WONG LAI KING HUBERT v. ASSAB STEELS (H.K.) LTD.

1998 L.T.A. No. 29

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 29 OF 1998

(On appeal from Labour Tribunal Claim No. LT1190/1998)

____________

____________

_______________

J U D G M E N T

_______________

1. The appellant, Wong Lai King, Hubert was employed by the respondent, ASSAB Steels (H.K.) Ltd. in February 1996 as an Assistant General Manager at the monthly salary of $36,000.00. He was dismissed in January 1998 with the payment of 3 months' wages in lieu of notice of termination.

2. The appellant brought proceedings in the Labour Tribunal against the respondent claiming for arrears of wages, annual leave pay, year end bonus, end of year double pay, severance pay and provident fund payment.

3. The claim for arrears of wages was conceded. The appellant was also awarded severance pay of $32,500.00. The claims for annual leave pay, year end bonus, end of year double pay and provident fund payment were dismissed.

4. The appellant appealed against the dismissal of the claim for year end bonus and the end of year double pay, leave having been granted by Deputy Judge Wong on 16 July 1998.

5. In clause 3 of the letter of appointment dated 12 January 1996, the provision of bonus was stated as follows:

"A bonus, equivalent to at least one month's basic salary will be(sic) paid at the end of December each year commencing in December, 1996. Any bonus in excess of one month's basic salary will be determined by the Management at its discretion. At an appropriate time the Management desires to offer you a Profit Share arrangement to replace the above bonus arrangement."

6. By a letter dated 29 May 1996, the appellant was informed that his basic salary would be increased to $40,000.00 per month and that all the other terms and conditions of the letter of employment dated 12 January 1996 would remain unchanged.

7. On 24 December 1996, the appellant was paid $36,175.00 as the basic bonus for the year 1996. It was also pointed out to him that bonus other than the basic bonus would be announced at the time when his performance was reviewed.

8. In a letter dated 13 January 1997 addressed to the appellant by the respondent, it was pointed out to him that his new salary would be $42,800.00. Apart from the basic bonus equal to one month's salary, he was further paid a additional bonus of the same amount. However there was no other incentive bonus. Attached to the aforesaid letter, there was another document titled "Bonus Scheme".

9. The full terms of the "Bonus Scheme" document are as follows:-

" TO : Wong Lai King, Hubert

Re : Bonus- Profit Sharing

Bonus based on ASSAB Ming Lee Sales (Assume achieving break-even)

Currency : HKD in thousand

ASSAB M.L. Sales	>2,300	>2,700	>4,000	>5,000
Bonus	70	90	130	150

Notes: 1. If ASSAB H.K. achieves below the HKD 17 Million (Budget Earnings after Tax), Management has the discretion to reduce the HKD70,000 bonus listed above.

2. Total bonus in 1996: HKD72,350 (on pro-rata basis)

3. Bonus in 1997 as calculated above: range from HKD70,000 to HKD150,000."

10. Although the earnings after tax of ASSAB H.K. was over 24 million in 1997, ASSAB Ming Lee's loss was increased from $404,000.00 in 1996 to $495,000.00.

11. The appellant contended that under the original contract of employment dated 12 January 1996, he was guaranteed a basic bonus of at least one month salary. The "bonus scheme documents" were only relevant in the determination of the further discretionary bonus.

12. The appellant further suggested in his evidence that when the "bonus scheme" was offered to him, he had made clear to the respondent that there was no chance for ASSAB Ming Lee to achieve break-even in 1997. He was then told that it was not necessary for ASSAB Ming Lee to achieve break-even as long as the cash at bank and the amount receivable was larger than the amount payable.

13. The respondent on the other hands argued that the "bonus scheme" had completely replaced the earlier agreement as far the payment of bonus was concerned. Under the new arrangement, the payment of any bonus was conditional upon ASSAB Ming Lee achieving a break-even. The respondent also denied the suggestion that bonus was payable when ASSAB Ming Lee had cash and amount receivable in excess of the amount payable.

14. The learned Presiding Officer rejected the evidence of the appellant and his contention. He found as a fact that the "bonus scheme" had completely replaced the earlier arrangement for the payment of bonus. Under the new "bonus scheme", bonus was payable if ASSAB Ming Lee achieved break even. As ASSAB Ming Lee in fact suffered a loss in 1997, there was no bonus payable.

15. Section 35(2) of the Labour Tribunal Ordinance Cap. 25 states that on an appeal from the Labour Tribunal, the High Court may not reverse or vary any determination made by the Tribunal on questions of facts.

16. Sitting in an appellate capacity, the High Court would not interfere with the finding of facts by the Tribunal unless such findings were not supported by evidence.

17. The learned Presiding Officer, having analysed the evidence, found that the "Bonus Scheme" had completely replaced the earlier arrangement under the initial contract of employment. The learned Presiding Officer also found that under the new "Bonus Scheme", bonus of any kind was only payable to the appellant if ASSAB Ming Lee achieved break even.

18. The finding of the learned Presiding officer that the "Bonus Scheme" had replaced the earlier arrangement, was based purely on the construction of the relevant documents. As such his finding is not purely a question of facts. I am in as good a position to construe the relevant documents as the learned Presiding Officer and should I find his conclusion to be wrong, I am entitled to correct it.

19. Year end double pay is a fundamental and intrinsic part of any contract of employment in Hong Kong except those for Government servants. It requires very strong evidence to the contrary to displace it. Clause 3 of the original contract of employment between the appellant and the respondent made it absolutely clear that "a bonus, equivalent to any least one month's basic salary will be paid at the end of December each year commencing in December, 1996."

20. The subsequent letters addressed to the appellant by the respondent pertaining to the "Bonus Scheme" did not mention at all that the new bonus scheme were to replace completely the original bonus arrangement, including the year end double pay.

21. At the trial, the respondent admitted that the appellant had not been expressly informed that the original bonus arrangement was to be replaced completely. Indeed, as the learned Presiding Officer observed, there was also "some unhappy drafting" in the relevant documents.

22. The burden was on the respondent to satisfy the court that the original bonus arrangement had been replaced. On the evidence, I am not satisfied that the respondent had discharged such a burden.

23. Taking also into consideration the "Contra proferentem" principle, I am inclined to accept the appellant's contention that the new "Bonus Scheme" was only relevant to the additional discretionary bonus and would not affect the year end double pay at all.

24. There was considerable argument as to whether under the new "Bonus Scheme", the appellant is entitled to additional bonus and if so the amount. One of the reasons for the difficulty was the way in which the documents were drafted. The contents of such documents were ambiguous to say the least.

25. Fortunately, I find it not necessary to resolve such difficulty. Clause 3 of the original contract of employment clearly states that the additional bonus over and above the year end double pay was discretionary, a point conceded by the appellant. The appellant had no legal basis to make any claim for the additional bonus. He should however be awarded the year end double pay.

26. In the circumstances, the appeal must be allowed. There will be judgment for the appellant against the respondent for the further sum of $42,800.00 being the year end double pay. The judgment sum will carry interest at the rate of 10 % p.a. from 6 March 1998.

27. As the appellant was not legally represented, I make no order as to costs. The order on costs is an order nisi to be made absolute 14 days after the handing down of this judgment.