Hong Kong Court Confirms Labour Tribunal's Broad Powers to Order Employer Give Security to Defend Claim

Introduction

In Chu Yeut Lin and Another v. Everbright Groups Limited [2024] HKCFI 1626, the Court of First Instance ("CFI") confirmed that the Labour Tribunal has a wide discretionary power to order the payment of security into the Tribunal under section 30 of the Labour Tribunal Ordinance (Cap 25) ("LTO") if it considers it just and expedient to do so having taken into account all the relevant circumstances of the case. 

Facts

The Defendant (the "Employer") applied for leave to appeal an Order made by the Presiding Officer (the "PO") of the Labour Tribunal requiring the Employer to pay into the Labour Tribunal security of HK$231,166.37 (the "Order"). The Employer had been sued by its employees for severance and long service payments under the Employment Ordinance. As is typical in the Labour Tribunal, following the commencement of proceedings, the Tribunal wrote to the Employer requesting certain documents in support of its defence to the claim. However, the Employer failed to do so by the time of the Labour Tribunal hearing. When the Employer's representative at the hearing was asked to explain the basis of the Employer's defence, she was unable to provide any details and only asked for an adjournment of the hearing. And so the Order was made.

The Employer submitted that the Order was erroneous in law on the grounds that the PO had (1) formed a preliminary view on the merits of the Employer's case before the filing of its defence and wrongly took this into account; (2) erred in his finding of the Employer's delay; and (3) failed to give sufficient weight to the Employer's explanation for seeking an extension of time to file its defence.

The Employer argued that the PO should only exercise his power to order the payment of security where there is conduct causing undue delay or amounting to an abuse of process, both of which were absent in this case. Furthermore, the Employer argued that the PO should not have considered the merits (or lack thereof) of the Employer's defence when ordering the payment of security. 

The CFI's Decision

The Tribunal's power to order security under section 30 of the LTO 

The Court held that the Tribunal's power to order security under s.30 of the LTO is not confined only to cases where there is abuse of process or undue delay.

The Court held that a wide power is conferred on the Tribunal to order security for the general and overall purpose of avoiding delay in the adjudication process. While section 30 sets out various circumstances in which the Tribunal may order security, including where there is a real risk that the payment of an award will be obstructed or delayed due to a dissipation of assets, or that a party's conduct has resulted in delay or amounts to an abuse of process, they are not exhaustive and should not limit the Tribunal's discretion to order security. 

Consideration of the merits

The Court also confirmed that, in exercising its discretion, the Tribunal is entitled to consider all relevant circumstances of the case, including a preliminary view of the claims made by or against a party on the basis of the information available. 

The Court emphasised that the filing of the Employer's defence as well as relevant supporting documents were essential to the PO's understanding of the case. This is particularly so when parties are not permitted to have legal representation in Labour Tribunal proceedings and it is for the PO to investigate the claims made by the employees and any issues raised by, or are relevant to, the defence of the Employer. However, by the time of the Labour Tribunal hearing, the Employer had still not produced any of the relevant documents requested by the Tribunal or explained the basis of its defence. Although the Employer had applied for an extension of time to file the requisite documents prior to the hearing, this application was made on the day the deadline for provision of the documents expired, and the Court held that the Employer should not expect that an extension of time or an adjournment would be granted as a matter of course. The Court viewed this as sufficient evidence of conscious and deliberate delay by the Employer, and held that the PO was entitled to consider it just and expedient to order security to be paid by the Employer. There being no arguable grounds for appeal, the Court declined to grant leave to appeal.

Key Takeaways 

Although the Labour Tribunal adopts a less formal approach to determining claims when compared to a court, the Tribunal has broad powers to make orders for the provision of security, which can be a substantial amount as can be seen in the present case. When defending (or prosecuting) a claim in the Labour Tribunal, employers should:

1. Comply with the prescribed deadlines. Following the commencement of proceedings in the Tribunal, a defendant employer will be served with the claim forms and will usually have a relatively short period of time to provide certain requested documents, including its Statement by Defendant (Company) which sets out its defence to the claim. Even if more time is required to provide a more comprehensive defence, an employer should, within the prescribed time, (a) complete and file its Statement by Defendant (Company) with as much details of its defence as it is able to provide at that time, and (b) submit as many requested documents and documents in support of its defence that it is able to provide.
2. Where it is likely that a deadline set by the Labour Tribunal will be missed, apply early for an extension and do not wait until the deadline to apply.
3. Ensure that the employer's representative at the Labour Tribunal hearing is familiar with the matter and, in particular, the employer's defence.
4. Remember that although a PO has a duty to investigate, a litigant bears the primary responsibility in the preparation and the procurement of evidence in support of their case. 

The judgment is available here.