De Nicolas, Nenita Cientos v. Lee Fung Lan

1997, No. LT 15

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

APPELLATE JURISDICTION

(On appeal from Labour Tribunal Claim No. LT 15 of 1997)

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J U D G M E N T

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1. The A. appeals an Award made by the Labour Tribunal (L.T.) on 3.2.97 where she was awarded a total of $6,182.00 for six items claimed in respect of her employment as a Domestic Helper, including one month's wages in lieu of notice ($3,750.00). Costs of $400.00 were awarded against the Defendant. The D. took no part in the L.T. proceedings and made no attempt to defend them, despite having been properly served throughout.

2. The A. applied for leave to appeal out of time - that was approved by the Registrar on 7.3.97. On 28.4.97 the Hon. Mr Justice Waung granted A. leave to appeal as he considered there was "at least an arguable case that the Labour Tribunal failed to have proper regard to the principle of constructive dismissal under S.10 of the Employment Ordinance and that therefore the Order was erroneous in point of law."

3. The Grounds of Appeal were that the Presiding Officer (P.O.) erred in holding that A., having been constructively dismissed, could not claim damages at common law in excess of one month's wages and that the P.O. ought to have held that damages for constructive dismissal should be assessed on common law principles in accordance with the judgment of the Hon Mr Justice Rhind in Ying Cheong Shoe Mfy v. Yam Yuk Bing & anor [1987] 2 HKC S.10.

4. The A. sought an order that the Award be set aside and the matter remitted to the L.T. for assessment of damages on the basis claimed.

Facts

5. The facts were simple. The A. came from the Philippines to work for D. and began work on the 25.5.96, residing, as she was required to do under Cl. 3 of the contract, at D's home.

6. The contract was a standard form contract for employment of a Domestic Helper recruited from outside H.K. The contract was for 2 years at a monthly wage of $3,750.00. The pertinent clauses are paraphrased below:

C1.4(a) The helper to perform only domestic duties for the employer

Cl.5(b) The employer to provide "suitable and furnished accommodation"

Cl.6 The helper is entitled to all rest days statutory holidays and paid annual leave.

Cl.11 Either party able to terminate by 1 month's notice in writing or wages in lieu.

7. The A. complained to the Immigration Department by letter about 2 1/2 months after starting work. The D. had provided a mattress on the dining room floor as "accommodation"; had required A. to work full-time at the D's restaurant as well as doing all the domestic work at home and failed to give, or compensate for missed, rest days.

8. More seriously A. had been assaulted on 5 occasions by the D's 19 year-old son, described by A. as "abnormal". When after a severe assault on 2.8.96 the A. complained to D. about her son, she was shouted at and further assaulted by the employer.

9. A. made a complaint to the police and thereafter lodged with a friend rather than return to D's house. The D. sent a letter to the Immigration Department on 9.9.96 advising she had terminated the contract because "she (A) and my youngest son have communication problem." D. did not advise Immigration Department that her youngest son was a 19-year old adult of violent propensity.

10. This revelation of extra-contractual work resulted in A. being charged and convicted on 27.9.96 of an offence against S.41 of the Immigration Ordinance. A belated appeal against conviction was lodged. If that fails A's chances of re-employment in HK are severely jeopardised, if not completely ruined. It was not clear whether D. was ever charged with any offence in relation to this breach of contract.

11. The A's claim was filed in the Labour Tribunal on 6.11.96 and amended in respect of D's address on 29.11.97. Leave was granted to A. at a hearing that day to amend Form 2 within 7 days to add two items;

1) Reimbursement of expenses.

2) Payment for out days.

12. D. had, by letter produced to the Court, sought the amendments. She also asked for an adjournment of the hearing as follows. "The reason for this request is that my claims include a claim for damages on constructive dismissal. Such damages cannot yet be assessed because the full extent of my loss has yet to be determined ....."

13. The 2 amendments were never filed by A., despite 2 reminders from the Court. They were not served on D.

14. Although the proceedings were adjourned to 3.2.97 no further damages claim was ever quantified by the A., nor was any such claim produced, or mentioned, by A. at the hearing.

15. For that reason the hearing on 3.2.97 proceeded on the basis of the original claim.

16. Although there was no amendment it appears that the issue of constructive dismissal was before the P.O., first in the Summary of Facts (Form 6) dated 26.11.96, prepared by a Tribunal Officer and forming part of the P.O.'s brief, which stated:

"Para. 2 The claimant was dismissed constructively from the service of the defendant on 2.8.96"

"Para. 3 The dismissal was made by conduct."

Para. 8 set out the reasons why the A. left D's service and these, if accepted, amount to constructive dismissal.

17. Then on 29.11.96 A's letter referred to the need to assess damages for constructive dismissal as a reason for adjourning the hearing.

18. The transcript of evidence of the hearing on 3.2.97 stated "Claim S. 10 dismissal in her statement,"; s. 10 of the Employment Ordinance Cap. 57 related to constructive dismissal.

19. The P.O. gave his decision with very brief reasons on 3.2.97, presumably orally. The decision merely stated that the P.O. accepted the A's evidence. No further reasons were given but as A's evidence was unchallenged, that is unsurprising. By s. 22(3) of the Labour Tribunal Ordinance, an award or order made orally "shall be reduced to writing as soon as possible, and in any case not later than 14 days after the date of the award or order."

20. S.19 of the Labour Tribunal Ordinance provides:

"The P.O. shall keep a summary of the evidence submissions or statement made or given and of any point of law raised at the hearing and of his decision on such point of law."

21. A document headed "Notes" dated the 19.3.97 appears to set out amplified reasons for the Award, albeit reduced to writing outside the time limit of 14 days. Presumably the notes were written after the A. indicated by letter of 4.3.97 that she was appealing. Whether they are intended to be additional to, or instead of, the Reasons is not stated but if they are not reasons, I can see no purpose in the P.O. making any such record.

22. I note too that the P.O. refused the A. a copy of the Notes of Proceedings on 10.3.97 (Letter dd 11.3.97). No reason for this refusal was given, but it may have been because the P.O. knew he had not given reasons in writing within the time required by s.22(3). I can deduce no other reason for this refusal, particularly as S. 8A(1)(a) provides for the supply of a certified copy of the record of proceeding when leave to appeal is sought.

23. For the sake of clarity and to comply with S. 19 the P.O. should have referred to any consideration of the constructive dismissal point when he made the Award and stated what he considered the measure of damages to be. He did not. However I am satisfied that he must have considered the constructive dismissal point and that he was satisfied, on the uncontroverted evidence before him, that constructive dismissal had been established.

24. The common law principle relating to assessment of damages in a case such as the instant one, is stated in Chitty on Contracts (1994) 27^th ed. Vol 2 Para. 37-141 p.807.

"The remedy of an employee who has been wrongly dismissed is an action for damages. The normal measure of damages is the amount the employee would have earned under the contract for the period until the employer could lawfully have terminated it, less the amount he could reasonably be expected to earn in other employment."

25. No comment is made thereafter as to what the measure of damages is in other than normal circumstances. That principle was examined and applied in the Hong Kong case of Ying Cheong Shoe Mfy. (supra):

@p.319 "As the employer was not "the party terminating the contract" there is no obligation on the employer to pay wages in lieu of notice. That does not mean however that the employer is entitled to walk away scotfree. Instead of being liable to pay liquidated damages under S.8A(1) the employer is instead to pay unliquidated damages according to ordinary common law principles for breach of contract. Thus instead of ordering the employer to pay wages in lieu of notice, the learned presiding officer should have assessed common law damages for the employer to pay." (emphasis supplied).

26. The Note by the P.O. annexed to the reason for Decision dated 19.9.97 contains this comment "As for the claim for damages, it is established law that her damages would not be more than one month's pay representing the notice period."

27. That indicates the P.O. was aware of the established measure of common law damages in respect of constructive dismissal.

28. The comment that follows "And wages in lieu of notice is already an item" shows that the P.O. was aware of the differences between the two types of claim.

29. In this case the earliest time at which the defendant could validly terminate the contract was at the expiry of 1 month which was the contractual period of notice. The P.O. was aware of that, but instead of stating it clearly, adopted an infelicitously expressed short-hand form which misled A. into thinking that the constructive dismissal point and assessment of common law damages for that dismissal had been ignored. He relied on the fact that, in this case, the common law damages were equal to the one months wages which was payable in lieu of notice.

30. I am satisfied that the P.O. did not overlook either point and that on the established principles and in normal circumstances his decision was correct.

31. This however was not a usual case. It is clear from the events described that the D. ab initio had no intention of abiding by the terms of the contract. It was always her intention to use the D.H. for extra-contractual work in the restaurant.

32. The D.H. was thus brought to H.K. under a misrepresentation by the D. of what her work was to be. On that basis the measure of damages can be significantly enlarged, because it was never intended by D. that she would carry out her contractual commitments.

33. The D.H. was used as a restaurant worker; work which was not permitted under the contract but which D. could force the D.H. to perform because she held the purse strings and could ensure the D.H.'s return to her home country if she refused to comply.

34. The only realistic choice the D.H. had was to work as ordered despite the flagrant breaches of contract conditions Cl. 4(a), Cl. 5(b) and Cl. 6, or to return to her home country to pay back, as best she could, any fees incurred to secure employment in Hong Kong, in the near certainty that she would not be able to return to H.K. for another contract.

35. In reality the nature of a D.H. contract puts an employee in a weak, or negligible, bargaining position with the employer throughout the contract, despite the protections explicitly afforded by the standard contract. For that reason the case of Ying Cheong Shoe Mfy. v. Yam Yuk Bing & anor (supra) is not really relevant, however useful the principles discussed there may be. The employees in that case were piece rate workers - their only tie with their employer was with the offering of and payment for work. The employees could, and did, withhold their labour when they realised their employer was deliberately cutting their work and thus their living wage.

36. A D.H. is not in a comparable position, being dependent on the employer not only for salary, but also for shelter, food and medicine; the employer is backed by the very tight control of the Director of Immigration and underpinned by the rapacity of employment agencies who extract money from generally ignorant applicants who do not know there is no legal need for an agency, or that the SAR government does not favour the use of such agencies.

37. The norm connotes an employer-employee relationship where one party contracts freely with another to exchange labour for wages with the parties being in an equal position throughout the period the relationship subsists. That is not the position with a D.H. contract where, as in the instant case, the employer had no intention of honouring it.

38. For example if a helper is not provided with proper accommodation, the remedies of the D.H. are limited. The Labour Department does not inspect what accommodation is provided and helpers often come directly from their home country so have no opportunity to check the accommodation before arriving to start work.

39. If accommodation is sub-standard the D.H. can, in theory, complain. In reality the D.H. is unlikely to do so, for fear of losing accommodation, promised wages and of being forced to leave Hong Kong. The employer can ignore any complaint knowing the D.H. is unlikely to risk losing the job. If the D.H. is indebted to an employment agency such debts can only be repaid if the job continues.

40. An employer who, as in the instant case, provides a mattress on the floor of a dining room used until all hours by family members as "adequate accommodation", is unlikely to brook complaints, and can always threaten immediate termination of the contract, secure in the knowledge that the DH has nowhere else to go and no money.

41. Similarly, the ordering of a DH to work in the employer's office, factory or restaurant, whether instead of, or as well as contractual domestic duties is not something the D.H. can easily resist, even if Cl. 4 of the contract is fully understood. The employer is unlikely to allow access to the police; often the employer holds the DH's travel documents - the employer can cut off money and food and forbid rest days. If the D.H. does manage to leave she risks an enforced return to the Philippines and, as in this case, a conviction for breaching a condition of stay, which may block immediate or future re-employment.

42. On what is referred to as the "normal measure of damages" the D.H. is never compensated for real losses as the employer pays the bare contractual penalties, which are rarely paid without the D.H. having to resort to the L.T. Even if a complaint succeeds, or the contract is resolved without difficulty, the D.H. is not permitted to remain in H.K. longer than 2 weeks to find re-employment. If unsuccessful and/or if civil or criminal cases are pending, the D.H. can remain in H.K. only with special permission of the Director of Immigration. During that time the D.H. cannot work legally and is ineligible for government benefits. The D.H. must rely on friends, charities, church groups and workers associations for living expenses and shelter. Any agency debts continue to incur interest and family and dependents in the home country are deprived of support.

43. Because this contract was entered into by the employer mala fides from its inception I am of the view that the "normal" range of damages does not apply but that damages should be assessed in such a way that they put the D.H. in the position she would have been if the contract had been performed.

44. Those damages would include inter alia payment on a quantum meruit basis for services actually performed i.e. the domestic duties and the restaurant duties. They could include employment agency fees incurred in the Philippines and/or Hong Kong in relation to this particular contract and expenses incidental to the contract - subject to the usual proofs.

45. Further, a claim for contractual wages during some or all of the time that the D.H. was obliged to remain in H.K. to pursue the claim against the employer and was unable to work, would not be unreasonable; although such would be reduced by the period of any delay attributable to the inactivity of the D.H. in pursuing the claim. Similarly medical and dental expenses of the nature contemplated by the contract could be claimed as well as legal expenses not covered by legal aid, if such had been incurred.

46. Accordingly I allow the appeal set aside the award and remit this case to the Labour Tribunal for damages to be re-assessed on common law principles. The A. should file and serve a revised claim within 21 days from the date of this decision.