Amor Live Holdings Ltd And Another v Tse Pak Kan And Others

Judgment Date19 October 1979
CourtDistrict Court (Hong Kong)
Judgement NumberDCMP1/1979
Subject MatterMiscellaneous Proceedings
DCMP000001/1979 AMOR LIVE HOLDINGS LTD AND ANOTHER v. TSE PAK KAN AND OTHERS

DCMP000001/1979

Construction of "Service Agreement" for employment of nightclub managers - status of managers not decisive in their authority - managers' authorization to employ sub-servants - effect of provisions in Service Agreement reflected by conduct of managers.

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

APPELLATE JURISDICTION

Labour Tribunal Appeal No. 1 of 1979

-----------------

BETWEEN: AMOR LIVE HOLDINGS LTD. 3rd Defendant/
Appellant
AMOR COFFEE HOUSE LTD. 4th Defendant/
Appellant
AND
TSE PAK KAN alias Peter TSE 1st Claimant/
Respondent
LAU CHE KEUNG 2nd Claimant/
Respondent
HON WAI KWONG 3rd Claimant/
Respondent

-----------------

Labour Tribunal Appeal No. 2 of 1979

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BETWEEN: AMOR LIVE HOLDINGS LTD. 3rd Defendant/
Appellant
AMOR COFFEE HOUSE LTD. 4th Defendant/
Appellant
AND
LAU SAU LUEN alias Rosline LAU Claimant/
Respondent

-----------------

Labour Tribunal Appeal No. 3 of 1979

-----------------

BETWEEN: AMOR LIVE HOLDINGS LTD. 3rd Defendant/
Appellant
AMOR COFFEE HOUSE LTD. 4th Defendant/
Appellant
AND
HO CHO YUEN 1st Claimant/
Respondent
FUNG WAI KEI 2nd Claimant/
Respondent
FRANCIS CHEN 3rd Claimant/
Respondent
LEE CHI CHEONG TELAN 4th Claimant/
Respondent
HSU BOBBY

5th Claimant/
Respondent

YAU KWOK KEUNG 6th Claimant/
Respondent
POON KIN SANG 7th Claimant/
Respondent
IU KONG IM 8th Claimant/
Respondent
TSUI YEE WAH BRUMA 9th Claimant/
Respondent

-----------------

Labour Tribunal Appeal No. 4 of 1979

-----------------

BETWEEN: AMOR LIVE HOLDINGS LTD. 3rd Defendant/
Appellant
AMOR COFFEE HOUSE LTD 4th Defendant/
Appellant
AND
LI PAK MOON Claimant/
Respondent

-----------------

Labour Tribunal Appeal No. 5 of 1979

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BETWEEN: AMOR LIVE HOLDINGS LTD. 3rd Defendant/
Appellant
AMOR COFFEE HOUSE LTD. 4th Defendant/
Appellant
AND
TUNG SIK HUNG 1st Claimant/
Respondent
FONG YUN FAT 2nd Claimant/
Respondent
CHEUNG CHEUNG HIN 3rd Claimant/
Respondent
LEE KA WOO 4th Claimant/
Respondent
LAU CHI WING 5th Claimant/
Respondent
CHAN SHAN HING BOTTY 6th Claimant/
Respondent
LEUNG KIN YIP
alias LEUNG CHUN HING
7th Claimant/
Respondent

Coram: Judge Liu, Q.C. in Court

Date of Judgment: 19 October 1979

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JUDGMENT

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1. The appellants are the 3rd and the 4th defendants before the Labour Tribunal. These proceedings were instituted by 22 claimants of whom 21 were successful in their claims for arrears of wages and Wages in lieu of notice. All the claimants were employees of the now defunct nightclub in the Magnolia Mansion, Tin Hau Temple Road, and each of them filed a claim against the 1st, 2nd, 3rd and 4th defendants. Judgment was given against only the 3rd and the 4th defendants who brought these five present appeals. The claims against the 1st and the 2nd defendants were dismissed. Such dismissal is not challenged, and none of the 1st and the 2nd defendants has been joined as a respondent. However, notice of these appeals was given to the 1st and the 2nd defendants by the direction of Judge Cruden, and they were present for part of the hearing.

2. Two preliminary matters may be instantly disposed of. First, one set of submissions were made in all the five appeals, and it was the consensus that these submissions were to be adopted for each of the appeals which concern common questions of law and fact. Consequently, one judgment is required of me in these five proceedings, all separate in form. Secondly, the 4th defendant is a wholly owned subsidiary of the 3rd defendant. These incorporated companies are legal entities on their own, but to all intents and purposes the 3rd and the 4th defendants, these appellants, had at all material times been taken as an inseparable establishment: First and foremost, the initial monthly payment under the agreement in suit with the 4th defendant was made by cheque, D7, to the 3rd defendant. This cheque was accepted and presented for payment by the 3rd defendant. After the cheque was dishonoured, the 1st and the 2nd defendants corresponded with the 3rd defendant by letters in "D6" dated the 22nd May and 27th May 1978 respectively. In these two letters, the 1st and the 2nd defendants claimed to be the employed managers of the 3rd defendant and referred to the terms of the agreement in suit signed by the 4th defendant in name, D2, as if it had been entered into with the 3rd defendant. Subsequent to the filing of the claims in the Labour Tribunal, it was the 3rd defendant which, by its letter dated the 14th June 1978, D5, sought to offer explanations to the learned Presiding Officer as if it had been directly involved. At the hearing before the Labour Tribunal, one of the representatives of the 3rd and the 4th defendants, Mr. Ng Wai-yip, gave evidence, the tenor of which drew no distinction between the 3rd and the 4th defendants. In my view, sufficient admission has been made to the Labour Tribunal of a fusion of interests of the 3rd and the 4th defendants, and in these appeals the 3rd defendant should not be heard to claim to have or retain an independent legal status which can have, in any case, little more than academic consequence. Furthermore, the adjudged liability of the 3rd defendant was not specifically made a separate ground of appeal, and counsel for the appellants never pursued this facet with much enthusiasm. Therefore, in these appeals the appellants are to be grouped and referred to as one.

3. The appellants were lessees of the 1st and the 2nd floors of the Magnolia Building in Tin Hau Temple Road. The 1st floor was used by the appellants as a restaurant and the 2nd floor as a nightclub previously known as the "Constellation Room". The head tenancy agreement was not produced, but suffice it to say that it prohibited subletting of the premises and subcontracting of the business conducted therein. By an agreement dated the 28th March 1978, D2, in the name of the 4th defendant "Amoy Coffee House Limited" the appellants permitted the 1st and the 2nd defendants to run the nightclub which was thereafter renamed "Lounge de Scorpio". The appellants claim that this agreement is not a service agreement despite its label and the expressions used in its provisions. The Court was warned against taking a telescopic view. Great emphasis was placed on the all too widespread local practice of transfer of business with its usual incidents and consequences, and the Court was urged not to overlook "that whether the contract is one of service depends in the last resort on whether an ordinary person would so consider it in the light of his experience and knowledge" (1)

4. Each of the successful claimants was interviewed by the 1st defendant and was invited to sign a form entitled "Application for Employment" for personal data. These forms are printed forms in English bearing the company name of the 3rd defendant in its heading. All these 21 successful claimants were employed subsequent to the singing of the agreement, D2. On or about the 1st May 1978, pursuant to this agreement, the 1st and the 2nd defendants paid to the 3rd defendant a post-dated cheque, D7, for the first month's guaranteed profits. This post-dated cheque was dishonoured on its presentation for payment on the 8th of May 1978, and the nightclub was locked up by the appellants and ceased to carry on business on the 16th of May 1978. Some claimants stopped to report for work as from that date with very few managing to work until the end of May.

5. In substance, the learned Presiding Officer found the 1st and the 2nd defendants to be employees of the 3rd and the 4th defendants, the appellants, and in turn the claimants to be employees of the appellants. It is quite unnecessary to deal with the Grounds of Appeal separately. The appellants claim that none of the claimants was in fact an employee of their companies. It was submitted on behalf of the appellants that the successful claimants were only sub-servants of the 1st and the 2nd defendants who operated the Night Club independently.

6. Much has been said of the true nature of the relationship created by the agreement, D2. It was contented that the 1st and the 2nd defendants were given de facto control of the Night Club in the capacity of an independent contractor with an undertaking to produce a minimum guaranteed monthly profit. Apart from "apparent authority", even a service agreement may specifically exclude any authority to engage workmen for and on behalf of the employer. Not every servant is given the power to take on workers for his employer. On the other hand, the power of employment may be delegated to one who is decidedly not a servant e.g. an employment agency. The concept of "servants" and "independent contractors" is primarily referable to the tortuous liability of the master of employer. That these successful claimants were engaged as servants of the Night...

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