SUMITRA JAYASENA KELLY v. CATHAY PACIFIC AIRWAYS LTD

HCLA 10/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 10 OF 2004

(On appeal from Labour Tribunal Claim No. 12076 of 2002)

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J U D G M E N T

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Introduction

1.  The appellant was the respondent’s former employee.  Her claim was dismissed by the Labour Tribunal (“the Tribunal”).  Being dissatisfied with that decision, she appeals to this court pursuant to s. 32. Labour Tribunal Ordinance (Cap. 25).  Leave to appeal was given by Yam J, earlier.

2.  The appellant was employed by the respondent from January 1984 until her resignation in May 1995 (a period of more than 10 years).  In the Labour Tribunal, she claimed damages for the respondent’s alleged breach of contract.  The claim arose from the following background facts, most of which were undisputed and which can be summarised as follows.

3.  The appellant was employed as one of the respondent’s aircraft cabin attendants.  One of the benefits offered by the respondent to cabin attendants who have already left their employment (“former cabin attendants”) was: concessionary rate air tickets for the former cabin attendants and their spouses.  The appellant complains that the respondent wrongfully refused to provide such benefit to her husband.  The respondent admits not providing such benefit but denies that the refusal was wrongful.  The appellant’s husband was also one of respondent’s former employees until his dismissal by the respondent.

The Issues Raised in the Labour Tribunal

4.  The main issue before the Labour Tribunal was in short whether the concessionary rate air tickets was part of the appellant’s contractual benefits, or merely part of the respondent’s policy which is not legally binding on the respondent.  There was apparently a further issue, namely, even if the respondent was contractually bound to provide concessionary rate air tickets, whether the appellant’s husband meets the requisite conditions regarding the provision of that benefit.

5.  There are a number of documents relevant to whether the respondent is contractually bound to provide concessionary rate air tickets to the former cabin attendants.  They include:-

(a)	Conditions of Service (revised on 1 May 1981 and signed by the appellant on 7 February 1984) (“the 1981 Conditions of Service”);
(b)	employment letter dated 27 January 1984;
(c)	Conditions of Service (revised on 1 January 1986) (“the 1986 Conditions of Service”);
(d)	Passenger Tariff Manual (dated May 1989);
(e)	Concession Travel – Online Cabin Attendants (undated);
(f)	Staff Benefits Handbook (Cabin Attendant) (issued in August 1992) (“the 1992 Staff Benefit Handbook”);
(g)	Staff Benefits Handbook (Cabin Attendant) (issued in July 1993);
(h)	letter dated 10 May 1993 from the respondent to serving cable crew regarding changes to cabin crew retirement benefit;
(i)	Concessional Travel Policy (dated 20 February 1995);
(j)	Letter dated 20 December 1995 from the respondent to its employees regarding changes to staff travel policies.

The Staff Benefit Handbooks are of particular importance to the appellant’s claim because the concessionary travel benefits are set out therein in great detail.  In fact, it is at least arguable that they are the only documents setting out such a scheme.

6.  Further, there was correspondence relating to concessionary rate air tickets having at one stage been provided to the appellant’s husband:-

(1)	a letter dated 23 April 2002 from the respondent to the appellant’s husband informing him he was not entitled to privileges under the concessionary travel policy because of the respondent’s long standing policy that employees whose employment had been terminated are not entitled to such benefits;
(2)	a letter dated 25 April 2002 from the appellant to the respondent stating the respondent has no valid reason to withdraw concessionary travel benefit (having provided such benefit earlier) and the respondent was in breach of contract for doing so;
(3)	a letter dated 30 April 2002 from the respondent to the appellant repeating sub-para. (1) above and adding that there was no contractual entitlement to concessionary travel benefit.

The Tribunal’s Decision

7.  The Tribunal’s reasons for dismissing the appellant’s claim have been set out in its “Reasons For Decision” dated 23 March 2004.  In short, they were:-

(1)	the appellant signed and agreed to be bound by the 1981 Conditions of Service;
(2)	the appellant relies on the 1992 Staff Benefit Handbook as the basis for her claim;
(3)	however, the 1992 Staff Benefit Handbook does not form part of the employment contract;
(4)	the scheme provided for in the 1992 Staff Benefit Handbook was only introduced after the appellant became the respondent’s employee.  She has not given any consideration in exchange for the scheme so provided.  Any consideration given by the appellant since the introduction of such a scheme was past consideration.

The Tribunal’s Error on Point of Law

8.  Leave to appeal has been given in relation to the 5 paragraphs set out in the Form 14 (Application for Leave to Appeal on Point of Law).  According to r. 9(2), Labour Tribunal (General) Rules (Cap. 25A):-

“Save with the permission of the Court of First Instance, an appellant shall not be entitled at the hearing of the appeal to rely on any ground of appeal not specified in the application for leave to appeal”.

The appellant indicated at the appeal hearing she wanted to put forth two additional grounds of appeal.  The respondent fairly did not oppose this.  I permitted the additional grounds (with amendment) to be relied on.

9.  I do not propose to set out the grounds of appeal in detail.  Suffice it to say in essence the appellant complains that:-

(a)	the Tribunal erred in stating her claim was based on the 1992 Staff Benefit Handbook when in fact it was based on the 1986 Conditions of Service.  The “Concession Travel – Online Cabin Attendants” was an elaboration of her entitlement under the 1986 Conditions of Service;
(b)	the 1986 Conditions of Service stipulated she was entitled to the concessionary travel benefits;
(c)	the Tribunal erred in thinking that the respondent’s case was the concessionary travel benefit did not form part of her employment contract when in fact this was not so;
(d)	the Tribunal made inconsistent findings: it found that the scheme set out in the 1992 Staff Benefit Handbook was introduced after she was employed and at the same time also found that there was no evidence when the scheme was introduced.  In fact, there was evidence the scheme was already in place when her employment commenced;
(e)	the Tribunal erred in holding that the appellant’s continued service as a cabin attendant was only past consideration.

The two new grounds of appeal do not in fact raise any additional points.

10.  In support of the ground of appeal relating to whether her continued employment since 1992 can constitute good consideration, the appellant refers this court to the decision in Cheung Ting Wan and Others v. RIS Computers Ltd., LTA 16 of 1986 (Barnett J, 20 June 1986).

11.  That appeal concerned the employee respondents’ entitlement to commission.  The commission scheme was introduced after their employment with the appellant has commenced.  Commission was in fact paid to the respondents at one stage.  In relation to the question of whether the respondents have given good consideration for the appellant’s promise to pay commission, the court said:-

“	10.	The more difficult question is whether or not the respondents gave consideration for the appellant's promise or undertaking to pay commission.  Mr. Kwok relies upon the principle established in Stilk v. Meyrick (1809) 2 Camp. 317, that the performance of existing obligations does not constitute consideration.  He contends that apart from fulfilling their existing obligations there was nothing extra that these respondents were required, or undertook, to do.
	11.	Mr. Mackay sought to rely upon certain dicta of Denning, L.J. (as he then was) to the effect that the performance of an existing duty is sufficient consideration.  These dicta were revealed in North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. and another The Atlantic Baron (1978) 3 All E.R. 1170, in which Mocatta, J. said (at p.1177):
			"Counsel for the yard relied on what Denning L.J. said in two cases dealing with very different subject matters.  The earlier was Ward v. Byham (1956) 2 All E.R. 318.  There the father of an illegitimate child who had lived with her mother for some years turned the mother out of the house, retaining the child for a while for himself.  Later he made an offer to let the mother have the child and pay an allowance of £ 1 a week, provided the child was well looked after and happy and was allowed to decide for herself where she wished to live.  When the mother married, the father discontinued payment, but on being sued by the mother he was held liable.  The mother was by statute bound to maintain her illegitimate child, but Denning L.J. said that he thought there was sufficient consideration in the promise to perform an existing duty or in its performance.  Apart from the fact that the existing duty on the mother was imposed on her by statute law, which I think differentiates the case, the other two members of the Court of Appeal thought that compliance with the special terms of the father's letter, about keeping the child happy and leaving her freedom of choice constituted ample consideration.  Again in Williams v. Williams (1957) 1 All E.R. 305 at 307, whilst Denning L.J. said that 'a promise to perform an existing duty is, I think, sufficient consideration to support a promise', nonetheless he went on to find two separate grounds for good consideration for the husband's promise.  Similarly Hodson L.J. and Morris L.J. found good consideration for the husband's promise.  I do not therefore think either of these cases successfully enables counsel for the yard to avoid the rule in Stilk v. Meyrick."
	12.	I respectfully agree with Mocatta, J.  Therefore, there must be identified something, which is capable of amounting to consideration.  In my view, it can legitimately be held that, as the commission scheme was expressed to be as an incentive, the consideration was harder work on the part of the employees.  Further, notwithstanding financial difficulties, the respondents stood by the appellant until they were dismissed on economic grounds.
	13.	I have not overlooked Mr. Kwok's argument that apart from the 2nd and the 22nd respondents, the other respondents in this group were employed after the introduction of the commission scheme.  It might be expected, therefore, that an appropriate term would have been written into their agreements.  In my view, however, the same considerations apply to these respondents.  Even if the same considerations do not apply, I have no doubt that a reasonable tribunal, properly directed, would have had little difficulty in finding on the evidence that there was a suitable implied term in their agreements”.

12.  I consider the test propounded by Barnett J to be the correct test.  With respect, the learned Presiding Officer has taken a too simplistic view as regards this issue.  For example, this topic was discussed in detail in Chitty on Contracts (1999) 28^th Ed., at para. 3-056 to 3-060 and 23-032 to 23-038.  As the respondent fairly observed at the appeal hearing, the learned Presiding Officer has not given any reason for concluding only the 1981 Conditions of Service was binding between the parties.  As stated above, there was at least also the 1986 Conditions of Service.  It appears that the respondent also regards the last-mentioned document to be binding between it and its staff (including the appellant before she left the respondent).  It is encumbent upon the learned Presiding Officer to properly direct himself as to whether the 1986 Conditions of Service was binding and if so the reason(s) therefor.  Likewise, he should also direct himself in relation to the legal status of the other documents relating to concessionary travel benefits (in particular, the 1992 Staff Benefit Handbook).

13.  I pause to note the learned Presiding Officer appears to think that, had there been good consideration in support, the 1992 Staff Benefit Handbook may be part of the employment contract.  Hence, his observation that:-

“I hold that the scheme was introduced as new benefits for the staff members after the [appellant] was employed by the [respondent].  The [appellant] must give fresh consideration to the [respondent] in return for the benefits under the scheme”.

Having said so, and to avoid doubt about this matter, I make no finding as to whether he was necessarily correct in so observing.

14.  By reason of the above matters, I find that the learned Presiding Officer has failed to properly direct himself and/or investigate into relevant matters.

Conclusion

15.  In view of the above matters, in exercise of the discretion conferred by RHC Ord. 55 r. 7(7), I allow this appeal.

16.  S. 35(2), Cap. 25 stipulates:-

“On an appeal for which it has granted leave under section 32, the Court of First Instance … may not … reverse or vary any determination made by the tribunal on questions of fact”.

17.  Issues such as whether the concessionary travel benefits formed part of the appellant’s employment contract and whether she has given good consideration for such benefits are questions of fact (or at least mixed law and fact) for the Tribunal.

18.  S. 35(1), Cap. 25 provides:-

“On an appeal for which it has granted leave under section 32, the Court of First Instance may-

(a) allow the appeal;

(b) dismiss the appeal; or

(c) remit the matter to the tribunal with such directions as it thinks fit, which may include a direction to the tribunal for a new hearing”.

19.  Accordingly, the most appropriate order is to order the claim to be remitted to the Tribunal to be tried by another Presiding Officer.  There is no need for any direction to be given for the new hearing.

Other Matters

20.  During the appeal hearing, the respondent also submitted that the following issues may need to be examined by the Tribunal:-

(a)	whether the loss (if recoverable from the respondent) is suffered by the appellant, rather than her husband.  See, for example, Chitty, para.3-067 to 3-070;
(b)	whether the quantum of loss should be calculated in the manner contended for by the appellant, bearing in mind the concessionary rate air tickets have a lower priority regarding boarding rights.

21.  I consider that these matters can be adequately dealt with by the Tribunal.  Afterall, the Tribunal is the specialised tribunal tasked by Cap. 25 to deal with monetary claims arising out of employment contracts.  Accordingly, no direction for dealing with these matters need to be given either.

Costs Order Nisi

22.  The above is sufficient to dispose of the appeal.  I will not say anything further regarding the other grounds of appeal raised herein.  Suffice it to say those other grounds have not taken a sufficiently long period of hearing time to warrant separate costs orders to be made.

23.  There is no apparent reason to depart from the usual rule that costs should follow the event.  There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that the costs of this appeal be paid by the respondent to the appellant to be taxed if not agreed.