LAU BUN HAY v. MASS TRANSIT RAILWAY CORPORATION

HCA1893/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1893 OF 1997

(On Transfer from Labour Tribunal Claim No. LT 4355 of 1996)

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JUDGMENT

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The action was commenced as a claim at the Labour Tribunal by the Plaintiff ("Mr. Lau") for:-

(a) retention bonus in the sum of $270,874.19 for the period from 1 October 1992 to 30 November 1995;

(b) housing allowance in the sum $24,100 for the period from 16 September 1996 to 15 October 1996;

(c) pro rata 13 month salary in the sum of $4,474.17 for the period from 16 September 1996 to 15 October 1996; and

(d) pro rata family leave passage in the sum of $2,691.16 for the period from 16 September 1996 to 15 October 1996.

As I understand it, the Defendant ("the MTRC") raises no issue in relation to heads (c) and (d). However, head (a) and head (b) are hotly contested. Trial concluded on 25 May 2000. Written final submissions by counsel were filed the day after I had gone on leave for two months. Hence judgment could not have been delivered earlier.

The Employment Contract

2. The terms of employment agreed by the parties are evidenced by a letter ("the Employment Letter") dated 25 June 1992 issued on behalf of the MTRC and counter-signed by Mr. Lau himself:-

"Dear Mr. Lau,

Following your recent interview with us, we are pleased to offer you appointment as Engineer I (Civil Planning) in the Railway Extension Department of the Corporation on a 2-year local renewable contract. I am setting out below the main terms of the package:-

Salary:	HK$40,000.- per month (This salary has already taken into account the salary review in July 1992).
Salary Review:	Annually in July. Your next salary review will be in july 1993.
13th Month Payment:	Payable in January in each year subject to the rules laid down in Corporation General Instruction No. 158
Housing Allowance:	HK$13,000.- per month all inclusive. The housing allowance will be reviewed every year in July.
Retirement Plan:	Own Contribution: 6% on base salary
	Corporation Contribution: 15% on base salary
	Please refer to Retirement Scheme booklet for detail of benefits.
Retention Bonus:	If your service is no longer required by the Corporation for reason of redundancy, an extra payment equivalent to 1 month salary per completed year of service subject to total payment (including that from retirement scheme) not exceeding 2.85 months salary will be provided.
Annual Leave:	24 working days per annum. Up to 6 days of annual leave can be converted to cash at the end of June each year on request.
Leave Passage:	HK-London-HK 1/3 business class air fare (can be cashed) for the whole family and maximum up to 4 children below age 19.
..................................
Termination of Employment:	Your appointment could be terminated by either party by giving three months' notice or salary in lieu.

I trust you will find the above terms and conditions agreeable and I will appreciate if you would sign the copy of the letter to signify your acceptance.

	Yours sincerely,
	Maranda Kong (Mrs.) Assistant Manager (Personnel)

I accept the offer of appointment on the terms and conditions aforementioned and will be availability for duty on _______________________.

Signed by	_______________________
	LAU Bun-hay, Luke"

3. The paragraph under the heading Retention Bonus is somewhat misleading where it says "subject to the total payment (including that from retirement scheme) not exceeding 2.85 months salary will be provided." In fact the ceiling is not 2.85 months salary. The amount of retention bonus claimed by Mr. Lau, well above the maximum permissible under the terms of the Employment Letter, is admittedly correct.

4. The salary and housing allowance for Mr. Lau had been revised upwards several times. The employment history is tabulated below:-

Effective From	Salary per month	Housing Allowance per month
25.6.1992	40,000	13,000
1.7.1993	43,600	18,600
1.7.1994	48,000	21,400
1.7.1995	52,100	24,100
1.7.1996	53,690	24,100

17.7.1996	Notice given by the MTRC to Mr. Lau to terminate his employment.
15.9.1996	Last day of employment as per notice of termination.
30.9.1996	Expiry of employment contract but for termination 15 days earlier.

5. The problem I have to resolve is the circumstances under which retention bonus is payable. The contractual terms in relation to retention bonus are not clear at all. As already mentioned, the ceiling for retention bonus prescribed by the Employment Letter was contradicted by documents ("Contemporaneous Documents") attached to that letter. See pp. 6 - 7 of the Common and Agreed Trial Bundle.

6. According to the Employment Letter, retention bonus is payable if "service is no longer required by the [MTRC] for reason of redundancy." The Contemporaneous Documents contain a remark that: "3. Retention Bonus payable if contract is not renewed by the [MTRC]". On 7 November 1995, i.e. more than three years after Mr. Lau had been in the employ of the MTRC, the MTRC issued a booklet entitled "Retention Bonus Scheme" ("the Booklet"). It was argued at one stage in this case that Mr. Lau had no notice of the Booklet. However, evidence emerged that Mr. Lau had knowledge of crucial contents of the Booklet. It was also argued that in so far as the contents of the Booklet purported to vary the terms of retention bonus that form part of the employment contract between Mr. Lau and the MTRC, the contents of the Booklet are of no effect because one cannot retrospectively and unilaterally vary a contract. See Cowey v. Liberian Operations Ltd. [1996] 2 Lloyd's List LR. 45. The MTRC, of course, contends that the contents of the Booklet govern this case.

7. The Booklet reads:-

"Redundancy		Means termination of Employment by the Corporation by reasons of redundancy or non-renewal of contract other than where the Member is dismissed for cause. In all cases the Corporation reserves the right to decide whether the termination qualifies as Redundancy." (page 2)
"Under what circumstances would the payment be made?		The Retention Bonus will only be paid out in case of your leaving the Corporation due to Redundancy as defined above. An Eligible Employee must be a Class M member at the time of redundancy although periods of Class A service and Class B service will be taken into account in calculating the amount of the Retention Bonus." (page 3)
"What happens if I resign?		You will be entitled to your usual leaving service benefit under the Retirement Plan Rules but no additional benefit will be paid under the Retention Bonus Scheme unless the special guarantee applies as described below." (page 6)
"What happens if I become redundant on completion of the construction of the Airport Railway but am subsequently transferred by the Corporation to another project?		You will continue to be potentially eligible for Retention Bonus benefits which would become payable if you are subsequently made redundant. Furthermore, if you were employed as a Class M Member on a 2-year contract prior to 1 April 1995 and the transfer is made at the request of the Corporation, you will guaranteed to receive a total benefit (Retirement Plan plus Retention Bonus Scheme) no less than the total benefit which would have applied had you not accepted the new contract. In these circumstances the guarantee would apply even if you subsequently resigned. (see Example 7)" (page 6)
"What happens if I voluntarily apply for transfer/promotion to another position?		Provided the new position qualifies you to maintain your Eligible Employee status, if you are subsequently made redundant, your total service would be taken into account when determining payment of Retention Bonus." (page 7)

8. However, the nature and effect of the contents of the Booklet should be considered in the light of its INTRODUCTION:-

"The Corporation is justifiably proud of its Retirement Plan which is amongst the best in Hong Kong. However, inevitably the benefits are geared towards staff completing a significant part of their total career with the Corporation. The purpose of the Retention Bonus Scheme is to ensure that Corporation's staff involved in short term projects still obtain a competitive benefit when their service is terminated at the completion of the project.

This booklet provides a brief summary of the Retention Bonus to which you may become entitled in addition to the benefits which are payable under the Corporation's Retirement Plan.

Whilst every attempt has been made to describe the Retention Bonus Scheme, this booklet cannot be held to be authoritative in every detail. If there are any differences between the Rules of the Retention Bonus Scheme and this booklet, the Rules will prevail." (page 1)

9. In my view, as the INTRODUCTION of the Booklet says, the contents of the Booklet only explain the retention bonus scheme. The Booklet does not purport to prescribe the precise terms under which retention bonus is payable. The terms governing the retention bonus scheme are supposed to be in the "Rules of the Retention Bonus Scheme" which "will prevail". Yet, at no stage has either party produced anything called "Rules of the Retention Bonus Scheme". I find, as a fact, that "Rules of the Retention Bonus Scheme" has never existed. Even if it existed, neither party relies upon it in this case.

10. To complicate matters further, the MTRC issued a Corporate Notice on 6 November 1995 ("the Corporate Notice") the gist of which is that:-

"Project Terms and Conditions of Employment

1. Introduction

To enhance the ability of the Corporation in recruiting and retaining professional engineers and related staff and to recognise the short-term character of a major railway construction project, the Corporation has decided to convert the current Retirement Scheme and retention bonus arrangements to gratuity payment for short-term staff at PG and PM grades working directly for Lantau and Airport Railway.

This document sets out the eligibility criteria for gratuity payment and the basis upon which existing eligible staff can exercise an option to make a conversion.

2. Eligibility

Staff members meeting all of the following criteria will be eligible to convert from Retirement Scheme and retention bonus to gratuity:

(a) Staff employed to work directly on the Lantau and Airport Railway Project and are;

(b) At PG or PM grades within Project Division Commercial/Contracts Department (Lantau at Airport Railway), Property Project Department, Property Development and the Rolling Stock Section (Lantau and Airport Railway) and are;

(c) On 2-year contract terms only.

............

4. Gratuity Payment

Gratuity arrangements will come into effect on 1 December 1995.

Gratuity will be calculated at the rate 25% of basic monthly salary, inclusive of 13th month pay but excluding other payments and allowances.

Gratuity will only be paid upon completion of individual contracts. The first payment of gratuity will be made upon completion of the current contract and the payment will be based on service counting from 1 December 1995.

These gratuity arrangements will terminate on the completion of construction of the Airport Railway. Any continuation of gratuity arrangements beyond that will be subject to further review and announcement.

5. Existing Retirement Scheme Arrangement

Retirement Scheme and retention bonus benefits earned up to 1 December 1995 will remain within the relevant schemes and will be paid upon termination of employment in accordance with the current provisions of the MRTC Retirement Scheme and the MRTC Retention Bonus Scheme respectively."

11. It is the MRTC's case that Mr. Lau validly opted for gratuity terms with effect from 1 December 1995 pursuant to the Corporate Notice. Mr. Ismail, counsel for the MRTC, suggests in his written final submission that, upon conversion to gratuity terms, Mr. Lau's entitlement to retention bonus would still be governed by the provisions of the retention bonus scheme contained in the Booklet. With respect, the Corporate Notice refers to the provisions, not the Booklet. The Booklet "provides a brief summary" which, on any view, cannot be regarded as binding terms.

The Basis of Claim

12. The statement of claim pleads that:-

"5. In about September 1995 the main civil planning work on the Lantau Airport Railway Extension Line was completed and the number of engineers and administrative staff in the Civil Planning Section was greatly reduced.

6. By a letter dated 17 July 1996, about 21/2 months before the expiry of the said renewed contract of employment, the Defendant terminated the employment of the Plaintiff with effect from 15 September 1996 by giving the Plaintiff 2 months' notice and 1 month's salary in lieu of notice.

7. Wrongfully, the reason given by the Defendant for the termination of the contract of employment was for the Plaintiff's unsatisfactory performance as assessed by his immediate supervisor when the Plaintiff was the only senior engineer left in the Civil Planning Section and had satisfactory annual performance assessments in the prior 3 years, evidenced by good salary increments following the said prior assessments.

8. By a letter dated 8 September 1996 the Plaintiff applied to be heard by the Project Director of the Defendant regarding the management's view of his performance resulting in his dismissal but the application was ignored.

9. In the premises, the Plaintiff was made redundant because the civil planning work for the Lantau Airport Railway Extension Line was completed but the Plaintiff was unfairly and wrongfully dismissed.

10. Further, wrongfully and in breach of contract, the Defendant failed or refused to pay the Plaintiff his Retention Bonus from 1 October 1992 to 30 November 1995, on which latter date a new gratuity scheme came into existence, and failed or refused to pay his housing allowance, a pro rata 13th month's salary and a pro rata family leave passage allowance in the 1 month's salary in lieu of notice that was paid him.

Particulars

(1)	Retention Bonus 1.10.92 - 30.11.95	$270,874.19
(2)	Housing Allowance 16.9.96 - 15.10.96	$24,100.00
(3)	Pro rata 13th month salary 16.9.96 - 15.10.96	$4,474.17
(4)	Pro rata family leave passage 16.9.96 - 15.10.96	$2,691.16
	Total:	$302,139.52 =========

11. By reason of the matters aforesaid, the plain has suffered loss and damage.

......

and the Plaintiff claims against the Defendant:-

(1) Damages as pleaded in Paragraph 10;

13. According to the Defence, the MRTC pleaded that Mr. Lau was dismissed 'for cause, namely, his performance did not meet the standard for which the position required". See Paragraph 5 of the Defence. Mr. Ismail maintains this position throughout. Furthermore, Mr. Ismail contends that (i) there was no redundancy and (ii) Mr. Lau was not terminated for or by reason of redundancy. The whole case, therefore, turns on the basis on which Mr. Lau's employment was terminated.

Termination of Employment

14. The termination is evidenced by a letter dated 17 July 1996 ("the Termination Letter") issued by an Assistant Manager (Personnel) ("Mrs. Kong") on behalf of the MRTC:-

"Despite our performance interview held on 18 March 1996 reiterating the ended for you to improve your performance, it has again been reported by your immediate supervisor that you have shown very little improvement in the recent months. In consequence, this letter serves to confirm our recent meeting on 16 July 1996 that your employment with the Corporation will be terminated in accordance with the terms and conditions of employment as stated in our letter of offer to you dated 25 June 1992. In this connection, we hereby confirm that your last day of service will be 15 September 1996 by giving you 2 months' notice in advance plus 1 month's salary in lieu of notice.

On termination of appointment, arrangements will be made to you for the following payments:

1. Your salary up to and including 15 September 1996 and an additional month's basic salary in lieu of notice.

2. Housing allowance and 13th month salary payment up to and including 15 September 1996 on pro rata basis.

3. Leaving service benefits under the Retirement Scheme calculated up to and including 30 November 1995.

4. Your earned leave of 22.07 working days not taken calculated up to and including 15 September 1996 on the assumption that no further leave will be taken.

5. Subject to the condition that you will perform your role in a satisfactory and co-operative manner during the rest of the notice period, you will be paid the gratuity payment calculated at the rate of 25% of basic salary, including a proportionate amount of 13th month pay earned between 1 December 1995 and 15 September 1996.

6. Leave Passage Allowance entitled bu not yet utilized.

On your last working day, you are required to return all items previously issued t you on a personal basis such as staff identity card and train pass etc. to Human Resource Management Department. A cheque in full settlement of the above payments will then be issued to you."

15. It is immediately apparent from the contents of the Termination Letter that, although Mr. Lau allegedly showed very little improvement in performance, the MRTC invoked the termination clause in the Employment Letter and purported to give 2 months' advance notice plus one month salary in lieu of the third month notice. The termination clause in the Employment Letter provides for termination by either party by giving three months' prior notice or payment in lieu. On any view, such termination clause must be regarded as a termination without cause clause.

16. An employer can, of course, dismiss an employee for cause such as grave misconduct or wilful disobedience of a lawful order on the part of the employee. It is trite law that where an employer purported to dismiss an employee for cause and such cause turned out to be unsubstantiated, the dismissed may still be justified by some other cause proved at the trial. However, this is not the case here. The MRTC did not at the time of termination purport to dismiss for cause. The MTRC terminated the employment of Mr. Lau pursuant to a contractual clause which does not require the party effecting termination to show cause.

17. Mr. Ismail contends that where there is dismissal for cause, according to the Booklet, retention bonus is not payable. However, dismissal for cause is nowhere defined in any document nor explained in the Booklet relied upon by the MTRC. Mr. Cheng, counsel for Mr. Lau, contends that dismissal for cause is tantamount to summary dismissal under section 9 of the Ordinance which, of course, includes summary dismissal under common law. I am inclined to agree with Mr. Cheng but it will be seen the issue does not call for decision.

18. Since the MRTC invoked the termination clause in the Employment Letter, question arises as to whether it has complied with the terms of the employment contract. In this respect, it is common ground that section 4(1) of the Ordinance applies.

19. In order to lawfully terminate Mr. Lau's employment under the termination clause, the MRTC must either give 3 months notice in advance or pay salary in lieu. There is no dispute over the 2 months' notice given. However, Mr. Lau complains that the MRTC did not pay the full salary in lieu of the third month notice. In particular, the MRTC refused to pay the housing allowance, pro rata 13th month salary and pro rata family leave passage as part of the payment in lieu. Mr. Ismail states in his final written submission that he makes no submissions on the pro rata items. This is almost as good as admission of liability. I have no difficulty in holding that the MRTC failed to make full payment in lieu of the third month notice. On this ground alone, there was breach of contract and wrongful dismissal.

20. In relation to the housing allowance, Yeung J. in Neckel Nils v. Dual Voltage Company Ltd., Labour Tribunal Appeal No. 100 of 1996 held that since such allowance is earned or payable for work done, it fits squarely within the definition of "wages" to be paid in lieu of notice termination. The learned judge further held that housing allowance is not excludable on the basis of being "the value of accommodation provided by the employer." Mr. Ismail seeks to distinguish that case from the instant one I have to decide by reference to the fact that the housing allowance due to Mr. Lau is a reimbursement. Clearly, the decision by Yeung J. was not based on whether the housing allowance in that case was a reimbursement or accountable. The distinction drawn by Mr. Ismail is unjustified. I have no doubt that the housing allowance under the employment contract between the MRTC and Mr. Lau forms part of his salary. By refusing to pay this part of the salary in lieu of the third month notice, again, the MRTC was in breach and thereby wrongfully terminated Mr. Lau's employment contract.

The Circumstances of Termination

21. Much of the time during the trial was spent on factual disputes. The MTRC called evidence tending to show that Mr. Lau did not perform to standard from the end of 1995 and, despite further opportunity given to him to improve, his performance by the middle of 1996 was assessed by Mr. Walker, Mr. Lau's immediate supervisor, to be that of an ordinary engineer, not that of a Senior Engineer. Mr. Lau, was at the time employed and paid as a Senior Engineer. It was for poor performance that the MTRC decided to terminate Mr. Lau's employment.

22. Evidence from Mr. Lau, on the other hand, show a different picture. The annual performance assessments of Mr. Lau by Mr. Walker for all previous years put Mr. Lau at least at above average. It is a fact that by 1995 many of the higher engineering managers above Mr. Lau and Mr. Walker had been laid off because the railway extension to the Chek Lap Kok Airport was nearing completion. It is also a fact that Mr. Walker himself was already by the end of 1995 scheduled to leave the MTRC in 1997. It was at this juncture that Mr. Walker reported that Mr. Lau's performance deteriorated. According to Mr. Lau, Mr. Walker wanted to get rid of Mr. Lau so that Mr. Walker could seek re-employment by the MTRC at the lower grade Senior Engineer. According to Mr. Lau, the complaints by Mr. Walker about Mr. Lau's performance are unjustified. Mr. Lau wrote to the directorate level only to be confronted by Mr. Walker asking him to recant. When Mr. Lau refused to withdraw his letter to the directorate, the Personnel Department issued the Termination Letter which made sure that Mr. Lau left the MTRC 15 days before his employment contract was due to expire.

23. I find that the totality of evidence before me well establishes that there was a redundancy situation. There can be no doubt that Mr. Lau was hired for the Chep Lap Kok New Airport railway extension project ("the LAR project"). The Booklet makes express reference to the LAR project. In fact, Mr. Lau qualified as M class employee defined in the Booklet for this very reason. Towards the end of 1995, the work of Mr. Lau for the LAR project had diminished significantly. Accordingly to a report dated 4 October 1995 from Mr. Walker's to his own superior, the LAR project would occupy the remaining 3 engineers (including Mr. Walker and Mr. Lau) only 70% of their time in 1996 and 1997. 30% of their time would be spent on exploratory work in smaller projects in town. The same report anticipated that the LAR project work for the remaining two engineers after Mr. Walker would have left in 1997 would drop to 50% by 1998 and 1999. The smaller projects, it should be noted, were tentative ones even by late 1996 after Mr. Lau had been terminated. The government approved those smaller projects later thereby putting life back into the section. Hence, the fact that the section had more staff in 1997 and thereafter cannot be taken as proof that there was no redundancy in 1996.

24. When each of the remaining 3 engineers of the section in 1996 had 30% slack in work for the LAR project for which they were hired, effectively one of the engineers was redundant by 1996. This is simple arithmetic. The Ordinance provides another guide for determining redundancy. Section 31E says that:-

"31E. Lay-off

(1) Where an employee is employed under a contract on such terms and conditions that his remuneration thereunder depends on his being provided by the employer with work of the kind he is employed to do, he shall for the purposes of section 31B(1) be taken to be laid off where the total number of days on each of which such work is not provided for him by the employer exceeds -

(a) half of the total number of normal working days in any period of 4 consecutive weeks; or

(b) one-third of the total number of normal working days in any period of 26 consecutive weeks,

and he is not paid a sum equivalent to the wages which he would have earned if work had been provided on the days on which no work was provided."

So, an employee is deemed to be laid off where there is one-third slack of work for half a year unless the employer continues to pay regular wages. In this case, for the entire 9 months period in 1996 when he was employed by the MTRC, Mr. Lau had one-third slack of work on the LAR project for which he was hired. Lay-off did not arise for as long as Mr. Lau continued to be paid his full salary. But as soon as he was terminated, i.e. no salary would be paid, Mr. Lau was in effect laid off. Moreover, there is a presumption of redundancy under section 31Q of the Ordinance which Mr. Ismail accepts applies to this case.

25. The burden is on the MTRC to prove, on the balance of probabilities, that Mr. Lau was not dismissed for or by reason of redundancy. The MTRC sought to discharge this burden by proving dismissal due to poor performance. The evidence of poor performance came entirely from Mr. Walker. On various occasions and in various modes of communication Mr. Walker reported to the MTRC a number of failures on the part of Mr. Lau. My task is simpler because Mr. Walker has set out in a witness statement the main points of the accusations against Mr. Lau. Those points were adopted and repeated by Mr. Walker when giving evidence:-

"(1) whilst his performance was adequate for a Civil Planning Engineer (Grade PG1), formerly Engineer II (Grade E II), it was below the standard of what was expected of a Senior Civil Planning Engineer; and

(2) a Senior Civil Planning Engineer was expected to be proactive in seeking solutions to problems facing the Civil Planning Section. I gave several examples to the Plaintiff of his lack of proactivity:-

(a) when I made a note on an incoming piece of correspondence and passed it to him with a request to study and discuss it with me, I often found myself looking for him to discuss the matter instead of the other way round;

(b) the Plaintiff was expected to think around the land problems that the Defendant faced, suggest solutions and work them through. He often did not do so. For example, the defendant needed to acquire the Mei Foo depot as a temporary work site with marine and vehicular access. There were problems with the Transport Department concerning the safety of the vehicular access to the depot because of the proximity of the depot to a roundabout. The Plaintiff was expected to sort out the differences between the Defendant and the relevant Government Departments and was asked to prepare some drawings for this purpose. To my surprise, the Plaintiff did not prepare the drawings or do anything useful and constructive to break the impasse between the Defendant and the relevant Government Departments. I often had to get involved to iron out the Defendant's differences with the Government Departments;

(c) the Railway Extensions Department dealt with land acquisition issues and it was very important to form and maintain a strong working relationship with the relevant Government Departments. The Plaintiff failed to establish any satisfactory direct contact and channel of communication with these Departments. From my observations, the Plaintiff often relied on formal letters to communicate and not on telephone conversations which are less personal. His letters led to miscommunication possibly because of differences in interpretation; and

(d) at times the Plaintiff did not work fast enough. For instance, he delayed in the preparation of the Land Budget and the maintenance matrix."

26. Obviously, Point (1) is a conclusion that needs to be substantiated by specifics. Points (2)(a), (b), (c) and (d) appear to be specifics. Before going into those specifics, I note that Point (1) is consistent with the theory advanced on behalf of Mr. Lau that Mr. Walker, faced with the prospect of losing his managerial post, tried to push Mr. Lau to a lower rank engineer post so that he Mr. Walker could take the vacated Senior Engineer post.

27. Point 2(a) is not helpful at all. Mr. Walker alleged that the failure to respond proactively occurred often. Bearing in mind the MTRC has all the files on which Mr. Walker and Mr. Lau worked, if the accusation is true, there should be no difficulty at all for the MTRC or Mr. Walker to produce an incoming piece of correspondence bearing a note written by Mr. Walker to Mr. Lau and further evidence to show that Mr. Lau did not deal with the matter adequately. However, at no time, whether during a performance review meeting with Personnel Department or during any discussion with Mr. Lau subsequently before Mr. Lau was dismissed or during the discovery stage of these proceedings or at the trial, did the MTRC or Mr. Walker produce any objective evidence to substantiate this point.

28. Point 2(b) refers to the Mei Foo depot land and marine access. It is quite specific. But it is soundly rebutted by Mr. Lau on evidence furnished by the MTRC and Mr. Walker. In the performance assessment report for the year 1994 - 1995, under Key Result Area 5, Mr. Lau set himself the objective of getting the government to agree by 1st November 1994 to the required land and marine access to the Mei Foo depot. Mr. Walker report that this "has been dealt with efficiently by [Mr. Lau]" and he gave Mr. Lau a performance rating of 6 out of 7 on this matter! Clearly the job had been done to the satisfaction of and admitted by Mr. Walker before the end of 1994 yet Mr. Walker had the gall to bring the matter up more than a year later and twisted it the other way round.

29. Point 2(c) accuses Mr. Lau of failing to form and maintain a strong working relationship with the relevant government departments. Obviously, Mr. Lau had to deal with the same government departments all through the years. Remembering how Mr. Lau handled the Mei Foo depot access job "efficiently" with the government, this accusation is automatically suspect. Also, in the performance assessment report for the year 1994 - 1995, Mr. Walker himself noted, under the heading Communication Skills, that “[Mr. Lau] writes very competent reports and letters. His oral communication skills are good and he always makes himself understood". Mr. Walker gave Mr. Lau a rating on this score of 5 out of 7 and recommended no need for training for improvement. Mr. Ismail suggests that it is possible that Mr. Lau's performance deteriorated after 1994. I accept there is always such possibility. But how was Mr. Lau's later performance? Mr. Walker alleges that Mr. Lau's "letters led to miscommunication possibly because of differences in interpretation." I was prepared to study any of the "letters" to appreciate the "miscommunication" but none has been shown to me.

30. Point 2(d) charges that Mr. Lau did not work fast enough and he delayed in the preparation of the Land Budget. This point had been raised, again, in the 1994 performance assessment report. Mr. Lau had already given an explanation in that report. Mr. Walker nonetheless noted "[Mr. Lau] has been very tardy in updating the Land Budget"]. Despite this very tardiness, Mr. Lau was given a performance rating of 4 out of 7. Then Mr. Walker noted in the same report, under the heading of Monitoring and Control work in progress, that "[Mr. Lau] does control his own work well .......". How could Mr. Lau be "very tardy" if he controlled his own work well?

31. A general complaint made by Mr. Walker against Mr. Lau is that Mr. Lau did not display the qualities of a Senior Engineer. A Senior Engineer is expected to have commensurate technical expertise, initiative and leadership. Mr. Walker repeatedly acknowledged that Mr. Lau show technical competence. Criticisms of lack of initiative in 1995 have fallen by the way side because they are unsubstantiated. As to leadership, again I find that Mr. Walker unfairly attacked Mr. Lau for lack of leadership. Although there had been a number of engineers in the section who according to the organization charts were under Mr. Lau, Mr. Lau stated in evidence that Mr. Walker had all along assumed direct supervision of all engineers in the section. In fact, Mr. Lau in the performance assessment reports on himself had noted that he had control of his own work only. Under autocratic style of management, it is only fair to observe, Mr. Lau had no room to exercise leadership. Neither the MTRC nor Mr. Walker offered any evidence to contradict this.

32. I have, of course, studied very carefully all the performance assessment reports made by Mr. Walker on Mr. Lau. It is not difficult to find furthermore in the report for 1994 - 1995 that Mr. Walker was prone to make self-contradictory comments on Mr. Lau. I find that the reports reflect Mr. Walker as a capricious assessor even when he did not deliberately set out to twist things around. In fact, during the trial, Mr. Walker admitted that, on the last performance assessment report (for the year 1995 - 96) he on the advice of Personnel Department reduced the overall assessment rating of Mr. Lau from 3 out of 7 to 2 out of 7. Two points stand out from this. First, Mr. Walker made an unacceptable assessment. Secondly, he allowed Personnel Department, which had no direct knowledge of Mr. Lau's performance, to influence his assessment.

33. In conclusion, I find Mr. Walker an unreliable witness so far as his evidence about Mr. Lau's alleged poor performance is concerned. I have little doubt that Mr. Walker did not honestly or genuinely believe that Mr. Lau was incompetent as a Senior Engineer.

34. Mr. Ismail also contends that the MTRC honestly and genuinely believed that Mr. Lau was not reasonably competent as a Senior Engineer. But, as counsel says, "Mr. Walker was the only person qualified to make [performance] appraisal" on Mr. Lau. Since, as I have held, Mr. Walker did not honestly or genuinely believe that Mr. Lau was incompetent as a Senior Engineer, such bad faith must also be attributed to the MTRC. I accept that in some cases it may be open to an employer to take the report of a manager on a subordinate on its face value. However, in this case, considering that (1) there are patent contradictions within the earlier performance assessment reports and (2) the sudden reported deterioration of performance despite consistent good performance in previous years, the MTRC ought to have seriously pondered over the complaints by Mr. Walker against Mr. Lau. Had the MTRC properly considered the complaints made by Mr. Walker, it would have appreciated that some of the complaints were nebulous and unsubstantiated and, at least in one instance, the complaint was false. Instead, the Personnel Department advised Mr. Walker to lower Mr. Lau's performance rating to aggravate the case against Mr. Lau.

35. In my view, the MTRC in the circumstances of this case cannot hide behind its managers. The MTRC cannot claim to have honest and genuine belief that there was good cause to dismiss Mr. Lau when the supervising manager Mr. Walker was not acting bona fides. In any event, I find that "cause" has not been established. In the premises, the MTRC has not rebutted the presumption of redundancy.

36. It may be argued that although Mr. Lau was not dismissed for cause, he was terminated by notice and hence he was not dismissed. I have already held that the termination did not fully comply with the terms of the employment contract and the Ordinance. Therefore, there was no valid termination by notice. I find that Mr. Lau was dismissed. In view of the slack in work and the statutory presumption of redundancy, I believe Mr. Lau was dismissed for or by reason of redundancy.

Quantum

37. No issue has been raised over quantum.

Conclusion

38. The MTRC unable to establish a positive case of dismissal for cause and having failed to rebut the presumption of redundancy is liable to pay to Mr. Lau retention bonus at $270,874.19. There being no real defence to the claims of outstanding housing allowance at $24,100.00, pro rata 13th month salary at 44,474.17 and pro rata family leave passage at $269.16, the MTRC is also liable for them.

39. Accordingly, there is judgment for the Plaintiff at $302,139.52 with interest and costs to be taxed if not agreed.