STEGEMANN R A v. 香港中文大學

HCLA 36/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 36 OF 2002

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO. LBTC 765/2002)

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J U D G M E N T

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1. This is an application by the Claimant for leave to appeal against an order made by the Labour Tribunal on 25 April 2002 dismissing his claim against the Defendant.

2. By a letter of appointment dated 29 April 2000 and countersigned by the Claimant on 11 May 2000, the Claimant was retained by the Defendant university as an instructor "for the period from 1 August, 2000 to 31 July, 2001". It was specifically provided as follows:

"Your employment at the University under this contract shall commence from the date you assume duty in Hong Kong, to be certified by the Chairman, Department of Economics, and shall cease on 31 July, 2001 upon the expiry of this stipulated contract period, or earlier in accordance with subparagraph 1(a) above, unless terminated by either party under provision in subparagraph 1(i) below, or extended or renewed subject to mutual agreement. You are required to assume duty on 1 August, 2000 or as soon as possible thereafter but not later than 16 August, 2000."

3. The Claimant was asked to leave the University upon the expiry of the one-year contract period.

4. However the Claimant claimed before the Labour Tribunal that apart from the terms set out in the letter of appointment, there was a collateral contract concluded between him and the University to the effect that upon the expiry of his one-year term, his contract of employment would be renewed as a matter of right if two conditions were satisfied, namely satisfactory performance and availability of funds.

5. He therefore sued the University in the Labour Tribunal for breach of the promise to renew his contract under this collateral contract and claimed damages for various items of loss and damage.

6. In support of his case, the Claimant relied on the correspondence between him and a representative of the University comprising essentially e-mails passing between the two. In particular, the Claimant relied on what was written to him on behalf of the University on 30 March 2000 as follows:

"Presently we can only offer you a one year contract. We wish to have a native English speaker in our Department in the long run, but the budget situation is not certain. Presently, all our Instructors are on one-year contracts, though most of them have worked for us for two or more years (we extend their contracts year by year). By the way, in the event that your contract is extended for another year, you are entitled to a gratuity (a lump sum equal to 15% of salary paid to you in the second year) if you finish the extended contract. But contract extension is not automatic (it depends on your performance in the first year), and it is also subject to availability of funds."

7. The Tribunal tried as a preliminary point whether there was in existence the alleged collateral contract between the parties. In the event, the Tribunal concluded that there was no such collateral contract; and it therefore dismissed the claim of the Claimant, without considering whether the alleged conditions for renewing the Claimant's contract as per the alleged collateral contract had been satisfied or not, and without considering either the various items of loss and damage claimed by the Claimant against the Defendant.

8. In this application, my function is to consider whether the Claimant has an arguable ground of appeal on law.

9. Prior to this hearing, the Claimant had submitted to the Court various new material and evidence in support of his claim. This was misconceived because according to section 35(2)(b)(ii) of the Labour Tribunal Ordinance (Cap. 25), on an appeal for which the Court has granted leave, the Court may not receive further evidence. A fortiori, in this application for leave to appeal, this Court cannot receive any further evidence in considering whether the Claimant has an arguable ground of appeal.

10. In my judgment, the case turns on the proper construction of the correspondence between the parties, there being no suggestion that the alleged collateral contract between the parties was concluded orally.

11. Moreover, the test is an objective one; in other words, the task of the Court is to look at the correspondence objectively to determine whether the alleged collateral contract has been concluded.

12. The first thing I note is that the contents of the alleged collateral contract did not sit well with the letter of appointment which no doubt constituted the contract of employment between the parties. The letter of appointment specifically referred to the term of employment as being one year; it mentioned about the possibility of a renewal of contract "subject to mutual agreement".

13. It is trite law that no extraneous material can be admitted in a court of law to add to, vary or contradict the terms of a written contract. This, by itself, creates a difficult hurdle for the Claimant to overcome in his present claim of an alleged collateral contract.

14. Even assuming that the Claimant could get round this rule of law (i.e. the parol evidence rule) or fit his case into one of the established exceptions to the rule (and of course, a collateral contract is such an exception), one would still need to look at the correspondence to see whether there was made a collateral contract.

15. Having looked at the correspondence as a whole as well as the various passages relied on by the Claimant including the passage extracted above, I am of the firm view that the parties never reached any firm or definite agreement or made any collateral contract relating to the renewal of the Claimant's contract of employment. In my judgment, nothing contractually binding was intended when the parties mentioned about the general situation under which a contract of employment might be renewed or extended by the University. In my judgment, what was written was merely descriptive in nature of what happened generally or normally, and was never intended to be legally binding, or to be exhaustive in terms of describing the situations or conditions under which the University would agree to renew an employee's contract of employment. As the letter of appointment expressly said, renewal of contract was "subject to mutual agreement".

16. It was plain during the hearing of this application that the Claimant was labouring under the misconception that if a party said something vague during negotiations, it was incumbent upon him to clarify the matter if he did not intend it to constitute a legally binding obligation on his part, even though the written contract eventually signed by the parties did not cover it. The Claimant said this was his experience in Japan where he had worked for 9 years prior to coming to Hong Kong, and where people (allegedly) like to leave things of this sort vague. I am afraid so far as this jurisdiction is concerned where the law is primarily based on English common law, that is not the correct approach. The Claimant came to the Labour Tribunal asserting the existence of a collateral contract, he pointed to passages here and there in the correspondence in support of his case, but unfortunately those passages were ambiguous and equivocal. In those circumstances, the Claimant's assertion of the existence of a collateral contract must fail.

17. During submission, the Claimant also referred to the different cultures involved in the present case, given that this was a contract concluded between him, a Westerner, who had however been working in Japan at the material time for a substantial period of time, and a university in Hong Kong. In my judgment, that notwithstanding, the test of whether a collateral contract has been concluded by the parties remains an objective one and the applicable law remains that of this jurisdiction. As I said, looking at the matter objectively, I have no doubt that no such collateral contract has been concluded between the parties.

18. The Claimant also emphasized to me the huge expenses he had incurred in moving from Japan to Hong Kong following his appointment to his post with the University here, and said that that illustrated his genuine belief or feeling that he had been promised a renewal based on the two named criteria. That may well have been the case; but the Claimant's genuine belief or feeling, however, is not in issue. What matters is whether objectively there has been concluded a collateral contract between the two parties.

19. There were also some complaints of a minor and procedural nature relating to the proceedings in the Tribunal below such as delay, the use of an interpreter, the standard of English and the apparent frustration experienced by the Claimant in obtaining a copy of the reasons for decision. No substantive prejudice, however, was caused to the Claimant. I believe at the end of the hearing before me, the Claimant agreed with me that none of this would provide him with an arguable ground of appeal; and everything would turn on whether he could show a meritorious case based on a collateral contract.

20. In the circumstances, I am of the view that there is no arguable ground of appeal, and the Tribunal has come to the correct conclusion. I dismiss the application for leave to appeal, and I make no order as to costs.