CHAN SUK BING ANGIE v. HABOUR PHOENIX LTD. AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

LABOUR TRIBUNAL APPEAL NO.46 OF 1991

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J U D G M E N T

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1. This is an appeal by the Claimant against a decision of the learned Presiding Officer of the Labour Tribunal dismissing her claim for severance payment against her former employer, the 1st Respondent. She was successful in her other claim for wages in lieu of notice and an award of $5,400 and costs $400 was made in her favour by the learned Presiding Officer on 1st November 1991. Leave to appeal was granted on 14th January 1992 on the grounds of (i) inconsistent findings of fact and (ii) a breach of the statutory duty by the learned Presiding Officer in failing to investigate the issue of redundancy. When the appeal was heard before me, reliance was only put on the latter of the 2 grounds.

2. The Claimant was first employed by the 1st Respondent as a receptionist/typist in January 1983. In 1985, the 1st Respondent entered into a joint venture with an English company, and incorporated the 2nd Respondent on an equal partnership basis with the English company. A management agreement was then made between the 1st Respondent and the 2nd Respondent underwhich the first was to provide management services to the latter. At the time of the commencement of the joint venture, the Claimant had already been promoted to the position of Stock Controller of the 1st Respondent. She also looked after the shipping and general accounts work of the 1st Respondent. Upon the incorporation of the 2nd Respondent she also assumed work in the 2nd Respondent in handling its accounts, purchasing materials for the production department, stock controlling and production control. In 1989, the nature of the joint venture changed from local packaging and retailing of the products of the English company to one of retailing only. Thus, the packaging/production section would have to be shut down. Packaging workers were gradually dismissed with severance payments, the last one on 15th May 1991. The Claimant was dismissed on 26th June 1991 by payment of wages in lieu of notice.

3. The 1st Respondent in his written defence disputed the claim for severance payment on the grounds that :-

(a) They were advised by the Labour Department that no such payment need to be paid if the worker is under 40 years of age and with under 10 years of service.

        (b) The events leading to the termination of her employment were that :

            (i)      she had been guilty of leaking marketing information to outsiders;

            (ii)     she did not have a good working relationship with some of the staff which sometimes resulted in the inability for instructions to be carried out smoothly.

4. In support of its defence, the 1st Respondent also alleged (via DW1 Mat Fat-ho) before the learned Presiding Officer that a replacement had been employed to take over the job of the Claimant. An alleged letter of confirmation of the employment of one Chow Kwok Hung, dated 25th August 1991, was produced (D-20) in support. The alleged replacement was challenged by the Claimant.

5. In his Reasons for Decision, the learned Presiding Officer said in relation to the claim for severance payment :

"As to claim for severance payment, Defendants have the burden to rebut the presumption of redundancy. Many reasons for dismissal were given but at least one was substantiated. CWl did not get along well with the brother-in-law of the boss although this might not be her fault. Looking at the duties listed by CW1 and the management structure of the company, the fact that replacement was found and its salaries, I did not find the dismissal was due wholly or, mainly to diminishing requirement of the business for CW1 to carry out her usual kind of work. The requirements had not been diminished now (nor) was it expected to."

6. The Claimant complained that the learned Presiding Officer relied solely on the alleged letter of confirmation of employment (D-20), a piece of hearsay evidence, to support his finding that the presumption of redundancy under s. 31Q has been rebutted. She said this was against the rule of justice in the circumstances of the case.

7. Section 20 of the Labour Tribunal Ordinance, Cap.25 provides that hearings at the tribunal shall be conducted in an informal manner. This is mainly due to the prohibition against legal representation in the tribunal. This in turn brought about s.20 (3) which provides that "the presiding officer shall investigate any matter which he may consider relevant to the Claim, whether or not it has been raised by a party". In the premises, hearings at the tribunal are inquisitorial, rather than adversary in nature. In view of the lack of legal representation and the informal nature of the hearings, there is thrusted upon the presiding officers the duty to investigate relevant matters irrespective whether they are raised or relied upon by any party. Despite the enormous workload that exists in the tribunal and the speed the Ordinance requires the claims to be dealt with, presiding officers should not allow themselves to derogate from this statutory duty under any circumstances, if a fair and just disposition of the Claim is to be ensued. The requirements of justice in a judicial system such as the tribunal is such that the presiding officers are required to assume an active inquisitive role in the proceedings. I accept, as Mr Lin for the Respondents suggests, that such a statutory duty is not an absolute one in the sense that the presiding officers do have a "discretion" in the matter. They are only bound to investigate matters they "may consider relevant". However, I reject Mr Lin's contention that such "discretion" is an absolute one and is not susceptible to interference by an appellate court. Notwithstanding the prohibition against reversal or variance of determinations of facts under s.35 (2) of Cap 25, I do not accept Mr Lin's submission that the presiding officers' determination of the "relevance" of a matter for the purpose of discharging their statutory duty to investigate is a matter not open to the appellate court. Firstly, very often, as in the present case, no conscious express determination of relevance would be made by the presiding officers; in which case no question of any prohibition under s.35 (2) can arise. It is then for the appellate court to determine if the matter alleged is a relevant matter which ought to have been investigated. Secondly, the relevance of a matter would inevitably depend on the issues of law and facts involved. The application of legal principles, or the failure to do so, in reaching a determination on the relevance is a matter upon which an appeal can lie.

8. It is obvious that not every failure to investigate a relevant matter will give rise to an appeal for a failure to discharge a statutory duty. The relevant matter forming the subject matter of the complaint must not only be relevant, but be of such a nature that the lack of investigation will give rise to injustice in that a fair and proper determination of the claim cannot be attained. All the circumstances of the case as well as all other findings of fact must be given all due regard before such a complaint can be upheld. Further, not only is the total absence of investigation a ground for complaint, totally inadequate or useless investigation which amount to no investigation at all will also suffice. It is, however, 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. To suffice, it must be a clear and obvious case that the inadequacy of the investigation will render an ordinary reasonable man on the tram to Shaukiwan to conclude that injustice has resulted in that a fair and proper determination of the claim cannot be attained.

9. A complaint of a failure to discharge the statutory duty to investigate is not to be confused with an attack on a finding on the basis that it is contrary to the weight of evidence. The latter is not a ground for appeal for a labour dispute in the tribunal. The insufficiency of evidence to support a finding, or the inconsistency of a finding with the evidence, are matters that the appellate court can properly take into account to determine whether there has been a failure to conduct any or any adequate investigation of material facts relevant to such a finding. But that is as far as the relevance of these matters go in relation to the failure to discharge the statutory duty. They do not per se prove a failure to discharge the statutory duty. They are only matters which may give rise to a need for further investigation before a determination should be made. If there has been a proper and adequate investigation of the claim, no complaint can be made against any such findings of fact.

10. As the learned Presiding Officer had determined that the Claimant's employment was terminated by the 1st Respondent by payment of 1 month's wages in lieu of notice, the presumption of redundancy arises. He was satisfied that the presumption was rebutted on the evidence before him. It was a relatively short hearing, lasting for about an hour. The notes of proceedings kept by the learned Presiding Officer fail to disclose any active participation on his part in the trial on the related issues of reason for dismissal and the alleged replacement of the Claimant's job by a new employee. No questions were asked by the learned Presiding Officer regarding the 2 related issues. The cross-examination of the Claimant as well as the witnesses for the Respondents hardly touch on these 2 related issues as well. All there were before the learned Presiding Officer in the form of evidence are :-

(i) a brief allegation in the statement of defence and one statement by a witness for the Respondents upon affirmation that a replacement was employed,

(ii) a brief statement in the statement of defence that the Claimant did not have a good working relationship with some of the staff,

(iii) allegation in the Claimant's own statement that the brother-in-law and the supervisor used foul language against her and that the boss indicated that it was not a matter of his concern when she made a complaint; and

(iv) the production of the alleged letter of confirmation of employment when the claimant asked D.W.1 the only question on the 2 related issues i.e. asking him to adduce proof of the alleged replacement.

Prima facie, it is open to the learned Presiding Officer to accept the above evidence and find the true reason for the dismissal was that the Claimant "did not get along well with the brother-in-law of the boss". Again, prima facie it is open to the learned Presiding Officer to find that the presumption of redundancy has been rebutted upon an examination of the Claimant's duty list, the management structure of the company, and "the fact that replacement was found and its salaries".

11. However, quite a different picture emerges when one looks at the circumstances surrounding the dismissal. The following undisputed facts are important :-

(a) The packaging section of the 2nd Respondent was closed down and the last packing worker was dismissed about 1 month prior to the Claimant's dismissal.

(b) As a result of the above, the requirement of the Claimant's job relating to the 2nd Respondent's packaging section had totally disappeared, leaving her with only general accounting work and perhaps some stock control

(c) Severance payments were made to the packaging workers.

(d) No supporting document of an independent nature was adduced by the Respondents regarding the alleged replacement employee, e.g. employee's record of personal particulars, payment invoice, wage receipts or bank statements re payment of wages. All such documents were evidently kept by the Respondents in relation to the Claimant's employment and were all produced as exhibits. Further, the alleged replacement was not called to give evidence.This sort of evidence would almost inevitably be made available by an employer trying to rebut the presumption in almost all such cases before the tribunal, but was conspicuously absent in the present trial.

(e) The refusal of the learned Presiding Officer to accept allegations of leakage of marketing information by the Claimant as a reason for her dismissal.

(f) The Claimant's job was not filled between 22nd June 1991 and the date of the alleged employment of the replacement. There is no evidence of any attempt to recruit a replacement prior to the breakdown of negotiation at the Labour Department and the remittance of the Claim to the tribunal on 6th August 1991.

(g) That the alleged letter of confirmation only contains a vague reference in relation to work in the 2nd Respondent with no details as to the nature at all. The letter only says "Part of your job will associate with matters relating to Wilkinson Foods (HK) Ltd". It cannot be ascertained from this letter if the Claimant's job or any part thereof in the 2nd Respondent was to be taken over by Mr Chow.

        (h) The alleged replacement's salary is about 20% less than the Claimant's.

12. There may very well be an innocent answer to each and every one of the above undisputed facts. The learned Presiding Officer may still come to the same conclusion after all due and proper investigation have been carried out. But where the learned Presiding Officer falls in error is to accept without any query or question, or any investigation at all, that the dismissal was not due wholly or mainly to a diminished requirement of the work performed by the Claimant on the strength of a bare allegation supported only by a self-serving, ambiguous and unverified letter; against the weight of the undisputed facts set out earlier, and bearing in mind that the burden is on the Respondents to rebut the statutory presumption of redundancy. Since the evidence available to rebut the presumption is so feeble, and the undisputed facts' tendency to support the presumption, the learned Presiding Officer ought to have conducted an investigation into the facts before he can be satisfied as to the true reason for the Claimant's dismissal. The suspicion raised by the said undisputed facts should be investigated rather than ignored and left unexplained. I am satisfied that the said matters are matters of great relevance to the issue of the reason for dismissal, as well as to the presumption of redundancy and the rebuttal thereof. I am satisfied also that the said matters must be investigated before the learned Presiding Officer can have a proper and fair determination of the said issues.

13. Mr Lin submitted that merely by looking at the documents and listening to the testimony, the learned Presiding Officer had discharged the duty to investigate the said matters. I cannot agree with that. What Mr Lin had described is the process of assessment of existing evidence not the investigation of relevant matters. To discharge such a duty, it is encumbered upon the learned Presiding Officer to actively involved in the inquiry and the search for facts and explanations. That is what an inquisitiorial system is all about after all. Mr Lin's description of the role of the learned Presiding Officer is of an adversary role. On the records, the learned Presiding Officer did not ask any . question nor took any other action, whether exercising the powers available to him under s.20(2) or otherwise, in relation to the said matters. Such absence of action amounts to a failure to discharge the statutory duty to investigate. Any ordinary reasonable man would be compelled to conclude from such failure to investigate such vital matters that a fair and proper determination of the said issues cannot be attained by the learned Presiding Officer and that grave injustice has thereby been caused.

14. Presiding Officers are advised that if they have in fact considered their duty under s.20(3) in relation to any matter and determined further investigation to be unnecessary, a clear and adequate record ought to be kept of such fact. In the absence of any record of such a consideration, the appellate court is left with no alternative but to draw the inevitable inference that the issue has not occurred to the presiding officer and that he has failed to consider the matter. Needless to say a clear record of any investigation that has been carried out must be kept as part of the record of the proceedings even if no useful evidence has been uncovered as a result thereof. This departure from the normal requirements in reasons for judgment is necessary in view of the unique statutory duty to investigate that a presiding officer has to discharge. To do justice to himself, it is encumbered upon the presiding officer to keep a clear record of the consideration and his determination thereof in the same manner as he would with regard to other rulings on law and procedure.

15. For reasons set out above, the appeal is allowed and the claim for severance payment is to be remitted back to the Labour Tribunal for a new hearing before a different presiding officer.

16. I would further add that it appears to me from a reading of the very brief reasons for judgment that the learned Presiding Officer has not distinguished "motive" from "reason". The two need not, and very often do not,coincide. Perhaps the acid test is to consider : whether the employer would have nevertheless dismissed the employee for the alleged personal dislike of the latter's character, attributes or inadequacies even when the diminution or cesser in requirement of her work has not arisen at all? If so, why did the employer put up with her and did not dismiss her, within the 8 years of her service, prior to the commencement of such diminution or cesser? In the words of Lord Denning, "The truth is that in this Act we are concerned with the cause of the dismissal, and not with the employer's motives or beliefs except in so far as they throw light upon the cause. To qualify for redundancy payment, the dismissal must be 'by reason of', that is, as a result of redundancy, or in other words, 'attributable' to the fact: and not as a result of, or attributable to some other cause. But the presumption is in favour of redundancy." (Hindle v. Percival Boats Ltd [1969] 1 WLR 174, at 179). The distinction between "motive" and "reason" and the importance to be alert to the difference was further emphasised by Lord Widgery, at pp.187-188, when he said :

"The tribunal must, however, be alert to reaslise that dismissal is often attributable to a number of causes and that an employer who has personal objections to a particular employee might still have retained him were it not for a diminution in the requirements of the business for employees of that kind. The tribunal must not only be on the look out for the dishonest employer who puts forward a false reason for the dismissal, but also for the employer who misdirects himself (to use the language of the Divisional Court) into thinking that he was influenced by the personal deficiencies of the employee when in truth the main factor was that the requirements of the business had declined ...... I do not feel able to draw a distinction between "motive" and "reason" in sufficient vivid terms to be of value to tribunals who have to consider these questions hereafter, and the lesson of the MacLaughlan case in my opinion is that the tribunal must not accept the explanation put forward by the employer, however honestly, without looking at the whole of the evidence to see if it positively established that the dismissal was not mainly due to a diminution in the requirement of the business for employees on work of a particular kind".

17. There is a need to be more careful in cases as the present one when it is not the whole job that has disappeared but only a change in the nature or scope of the job. The Ordinance deals with "work of a particular kind" i.e. a consideration of the special skill and experience required of the job. It was held in Murphy v. Epsom College [1985] I.C.R. 80 that where the heating system of the employer had been modernized and a new heating technician having different skills and qualification than the plumber he was replacing was employed, such replacement rendered the dismissal of the plumber a redundancy. The decision of the tribunal was set aside in Amos v. Max-Arc Ltd. [1972] I.C.R. 46 when the appellate court held that "work of a particular kind" means work which was distinguished from other work of the same general kind by requiring special aptitudes, skills or knowledge; and that it was not clear from the tribunal's reasons whether that test was applied in coming to that decision. In that case stainless steel metal workers were offered to continue to be employed as black steel workers at a lower rate of pay after a reorganization of the factory.

18. In view of the fact that the Respondents played no part in the error upon which the appeal has been allowed, I do not propose to make any order as to costs for the appeal nor to interfere with the costs awarded to the Claimant in the tribunal. An order nisi that there be no order as to costs of the appeal is made.

19. Lastly, I am grateful to Mr Lin for his very helpful participation in exploring this rarely explored area in this piece of legislation. I have, since writing this judgment, been able to find comfort in the judgment in First Fit Co. Ltd. v. Lam Yau, Labour Tribunal Appeal No.4 of 1990 where similar views were expressed by the Court.

Dated this 9th day of September 1992.