LAM KIT WAH v. SEA WAVE HAIR DESIGN HOLDINGS LTD.

HCLA 69/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 69 OF 1998

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J U D G M E N T

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Background

1. In January 1998, the Claimant, Lam Kit Wah, claimed under the Labour Tribunal Ordinance, Cap.25 against his employer, the Defendant for the amount of $1,042,095.00 as follows :-

(i)	Wage in lieu of notice (1 month)	$ 17,000.00
(ii)	Arrears of salary (1/11/97 - 12/11/97)	$ 6,800.00
(iii)	Annual paid leave (1/1/93 - 12/11/97)	$ 26,633.00
(iv)	Annual bonus (1989/90 - 12/11/97)	$ 840,000.00
(v)	Year-end double payment (1/1/97 - 12/11/97)	$ 14,718.00
(vi)	Long service payment (11/10/85 - 12/11/97)	$ 136,944.00
	Total	$ 1,042,095.00

2. On 16 September 1998, the learned Presiding Officer, Mr Josiah Lam of the Labour Tribunal, awarded the Claimant $1,025,095.00. The claim for the aforesaid wage in lieu of notice in the amount of $17,000.00 was dismissed, against which there was no cross-appeal from the Claimant.

3. On 12 January 1999, leave to appeal was granted to the Defendant only on the following two grounds, namely :-

(i) whether some part of the annual bonus had been statute barred; and

(ii) whether the Claimant had agreed to pay compensation instead of long service payment.

In other words, this appeal should only be concerned with the aforesaid two items.

The Annual Bonus

4. The Claimant was first employed by the Defendant on 11 October 1985 as a Deputy General Manager. An employment agreement dated 28 January 1986 (Exhibit C4A), which was signed by the Claimant and the Managing Director of the Defendant, contained a clause that the Claimant would be entitled to an annual bonus equivalent to the amount of dividends declared and payable on 200,000 shares of the Defendant. Nowhere in the agreement suggested that the award of bonus was subject to the Defendant's discretion only. In 1989, the Defendant suggested to the Claimant not to withdraw the dividends payable to him, but put to the former as deposits and long term investment. By so agreeing, the Claimant was offered to purchase the shares at a concession price upon listing of the Defendant. The learned Presiding Officer was satisfied and found that as a result of this oral representation in relation to the written employment agreement, the Claimant did not withdraw his bonus but let the Defendant hold the same for and on behalf of himself since the year 1989/90.

5. In response to the claim for bonus, the Defendant initially said that the award of such was purely discretionary, that the agreement to award bonus was made orally and that such an award had been cancelled since 10 years ago. That was rejected in the Tribunal below. Subsequently, at the review hearing, the Defendant relied on the defence that the claim or at least part of it should have been time-barred under section 4 of the Limitation Ordinance, Cap.347.

6. A closer look at the said written employment agreement revealed that the bonus was payable to the Claimant when the dividends were declared. Furthermore, the learned Presiding Officer found that there was an oral agreement between the Claimant and the Defendant, pursuant to which the Claimant deposited the bonus awarded to him by way of dividends. By the time the Claimant left the Defendant, his entitlement to the said dividends had been accrued to $840,000.00.

7. As far as limitation of action is concerned, it has been a long-standing general rule that the cause of action accrues at the earliest time at which an action could have been brought. In essence, the test is whether a complete cause of action has arisen. In the instant case, the bonus by way of dividends was only payable to the Claimant when they were declared, and the Claimant had not exercised his right by withdrawing the sum until he left the Defendant. Thus, the cause of action for the recovery of the dividends against the Defendant cannot be said to be complete at any time before the Claimant left the Defendant. Since the Claimant lodged his claim with the Tribunal within a year from his vacation of office, the learned Presiding Officer was correct in finding that the Claimant's entitlement to the dividends was not time-barred.

The Long Service Payment

8. In respect of the second ground of appeal, namely, the Defendant contended that the Claimant had agreed to pay compensation instead of receiving long service payment, the learned Presiding Officer made it clear in his judgment that he was not persuaded that the Claimant, by issuing a cheque in the amount of $317,872.50, sought to resolve all the monetary affairs between the two, which included the long service payment. As a result, he ruled in favour of the Claimant that there was no agreement as such. From his judgment, it can be seen that the learned Presiding Officer had taken into account not only the evidence from the Claimant and the representative of the Defendant, but also some documentary evidence (Exhibit D18) tendered by the Defendant.

9. The Labour Tribunal Ordinance, Cap.25 provides :-

"Section 35. Powers of Court of First Instance on appeal

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

(a) draw any inference of fact; and

(b) make such order as to costs and expenses as it thinks fit, but may not -

(i) reverse or vary any determination made by the tribunal on questions of facts; or

(ii) receive further evidence."

10. Since the learned Presiding Officer had made a well reasoned finding of fact against the Defendant regarding the non-existence of the alleged arrangement for compensation, this Court is not entitled to interfere with his judgment in this respect. In any event, there is no ground for such an interference at all.

Further Grounds

11. When the appeal was heard before me, apart from the above two grounds of appeal, the Defendant further relied on the grounds that :-

(i) the Tribunal had failed to discharge its duties in three different aspects; and

(ii) the Tribunal had failed to investigate whether the Claimant was dismissed or resigned on his own accord.

12. It is improper for the Defendant/Appellant to include further grounds of appeal when leave, as aforesaid, was only granted on the two said items. However, as one of the further grounds was closely connected with the long service payment and in deference to Counsel's industrious effort, I would venture to deal with these further grounds hereinbelow entirely on ex abundanti cautella basis.

Failure of the Tribunal to discharge its duties

13. Dealing first with the submission that the Tribunal failed to discharge its duties, Mr Kwan for the Defendant submitted that the Tribunal failed :-

(i) to summon the Claimant's wife and his brother to give evidence;

(ii) to investigate the economic transactions between the Claimant and the Defendant; and

(iii) to transfer the case to the High Court.

14. On principle, Mr Kwan was quite correct to say that the Tribunal should take an active role into the investigation of the matters, Chan Suk Bing Angie v Harbour Phoenix Ltd. & anor [1992] 2 HKC 459 (per Jerome Chan DJ, as he then was) was cited. While the legal position is that hearings at the Tribunal are inquisitorial in nature, such a statutory duty imposed on the Presiding Officers is not an absolute one - the Presiding Officers are only bound to investigate matters they might consider relevant.

15. Before a complaint of the Tribunal's failure to investigate can be upheld, all the circumstances of the case as well as other findings of fact must be given all due regard. It was held in the aforesaid case of Chan Suk Bing Angie that :

"Not every failure to investigate a relevant matter would give rise to an appeal. The relevant matter forming the subject matter of the complaint must not only be relevant but of such a nature that the lack of investigation would give rise to injustice, in that, a fair and proper determination of the claim could not be sustained".

16. Subsequently, in Team Concepts International Ltd. v Sher Wai Ling & 2 Others, LTA No. 72 of 1995 (per Jerome Chan, J), it was held that while the Presiding Officers had a duty to investigate in a manner that will not lead to injustice in a fair and proper determination of the issue, such a duty would be discharged if the Presiding Officer has gone into the main contentions between the parties. In that case, the Appellate Court expressed the view that "it would be absurd to require [the presiding officer] to inquire into every matter that is at issue". In any case, to rule that the Tribunal fails to discharge its duties, it is never sufficient for the Appellate Court to conclude that it would have preferred to approach the matter differently, or that there is a better way to investigate the claim. It is not open to the Appellate Court to prefer its own views to that of the Presiding Officers' as to the manner of investigation. I shall now deal with the specific submission of the Defendant.

(i) Failure to summon witnesses

17. The first complaint of the Defendant is that the Tribunal failed to summon the Claimant's wife and brother to give evidence. According to Mr Kwan for the Defendant, both of them were working for the Defendant and eventually left in 1997.

18. It was suggested that the evidence of the two of them would not just assist the Tribunal in deciding if the Claimant resigned himself or was dismissed by the Defendant, but would also affect the credibility of the Claimant. Being separate and different individuals, the fact that two of them left in the same year as the Claimant did, without further, would by no means shade light to the allegation that three of them left in conspiracy and that the Claimant left on his own accord instead of being dismissed.

19. Also, the fact that the Claimant's brother failed in another case before the Tribunal against the Defendant would not necessarily correlate with the condition under which the Claimant vacated his office.

20. It is irrational to say or invite the Tribunal to draw an inference that because the brother was found to have resigned but not dismissed by the Defendant in another case, the Claimant should also be so found at the instant hearing. The claim that the evidence of the Claimant's wife and brother might affect the Claimant's credibility is actually nothing but a sweeping attack without any specified target. All the Defendant was trying to do by suggesting that these two persons should be called was in fact fishing for evidence in its favour. At least, the Defendant had not demonstrated to me that such an investigation was necessary.

21. It must be reminded that it is not the Tribunal's duty to entertain such kind of fanciful assumptions that certain witnesses might be of some assistance, however trivial, to the determination of the case. Therefore, the learned Presiding Officer cannot be said to have failed in discharging his duty by not calling the Claimant's wife and brother to give evidence.

(ii) Failure to investigate into the economic transactions

22. Secondly, it was submitted that the Tribunal did not discharge its duties by failing to investigate into the economic transactions between the Claimant and the Defendant.

23. According to the record of proceedings on 11 February 1998 as exhibited to the third affirmation of Ms Tang, the Tribunal suggested that parties might choose to have this employment case heard together with the economic transactions case in the High Court (HCA1902 of 1998) between the Claimant and the Defendant. The Claimant and the Defendant, however, decided to have the instant case dealt with in the Tribunal and not to be jointly heard with the High Court case.

24. In the judgment delivered upon Review on 23 November 1998, both the Claimant and the Defendant agreed that this employment case could be dealt with separately from the High Court case dealing with their economic transactions.

25. Furthermore, as revealed in the summons (Exhibit C17) of that High Court case, this employment case was not intended to be jointly heard with the case on all those economic transactions.

26. Having adverted his mind to the parties' choice as aforesaid, the learned Presiding Officer did look into the context of the statement in relation to the cheque issued by the Claimant to the Defendant. He then found it unnecessary to deal with those economic transactions between the parties as he found as a matter of fact that there was no such agreement as aforesaid and those transactions were not related to the employment dispute between the parties. Consequently, he was perfectly correct to find that there was no need to transfer this case to the High Court.

27. In this commercial world, it is never surprising to find that there are separate contracts and transactions in different nature and context between the same parties. It is arbitrary and unrealistic to pull all the dealings between the parties together whenever a dispute on any of those independent transactions arises. In the instant case, instead of establishing a real connection between the employment of the Claimant and the other economic transactions, the Defendant merely adopted a blanket allegation that they were correlated without any concrete proof. Therefore, the learned Presiding Officer was entitled to concentrate on the employment case without being diverted by those separate and independent economic transactions between the parties.

(iii) Failure to transfer the case to the High Court

28. In view of the aforesaid reasons mentioned in the previous paragraph, there is no ground at all for this court to interfere with the decision of the Tribunal in this regard.

Constructive dismissal v Resignation

29. Lastly, Mr Kwan for the Defendant submitted that the Tribunal failed to resolve the issue of whether the Claimant resigned on his own accord or was dismissed by the Defendant. No doubt, this was one of the central issues in deciding if the Claimant should be entitled to the bonus and the long service payment.

30. In his judgment, the learned Presiding Office found that the Claimant was asked to leave by a managing director of the Defendant in early November 1997. In order to save face, the Claimant thus vacated his office, which in effect was a dismissal but not a resignation. In response to this, Mr Kwan argued that at no time did the Defendant behave in such a way which made the Claimant to feel that he was compelled to leave.

31. As a matter of law, as established in Penprase v Mander Bros. Ltd. [1973] IRLR 167, an employee who resigns as a result of being given an option either to do so or be dismissed, he is usually said to have been constructively dismissed. This is particularly compelling in the current situation where the Claimant was formerly a deputy general manager of the Defendant, the great prejudicial impact of a dismissal would force him to choose to resign himself when he was asked to vacate his office.

32. Taking into account the conversation between the Claimant and the managing director of the Defendant at a hotel, the learned Presiding Officer concluded that the Claimant was forced to resign, under which circumstance he was in fact dismissed by the Defendant. The Claimant was found to have perceived that anything other than resignation would result in a dismissal, the learned Presiding Officer did not err in applying the law in relation to constructive dismissal and did not err in finding that the Claimant was so dismissed by the Defendant. It is thus not open to this Appellate Court to interfere with the Tribunal's decision in this aspect. There is simply no failure to resolve this issue. On the contrary, the Tribunal had made a specific finding in this respect.

Conclusion

33. After considering the submission and the relevant evidence before me, I am satisfied that the learned Presiding Officer had gone into the main contentions between the parties and that he did not fail in so discharging his duty to investigate.

34. Furthermore, having dealt with the grounds of appeal and all other points raised by the Defendant, I find there is no substance in the Defendant's grounds of appeal. Accordingly, this appeal must be dismissed.

Costs

35. Under O.62, r.9(4)(b) of the Rules of the Supreme Court, the court has the power to order a gross sum in lieu of taxed costs. As the Claimant appeared in person, I find it appropriate for me to exercise this power to order an immediate payment of costs, without the necessity for taxation. The Claimant's preparation for the appeal and the appearance at the hearing would at least amount to $5,000.00.

36. Accordingly there shall be an Order nisi of costs of the appeal to the Claimant in the sum of $5,000.00 against the Defendant.