XU DAZHONG v. NIPPON KAIJI KYOKAI t/a NIPPON KAIJI KYOKAI HONG KONG BRANCH

HCLA 15/2018

[2019] HKCFI 2588

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 15 OF 2018

(ON APPEAL FROM LABOUR TRIBUNAL

CLAIM NO. LBTC 3710 OF 2017)

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J U D G M E N T

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1.  This is an appeal against the order (“the Order”) of the Presiding Officer, Ms Jacqueline Lee (“the Presiding Officer”), of the Labour Tribunal (“the Tribunal”) dated 1 June 2018. The Presiding Officer handed down the reasons for making the Order in the written decision dated 20 June 2018 (“the Decision”).

2.  The Claimant was employed by the Defendant as a surveyor from 15 April 2013 to 30 September 2017.  By a resignation letter dated 1 September 2017, the Claimant gave notice of the termination of his employment.

3.  In the proceedings before the Tribunal, the Claimant claimed for: (i) annual leave with pay; (ii) discretionary bonuses; and (iii) end-of-year payments (“EOY Payments”).  After the trial, the Presiding Officer dismissed all the claims of the Claimant.

4.  By the order made by me on 6 August 2018, I granted leave to the Claimant to appeal against the Order in so far as it relates to the claim for the EOY Payments.

5.  It has all along been the Claimant’s case that he was entitled to receive 2 months of salary as bonus each year as specified in the email dated 22 January 2013.  However, the Presiding Officer held that the terms of the employment agreement were varied and eventually superseded by the terms of the subsequent agreement incorporating the office regulations as set out in the Employee Handbook (“the Handbook”), which the Claimant knowingly accepted and signed.  Such finding made by the Presiding Officer cannot be faulted.

6.  According to clause 4-1 of the Handbook, the Claimant was entitled to various payments including discretionary bonuses and EOY Payments.

7.  As correctly held by the Presiding Officer, there was no contractual entitlement to discretionary bonus.  On the other hand, clause 4-15 of the Handbook entitled the Claimant to receive EOY Payments twice in each calendar year (in June and December respectively) in the amount of half a month’s salary, making a total of 1 month’s salary as EOY Payments for each calendar year.

8.  There is no dispute that the Claimant received the following payments as “bonus” (“the Subject Payments”):

Sums	Date
$17,916	June 2013
$43,000	December 2013
$46,000	June 2014
$46,000	December 2014
$47,700	June 2015
$47,700	December 2015
$48,800	June 2016
$43,920	December 2016
$39,040	June 2017

9.  The issue between the parties is: (i) whether the Subject Payments were all discretionary bonuses, with the result that the Claimant has not been paid any EOY Payments; or (ii) whether the Subject Payments consisted of both discretionary bonuses and EOY Payments, with the result that the claim for EOY Payments must be dismissed.  This is very much a question of fact to be decided according to the evidence in the case.

10.  In my judgment, the problem with the Decision is that the Presiding Officer gave insufficient or wrong reason to support the finding that the Subject Payments included the EOY Payments.

11.  In the salary receipts, the Subject Payments were described as “bonus”.  In §48 of the Decision, the Presiding Officer referred to the oral testimony given by the witness for the Defendant, who explained that the “bonuses”, i.e. the Subject Payments, included both the discretionary bonuses and EOY Payments.  Subsequently in §51 of the Decision, the Presiding Officer noted the objection of the Claimant, who maintained that the simple word “bonus” used in the salary receipts referred to the discretionary bonuses and not EOY Payments, and so the EOY Payments have remained outstanding.

12.  In finding the case in favour of the Defendant, the Presiding Officer gave her reasons in §§52 and 53 of the Decision.  She held that, since the Defendant had never promised to give a specified sum to the Claimant as annual bonus, the amounts of the Subject Payments made by the Defendant were not unreasonable or unusual.  The Presiding Officer seemed to acknowledge that the word “bonus” used in the salary receipts was not clear enough to indicate that such payments were to include EOY Payments, and it would be desirable for the Defendant to amend such term to avoid misunderstandings. In the subsequent part of the Decision dealing with the EOY Payments, the Presiding Officer gave no further reason as to why she made the finding that the Subject Payments, thought described as “bonus”, were to include both discretionary bonuses and EOY Payments instead of just referring to the former.

13.  In determining whether the Subject Payments were to include the EOY Payments, the Presiding Officer should have ascertained the intention of the parties with respect to the Subject Payments.  The intention should have been ascertained objectively by reference to the conduct of the parties and other circumstances of the case.  The subjective intention of the Defendant’s witness is not conclusive.  Further, apart from the lack of reason to substantiate her conclusion that the amounts of the Subject Payments are reasonable, such factor is hardly relevant in determining the exact nature of the Subject Payments.

14.  More importantly, I note that in the Defendant’s first statement dated 28 November 2017[1], the Defendant actually referred to the Subject Payments as “discretionary bonus”. No reference was made about the making of EOY Payments.  It was only in the subsequent statements that the Defendant seemed to change its position by stating that the Subject Payments were to include both discretionary bonuses and EOY Payments.  Such inconsistency had not been canvassed at the trial or addressed by the Presiding Officer in the Decision.  This is highly undesirable.  As there is no satisfactory explanation or reason given by the Presiding Officer to support her finding, her decision on the EOY Payments claim lacks proper basis.  This is an error of law which necessitates the intervention by the appellate court.

15.  For the above reasons, I allow the appeal to the extent of setting aside the Order relating to the claim for EOY Payments.  I remit such claim back to the Tribunal for retrial before the Presiding Officer if she is still sitting in the Tribunal, or otherwise before another presiding officer, for determining the nature of the Subject Payments in accordance with the principles laid down in this Judgment.

16.  The Claimant succeeds in the appeal hearing. Since he has not been legally represented, I make a costs order nisi that the costs of the appeal be to the Claimant in the sum of $600.  The costs order nisi shall be made absolute 14 days after the handing down of this Judgment.