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Filbert Terrence Kirk v Big Blue Resources Ltd

Judgment Cited authorities 2 Cited in Precedent Map Related
Vincent
Judgment Date01 February 2019
Neutral Citation[2019] HKCFI 285
Year2019
Judgement NumberHCLA27/2015
Subject MatterLabour Tribunal Appeal
CourtCourt of First Instance (Hong Kong)
HCLA27/2015 FILBERT TERRENCE KIRK v. BIG BLUE RESOURCES LTD

HCLA 27/2015

[2019] HKCFI 285

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 27 OF 2015

(ON APPEAL FROM LABOUR TRIBUNAL

CLAIM NO. LBTC 2579 OF 2013)

____________

BETWEEN
FILBERT TERRENCE KIRK Claimant
(Respondent)

and
BIG BLUE RESOURCES LIMITED 1st Defendant
(1st Appellant)
BIG BLUE RESOURCES (HOLDINGS) LIMITED 2nd Defendant
(2nd Appellant)

____________

Before: Hon Lok J in Court
Date of Hearing: 12 January 2018
Date of Judgment: 1 February 2019

_______________

J U D G M E N T

_______________

1. This is the appeal against the order (“the Order”) of the Presiding Officer, Mr Raymund C W Chow (“the Presiding Officer”), of the Labour Tribunal (“the Tribunal”) dated 14 May 2015.

2. In the subject claim in the Tribunal (“the Claim”), the Claimant claimed against the 1st and 2nd Defendants for: (i) wages in lieu of notice in the sum of $697,500; (ii) arrears of wages from 1 April 2013 to 11 June 2013 in the sum of $275,125; (iii) annual pay leave in the sum of $115,861.69; (iv) the value of 3 home visit tickets in the sum of $232,500; and (v) severance pay in the sum of $17,389,726.02.

3. Under the Order, the Defendants were held jointly and severally liable to pay the Claimant his wages in arrears in the amount of $275,125 and another sum of $135,000 being the value of the 3 air tickets. Other claims by the Claimant were dismissed.

4. The Defendants’ review application was dismissed on 29 July 2015. The Defendants lodged an appeal against the Order and the Presiding Officer handed down the Reasons for Decision dated 9 September 2015 (“the Decision”). Subsequently on 17 September 2015, I granted leave to the Defendants to appeal against the Order.

Background

5. The 1st Defendant is and was at all material times wholly-owned subsidiary of the 2nd Defendant.

6. Before 2010, the 1st Defendant was a dormant shelf company of which the Claimant was the sole director.

7. In 2010, the Claimant was presented with a business opportunity of obtaining Indonesian coal concessions by his friend Eddy Syaifulah (“Syaifulah”). They then decided to use the 1st Defendant as the vehicle for the said business opportunity.

8. In January 2011, the 1st Defendant engaged 2 bankers to raise fund for the investment of the coal concessions project.

9. The Claimant and Syaifulah were at the helm of the business from its inception in 2011 until 2013. The two were the only directors of the 1st Defendant at the material time in 2011 when the Claimant’s remuneration was determined.

10. By a purported written agreement dated 15 March 2011 between the Claimant and the 1st Defendant (“the Employment Contract”), the 1st Defendant employed the Claimant as an executive director with a monthly remuneration of US$10,000. Such remuneration had not been approved by the 1st Defendant’s shareholders in general meeting.

11. On 1 October 2011, the 1st Defendant purportedly assigned the Employment Contract in its entirety to the 2nd Defendant. The 2nd Defendant’s shareholders had not approved the Claimant’s remuneration in terms of the Employment Contract. There was merely a board resolution which stated that the Employment Contract had been assigned to the 2nd Defendant.

12. On 11 November 2011, the board of the 2nd Defendant passed a resolution to revise upwards the level of pay to the Claimant to US$15,000 per month. The Claimant was also granted 4 business-class air tickets for home visit by that resolution. Such revision had not been approved by the 2nd Defendant’s shareholders in general meeting.

13. There were a few rounds of fund raising for the coal concessions project. After the third round of fund raising, the representatives of the new investors (“the New Investors”) were appointed as directors of both Defendants in March and May 2013.

14. Upon review of the records and documents of the Defendants, the New Investors claimed that there were certain irregularities and they therefore sought answers from the Claimant.

15. The New Investors were not satisfied with the answers. The Defendants issued a suspension notice to the Claimant dated 13 April 2013 suspending his duties as director. He was removed as a director on 10 June 2013.

The issues in the Claim and the decision of the Presiding Officer

16. The Claimant brought the Claim in the Tribunal to claim for various payments under the Employment Contract and the provisions of the Employment Ordinance (Cap 57).

17. Article 14(a) of the 1st Defendant’s Articles of Association (“Art 14(a)”) provides that the directors shall be paid out of the funds of the company remuneration for their services such sum (if any) as the company may by ordinary resolution from time to time determine. The 1st Defendant therefore contended that without the requisite approval from the 1st Defendant’s shareholders in general meeting, there was no legal basis for the Claimant to claim remuneration under the Employment Contract. There is also similar provision in Article 83 of the Articles of Association of the 2nd Defendant requiring the director’s remuneration to be determined by shareholders in general meeting. Again no such approval was given by the shareholders of the 2nd Defendant.

18. Alternatively, if the Tribunal were to find that there was a valid Employment Contract between the parties and the remuneration properly approved, the Claimant was not entitled to certain payments because he had committed some wrongs which justified a summary dismissal by the 1st or 2nd Defendant.

19. The decision of the Presiding Officer can be summarised as follows:

(i) The remuneration of the Claimant as director had to be approved by the shareholders of the 1st Defendant. There was no such approval and the Claimant was aware of this.

(ii) Despite the lack of approval by the shareholders, there was still an employment relationship between the Claimant and the Defendants. The Defendants are therefore still liable to pay remuneration to the Claimant, although they may claim back the same from the Claimant resorting to company law.

(iii) Though there was no written agreement between the Claimant and the 2nd Defendant for his employment, the circumstances of the case show that both Defendants were the employers of the Claimant.

(iv) As stipulated in the Employment Contract, the Claimant was employed as an executive director and not managing director of the Defendants.

(v) The Claimant was guilty of serious misconduct in respect of: (a) the transfer of a sum of US$395,000 to a number of recipients who were the shareholders or investors of the 1st Defendant; (b) the advancing of a loan to the banker; and (c) the application of bonus shares, and as a result the Defendants were entitled to terminate the Claimant’s employment by way of summary dismissal.

(vi) By reason of the summary dismissal, the Claimant was not entitled to claim any wages in lieu of notice, terminal payment or severance payment.

(vii) The summary dismissal would not affect the Claimant’s claim for arrears of wages and the value of the air tickets, and the Presiding Officer ordered both Defendants to pay the sums jointly and severally.

The parties’ position in this appeal

20. The Defendants accept the findings of fact made by the Presiding Officer. However, they complain that the Presiding Officer had made the following errors of law:

(i) The primary position of the Defendants is that neither of them had approved the remuneration of the Claimant as executive director in general meetings. The Claimant therefore has no right to recover the same pursuant to any employment contract.

(ii) Even if the Employment Contract and the remuneration stipulated therein are somehow valid, it either binds the 1st or the 2nd Defendant. They cannot both be ordered to pay the Claimant on a joint and several basis.

(iii) The purported increase of monthly remuneration by US$5,000, as approved by the 2nd Defendant’s board, is not valid and in any event does not bind the 1st Defendant. Similarly, the relevant board resolution of the 2nd Defendant in granting the air tickets cannot bind the 1st Defendant.

(iv) Even if the Employment Contract and the remuneration stipulated therein are valid, the Tribunal should set off any wages in arrears with the damages payable by the Claimant for his breach of contractual duties.

(v) At least 14 days of wages should be deducted from the Claimant’s claim for arrears of wages because of the suspension notice.

21. The Defendants argue that if their primary position is accepted, this court should dismiss the Claim outright. On the other hand, if the court accepts the other arguments but not the Defendants’ primary position, the court will have to explore what order to make in the circumstances.

22. The position of the Claimant is an interesting one. The Claimant seems to accept that the Presiding Officer had made errors of law in reaching the Decision, and he does not contest the proposition that, if the Claimant was so employed as an executive director, his remuneration had to be approved by the shareholders in general meeting.

23. Despite that, the Claimant relies on cases such as Chok Kin Ming v Equal Opportunities Commission[1] and Chong Cheng Lin Courtney v Cathay Pacific Airways Ltd[2] and argues that the appellate court should not dismiss the Claim outright. This is not the case that the Tribunal, if properly directed, could have come to only one legitimate conclusion on the evidence and findings. Since the Tribunal could possibly have arrived at the same decision on alternative grounds, the court should remit the case back to the Tribunal for re-trial with the following...

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