one to three days in certain months, the employer could not prove in accordance with the mechanism provided under the clause in the employment contract that he had paid salaries to employees as compensation for working on rest days. The relevant clause in that employment contract is shown in paragraph 85 of the Deputy Presiding Officer’s Reasons for Decision. To put it simply, the clause stated that the compensation for the ‘purchase of holidays’ was already included in the monthly salary. Regardless of the number of paid holidays or rest days in a month, the employees’ salaries remained the same. Basically, the compensation for the ‘purchase of holidays’ under the clause was false. That was the basis on which Yuen J found that the employer could not prove that it had paid salaries to the employees in compensation for working on rest days. As Woo VP pointed out in Hsin Kuang Restaurant, Yuen J in Hang Fook Lau made that decision because she took the view that on the facts of that case, the salary of the employee was not pegged to the number of days he had to work in a month.

14.I have carefully read Yuen J’s Reasons for Decision in Hang Fook Lau. But nowhere in that judgment can I find the legal principle relied upon by the Deputy Presiding Officer, which state that an employer must state how much has been doubly paid as salaries for rest days before he can prove that an employee has obtained a double benefit. The Deputy Presiding Officer has not specified the basis of the legal principle. I believe that he has relied upon the judgment in relation to double benefits set out in page 7 of Yuen J’s judgment in Hang Fook Lau. Yuen J stated:

“A further submission that Mr. Yau made was that under the Labour Tribunal’s award, the Respondent is being paid twice for the 46 rest days because under Clause 6, the pay for working on the 2 “working rest days” had been included in the basic salary.

Mr. Yau was unable to refer the Court to any authorities to the effect that even after a term of contract is struck down as void as being contrary to statue, it could nevertheless be relied upon as determining the rights of the parties thereto.

A further difficulty that Mr. Yau had was that the salary here was a monthly salary, and not daily rated. Thus, if there were statutory holidays during any particular month, the Respondent would have got the same pay as for another month when there were more working days. On the face of it, therefore, the salary was not pegged to the number of working days. There was also no evidence before the Tribunal or the Court as to how much the employer would have offered and how much the employee would have accepted if Clause 6 had been excluded.”

15.I have already explained in the previous paragraphs that Yuen J’s judgment and the reasons for her refusal to accept the employer’s argument of double benefits. I believe the Deputy Presiding Officer thought that the legal principle he relied upon was set out in the last sentence of the portion of Yuen J’s judgment quoted above. However that paragraph of the judgment shows that Yuen J was merely pointing out that there was no evidence in the case to suggest that the two parties had any agreement on compensation for the “holidays purchased”. I think it is not possible to construe that portion of Yuen J’s judgment as the legal principle relied upon by the Deputy Presiding Officer.

16.Counsel for the Respondent Mr. Erik Shum cited the case of Choi Sik Chun & others v Champion Cleaning Transport Company Limited HCLA 13/2003, to support the legal principles relied upon by the Deputy Presiding Officer. He quoted paragraphs 13 to 18 of Lam J’s judgment in the case:

“13. Obviously, the Court of Appeal considered the facts in Hsin Kuang Restaurant to be different from those in the earlier case of Hang Fook Lau. In Hang Fook Lau, Yuen J (as she then was) in her judgment refused the suggestion that the basic salary may cover the compensation for rest days. The employment contract involved in Hang Fook Lau included this clause:

“Holidays: Two days statutory holidays monthly for the employee, whilst the other two days statutory holidays are included in the calculation of the basic salary.”

Yuen J held in her judgment in that case that this could not be regarded as granting sufficient compensation to the claimant.

14. I am of the view that in the case of Hsin Kuang Restaurant, the Court of Appeal did not indicate that it disagreed with Yuen’ Js ruling in this regard. The above quotations of the Court of Appeal judges in this regard show that the Court of Appeal agreed with Yuen J’s rulings on the basis of the facts of the case, including her ruling in respect of the compensation for rest days.

15. As to the present case, I am of the view that the facts are similar to those in the Hang Fook Lau case. Mr. Ho never indicated to this Court that the Defendant company had adduced concrete evidence before the Tribunal to show that the claimants had obtained extra compensation for working on rest days. The crux of Mr. Ho’s submission was that the basic salaries could impliedly cover the compensation for working on other rest days. Given that in Hang Fook Lau, the claimants’ claims for rest days’ compensation was successful despite express provisions in the employment contracts that the two statutory holidays were included in the basic salaries. I cannot see how the Defendant company could, in the absence of such contractual provisions, rely on the legal principle of implied terms to argue that the claimants were granted sufficient compensation for working on rest days.

16. The Presiding Officer did not discuss the implied meaning of basic salaries in his Statement of Findings. I do not find that there is any need to do so, and do not see any chance of success with the 2^nd and 4^th Ground of Appeal.

17. As for the 3^rd Ground of Appeal, I consider that the Presiding Officer had indicated in his Statement of Findings that the Claimants’ (the 1^st, 5^th and 7^th Claimants included) basic salaries did not cover the compensation for working on rest days and this was a matter that was clearly reflected in his calculation of the compensation that each claimant was entitled to. Therefore there is no merit in this Ground of Appeal.

18. For the reasons stated above, I do not consider that the Defendant company has raised any Ground of Appeal that can satisfy the requirements of section 32 of the Labour Tribunal Ordinance. Accordingly I dismiss the Defendant company’s application for leave to appeal.”

17.I am of the view that Lam J merely pointed out in the above judgment that an employer, without clear evidence to show that he has paid rest days’ compensation, cannot claim that such payment has been made. It is trite law that any party making a claim is under an obligation to prove it. I have read the rest of Lam J’s judgment in detail. The issue in that case was also the “purchase of holidays”. Lam J considered that that case was similar to Hang Fook Lau. He found that the employer could not prove that the rest days’ compensation had been paid. Both Lam J and Yuen J found that the employers could not prove that they had paid rest days’ compensation twice. Lam J did not lay down the legal principle that if an employer cannot elaborate how much has been paid as compensation for the rights claimed by his employee, then the employer may not substantiate an allegation of unjust benefits against the employee.

18.The facts of Hsin Kuang Restaurant were slightly different from those of Hang Fook Lau. Both cases had the same issue which was the “purchase of holidays”. The employers in both cases defended that they had paid extra compensation to “purchase the holidays”. The Court of Appeal found that in accordance with the employment contracts in Hsin Kuang Restaurant, the employer had a specific mechanism to calculate the compensation for the “purchase of holidays”. Although the Court of Appeal ruled that the relevant clauses in the employment contracts were void, the Labour Tribunal nonetheless had to consider the legal principles of unjust enrichment or double benefit. The employers’ grounds of defence in those two cases were the “purchase of holidays”. Therefore they were required to specify the purchase of holidays and also to prove how much was paid towards rest days’ compensation before they could run their defences successfully. It thus shows that specifying how much had been paid towards compensating for rest days’ was only a necessary incident of that ground of defence. It is a matter of adducing evidence to prove the case, and not one of the elements of the legal principle for establishing double benefit. The Deputy Presiding Officer might have misunderstood the basis of Hsin Kuang Restaurant and Hang Fook Lau, and erroneously thought that the two cases laid down the principle that an employer must be able to specify how much has been paid toward compensation for the various employees’ benefits before he can establish an allegation of unjust enrichment or double benefit.

19.In view of the above analysis, it is one question whether an employer has given a consideration and whether that consideration is sufficient compensation for an employee who has worked on rest days, and it is a different question whether the employee has obtained double benefits. If the dispute is one of the “purchase of holidays”, certainly the employer must prove that he has paid a real and sufficient compensation to cover the employee’s holiday pay. If the dispute is one of unjust enrichment or double benefits, then in accordance with Banque Financiere and my analysis in paragraph 12 above, the employer only needs to show that the employee has obtained some benefits which are unjust and does not need to show that the relationship in monetary terms between the consideration he has given and the double benefit the employee has obtained. It is irrelevant whether the consideration he has given is more than, equal to or less than the double benefit the employee has obtained. Therefore I am of the view that neither Hang Fook Lau nor Choi Sik Chun has laid down the principle that an employer must specify how much he has paid in compensation of the statutory holidays’ pay, annual leave pay, long service payment and other employees’ benefits before he may have a legal remedy, and that that principle is contrary to the legal principle of restitution or unjust enrichment.

1st and 2nd Grounds of Appeal: Unjust enrichment in equity and the calculation of the amount of compensation

20.These two grounds of appeal can properly be dealt with together. The Deputy Presiding Officer made a comparison of the facts in the present case and those in the two precedents to decide which bore a greater resemblance with the present case. He then applied the rulings of that precedent to the present case. The way that the Deputy Presiding Officer applied a precedent was inconsistent with legal principles. To apply a precedent, the court should first make findings of facts in the case. The court should then find out the applicable legal principles from the appropriate precedent and apply such legal principles to the facts of the case. After proper consideration, the court should make a decision in accordance with the legal principles.

21.The claim in the present case is completely different from the factual circumstances in Hsin Kuang Restaurant and Hang Fook Lau. The employers and employees in those two cases were well aware that they had an employer-employee relationship. The employers made use of the clauses in the employment contracts to “purchase holidays” from the employees. In the present claim, it was the common intention of both the Defendant company and the 6^th Claimant to establish a contractor relationship. As the Deputy Presiding Officer said in paragraph 87 of his Statement of Findings, the 6^th Claimant voluntarily chose to work as a contractor or a labour contractor. He understood that the difference in remuneration that the Defendant company paid to a contractor driver and an employee driver was to compensate the employees’ benefits that a contractor driver has renounced. The difference between the present case and Hang Fook Lau is that both the Defendant company and the 6^th Claimant had the common intention to have a contractor relationship. The Defendant company never sought, by the wordings in the clauses of the employment contract, to deprive the choice of the employee, or to extinguish or reduce a right or protection conferred upon the employee under the Employment Ordinance. Instead it gave the 6^th Claimant the option of working as a contractor driver or an employer driver. Two-thirds of the drivers chose to work as employee drivers while the 6^th Claimant chose to work as a contractor driver. As a matter of law, the true relationship between the Defendant company and the 6^th Claimant has remained that of employer and employee. But the Deputy Presiding Officer thought that this claim was analogous to the facts in Hang Fook Lau and found that the Defendant company’s argument of double benefit could not stand for the above two reasons. If the Deputy Presiding Officer could focus on the distinction between the present claim and Hang Fook Lau and apply the precedent in accordance with legal principles, he could have arrived at a different conclusion.

22.I will now go on to discuss the two factors that the Deputy Presiding Officer has considered. In paragraph 80 of the Reasons for Decision, the Deputy Presiding Officer considered it pivotal that the Defendant company did not admit its employer-employee relationship with the 6^th Claimant, but he did not elaborate how this factor affected his decision to reject the Defendant company’s argument of double benefits. It was implied in his judgment that he had drawn an adverse inference against the credibility or propensity of the Defendant company. But in the present claim, the Deputy Presiding Officer made a finding of fact that their common intention was to establish a contractor relationship. Therefore he should not have made an adverse inference against the Defendant company because of the dispute it raised. Moreover, it is understandable that the Defendant company did not admit and even disputed the employee identity of the 6^th Claimant. Eventually the Deputy Presiding Officer held on the basis of legal principles that their relationship was an employer-employee relationship. However it was undeniable that the 6^th Claimant voluntarily opted to be employed as a contractor or labour contractor, and that he had given up his entitlement to employees’ benefits in order to earn higher remunerations. In these circumstances, the Deputy Presiding Officer should have considered whether the 6^th Claimant would receive unjust enrichment if his claim was successful. The Defendant company’s non-admission of the employee status of the 6^th Claimant could not be a basis for distinguishing the present claim from Hsin Kuang Restaurant, and no adverse inference should be drawn against the Defendant company for this.

23.In paragraphs 82 and 83 of the Reasons for Decision, the Deputy Presiding Officer held that the employment benefits in Clause (F) of the “Contractor (Labour Contractor) Agreement” covered a wide spectrum of benefits which were not limited to annual leave pay, statutory holidays’ pay, severance payment or long service payment. He also held that the Defendant company could not specify how much it had paid in compensation of the damages suffered by the 6^th Claimant in relation to annual leave pay, statutory holidays’ pay, severance payment or long service payment. I concur with his findings of facts therein. As the Defendant company and the 6^th Claimant had an employer-employee relationship, he held that Clause (F) of the “Contractor (Labour Contractor) Agreement” was void as it was contrary to section 70 of the Employment Ordinance. His reasoning in this regard was also correct.

24.In the present case, the Defendant company did not oppose the payment of statutory holidays’ pay and annual leave pay once the employee status of the 6^th Claimant was confirmed. It only made a counterclaim for the remuneration paid in excess. Its legal basis was unjust enrichment. Its defence was not one of “purchase of holidays”, so the issue in the present case was different from that in Hsin Kuang Restaurant and Hang Fook Lau. According to Banque Financiere, the Defendant company was under no obligation to specify how much it had paid as compensation for the statutory holidays’ pay, annual leave pay, long service payment and other employees’ benefits before it could rely on the legal principle of unjust enrichment. The Deputy Presiding Officer erroneously thought that the present case was analogous to Hang Fook Lau and Hsin Kuang Restaurant. His dismissal, by reason of the Defendant company’s non-admission of the 6^th Claimant’s employee status and its failure to specify how much it had paid as compensation for the 6^th Claimant’s statutory holidays’ pay, annual leave pay and long service payment, of the Defendant company’s counterclaim was not in accordance with the requirements of the legal principle of unjust enrichment.

25.I will now re-consider the counter-claim by the Defendant company on the basis of the Deputy Presiding Officer’s findings of fact. The Deputy Presiding Officer held that the Defendant company presented the 6^th Claimant at the same time an option to choose between an employment contract and a contractor contract. The 6^th Claimant voluntarily opted to be employed as a contractor driver. Their common intention was to establish a contractor relationship and the 6^th Claimant could not be criticized for choosing remuneration higher than that of an employee driver. He knew that he had to give up the employee driver’s benefits if he opted for a salary 15% higher than that of an employee driver. Now having obtained a higher salary, he went back on his word, arguing that they had an employer-employee relationship and claiming employees’ benefits against the Defendant company. If he were employed as an employee driver at the signing of the contractor, the Defendant company would not have to pay 15% more remuneration to compensate him for the loss of employees’ benefits. In view of those facts, it is indisputable that the 6^th Claimant had obtained an unjust enrichment from the Defendant company.

26.Is it fair to allow the 6^th Claimant to have double benefits? The present case is different from the case of Hang Fook Lau. The employer in Hang Fook Lau unduly extinguished or reduced the employees’ benefits. The compensation stated in the employment contract to “purchase holidays” from the employees was a fake. But in the present case, the 6^th Claimant voluntarily opted to be employed as a contractor driver in order to earn a higher remuneration. The Defendant company did not by any undue, oppressive or deceptive means force the 6^th Claimant to make the choice that he did. If he was entitled to other benefits after he was paid a higher remuneration, he would obtain double benefits. What he did was in contravention of the common intention of both parties when the contract was entered into, deceiving the Defendant company and being unfair to employee drivers. I am of the view that it is unfair to allow the 6^th Claimant to retain the benefits. Otherwise, there would be the adverse effects of encouraging employees to put monetary gains before moral considerations, to go back on their promises, to cheat their employers and to abuse the Employment Ordinance.

27.The 6^th Claimant could not put forward a ground to oppose the counterclaim by the Defendant company but Mr. Shum submitted that the 6^th Claimant did have a ground of defence. He thought that Clause (F) of the “Contractor (Labour Contractor) Agreement” extinguished or reduced the 6^th Claimant’s rights as an employee and was void for contradicting section 70 of the Employment Ordinance. However that would not affect those clauses in the Agreement regarding remuneration and the 6^th Claimant should therefore be entitled to the salaries of a contractor driver in accordance with the Agreement, and also statutory holidays’ pay, annual leave pay and long service payment. He also considered that since the Defendant company deliberately distorted its employer-employee relationship with the 6^th Claimant, it should bear the consequences of not following the laws. I cannot agree with his submission. I have repeatedly emphasized that it was the common intention of the 6^th Claimant and the Defendant company to establish a contractor relationship and that the 6^th Claimant voluntarily opted to be employed as a contractor driver for higher remuneration. They misunderstood the legal concepts and overlooked the real relationship between them, so they should bear the responsibility of the mistake together. Mr. Shum’s submission that the Defendant company deliberately distorted its employer-employee relationship with the 6^th Claimant did not accord with the facts and was unreasonable. The 6^th Claimant should know that if he wanted to enjoy benefits such as statutory holidays with pay, paid annual leave and long service payment, he could only choose to be employed as an employee driver without earning roughly 15% more salaries. If he could enjoy the benefits of an employee driver and retain his salaries as a contractor driver, he would be unjustly enriched. Although the provisions in the “Contractor (Labour Contractor) Agreement” regarding remuneration were not void for contravening section 70 of the Employment Ordinance, the remuneration involved an unjust enrichment in the circumstances of the present case. The legality of the remuneration clauses did not constitute a ground of defence for unjust enrichment.

28.As to the quantum of the counterclaim, Mr. Chan for the Appellant company submitted that the “Applicant’s Letter of Intention to Provide Container Haulage Services” stipulated the remuneration for a contractor driver and that for an employee driver and since the clauses in relation to a contractor driver was held to be void, the 6^th Claimant should be paid an employee driver’s remuneration. The unjust enrichment should be calculated as the difference between the salary of a contractor driver and that of an employee driver. On the other hand, Mr. Shum argued that the relevant clause in “Contractor (Labour Contractor) Agreement” was not rendered void for contravening section 70 of the Employment Ordinance, and thus remained valid. This argument was the same as the aforesaid one and I do not accept his reasoning.

29.Mr. Shum also pointed out that on the basis of the difference in remuneration between a contractor driver and an employee driver, if the 6^th Claimant was obliged to make restitution to the Defendant company of such difference in amount, it would mean that their employment contract was redrafted by the court. Although calculating the benefits gained by the 6^th Claimant in this way and making restitution to the Defendant company of the amount thus calculated would lead to that result, it is not the same as the Court redrafting their employment contract. The 6^th Claimant was paid a contractor driver’s remuneration in accordance with the contract. However, given the facts in the present case and the acts of the 6^th Claimant, he obtained an unjust enrichment. Pursuant to the legal principles, he should make restitution of that unjust enrichment to the Defendant company. The 6^th Claimant made this claim to sue for the benefits of an employee driver. It was he who went back on their common intention and undertaking and attempted to obtain double benefits from the Defendant company. He was the party who redrafted their employment contract. I disagree with the submission by Mr. Shum.

30.Mr. Shum also submitted that a contractor driver was required to subscribe to an accident insurance policy in place of the protection offered to an employee by his employer under the Employees’ Compensation Ordinance and other benefits under the Mandatory Provident Fund Schemes Ordinance. He argued that the Defendant company had the burden of proving the difference in remuneration between a contractor driver and an employee driver was sufficient to compensate those benefits such as the statutory holidays’ pay, annual leave pay, severance payment and long service payment, but it was unable to discharge the evidential burden to the required standard. Mr. Shum was merely repeating the erroneous legal principles that the Deputy Presiding Officer had adopted. He mistakenly considered the present case as analogous to Hang Fook Lau and misunderstood the nature of the counterclaim. The issue in the present case was not the “purchase of holidays” and the grounds of appeal of the Defendant company was not that it had paid the 6^th Claimant the employees’ benefits he sued for. It did not dispute that it had to pay the 6^th Claimant benefits such as the statutory holidays’ pay, annual leave pay, severance payment or long service payment. The basis for its counterclaim was that the 6^th Claimant had received unjust enrichment and that he should make restitution, with the difference serving as an indicator to evaluate the amount of the double benefits. It only needed to show that the 6^th Claimant had obtained the benefits paid by it and it did not have to show how much remuneration was paid in lieu of benefits such as the statutory holidays’ pay, annual leave pay and severance payment or long service payment. The 6^th Claimant lodged a claim for such employees’ benefits and should his claim be successful, he could not deny that the difference in remuneration he had received was a double benefit. It would be even more meaningless if he insisted that the Defendant company was obliged to show the amount it had paid towards the statutory holidays’ pay, annual pay and severance payment/long service payment, etc. As for other employees’ benefits that could not be anticipated, for example employees’ compensation in case of any injury sustained at work, he could also claim for the same if he had an accident and was injured. This would not affect the Defendant company’s counterclaim on unjust enrichment. If he had paid insurance premiums to mitigate the Defendant company’s duty towards him in terms of employees’ compensation, he could deduct the premiums he paid from the difference in the amount of remuneration because such premiums reduced his enrichment.

31.In view of the above considerations, I accept Mr. Chan’s calculation in respect of the counterclaim. The enrichment that the 6^th Claimant obtained was the difference in remuneration between a contractor driver and an employee driver. At the trial, the Deputy Presiding Officer calculated the amount of the enrichment by deducting $83,729.82 from the difference in remuneration, the former being the contribution the employer made pursuant to the Mandatory Provident Fund Schemes Ordinance. Accordingly the double benefits obtained by the 6^th Claimant were in the amount of $164,790.18. At the review hearing, Mr. Leung who represented the Defendant company said that the Deputy Presiding Officer should not have deducted the contributions to the mandatory provident fund, and that taking the same mandatory provident fund contributions into consideration, the double benefits received by the 6^th Claimant should be in the amount of $248,520 instead. The 6^th Claimant did not challenge this calculation. However, the Deputy Presiding Officer misunderstood the precedents and erroneously dismissed the counterclaim by the Defendant company.

32.Section 31Y of the Employment Ordinance provides that an employer is entitled to reduce the long service payment by the contributions to mandatory provident fund that he has made. The details of the provisions are as follow:

“ If an employee becomes entitled to payment of a long service payment under this Part and -

(a) because of the operation of the employee's contract of employment, one or more gratuities based on length of service or one or more relevant occupational retirement scheme benefits have been paid to the employee; or

(b) a relevant mandatory provident fund scheme benefit is being held in a mandatory provident fund scheme in respect of the employee, or has been paid to or in respect of the employee,

the long service payment is to be reduced by the total amount of all of the gratuities and benefits to or in respect of the employee to the extent that they relate to the employee's years of service for which the long service payment is payable.”

33.According to the Mandatory Provident Fund Scheme, an employer is required to pay contributions to the mandatory provident fund. If an employee is granted long service payment, his employer is entitled to deduct from the long service payment the employer’s contributions to the mandatory provident fund. If the contributions are more than the long service payment, the employee is entitled to long service payment as well as the difference between the contributions and the long service payment. In other words, the employee is entitled to an amount equal to the contributions made to the mandatory provident fund but he is not entitled to the long service payment at the same time. If the contributions to the mandatory provident fund are less than the long service payment, the employee must make restitution of the contributions upon receiving the whole lump sum of the long service payment. He is not entitled to the mandatory provident fund contributions at the same time.

34.In the present case, the mandatory provident fund contributions amounted to $83,729.82 whereas the long service payment was $157,895.60. Since the mandatory provident fund contributions were less than the long service payment, if the 6^th Claimant was granted long service payment, he could not at the same time be entitled to the mandatory provident fund contributions. Therefore, I accept the Defendant company’s argument in relation to the calculation of double benefits. I rule that the unjust enrichment received by the 6^th Claimant is $248,520.

35.To sum up the above reasoning, I conclude that when the Deputy Presiding Officer dismissed the counterclaim of the Defendant company, he had relied on the wrong legal principles and taken into account some irrelevant factors. I set aside his order of dismissal of the Defendant company’s counterclaim, and allow the Defendant company’s counterclaim. The 6^th Claimant is to pay the Defendant company a sum of $248,520 as restitution of the unjust enrichment he obtained from the Defendant company.

3^rd Ground of Appeal: Paid Annual Leave: the Applicability of section 41C(2) of the Employment Ordinance

36.Another ground of appeal of the Defendant company was against the Deputy Presiding Officer’s ruling in relation to annual leave pay:

“The Presiding Officer also erred in omitting to apply section 41C(2) of the Employment Ordinance (Cap. 42) which states that:

“The daily rate of annual leave pay is a sum equivalent to the daily average of the wages earned by the employee during-

(a) the period of 12 months immediately before the day of annual leave … or the date of termination of the contract of employment (as appropriate).”

The date of termination incidentally, fell on 31 March 2008. An application of section 41C(2) would have yielded a daily rate of $637.50 (being the $217,388 ÷ 341), based on the unchallenged and uncontroverted evidence of the 6^th Claimant’s last 12 months’ earnings, as particularized in Appendix 2 to Document D53. Instead, the Presiding Officer erroneously adopted the 6^th Claimant’s purported daily rate of $692 for the period before 23 August 2006, and $706 for the period from 23 August 2006, for the calculation of annual leave pay.”

After hearing Mr. Shum’s legal submission, Mr. Chan applied to amend his ground of appeal as follows:

“The Presiding Officer also erred in omitting to apply the old section 41C(2) of the Employment Ordinance (Cap. 42) to Items 1 to 6 of the 6^th Claimant’s claims for Annual Leave Pay [A21] and the new section 41C(2) thereof to Items 7 and 8 thereof. which states that:

“The daily rate of annual leave pay is a sum equivalent to the daily average of the wages earned by the employee during-

(a) the period of 12 months immediately before the day of annual leave … or the date of termination of the contract of employment (as appropriate).”

The date of termination incidentally, fell on 31 March 2008. An application of the old and new section 41C(2) would have yielded a daily rate of $471.98 ($13,215.50 ÷ 28) for Items 1 to 6, and $637.50 (being the $217,388 ÷ 341) for Items 7 and 8, based on the unchallenged and uncontroverted evidence of the 6^th Claimant’s last 12 months’ invoiced earnings, as particularized in Appendix 2 to Document D53. Instead, the Presiding Officer erroneously adopted the 6^th Claimant’s purported daily rate of $692 for the period before 23 August 2006, and $706 for the period from 23 August 2006, for the calculation of annual leave pay.”

(The bolded and crossed out parts represent the proposed amendments.)

37.The reason why the Defendant company was granted leave to appeal was that the Deputy Presiding Officer made a mistake and did not apply, when calculating the annual leave pay, the current version of section 41C(2)(a) of the Employment Ordinance, which came into effect on 13 July 2007. It had cited the provisions of that section in its Grounds of Appeal. The ground of appeal relied upon by the Defendant company and the relevant provisions of the Ordinance are very clear. This ground of appeal is on a point of law. But the proposed amendments to the Grounds of Appeal were against the Deputy Presiding Officer’s reliance on the version of section 41C(2)(a) that was valid prior to 13 July 2007 when he calculated the annual leave pay for the first 6 years of service. When he calculated the annual leave pay for the last two years of service, he adopted the version of section 41C(2)(a) which came into effect since 13 July 2007. That was exactly the provisions that the Deputy Presiding Officer chose to rely upon when calculating the annual leave pay. In other words, the Defendant company was not against the reliance on the wrong provisions by the Deputy Presiding Officer. In substance, its ground of appeal was that on the basis of the invoices tendered by the 6^th Claimant, the daily rate of his annual leave for the first 6 years should be $471.98 instead of $637.50. This obviously was against the findings of fact by the Deputy Presiding Officer and was not a ground of appeal on a point of law. The proposed amendments by the Defendant company fundamentally and substantively changed the ground of appeal to which it was granted leave to appeal.

38.Mr. Shum strongly opposed the proposed amendments by the Defendant company. As I have mentioned, the proposed amendments fundamentally and substantively changed the ground of appeal to which leave was granted. Generally speaking, an appellate court would not allow an application of this type save that the applicant has cogent reasons. The basic conditions are that: (1) the applicant is able to give an explanation for the delay in seeking to make the amendments; (2) if the applicant had applied for leave to appeal on the proposed amended ground of appeal, the appellate court would have granted leave; (3) there are merits in the proposed amended ground of appeal; and (4) the delay will not cause unfairness to the respondent that cannot be compensated by costs.

39.Mr. Chan frankly admitted that he did not propose the amendments in time because he had misunderstood the provisions in section 41C. The Defendant company applied for leave to appeal on 8December 2008. It and its legal representatives had more than nine months to consider and amend the Grounds of Appeal before the appeal hearing. But it was only after the Appellant company had heard the legal submissions of Mr. Shum that it applied to amend the Grounds of Appeal and that was too late. A lawyer’s misunderstanding of the legislation cannot be a reasonable ground for proposing any amendments to the grounds of appeal.

40.Mr. Chan failed to put forward any argument that could turn his alleged miscalculation by the Deputy Presiding Officer regarding the annual leave pay into an error in law. Even if the Defendant company had applied for leave to appeal on the basis of the proposed amended ground of appeal, its proposed amendments would be disallowed by this reason alone.

41.By the invoices tendered by the 6^th Claimant, the Defendant company supported its proposal to amend the Grounds of Appeal. Leaving aside whether the Deputy Presiding Officer was wrong in law, there are prima facie merits in this ground of appeal. However, Mr. Shum submitted that the Appeal Bundle was compiled specifically for the grounds of appeal that were granted leave, and thus it did not include documents essential to the proposed amended ground of appeal. The invoices tendered by the 6^th Claimant only provided this Court with one-sided evidence. Therefore I have no way to assess whether the proposed amended ground of appeal has any chance of success in appeal.

42.Mr. Shum further submitted that at this stage if the Defendant company was allowed to amend the Grounds of Appeal and the appeal hearing was to continue on that basis, it would be extremely unfair to the 6^th Claimant. If the present hearing was adjourned for both parties to file other documents, there would be a delay. Although the Defendant company could compensate the 6^th Claimant in costs, it would nonetheless delay the judgment of the other 14 claimants. Only a sum of roughly $15,000 was involved in the proposed amended ground of appeal. If the hearing was adjourned for a dispute over such a small amount, it would cause delay to all parties and would waste costs. The dispute involved no point of law and would not affect the claims of the other 14 claimants. It would be inappropriate and unwise to adjourn the hearing to resolve this dispute. I consider that it is also unfair to all parties if the Defendant company is allowed to amend its Grounds of Appeal at this stage.

43.To sum up, I have no way to assess the chance of success of the proposed amended grounds of appeal. The Defendant company should bear the dire consequences for not having a reasonable cause for applying for amendments at this late stage. Moreover, the Defendant company will not benefit financially from the proposed amendments because of the question of costs. Having considered the matter in its entirety, I do not think I should exercise my discretion to allow the Defendant company to amend its Grounds of Appeal at the appeal hearing. Therefore I refuse the Defendant company’s application to amend its Grounds of Appeal.

44.Lastly Mr. Chan agreed that the Deputy Presiding Officer did not make an error in law when he applied section 41C(2)(a) of the Employment Ordinance. Given that his application to amend the Grounds of Appeal has been disallowed, I do not need to consider the appeal in relation to annual leave pay. I dismiss the 3^rd ground of appeal.

Conclusion

45.The Deputy Presiding Officer erred in the interpretation of the precedents and took into account some irrelevant factors when he dismissed the counterclaim of the Defendant company. I set aside the Deputy Presiding Officer’s order to dismiss the Defendant company’s counterclaim against the 6^th Claimant, and allow the Defendant company’s counterclaim. The 6^th Claimant is to pay the Defendant company a sum of $248,520 as restitution of the unjust enrichment he received from the Defendant company. The Defendant company’s appeal against the Deputy Presiding Officer’s decision in respect of annual leave pay is dismissed.

46.As the outcome of the appeal is in favour of each of the parties in different disputes, the Respondent shall pay part of the costs of the Appellant company. An order nisi is granted on costs in the following terms: The Respondent shall pay 60% of the costs of the Appellant company and the personal costs of the Respondent are to be taxed in accordance with the Legal Aid Regulations. If any party disputes the order nisi, an application for a review hearing on costs must be made within 14 days. Otherwise this order nisi shall be made absolute.