CHEUNG SIU-NGON AND ANOTHER v. EDGE DESIGN COMMUNICATION LTD

DCCJ 19251/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 19251 OF 2001

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JUDGMENT

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HISTORY

1. This case originated from a claim made by the 1st and 2nd Plaintiffs against the Defendant at the Labour Tribunal under Action No.LBTC 4907/2001 in which the 1st and 2nd Plaintiffs claimed against the Defendant for, inter alia, payment in lieu of notice, outstanding salaries, outstanding leave payment and severance payment etc. At the Labour Tribunal the Defendant filed a Defence denying the Plaintiffs' claim, alleging wrongful termination of employment contract on the part of the 1st and 2nd Plaintiffs, misconduct on the part of the 1st and 2nd Plaintiffs justifying summarily dismissal etc and counterclaiming for a sum of over HK$2 million.

2. By an Order made by Presiding Officer Mr Jack Wong on 11th October 2001 this case was transferred to the District Court.

3. On 18th March 2002, a Statement of Claim was filed by the 1st and 2nd Plaintiffs claiming against the Defendant for wrongful termination of their employment on 7th May 2001 in which

(i) the 1st Plaintiff claims against the Defendant for:

(a) payment in lieu of notice in the sum of HK$15,000.00,

(b) arrears of salary in the sum of HK$3,387.00,

(c) outstanding annual leave in the sum of HK$5,000.00,

(d) pro-rata end-of-year payment in the sum of HK$5,291.10; and

(ii) the 2nd Plaintiff claims for:-

(a) payment in lieu of notice in the sum of HK$13,860.00,

(b) arrears of salary in the sum of HK$3,129.60,

(c) outstanding annual leave payment in the sum of HK$14,784.00,

(d) pro-rata end-of-year payment in the sum of HK$4,822.50,

(e) severance payment in the sum of HK$34,200.60, and

(f) a sum of HK$2,780.00 being reimbursement of the cost of a computer driver.

4. On 16th April 2002 the Defendant filed a Defence and Counterclaim denying the Plaintiffs' claim alleging that the 1st and 2nd Plaintiffs terminated their own employment without serving notice on the Defendant and that the Plaintiffs were guilty of various misconduct justifying their dismissal without notice under Section 9 of the Employment Ordinance (Cap.57) ("the Ordinance"). The Defendant also counterclaimed for damages as a result of the 1st and 2nd Plaintiffs' alleged breach(es) and conversion of the Defendant's properties.

5. At the trial the 1st and 2nd Plaintiffs were represented by Mr Lee J. Burney and the Defendant was represented by Counsel Mr Stirling.

6. The 1st and 2nd Plaintiffs gave evidence for the Plaintiffs' case. The Defendant's Ms Sandra Au Ngan-ling ("Au"), Mr Ng Wai Tong ("Ng") and Mr Howard Pan Ze-hao ("Pan") gave evidence for the Defendant.

BACKGROUND

7. The 1st Plaintiff studied graphic design and had worked as a graphic designer since 1990. The 1st Plaintiff has known the 2nd Plaintiff since 1997. He was introduced by the 2nd Plaintiff to work for the Defendant and was employed by the Defendant since 1st May 2000 as a designer.

8. It is not in dispute that the terms of the employment contract between the 1st Plaintiff and the Defendant contained, inter alia, the following express terms:

(i) the 1st Plaintiff would be paid a monthly salary of HK$15,000.00;

(ii) the 1st Plaintiff would be entitled to an end-of-year payment equivalent to 1 month's salary; and

(iii) the 1st Plaintiff would be entitled to 10 days annual leave per year.

9. The 2nd Plaintiff also studied graphic design. She worked as a graphic designer with Edge Design Communication ("Edge Design") in August 1997. Edge Design was restructured to become the Defendant in or about April 2000 and starting from 1st May 2000 the 2nd Plaintiff was employed by the Defendant. Since 1st May 2000 after the 1st Plaintiff joined the Defendant as a designer, the 2nd Plaintiff became mainly responsible for dealing with customers and administration. The 2nd Plaintiff was employed by Edge Design on 25th August 1997 and is deemed to have been employed by the Defendant from that date until 8th May 2001.

10. It is also not in dispute that the terms of the employment contract between the 2nd Plaintiff and the Defendant contained, inter alia, the following express terms:-

(i) the 2nd Plaintiff would be paid a monthly salary (which at the time of the termination was HK$13,860.00);

(ii) the 2nd Plaintiff would be entitled to an end-of-year payment equivalent to 1 month's salary;

(iii) the 2nd Plaintiff would be entitled to 10 days annual leave per year; and

(iv) the 2nd Plaintiff would be reimbursed for all expenses incurred by the 2nd Plaintiff in the course of her employment.

11. The contract of employment of the 1st and 2nd Plaintiffs contained no stipulation as to notice of termination and the 1st and 2nd Plaintiffs were accordingly entitled to 1 month's notice pursuant to Section 6 of the Ordinance or alternatively to receive 1 month's salary in lieu of notice pursuant to Section 7 of the Ordinance.

12. The employment of the 1st and 2nd Plaintiffs were terminated on 7th May 2001.

13. The Defendant is a limited company and was incorporated in Hong Kong in May 2000. It carried out design business. It was the successor of Edge Design, which commenced business in June 1991.

14. Au and her husband are directors of the Defendant. They have been residing in Canada since 1995. The Defendant was managed by the 2nd Plaintiff with the assistance of the 1st Plaintiff who were effectively the only employees of the Defendant in Hong Kong. The 2nd Plaintiff was required to report regularly to Au and by fax or e-mail submit various documents, vouchers, accounts, bank statements etc to her in Canada. In terms of management of the Defendant's finance, Au's friend, Pan was entrusted by Au to check the company vouchers and sign cheques for the Defendant from time to time.

15. The business of the Defendant was not doing too well since early 2001. Au informed the 2nd Plaintiff over the phone that she was going to reorganize the company and was negotiating a merger with another company. She invited the 2nd Plaintiff to consider purchasing the company together with the 1st Plaintiff. Au says this conversation took place in March - early April whereas the 2nd Plaintiff says it was late April - early May but I do not think the exact date matters. The 1st and 2nd Plaintiffs decided not to purchase the company. The proposed merger also fell through.

16. Au then decided to continue the business of the Defendant but due to the poor financial position of the Defendant she decided that the Defendant could no longer keep the 1st Plaintiff. During a telephone conversation on 5th May 2001, she informed the 1st Plaintiff that his employment would be terminated. There is dispute between the 1st Plaintiff and Au over the contents of this telephone conversation as to whether Au informed the 1st Plaintiff that his employment would be terminated immediately with effect on 7th May 2001 or whether he was informed that one month's notice would be given to him. Following this telephone conversation, the 1st Plaintiff packed up and left the Defendant company and did not return to work ever since.

17. There was then a telephone conversation between Au and Ng on 6th May 2001. Ng has known Au for more than 10 years and had been working at Edge Design till April 2000 when it was restructured to become the Defendant. Hence he has knowledge of the business operation of the Defendant. During this telephone conversation Au asked Ng to help deliver a notice of termination to the 1st Plaintiff.

18. After the above telephone conversation, there was another telephone conversation between the 2nd Plaintiff and Au on 7th May 2001. The 2nd Plaintiff said that in this telephone conversation Au told her to hand over all company records and office keys to Pan and she understood that to mean that she was dismissed. Au however said that she only asked the 2nd Plaintiff to be released from her accounting duties. The 2nd Plaintiff was asked to remain with the Defendant company as a designer but the 2nd Plaintiff replied saying that she would not wish to stay with the Defendant and said that she would return the office keys to Pan.

19. On 7th May 2001 Ng telephoned the 2nd Plaintiff to try and make an appointment to visit the Defendant's office. The appointment was originally fixed in the afternoon on 7th May 2001 but this was later postponed to 8th May 2001 at the request of the 2nd Plaintiff.

20. Ng and Pan went to the Defendant's office and meet the 2nd Plaintiff in the afternoon on 8th May 2001. The 1st Plaintiff was not there. The notice of termination could not be served on the 1st Plaintiff. Ng went to inspect the computer record and discovered some files were missing. The 2nd Plaintiff returned all company records and receipts together with office keys to Pan. Pan signed a letter acknowledging receipt of the keys and acknowledging that all the interior installation and office equipment at the Defendant's office were in good status. The 2nd Plaintiff then left the Defendant company and did not return ever since.

21. Subsequently Ng reported to Au about the missing files. Ng also chased the 2nd Plaintiff inquiring whether the 1st Plaintiff knows of the missing file but to no avail. On Au's instructions Ng made a report to the police on 12th May 2001 about the missing files. On 14th May 2001 the 1st and 2nd Plaintiffs filed their claims against the Defendant with the Labour Tribunal. On 15th May 2001 the Defendant instructed solicitors to write to both the 1st and 2nd Plaintiffs regarding the missing files. The police concluded the investigation on 16th June 2001 that there was insufficient evidence to support any prosecution on the Defendant's complaint.

TERMINATION OF THE EMPLOYMENT OF THE 1ST PLAINTIFF

22. To decide on the question of how the 1st Plaintiff's employment was terminated, it is necessary to consider what was discussed over the telephone conversation between the 1st Plaintiff and Au on 5th May 2001.

23. On 5th May 2001 there was a telephone conversation between Au and the 2nd Plaintiff when Au told the 2nd Plaintiff that the Defendant would terminate the employment of the 1st Plaintiff. The 2nd Plaintiff then handed the phone to the 1st Plaintiff to speak with Au direct. It is the 1st Plaintiff's evidence that during this telephone conversation Au told him that his employment would be terminated with effect on 7th May 2001. He then asked Au about payment of his salary and statutory entitlements and Au assured him that he would be paid his entitlements. Au's evidence however is that during this telephone conversation she told the 1st Plaintiff that his employment would be terminated and that a letter of termination with one month's notice would be delivered to him on 7th May 2001. The issue here is whether Au had given one month's notice to terminate the 1st Plaintiff's employment as required under Section 6 of the Ordinance. Under this section, Au is required to give one month's notice, either orally or in writing, to the 1st Plaintiff of her intention to terminate his employment. The 1st Plaintiff's case is that he was not given this one month's notice for he was told over the phone that his employment would be terminated with effect on 7th May 2001. The Defendant's case however is that over the phone she told the 1st Plaintiff that his employment would be terminated with one month's notice and that the written notice would be delivered to him on 7th May 2001.

24. The written notice that Au asked her friends Ng and Pan to deliver to the 1st Plaintiff appeared in P.22 of the Trial Bundle. As the contents of this notice are important, I set out below its contents, which read as follows:-

"To: Cheung Siu Ngon

Date: May 7, 2001

Re: Termination of Employment

This is to inform you that your service with the company will no longer be required.

This letter serves as an one month notice. However, 11 days of annual leave for year 2000 and 2001 (10 days for May 1, 2000 to April 30, 2001 and 1 day for May 1 to June 6, 2001) will be deducted. Therefore your last day of employment will be May 22, 2001.

Yours sincerely,

Sandra Au

Director"

25. At the right hand lower corner of the notice there were manuscript notes which read:-

"prepared for termination but no show out until 7th or 8th (illegible) May 2001

Pan Ze Hao Howard

92269889"

26. Pan confirmed that the manuscript notes were his handwriting but as to the reason why he wrote this down he could not recall. He said that he might have written that down to remind himself that he did try to serve this notice on the 1st Plaintiff on 7th May 2001 but unsuccessful.

27. In any event, the notice was never served on the 1st Plaintiff on 7th May 2001 or on any date thereafter. Pan and Ng said that because the 1st Plaintiff was not at the office when they visited the office. They did not however attempt to have it served on the 1st Plaintiff in any other manner e.g. by post or through the 2nd Plaintiff. The Defendant's case is that they did not have the 1st Plaintiff's address for service. I must say I find this explanation difficult to accept. This is because subsequently on 15th May 2001, when the Defendant instructed its solicitors, Messrs Massie & Clement to write to the 1st Plaintiff they had no difficulty writing to the 1st Plaintiff at his address at 1406 Lee Ga Building, Siu Wan Ho Street, Hong Kong. This goes to show whether the Defendant was in fact serious about serving the purported one month notice on the 1st Plaintiff at the time.

28. In any event looking at the contents of the notice this could not amount to proper notice pursuant to Section 6 of the Ordinance. This is because in the notice the Defendant purported to deduct annual leave from the notice period. This is not allowed under Section 6(2A) of the Ordinance. In other words, even had the notice been served on the 1st Plaintiff on the day it would not have constituted proper notice for the purpose of compliance with Section 6 of the Ordinance.

29. In addition, according to Ng's evidence, he recalled during a telephone conversation with Au on 6th May 2001 he was told by Au that she had a dispute with the 1st Plaintiff, she was very angry and she wanted to sack the 1st Plaintiff. This piece of evidence shows that there must have been some kind of dispute between Au and the 1st Plaintiff during their telephone conversation on 5th May 2001 resulting Au's decision to terminate the 1st Plaintiff's employment. If that was the case it would not have been probable for Au, when she was at that state of anger, to have told the 1st Plaintiff that his employment would be terminated with one month's notice to be served on him on 7th May 2001. It would have been more probable that she had told the 1st Plaintiff that he was to be dismissed forthwith.

30. Based on the above, I find that it is more probable for Au to have told the 1st Plaintiff on 5th May 2001 that his employment would be terminated with effect on 7th May 2001 without giving the requisite one month's notice.

TERMINATION OF THE EMPLOYMENT OF THE 2ND PLAINTIFF

31. To decide on the question of the termination of the 2nd Plaintiff's employment, it is necessary to consider what were discussed over the telephone conversations on 6th and 7th May 2001.

TELEPHONE CONVERSATION ON 6TH MAY 2001

32. On 6th May 2001 there was a telephone conversation between Au and Ng when Au asked Ng to deliver the notice to the 1st Plaintiff to terminate his employment. With regard to the contents of this telephone conversation there is some confusion as to what exactly had Au told Ng to do. Au said in her evidence that she had only told Ng to deliver the notice to the 1st Plaintiff but not to check computer record and collect keys. In Ng's evidence he said that so far as he recalled he was told also to collect keys from the 1st Plaintiff. Au said that it was only at a subsequent telephone conversation on 7th May 2001 that she told Ng to go to collect keys from the 1st and 2nd Plaintiffs and that was because that was after she spoke to the 2nd Plaintiff on a separate telephone conversation on 7th May 2001 when the 2nd Plaintiff told Au that she would no longer stay in the employ of the Defendant then she called Ng again and asked him to go to collect the keys from the Plaintiffs as well. I find that Au's version of events are more probable because in cross-examination Ng at times was not entirely sure as to the timing of the occurrence of certain events. In addition, I do not think it probable that Au would have instructed him to collect the keys on 6th May 2001 when the question of handover of the Defendant's office was only raised in the telephone conversation between Au and the 2nd Plaintiff on 7th May 2001. See my reasons set out in paragraph 34 to 36 below.

TELEPHONE CONVERSATION ON 7TH MAY 2001

33. There is an important telephone conversation between the 2nd Plaintiff and Au on 7th May 2001. The 2nd Plaintiff says that during this telephone conversation she was told by Au to hand over the company records and office keys to Pan. The 2nd Plaintiff accepted that Au never said to her that she was dismissed but by asking her to hand over company records and office keys to Pan she understood that to mean that she was dismissed. Au said that she did not ask the 2nd Plaintiff to hand over the keys to Pan during this telephone conversation. She only asked her to hand over her accounting duties to Pan hence handing over the company records to him but the 2nd Plaintiff was to remain employed as a designer. Au said that it was the 2nd Plaintiff who said to her over the phone that she would not like to stay with the Defendant any more and said she would return the office keys to Pan and then hung up. Au further said in cross-examination that during this telephone conversation the 2nd Plaintiff said that she would only stay if the 1st Plaintiff is not dismissed.

34. The 2nd Plaintiff admitted in her evidence that she had never been told by Au on 7th May 2001 at the telephone conversation, or any time thereafter, that she was dismissed. She said that by Au asking her to hand over the keys she understood that to mean that she was dismissed. The question that I have to decide is whether it was Au who asked the 2nd Plaintiff to hand over keys to Pan or whether it was the 2nd Plaintiff who initiated it. In my judgment it is more probable that it was the 2nd Plaintiff who offered to hand over the keys to Pan i.e. to resign rather than Au telling her to hand over the keys to Pan. This is because the 2nd Plaintiff had known the 1st Plaintiff since 1997 and it was her who introduced the 1st Plaintiff to work for the Defendant as a designer. Because of the financial situation of the Defendant the 1st Plaintiff had to be dismissed. The 2nd Plaintiff was to be released with her accounting duties whilst remain to be a designer i.e. taking up the 1st Plaintiff's role. As the 1st Plaintiff's friend and colleague she obviously would be embarrassed with such change. It is therefore probable that because of this she told Au over the phone that she would only stay if the 1st Plaintiff stays, and if the 1st Plaintiff does not stay she would also leave.

35. In addition, I do not think it likely that Au would dismiss the 1st and 2nd Plaintiffs at the same time knowing full well that both of them were the only staff of the company at the time. This is particularly the case when the 2nd Plaintiff knows the operation of the Defendant well, having been there working since May 2000 and before that with Edge Design, the Defendant's predecessor for 3 years. It would not make any commercial sense for Au to dismiss the 2nd Plaintiff at the same time when she had dismissed the 1st Plaintiff. I accept that it is highly probable for Au to have asked the 2nd Plaintiff to be released with her accounting duties for the 2nd Plaintiff was not professionally trained to deal with accounting matters and in fact in the 2nd Plaintiff's evidence it is clear that she does not really know much about accounting. It would make more sense for Au to try and retain the 2nd Plaintiff as a designer, after dismissing the 1st Plaintiff, till the final wind down of the Defendant's business, as she would obviously need someone who knows the company well to help out, in particular to take over the 1st Plaintiff's work and run the office. Although Pan and Ng are good friends of Au, Ng had left the Defendant business for over 2 years and Pan only assumes a supervisory role. It would not be feasible to leave the whole business operation of the Defendant to Ng and Pan and/or to employ new people to join the Defendant at that time.

36. It is therefore my finding that during the telephone conversation on 7th May 2001 it was the 2nd Plaintiff who offered to resign by offering to hand over the keys back to Pan because of Au's decision to dismiss the 1st Plaintiff and to release her accounting duties and requiring her to take over the 1st Plaintiff's job as a designer. Her offer to resign was accepted by the Defendant through Au's conduct in Au's instructing Pan to collect the keys from her. In addition, in the Defendant's subsequent solicitors letter to the 2nd Plaintiff on 15th May 2001 there was also no mention or complaint against the 2nd Plaintiff on her wrongful terminating her employment. There is therefore no question of the 2nd Plaintiff being liable for wrongful termination of her own employment because she had in fact resigned and that was accepted by Au. I therefore find that there was in fact a resignation on the part of the 2nd Plaintiff from her employment on 7th May 2001 which resignation was accepted by Au.

37. The 2nd Plaintiff says that there was a telephone conversation with Au on 10th May 2001 when Au agreed to pay her compensation. Au denies that there was such a telephone conversation. The 2nd Plaintiff said that at that telephone conversation there was however no discussion of amount of payment that the Defendant would pay to her. She said that there was nothing further discussed during that telephone conversation. Given the fact that the 2nd Plaintiff had unexpectedly resigned, the discovery of missing files on 8th May 2001, plus the fact that Au had already contacted her clients on 9th May 2001 discovering that there were outstanding jobs it would not have been possible for Au not to raise all these issues with the 2nd Plaintiff if there was a telephone conversation between them on 10th May 2001. Accordingly, it is my finding that there was in fact no such telephone conversation between the 2nd Plaintiff and Au on 10th May 2001.

COST OF THE COMPUTER DRIVER

38. I now turn to the 2nd Plaintiff's claim for the sum of HK$2,780.00 being reimbursement of the cost of the computer driver which the 2nd Plaintiff claims that she purchased on behalf of the Defendant. The 2nd Plaintiff says that she purchased this computer in April 2000. The 2nd Plaintiff however admits that when she bought this computer she did not inform the Defendant nor has she first obtained the Defendant's approval on this purchase. There is no evidence to show the source of funds used to purchase this computer, nor that the Defendant had approved her buying the computer or that it was purchased in the course of her employment. The 2nd Plaintiff has always been using this computer since and still retains it. By reason thereof I would dismiss the 2nd Plaintiff's claim for reimbursement for this computer driver.

MISCONDUCT ON THE PART OF THE 1ST AND 2ND PLAINTIFFS AS PLEADED IN PARAGRAPH 5 OF THE DFENCE

39. To constitute "misconduct" for the purpose of Section 9 of the Ordinance as pleaded in the Defence the law requires that such misconduct must be ".... such a manner as to be inconsistent with the due and faithful discharge of an employee's duties....." and that "The question is whether the misconduct was sufficiently grave to amount to a repudiation by the employee of the contract of employment, either as to the whole contract or as to a particular part of it of fundamental importance. This is a question of fact in any particular case depending on the circumstances of the case, the nature of the employment and, possibly, the terms of the particular contract in question." See P.446 of Halsbury Laws of Hong Kong Volume 10(2) 2001 Reissue.

MISCONDUCT ON THE PART OF THE 2ND PLAINTIFF

40. I now turn to the Defendant's allegation in paragraph 5(i) of the Defence that the 2nd Plaintiff had misconducted herself in that over a telephone conversation she told Au that there were no client jobs outstanding when in fact there were ongoing assignments for design work for Bank of America and AIA. The Defendant says that this misconduct justify dismissing the 2nd Plaintiff without notice under Section 9 of the Ordinance. Given that I have already found that the 2nd Plaintiff in fact resigned the question of whether this would enable the Defendant to dismiss the 2nd Plaintiff without notice is irrelevant. Nevertheless I still need to consider this as the Defendant claims damages in their counterclaim against the Plaintiffs arising out of this, which the Defendant says is a breach of the employee's duty on the part of 2nd Plaintiff.

41. Au says that during the telephone conversation on 7th May 2001 after she was told by the 2nd Plaintiff that the 2nd Plaintiff would resign she asked the 2nd Plaintiff whether there were any jobs outstanding. The 2nd Plaintiff said that there was none and that all jobs were already finished. Then Au specifically asked the 2nd Plaintiff about the progress of work undertaken for Bank of America and AIA. Au said that the 2nd Plaintiff said that the work for these 2 clients were already finished. Ng also said that this was what the 2nd Plaintiff told him on 7th May 2001 when he asked her whether there was any outstanding work. Au said that this was in fact not true for she subsequently contacted Bank of America and AIA on 9th May 2001 she discovered that there were outstanding work. The 2nd Plaintiff denies that she ever told Au over the telephone conversation on 7th May 2001 that there were no outstanding jobs. It is the 2nd Plaintiff's evidence that she did tell Au over the phone that there were outstanding jobs and that Au all along knew about this because the 2nd Plaintiff had regularly reported status of work to Au. Given the 2nd Plaintiff's state of mind at the time of the telephone conversation (see paragraph 34 above) I think it is probable that she might have told Au over the phone that all jobs were finished because she was frustrated and embarrassed with Au's decision at the time. However, I do not think such amounted to misconduct in the context as that set out in paragraph 39 above for there is evidence to suggest that Au all along knew of the outstanding work and she had no difficulty after the telephone conversation with the 2nd Plaintiff to check with the clients to find out that there was outstanding work pending. The evidence shows that Au already suspected that what the 2nd Plaintiff told her over the phone on 7th May 2001 that there was no outstanding work might not be correct. At that point in time she already specifically asked about AIA and Bank of America hence she must have suspicion that there were ongoing jobs at the time. Further, she was able to contact the client in 2 days' time to confirm the status of work that was outstanding plus the fact that Bank of America had always been a longstanding client of the Defendant since 1996 and AIA was introduced to the Defendant through a good friend of Au she should have no difficulty at all to check on the status of work. Hence, even if the 2nd Plaintiff had told her that there was no outstanding job at the time given the evidence I find that Au did not actually believe what the 2nd Plaintiff had said. I accordingly find that the Defendant's claim on the 2nd Plaintiff's misconduct is not substantiated. In any event, even if what the 2nd Plaintiff had done amounted to misconduct such did not give rise to any losses suffered by the Defendant because of the reasons set out above.

MISCONDUCT ON THE PART OF THE 1ST AND 2ND PLAINTIFFS

42. The Defendant also claims in paragraph 5(ii) of the Defence that the 1st and 2nd Plaintiffs downloaded and/or copied and/or deleted all clients' files concerning the work for Bank of America and AIA from the Defendant's computer. The Defendant claimed that by reason of this the 1st and 2nd Plaintiffs had converted the Defendant's property. The only evidence that the Defendant has is the evidence of Ng. He said that when he went to the Defendant's office on 8th May 2001 he went to inspect the 1st Plaintiff's computer he did not see any record of files in the computer for the past 6 months. He therefore assumed that the 1st and/or 2nd Plaintiffs must have deleted those files and taken those files away from the Defendant's computer. Both the 1st and 2nd Plaintiffs deny this. The 1st Plaintiff said all the files were there in the computer and it may well be the case that Ng did not know how to retrieve them. The case was reported to the police and the police had commenced investigation but concluded that there is no evidence to substantiate any charges. In fact, the evidence is that after the discovery of the alleged missing files no steps had ever been taken by the Defendant to check so as to ascertain whether any files had been deleted from the record. Au accepted in her evidence that she only relied on Ng's report to her that there were missing files. The evidence is that at the time when Ng and Pan were called upon by Au to go to take over from the 1st and 2nd Plaintiffs this was done on quite an urgent and haphazard manner. Both Pan and Ng did not really have any knowledge on the update work progress of the Defendant company at the time and when Ng went to check the computers he did not really have anything in mind to look for. Ng's evidence only shows that when he visited the Defendant's office and inspected the 1st Plaintiff's computer he did not see any files recorded in that computer for 6 months prior to that date. There is no evidence to show that there had in fact been files recorded in that computer nor is there evidence to show that files had been downloaded by the 1st and/or 2nd Plaintiffs or had been deleted therefrom. The evidence also shows that the handover that took place on 8th May 2001 was carried out on a rather haphazard manner i.e. that whilst Ng might have discovered something appeared missing from the computer record Pan nevertheless signed and acknowledged that everything was in order to him during the handover. This shows that both Ng and Pan were in fact not too serious in attending to the handover. Based on the above, I find that this claim is also not substantiated. It therefore follows that the Defendant's conversion claim must fail.

43. The Defendant also claims in paragraph 5(iii) of the Defence that the 1st and 2nd Plaintiffs approached the Defendant's clients, Bank of America and AIA suggesting that they could take over the outstanding assignments and invited them to withdraw the assignments from the Defendant and transfer the work to the 1st and 2nd Plaintiffs. There is no direct evidence adduced by the Defendant to prove the above. The 1st and 2nd Plaintiffs accepted that after they left the employ of the Defendant they did contact Bank of America and AIA telling them that they were leaving but they did not ask for the outstanding assignment to be transferred to them. According to the 1st and 2nd Plaintiffs they contacted Bank of America only after the termination of their employment with the Defendant. They also accepted that they received work from Bank of America after they left the Defendant but did not get any work from AIA. These work was new work and that Bank of America did not transfer the outstanding assignment work to them. I cannot see how the above could amount to misconduct on the part of the 1st and 2nd Plaintiffs for when that happened they were no longer employees of the Defendant. This is particularly the case when there is no restrictive covenant in the employment contract of either the 1st and 2nd Plaintiffs prohibiting them from getting work from the Defendant's customers after they leave the Defendant's employ. I would therefore also dismiss the Defendant's claim on this.

44. Given my above findings the Defendant's counterclaim must fail. There is therefore no need for me to consider the Defendant's claim for damages as that set out in paragraph 11 of the Defence and Counterclaim, save that I have the following observations:-

(i) On the Defendant's claim that they had to employ outside worker to finish the outstanding assignment. Au said that the Defendant has to pay HK$60,000.00 to finish those unfinished work. Au said that the outside help is a friend of her but she did not produce any supporting documents or evidence at all to show that the Defendant in fact had paid this sum. This is simply no evidence to show this has been paid.

(ii) On the Defendant's claim for loss of business in the sum of HK$550,000. Again, no supporting evidence has ever been called to prove this. On the contrary it is Au's own evidence that the Defendant's business was a break-even business and there would have been no profits made any way. As such, there should never have been any claims on loss of profits allegedly suffered by the Defendant.

45. Given that I have found in favour of the 1st Plaintiff on wrongful termination of employment, I award judgment in favour of the 1st Plaintiff against the Defendant in the total sum of HK$28,678.10, which comprises of the following items:-

(i) Payment in lieu of notice

The 1st Plaintiff is entitled to a sum equal to 1 month's wages pursuant to Section 8A(1) of the Ordinance i.e. HK$15,000.00.

(ii) Arrears of salary

The 1st Plaintiff is entitled to be paid his outstanding wages for the period 1st May 2002 to 7th May 2002 pursuant to Section 25 of the Ordinance i.e. HK$3,387.00.

(iii) Outstanding annual leave pay

The fact that the 1st Plaintiff was due 10 days leave is not challenged. The 1st Plaintiff is therefore entitled to be paid upon cessation of his employment compensation equal in amount to the annual leave pay he would have received had the 10 days leave due to him been granted immediately after such cesser under Section 41D(1) of the Ordinance i.e. HK$5,000.00.

(iv) Pro-rata end-of-year payment

(a) Although the Defendant alleges that the end of year payment was discretionary. But under Section 11AA of the Ordinance, it provides that in the absence of express provision, an end of year payment is deemed to be contractual.

(b) Accordingly, the 1st Plaintiff is entitled to a proportion of the end of year payment upon termination of his employment pursuant to Section 11F(1) of the Ordinance, which is equal to HK$5,291.10.

46. In so far as the 2nd Plaintiff is concerned, given my findings that she had in fact resigned she would not be entitled to payment in lieu of notice and severance payment. She would still be entitled to be paid her arrears of salaries, outstanding annual leave pay as well as pro-rata end-of-year payment. I therefore award judgment in favour of the 2nd Plaintiff against the Defendant for the sum of HK$22,736.10, which comprises of the following items:-

(i) Arrears of salaries

The 2nd Plaintiff is entitled to be paid her outstanding wages for the period 1st May 2002 to 7th May 2002 pursuant to Section 25 of the Ordinance equal to HK$3,129.60.

(ii) Outstanding annual leave pay

The fact that the 2nd Plaintiff is due 32 days leave is not challenged. The 2nd Plaintiff is therefore entitled to be paid upon cessation of her employment compensation equal in amount to the annual leave pay she would have received had the 32 days leave due to her been granted immediately after such cesser under Section 41D(1) of the Ordinance. This equals to HK$14,784.00.

(iii) Pro-rata end-of-year payment

Based on the same reasons set out in paragraph 45(iv) above, the 2nd Plaintiff is entitled to a proportion of the end of year payment upon termination of her employment, which equals to HK$4,822.50.

47. Given my findings set out in paragraph 44 above, I also order that the Defendant's counterclaim be dismissed.

COSTS

48. Given that I have found in favour of the 1st Plaintiff I see no reason why the 1st Plaintiff should not get his costs. I would therefore make an Order Nisi that the Defendant do bear the 1st Plaintiff's costs of this action, to be taxed, if not agreed and that the 1st Plaintiff's own costs be taxed in accordance with the Legal Aid Regulations.

49. With regard to the 2nd Plaintiff's claim, although I find that the 2nd Plaintiff was not dismissed I have nevertheless awarded judgment in her favour in respect of her outstanding salaries, annual leave payment and pro-rata end-of-year payment all of which should have been paid by the Defendant. By reason thereof, I see no reason why the 2nd Plaintiff should not be awarded her costs of this action. I would therefore make an Order Nisi that the Defendant do bear the 2nd Plaintiff's costs of the action, to be taxed, if not agreed and that the 2nd Plaintiff's own cost be taxed in accordance with the Legal Aid Regulations.