HKSAR v. PENTA-OCEAN CONSTRUCTION CO LTD

HCMA945/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 945 OF 2007

(ON APPEAL FROM FLS 13855 OF 2006)

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J U D G M E N T

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1. This is an appeal by Penta-Ocean Construction Co. Ltd against a Deputy Magistrate’s decision to reject the appellant’s application for costs under section 3 of the Costs in Criminal Cases Ordinance, Cap. 492.  The appellant was summoned before the magistracy for breach of section 72B(1)(b) and section 63A of the Employment Ordinance, Cap. 57.  It was alleged that the appellant terminated the employment of one Mr Chan who appeared as PW1 at the trial, by reason of the fact that he had given information to a public officer in an inquiry made by the officer for the purposes of or in connection with the enforcement of the Employment Ordinance.

2. After a trial that lasted for some 14 days, the summons was dismissed.  The appellant applied for costs.  The Deputy Magistrate, having referred himself to the case of HKSAR v. Tong Cun Lin [1999] 2 HKCFAR 531, the leading authority in this area of the law, refused the application for the reason that the appellant had brought suspicion upon himself and had misled the prosecution to believe that there was a stronger case against the appellant.

3. The evidence for the prosecution at the time was that PW1 was employed by the appellant as Labour Relations Officer (“LRO”) from 23 January 2006.  The contract of employment specified that there was to be a probationary period of three months until 22 April 2006.  Under the terms of the contract PW1 was required to work at a construction site under an Architectural Services Department (“ASD”) project contract of which the appellant was the main contractor.  As LRO PW1’s duties included monitoring the wage payments and mandatory provident fund (“MPF”) contributions to the site personnel and handling their complaints on wage arrears.

4. On or about 19 April 2006, PW1 complained to the Labour Department on issues about late and non-payment of wages by the appellant and other sub-contractors at the site as a result of which a number of Labour Inspectors of the Labour Department conducted an inspection at the site on 24 and 25 April 2006.

5. On 2 May 2006, the appellant served a notice on PW1 to terminate his employment with immediate effect.  The letter of dismissal was superceded by a subsequent letter dated 3 May 2006 signed by the Senior Administration Manager of the appellant.  The contents of the two letters are identical except for the date of PW1’s last working date.  The contents of the 2^nd letter reads :

“According to the section 7 of the Employment Ordinance Chapter 57, we hereby give you one month payment in lieu of notice to terminate your employment from May 4, 2006.  Your last working date will be May 3, 2006.  The payment for the following will be settle in accordance to the Employment Ordinance.

1. Basic Salary from May 1, 2006 to May 3, 2006

2. Overtime Allowance from (sic) April 21, 2006 to May 3, 2006, if any

3. One month payment in lieu of notice

4. Pro-rata double pay and Pro-rata annual leave pay

….”

No reason of dismissal was stated in the letter.

6. There was a provision in the main building contract between ASD and the appellant as the contractor that :

“6(1)   The Contractor shall monitor the payment of wages and MPF contributions to all the Site Personnel and shall provide all necessary assistance in the handling of complaints on arrears of wages and MPF contributions raised by all the Site Personnel.

  (2)   …. The Contractor shall not terminate the service of the approved Labour Relations Officer without the agreement from the Architect.  The Labour Relations Officer shall be required to have the following minimum qualifications:

   …

  (4)   The Labour Relations Officer …. shall provide all necessary assistance to the Site Personnel to refer the complaint cases to the Labour Department and the MPF Authority if necessary and shall work in collaboration with the Labour Department and the MPF Authority to investigate and verify the validity of the complaints.”

The Architect referred to in clause 6(2) above was P&T Architects &Engineers Ltd, the project architect.

7. On the basis of complaints from PW1 regarding his dismissal, the appellant was charged for breaching section 72B(1)(b) of the Employment Ordinance and was summonsed before the magistracy.

8. A total of five prosecution witnesses were called.  At the end of the prosecution’s case at the trial, the Deputy Magistrate ruled that there was :

“barely a case to answer”.

The appellant elected not to give evidence and no defence witness was called.  The final addresses were concluded on 20 July 2007 and the Deputy Magistrate took time to consider his decision.

9. On 16 August 2007, the Deputy Magistrate gave detailed oral reasons for his decision at the end of which he found the appellant not guilty of the charge.  This was how the Deputy Magistrate approached PW1’s evidence :

“40.   Now, PW1 is the most crucial prosecution witness in the prosecution case.  If his evidence is credible, this will forcibly strengthen the case of the prosecution.  On the contrary, if his evidence is not accepted by the court, this will seriously undermine the prosecution case.”

10. Following a detailed analysis of the case the Deputy Magistrate concluded by passing the following highly critical remarks on PW1 :

“54.   …. The court cannot be satisfied that PW1 is a credible witness.

55. Equally, the court cannot be satisfied as to whether PW1 was telling the court the whole truth, nothing but the truth.  This casts a great doubt to his evidence, in particular to the part of evidence which he gave against the defendant, containing reasons of his dismissal, in particular to the part of evidence which he gave against Wilson Chu.  Therefore the court is satisfied that PW1, a crucial witness to this case, is not a credible witness and his evidence cannot be accepted by the court, despite the fact the other fours PWs – they are ruled to be credible witnesses.”

It is clear from the above passages that the Deputy Magistrate had rejected PW1’s evidence in its entirety.

11. Later in his oral reasons, the Deputy Magistrate commented on the conduct of the appellant in handling the dismissal of PW1.  He said :

“65.   …. So in a position as such, as a matter of fact the defendant could have given clear warning, could have given clear reasons of dismissal to the PW1 before PW1 was formally dismissed.  Therefore the court is not satisfied with the conduct of the defendant to the effect that the defendant has never made a good effort to inform PW1 of the real reason, the true reason of his dismissal.

66. In fact, the reason for dismissal is very, very weak.  There is no dispute that PW1 had actually made complaints to Labour Department.  There is no dispute that officers of Labour Department had visited the sites of the defendant on various occasions.  There is no dispute that Labour officers had informed Wilson Chu or representative of Penta-Ocean that suspected breaches under the labour law or Employment Ordinance had been found – suspected, breaches had been suspected.  This evidence could be found in PW2.

67. Therefore, to a certain extent, the court is satisfied that the defendant’s conduct has brought upon itself suspicion, misleading the prosecution into believing that they have a strong case against the defendant or misleading the prosecution into believing that they have a strong or stronger case against the defendant; ….”  (emphasis added)

12. It appears from the above passages that the Deputy Magistrate had taken a firm view that by not giving a prior warning to PW1 before his dismissal and by not informing the reason for his dismissal, the appellant had brought suspicion upon himself and had misled the prosecution into believing that they had a strong case against the appellant.  This finding preceded the appellant’s application for costs.

13. Subsequently, on 20 August 2007, the Deputy Magistrate heard submissions by the parties on costs.

14. In his Statement of Findings dated 29 August 2007 in respect of his refusal to award costs, the Deputy Magistrate took a very different approach to the issue of the need for the appellant to inform PW1 the reason of his dismissal.  The Deputy Magistrate had said previously in his oral reasons for the appellant’s acquittal that the appellant’s failure to give prior warnings and reasons for dismissal to PW1 had led him to conclude that the appellant had brought suspicion upon himself.  However, at paragraphs 26 and 27 of the Statement of Findings the Deputy Magistrate said :

“26.   Following submissions from the Prosecution and the Defence, I accepted that there was no requirement in law that an Employer must give a true reason for dismissal to an Employee and it was a practice for some Employer, depending on circumstances, not to give a true reason to Employee at the time of dismissal in order to avoid confrontation and / or to avoid litigation of wrongful dismissal against the Employer by the Employee.

27. …. It is not in dispute that PW 1 had not been giving any warning that his failure to obey lawful order would lead to his dismissal.  Defence Counsel submitted that in law, there was no requirement for the Employer to give such warning.  I accepted this after listening to his submission.  For the purpose of considering the costs application, I bear in mind that in law, the Appellant was not obliged to give a true reason of dismissal and not obliged to give warning before dismissal to PW 1.”  (emphasis added)

One might ask if there was no requirement in law on the appellant to give prior warnings or reasons to PW1, how then the appellant could have brought suspicion upon himself by choosing not to give them? 

15. At this appeal, Mr Downey appearing for the appellant advanced a total of six grounds of appeal.  Suffice it for me to say that Mr Downey’s contention is that there was no evidence for the Deputy Magistrate to come to the conclusion that the appellant had brought suspicion upon himself and also that that he had misled the prosecution into believing they had a stronger case against the appellant.

16. The entire prosecution case rests on the complaints of PW1 against one Wilson Chu, the Senior Project Architect of the Appellant.  PW1 alleged that Chu had threatened him not to report the problems of late payment of wages to the Labour Department, and after PW1 did report such incidents Chu was angry with what he did.  PW1 suggested in his oral testimony that this was the real reason behind his dismissal and the conduct of the appellant was therefore in contravention of the ordinance.

17. Once the Deputy Magistrate found that PW1 was not a credible witness, it would necessarily follow that there was no evidence to support the prosecution’s allegations against the appellant.  Such allegations being that PW1 believed he was dismissed because he had passed information to the Labour Department Inspectors on issues concerning wages and MPF contributions.  The Deputy Magistrate must have been correct in finding that the charge was not proved against the appellant when the basis of PW1’s allegation was called into doubt. 

18. On the issue of whether the appellant had led the prosecution into believing that they had a stronger case against the appellant, the answer must also be in the negative.  A passage in a letter dated 8 May 2006 from Wilson Chu to P&T might have given rise to the Deputy Magistrate’s comment against the appellant’s conduct.  The letter was a report by the appellant to P&T on the dismissal of PW1 and the need to replace PW1 with a new LRO.  The passage in the letter read :

“During the last few months, the appointed LRO has raised complaints to the Employer, the Architect and the Labour Department alleging that there are cases of irregularities on wages payment and MPF contributions. ….”

The Deputy Magistrate took the view that this could have been the true reason for the dismissal of PW1 and hence a contravention of section 72B(1)(b) of the Employment Ordinance.  

19. In the same letter the appellant was also critical of the conduct of PW1 in that he refused to perform his duties in accordance with the procedure required by the contract and his working relationship with the other members of the appellant’s site team was deteriorating over the period.  Nowhere, however, in the letter was there a reference that PW1’s report to the Labour Department was the reason for his dismissal.  The duties of PW1 included making reports to the Labour Department on possible irregularities on wages and MPF contributions.  The passage above was a straightforward statement of fact.  For the Deputy Magistrate to surmise that this was the reason that PW1 was dismissed was to blatantly overlook the critical remarks directed against PW1 regarding his work attitude and relationship with his colleagues.  The fact that PW1 had made complaints to the Labour Department could not, by any stretch of imagination, be construed as a primary reason, or indeed one of the reasons for his dismissal.

20. The Deputy Magistrate’s conclusion that the appellant had brought suspicion upon himself and misleading the prosecution to believe that there is a stronger case against the appellant was made contrary to the evidence and his own findings in this case.  His conclusions were therefore erroneous. 

21. For the reasons above, this appeal is allowed.  The Deputy Magistrate’s order for refusing the appellant’s costs is set aside.  The appellant is allowed the costs of his trial in the magistracy and in this appeal and such costs to be taxed, if not agreed.