WU MAN KWONG v. ASIA CULTURE BROADCAST CO. LTD.

HCLA 1/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 1 OF 1998

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J U D G M E N T

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Background Litigation History

1. This is an appeal against the decision of Mr. Roy Yu, a presiding officer of the Labour Tribunal, given on 24th December, 1997. The claimant (appellant) was the employee and the respondent was the employer. The claim was filed with the Labour Tribunal on 4th March, 1997, and after a few hearings and adjournments, eventually, on 24th December, 1997 the presiding officer made his award. He awarded the claimant the sum of $3,514 being the amount owed to him as annual leave pay. He dismissed the claimant's claim for arrears of salary and year end bonus. He also dismissed the claimant's claim for common law damages. He made no order as to cost.

2. The claimant was not satisfied with the decision. On 3rd February, 1998 he appeared before Yeung J. to apply for leave to appeal. The application was adjourned to enable the appellant to obtain legal aid. Leave to appeal was granted by Mr. Recorder Riberio SC on 23rd June, 1998. The appeal was heard by Deputy Judge Z.E. Li on 3rd September, 1998. The hearing was not effective. The Deputy Judge considered that the presiding officer had not made sufficient findings of facts to enable the appeal to be disposed of. He adjourned the hearing to enable the presiding officer "to prepare a Supplemental Reasons for Decision stating categorically what findings of facts he made after trial so far as he considers necessary". In his reasons for decision, the Deputy Judge specifically mentioned that he considered that a finding of fact in relation to the status of the employment of the appellant as on 9th December, 1996 and when the respondent had ceased paying the appellant was crucial. It would also appear that he would consider that the appeal could not be satisfactorily disposed of without reference to the documentary evidence in Chinese produced in the trial. Apparently the appellant's solicitors did not have copies of all the exhibits at that time. On 18th September, 1998 the presiding officer indicated that all findings of facts he made were contained in the reasons for decision dated 24th December, 1998. He had thus declined to make any further finding of facts. There was no application for mandamus. The appeal was restored before me on 19rth January, 1999. The respondent was not represented and did not appear.

3. While conceding that there were gaps in the findings of facts, counsel for the appellant urged upon me to hear and dispose of the appeal on the basis of the material available. His contention was that despite the gaps in the findings of facts, there was sufficient material before me to enable me to dispose of the appeal. In particular he reminded me that although I did not have any power to vary any finding of facts by the presiding officer, I was entitled to draw any inference of fact from the evidence and material before the tribunal. Of course in so far as those evidence which the presiding officer had rejected as being not creditable, I am not at liberty to draw any inference form those evidence. Bearing in mind the history of this matter and that the burden of proof and the burden in this appeal were all on the appellant, I proceed to hear and consider the merit of this appeal.

Factual Background

4. The appellant was employed by the respondent as the production controller of the company on 15th July, 1996. His salary was $23,000 per month. The terms of the contract of employment were set out in a letter signed by both parties dated 16th July, 1996. Paragraph 5 of the terms read : "You will be entitled to an Annual Bonus of one month's salary, based on your salary as review, provided that you have completed not less than 36 weeks' service with the Company, Annual Bonus is normally pro-rata in the first year commencing after the probationary period and according to length of service." While Section 11AA of the Employment Ordinance would not apply because this contract of employment was made before the commencement of that section, it is clear that the annual bonus in this case was not payable as a matter of discretion on the part of the respondent.

5. There was no dispute that the appellant was so employed until at least the end of November, 1997. There was no revision of his salary. Thus the pro rata amount of year end bonus would be payable to the claimant unless this was a case of the termination of employment by the claimant under section 6 or 7 of the Employment Ordinance or by the respondent under section 9 of the same ordinance (see section 11F(1) Employment Ordinance).

6. As a production controller, the appellant was assigned to head and to supervise a television station of the respondent at Kodah House. The presiding officer described his job as production supervisor in charge of the TV station at Kodah House. On 30th November, 1996, all the employees of that station tendered their resignation to the respondent. In their letter of resignation, various accusations were made against the appellant for mal-administration.

7. What transpired after 30th November, 1996 was not very clear. It would appear from the findings of the presiding officer that there were a number of meetings held between Mr. Sun of the respondent and the appellant. It would also appear to be the finding of the presiding officer that Mr. Sun suspended the duty of the appellant as production supervisor and that the salary of the appellant was also reduced by 1/3. Indeed so far as the reduction of the salary is concerned, there seems to be no dispute between the parties. This is evidenced from the claim lodged by the appellant where salary was claimed on the basis of 2/3 of $23,000 per month from 10th December, 1996 thus suggesting that as from 11th December, 1996 onwards, the appellant's salary had been reduced by 1/3. In the circumstances of this case, in the light of the finding of the presiding officer, and in the light of paragraph 11 of the Statement of Defence of the respondent (exhibit D-1), I am entitled to come to the conclusion that there was a variation of the terms of the employment of the appellant whereby his salary was reduced by 1/3 and that this incident of variation was the very incident whereby the appellant's duty as production supervisor was suspended. I am also entitled to come to the view that the appellant consented to such variation of duties and salary.

8. I would like to point out that as the presiding officer had found that the arrangement was a suspension of the duties of the appellant as production supervisor with a reduced salary, this kind of suspension was very different from "suspension from employment" referred to in section 11 of the Employment Ordinance, which envisaged the suspension of the rights and obligations of the contract of employment so that the employee was not required to do any work and the employer was not required to pay the employee. Hence I do not consider that the arrangement had infringed section 11 of the Ordinance.

9. I would also like to point out that although the presiding officer did not made any specific finding that the appellant was paid his salary up to 30th November 1996, it is plain from the claim filed and the Statement of Defence that there was no dispute on this point. Hence I am of the view that I can proceed on the basis that the appellant was paid up to 30th November 1996.

The disputes and the ruling of the presiding officer

10. The case of the appellant before the presiding officer appeared to be that although he was relieved of his duties as production supervisor, he was given new assignments by the respondent. He was not asked or required to attend any particular officer to perform these assignments. These assignments were (a) to look for a production house who would be sub-contracted to produce for the respondent and to re-structure the employee working at the respondent's TV station, (b) to look for new premises for the respondent's studio, and (c) to look for a buyer for the existing premises of the TV station for financing purposes. The appellant's case was that he completed these assignments. In January, 1997 the appellant claimed that he had demanded to be paid the arrears of his salary but he was not paid. He decided to terminate his employment relationship with the respondent at the end of February, 1997. He filed his claim on 4th March, 1997.

11. The case for the respondent was that following the mass resignation of the employees working under the appellant, the appellant was suspended from his duties of production supervisor. The appellant was expressly told by Mr. Sun that instead of attending office at Kodah House where the appellant used to work, he should attend office at Star House. The appellant however did not attend the office as directed. Although the appellant appeared in the respondent's Star House office on a few occasions, his appearance was not for the purpose of work but was only for brief meetings only. The respondent denied that the appellant had been given the 3 assignments which the appellant claimed that he was asked to do. Indeed, it would appear that on the respondent's case, the appellant was given no assignment at all. It was the respondent's case, that the appellant's employment was terminated on 30th November, 1996, or 6th December, 1996 and in any event not later than 9th December, 1996. The relevance of the date of 6th December, 1996 and 9th December, 1996 was that on those 2 days, there were board meetings of the respondent whereby the question of the employment of the appellant was raised and discussed. It would appear that the presiding officer had accepted that the minutes of the meetings were genuine and that the minutes constituted a fair record of what took place in the meeting.

12. The presiding officer found that the appellant was not a reliable witness. He also found that CW5, a witness called by the appellant to support his claim that he had performed the assignment of looking for new premises and looking for a buyer of the existing premises to be unreliable too. It is not at all clear as to whether the presiding officer accepted that the appellant had actually performed the 3 assignments or any of them or any part of them, or whether the presiding officer was of the view that he could not be satisfied that what the appellant did was at the direction of Mr. Sun or any other officer of the respondent.

13. Furthermore, the presiding officer also found Mr. Sun and Mr. Fai, the officers of the respondent giving evidence, to be unreliable witnesses too. The consequence of such finding must be that the presiding officer could not find that there was no instruction given to the appellant to perform the 3 assignments. In the end, this issue of whether the appellant was given the 3 assignments was wholly uncertain. There was no primary fact found by the presiding officer which would enable me to draw any inference at all.

14. What I think I can infer is that after the 10th December, 1996, the appellant did not turn up regularly for work at the office of either Kodah House or Star House. This inference I can draw from the case of the respondent as gleaned from exhibit D-1 and also from the fact that the appellant did not appear to have disputed that through out the conduct of the trial before the presiding officer. I was unable to come to any view on exactly what the appellant did before 10th December, 1996 because much of what had happened before that day was the subject matter of the evidence of the parties and the presiding officer found them to be unreliable witnesses.

15. In the end the presiding officer found that for the period in which wages were claimed the appellant had not been working at all. The presiding officer was of the view that because he had not performed any work, he could not complain of not being paid his wages. His view was that when an employee was not required to return to work, and could not prove that he had performed any work for the employer, he was not entitled to any wages as he had given no consideration for the contract. On this basis, he dismissed the claim of the appellant for arrears of wages.

16. Although the presiding officer found that the appellant had not performed any work, he rejected the respondent's claim that the respondent had terminated the employment of the appellant by a letter dated 9th December, 1996 (exhibit D-10). Whatever was the effect of this letter, the presiding officer found that the respondent failed to prove that this letter had been served on the appellant. Accordingly the letter would simply serve to record the un-communicated intention of the respondent.

17. The presiding officer also said : "I therefore found that his employment was terminated by the Defendant (sic) on 28/2/97 when he claims section 10 resignation. He would be entitled to pro rata payment of annual leave". I think the word "Defendant" was a slip, and the presiding officer must intend to mean claimant (appellant) for 2 reasons. First, the reference to section 10 is a reference to the right of an employee to terminate employment without any notice or payment in lieu. Secondly, as was apparent from the presiding officer's reasons for decision, the respondent's case was that the employment was terminated on 31st November, 1996 or 6th December, 1996 or 9th December, 1996, it is difficult to reconcile with any finding by the tribunal that the "Defendant" (respondent) had terminated the appellant's employment on 28th February, 1997.

18. The presiding officer rejected the appellant's claim for year end bonus for this reason. He said : "As he left the employment himself, he must be deemed to leave under section 6 of the Employment Ordinance unless he proves constructive dismissal. Under section 11F of the Employment Ordinance, he is not entitled to end of year payment on pro rata basis". I must say that I found this reasoning difficult to understand. It would appear that this was in direct conflict with his earlier finding that the employment was terminated on 28th February, 1997 when the appellant claimed section 10 resignation. Section 6 termination and Section 10 termination cannot co-exist.

The appeal

19. I am of the view that the presiding officer was wrong in rejecting the claim for arrears of salary.

20. I note that it was not the case of either party that the appellant was told that his duties as production supervisor were suspended on 1st December, 1996. Hence between the 1st December, 1996 and the date when the parties agreed that the appellant's duties were suspended and his salary should be reduced by 1/3, there is no reason for the appellant not to be paid his salary at the old rate at all. Even if there was no reliable evidence on what work the appellant had performed during this period, there was no evidence or suggestion that during this period, he had refused to perform any work asked of him. Furthermore, even if the appellant had done no work and this was sufficient to justify the respondent to terminate his employment without notice, plainly in agreeing with him to suspend his duties as production supervisor at a 1/3 reduction of salary, the respondent had decided to affirm his contract of employment albeit on varied terms as to the duties and rate of pay. Accordingly I am of the view that the appellant must be entitled to be paid for this period.

21. The difficulty that I face is that the presiding officer had made no finding on the date on which the parties had agreed to the suspension of duties and reduction of pay. From the minutes of the Board meetings of the respondent, it is likely that the agreement on the suspension of duties and reduction of pay would have taken place between 6th December, 1996 and 9th December, 1996. In the light of the presiding officer's finding that neither the appellant nor Sun nor Fai was a reliable witness, I am in no position to draw any inference from the evidence given by them as to what should be the correct date. The appellant, through his counsel however was prepared to accept the date of 5th December, 1996 which was the date least favourable to the appellant in order to avoid my remitting the case for a new decision or further finding by the tribunal. On this basis, I will hold that the appellant was entitled to be paid salary at the rate of $23,000 per month for the 5 days between 1st December, 1996 and 5th December, 1996.

22. As to the period since suspension, the presiding officer found that in fact the employment did not terminate until 28th February, 1997. On this finding I am of the view that prima facie, the appellant was entitled to be paid salary at the rate of 2/3 of $23,000 per month between 5th December, 1996 and 28th February, 1997. I do not agree that the consideration furnished by the employee must be the actual performance of his work or that in order to succeed in showing any entitlement to salary, the employee would have to show that he had actually performed any work asked of him. In the ordinary case, the consideration furnished by the employee to support the contract of employment was his being ready and willing to serve or to perform work asked of him (see Halsbury's Law of England vol. 6 para 15). I see no reason why this would not apply to the appellant's contract in the present case. In any event, on the finding of the presiding officer that neither Sun nor Fai nor the appellant was a reliable witness, there was simply no evidence on what work was required of the appellant. The finding that Sun was not a reliable witness must necessary mean that the presiding officer was not satisfied that Sun had asked the appellant to turn up for work at the officer at Star House, which, admittedly the appellant had not done. Thus on the finding, the state of affairs was that (a) there was an agreement that the appellant's duties as production supervisor was to be suspended, and so the appellant was not required to discharge any of his previous duties as production supervisor, (b) there was no evidence to suggest what other duties or things that the respondent had asked the appellant to do. In the circumstance, I am of the view that the respondent could not complain that in fact during this period, the appellant had not done anything at all, because no work was required of him. On this state of affairs as found by the presiding officer, I am unable to infer that the appellant had not been ready and willing to perform any work required of him during this period. As the employment no doubt subsisted during this period, I am of the view that the appellant was entitled to be paid his salary at the rate of 2/3 of $23,000 per month for the period between 5th December, 1996 to 28th February, 1997.

23. Again, even if the conduct of the appellant during this period was such that would have justified the respondent to terminate his employment, there was no evidence that the respondent had done so. Even if the letter dated 9th December, 1996 (Exhibit D-10) could be interpreted as an acceptance of the appellant's repudiation of the contract and an act to terminate the employment of the appellant, as the was no evidence that the letter had been served on the appellant, the inevitable conclusion must be that the respondent had not elected to terminate the employment and would be prepared to allow the employment to go on. Thus in my view, the proper inference to draw was that whether the respondent had any ground for terminating the employment contract or not, the employment contract went on until the appellant decided to terminate it on the ground that he was not paid any salary. This the appellant did by the filing of the claim in the Labour Tribunal on 4th March, 1997 opting to treat the 28th February, 1997 as the date of termination of the contract of employment.

24. In relation to the claim for common law damages and year end bonus, I note that in the appellant's notice of appeal, no appeal was lodged in relation to the dismissal of these items of claim by the presiding officer. This is further confirmed by the appellant's skeleton argument put before me. In the circumstances, I have not been called upon to disturb the decision of the presiding officer and I would not do so.

25. Although in the notice of appeal, the appellant had asked for an order that the cost of this appeal and below to be paid by the respondent, counsel for the appellant had informed me that he did not want to seek the cost below. Accordingly I would not disturb this part of the decision of the presiding officer also.

26. To conclude, I would allow the appeal and I would award the appellant arrears of salary in the sum of $47,236.56 with cost of this appeal. The figure of $47,236.56 is made up as follows :