YIU SZE TING v. HLB HODGSON IMPEY CHENG LTD

HCLA 19/2017

[2019] HKCFI 1518

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 19 OF 2017

(On appeal from LBTC 2765/2016)

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D E C I S I O N

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Application

1.  Before the court is an application by HLB Hodgson Impey Cheng Limited (“HLB”), the defendant in Labour Tribunal Claim No 2765/2016 commenced by its former employee, Ms Yiu Sze Ting (“Ms Yiu”), for leave to appeal against the decision made by Mr Daniel Chan, Deputy Presiding Officer (“Presiding Officer”), on 28 August 2017, refusing to review his earlier decision delivered orally on 6 July 2017 with written Reasons for Decision handed down on 24 October 2017 (“Decision”)[1], by which the Presiding Officer ordered HLB to pay Ms Sze various sums totalling HK$301,525.66[2] with costs (“Order”) for the wrongful dismissal of Ms Yiu on 28 June 2016.

Background

2.  The following facts were either found by the Presiding Officer in the Decision or were not disputed or not put in dispute by the parties.  In finding these facts, the Presiding Officer fully accepted Ms Yiu’s evidence and her account of the whole incident[3] and disbelieved HLB’s witnesses on a number of matters, as noted below.  In recounting the factual background, where appropriate, I would quote in brackets the evidence of Ms Yiu or other witnesses, which was given in Chinese.

3.  HLB is a firm of certified public accountants in Hong Kong.  Mr Raymond Cheng (“Mr Cheng”) was HLB’s Managing Director at the material time.  Ms Ivy Ho (“Ms Ho”) was Mr Cheng’s personal assistant.

4.  Ms Yiu was in HLB’s employ as its Human Resources & Administration Manager pursuant to a letter of employment dated 15 May 2015 from 18 May 2015 until 28 June 2016 when she was summarily dismissed by HLB in the circumstances set out in the following paragraphs under this heading. 

5.  Insofar as it is material, clause 12(a)(iii) of Ms Yiu’s said letter of employment provided against the heading “Summary Dismissal”:

“[HLB] may terminate your employment without notice or payment in lieu if you:-

a) …

(iii)  are guilty of fraud or dishonesty;…”

6.  Ms Yiu’s immediate superior at the material time was one Ms Hope Lee (“Ms Lee”) who was then still Head of Human Resources & Administration.

7.  One of Ms Yiu’s job responsibilities was to prepare employment contracts for HLB’s new employees and to arrange for the execution of such contracts.

8.  In end May/early June 2016, Mr Cheng recruited one Ms Vivian Choi (“Ms Choi”) with the title “Assistant Administration Manager”, which was a new position introduced after the restructuring of HLB’s human resources department (“HRD”). One of the terms of employment agreed between Mr Cheng and Ms Choi was that Ms Choi would be entitled to 15 days of annual leave.

9.  As the Human Resources & Administration Manager, Ms Yiu was instructed by Ms Ho to prepare Ms Choi’s contract of employment.  The Presiding Officer accepted Ms Yiu’s testimony that she had, however, not been advised that Ms Choi’s annual leave entitlement was 15 days[4] and rejected Ms Ho’s evidence that she had passed onto Ms Yiu Mr Cheng’s oral instruction that Ms Choi was entitled to 15 days of annual leave.[5]

10.  As the position of Assistant Administration Manager was a new one, Ms Yiu adopted, as template, the Audit Assistant Manager’s contract, which happened to provide for 15 days of annual leave.

11.  On 2 June 2016, Ms Yiu prepared Ms Choi’s contract of employment in duplicates and passed the same to Mr Cheng through Ms Ho for his review and execution, which he did on the same day.  On 6 June 2016, Ms Choi also executed the contract in duplicates and commenced work.  Ms Choi was given one copy of the original contract (after having been executed by both parties in duplicates) while the other copy was kept in the HRD.

12.  Then, in the morning on 16 June 2016, when Ms Yiu was entering Ms Choi’s information into HLB’s computer system, she noted that Ms Choi’s contract provided for 15 days of annual leave.   As (1) the majority of assistant managers in HLB were entitled to only 10 days of annual leave and (2) the Tax or Audit Assistant Manager, whose contract (under which there were 5 additional days of annual leave) Ms Yiu had used as a template in preparing Ms Choi’s contract of employment, was more of an exception, Ms Yiu assumed that she had made a mistake in respect of Ms Choi’s contract by putting in 15, instead of 10, days of annual leave, a mistake which she needed to rectify.  In this regard, the Presiding Officer specifically found that Ms Yiu genuinely thought that she had made, and should rectify, the said mistake.[6]

13.  Ms Yiu told Ms Lee of her said assumed mistake in that same morning.  Ms Lee advised Ms Yiu to inform Ms Ho first and then she should handle the matter according to the company’s past practice and notify that staff member the material part of the contract that required change (“李小姐建議先通知 Ivy Ho，及後照公司往常做法處理，通知該名員工合約需更改的相關內容”).

14.  The Presiding Officer found that, as Ms Yiu’s immediate supervisor, Ms Lee had actual or ostensible authority from HLB to deal with HLB’s affairs (one would have thought especially in relation to human resources and administration)[7] and that, through her conversation with Ms Lee (and also with Ms Ho with whom she spoke next) on 16 June 2016, Ms Yiu had obtained Ms Lee’s authorisation on behalf of HLB to rectify her said assumed mistake in accordance with HLB’s past practice.[8]

15.  Following Ms Lee’s advice, Ms Yiu immediately telephoned Ms Ho to inform her of her assumed mistake regarding the annual leave provision in Ms Choi’s contract of employment.  In this connection, the Presiding Officer also accepted Ms Yiu’s evidence that Ms Ho had not then corrected Ms Yiu, and rejected Ms Ho’s evidence that she had then repeated to Ms Yiu (or told her for the second time), that it was Mr Cheng’s oral instruction that Ms Choi should have 15 days of annual leave when Ms Yiu spoke to her on 16 June 2016.[9]

16.  Ms Yiu further suggested to Ms Ho that she should not tell others, so that Ms Yiu could explain to Ms Choi the company’s job benefits and to make the appropriate replacement to her contract (“本人建議何小姐不要透露給其他人知悉，好讓本人與Vivian Choi解釋公司福利的安排，並作出相應的合約更換”).

17.  Ms Yiu next spoke to Ms Choi and told her that her contract had, by mistake, provided for 15, instead of 10, days of annual leave.  However, Ms Choi did not, and did not think that she needed to, there and then correct Ms Yiu that Mr Cheng had agreed to give her 15 days of annual leave.[10] Ms Yiu asked Ms Choi for her copy of the original contract.  Ms Choi complied with such request and gave Ms Yiu her original contract.  The Presiding Officer specifically rejected Ms Choi’s evidence that Ms Yiu ordered her to hand over, and forcibly took away, her copy of the original contract.[11]  Ms Yiu removed the staple from Ms Choi’s contract and substituted the page providing for 15 days of annual leave with a newly printed page (providing for 10 days leave), and returned the document with the replaced page to Ms Choi.

18.  It was the Presiding Officer’s finding that although Ms Yiu could/should have been more cautious and proceeded in a way that would have afforded herself greater protection[12]:

(1)  Ms Yiu replaced the material page of Ms Choi’s contract as aforesaid with a view to rectifying her said assumed mistake in relation to that contract.

(2)  In so doing, Ms Yiu was motivated by a genuine intention to act in HLB’s interest and had obtained HLB’s prior authority (through her immediate supervisor Ms Lee) as well as Ms Choi’s consent.

(3)  Although the relevant contract was signed by Mr Cheng, what Ms Yiu changed was HLB’s contract with Ms Choi and not Mr Cheng’s personal contract.  Ms Yiu did not need Mr Cheng’s instruction or authorisation to initiate a change to such contract.  Ms Lee, as the Head of Human Resources & Administration, did have the necessary authority to, in turn, authorise Ms Yiu to rectify her said assumed mistake.  

19.  About 30 to 45 minutes later, Ms Choi indicated to Ms Yiu that she wanted to resign as a result of the reduction in her annual leave by the company.  Ms Yiu tried to persuade Ms Choi to reconsider.

20.  By an email to Mr Cheng sent at 2:49 pm on the same day, Ms Yiu reported her assumed mistake and Ms Choi’s intended resignation to Mr Cheng who was out of the office at the time.  Ms Yiu also orally advised Ms Lee that she was pregnant (which was relevant to quantum).

21.  Mr Cheng responded to Ms Yiu’s email by email at 4:08 pm by asking Ms Yiu for all the documents including those Ms Yiu had changed and cancelled without his approval.  He returned to the office at about 5:30 pm. He reprimanded Ms Yiu for her unauthorised alteration of Ms Choi’s contract and instructed her to prepare a fresh set of contract for Ms Choi, providing for 15 days of annual leave.

22.  On 22 June 2016, Ms Yiu had a meeting with HLB’s management and a Mr Wong (“Mr Wong”), a solicitor of Stevenson, Wong & Co (“SWC”), HLB’s solicitors. HLB’s management informed Ms Yiu that, upon taking legal advice, it took the view that Ms Yiu’s conduct amounted to grave misconduct and dishonesty; that it was minded to dismiss Ms Yiu; and that the matter would be reported to the police.  However, HLB offered Ms Yiu the opportunity to resign.  Before the matter was resolved, Ms Yiu reported that she was experiencing abdominal pain, whereupon an ambulance was called and arrived to take Ms Yiu to hospital. 

23.  Thereafter, Ms Yiu took sick leave, until she was summarily dismissed.  Ms Yiu was so dismissed firstly orally in a telephone conversation between her and Mr Wong in the afternoon on 28 June 2016, which was then followed by SWC’s letter dated 28 June 2016 later in the evening.

Grounds for summary dismissal

24.  In seeking to justify the summary dismissal of Ms Yiu, HLB relied on s 9(1)(a)(ii) and/or (iii) of the Employment Ordinance (Cap 57) (“EO”), which provides:

“(1) An employer may terminate a contract of employment without notice or payment in lieu—

(a) if an employee, in relation to his employment—

…

(ii) misconducts himself, such conduct being inconsistent with the due and faithful discharge of his duties;

(iii) is guilty of fraud or dishonesty; …”

Broad issues and Tribunal’s conclusions

25.  The issue arising for the Tribunal’s determination was whether HLB was entitled to summarily dismiss Ms Yiu on 28 June 2017 under either s 9(1)(a)(ii) or (iii) of the EO, which raised the following sub-issues:

(1)  whether Ms Yiu had conducted herself in a way that was inconsistent with the due and faithful discharge of her duties to HLB; or

(2)  whether Ms Yiu was guilty of fraud or dishonesty

on the facts agreed by the parties / found by the Tribunal, as set out under the preceding heading.

26.  The Tribunal answered both these questions in the negative and further found HLB’s dismissal of Ms Yiu on 28 June 2016 “unfair” and “unreasonable” to Ms Yiu[13].

Proposed grounds for appeal

27.  By the Application for Leave to Appeal on Point of Law (Form 14) dated 6 September 2017, HLB contended that such determination is erroneous in point of law in that:

(1)  The Presiding Officer erred in his construction of clause 12(a) of Ms Yiu’s contract of employment and s 9 of the EO as to what constituted “dishonesty” and “misconduct” by Ms Yiu (“Ground 1”).

(2)  The Presiding Officer failed to take into account relevant considerations, and took into account irrelevant considerations, in reaching his conclusions (“Ground 2”).

(3)  The Presiding Officer failed to investigate into matters that had or would have significant impact on relevant issues (“Ground 3”).

(4)  It is contradicted by the true and only reasonable conclusion drawn from the evidence (“Ground 4”).

Requirements for leave to appeal

28.  The Labour Tribunal Ordinance (Cap 25) stipulates, by s 32(1), that the Court of First Instance may grant leave to appeal from an award, order or determination by the Labour Tribunal (“Tribunal”) if any party is dissatisfied with such an award, order or determination on the grounds that it is erroneous in point of law or outside the jurisdiction of the Tribunal. It is not suggested that the Order is outside the jurisdiction of the Tribunal. The question raised by this application for leave to appeal is whether the Presiding Officer had erred in law in making the Order.

29.  It is trite that in seeking leave to appeal, the applicant has to show that the intended appeal on the ground(s) identified is arguable.  See, for instance, Chan Kwok Hung v Hotel Panorama Co Ltd, HCLA 30/2009, unreported, 19 November 2009, per Chu J (as she then was) at [13].

30.  In her effort to demonstrate an error of law on the part of the Tribunal, Ms Frances Lok, counsel for HLB referred the court to Kwong Mile Services Ltd v Commisioner of Inland Revenue (2004) 7 HKCFAR 275, in which Bokhary PJ said at [31] that:

(1)  Intervention in an appeal on law only is not confined to instances in which it is apparent that the determination appealed against resulted from a specifically identifable error of law.

(2)  Where the determination appealed against is contradicted by “the true and only reasonable conclusion”, the appellate court will assume that it resulted from an error of law.

31.  However, a more comprehensive summary of the appellate approach in an appeal on law turning on the inference to be drawn from the primary facts established can be found at [37], as follows:

(1)  In an appeal on law only, the appellate court must bear in mind what scope the circumstances provide for reasonable minds to differ as to the conclusion to be drawn from the primary facts found. 

(2)  If the fact-finding tribunal’s conclusion is a reasonable one, the appellate court cannot disturb that conclusion even if its own preference is for a contrary conclusion.

(3)  But if the appellate court regards the contrary conclusion as the true and only reasonable one, the appellate court is duty-bound to substitute the contrary conclusion for the one reached by the fact-finding tribunal.

32.  See also 馮皓嵐訴威達製品有限公司, HCLA 6/2011, unreported, 14 October 2011, per Deputy High Court Judge Au-Yeung (as she then was) at [38]-[40].

33.  As observed by Bokhary PJ in Kwong Mile Services Ltd v Commisioner of Inland Revenue also at [37], it is understandable that those attacking the fact-finding tribunal’s conclusion would stress the third proposition, as Ms Lok does, while those defending that conclusion stress the first two.

34.  The Tribunal’s conclusion is contradicted by the true and only reasonable conclusion in the following circumstances:

(1)  It is based on a finding of fact or inference from the facts which is perverse or irrational.

(2)  There was no evidence to support it.

(3)  It was made by reference to irrelevant factors or without regard to relevant factors.

See again Kwong Mile Services Ltd v Commisioner of Inland Revenue at [32]-[34].

Discussion

Proper view of the conduct complained

35.  Before I turn to the proposed grounds of appeal, on what HLB put forward as misconduct on Ms Yiu’s part, first, as it turned out, Ms Yiu did (though somewhat inadvertently) use the correct template for Ms Choi’s contract.

36.  Second, I do not see how one could reasonably blame Ms Yiu for subsequently thinking that she had made a mistake about the term regarding Ms Choi’s annual leave entitlement for the simple reason that she had not been given any specific instruction on Ms Choi’s specially agreed annual leave entitlement (see paragraph 9 above).  Ms Lok harped on Ms Yiu’s supposed failure to verify such assumption. However, HLB apparently had standard provisions for annual leave depending on an employee’s rank: see [9] of the Decision. In the absence of instruction to the contrary, it is to my mind perfectly understandable for Ms Yiu to assume that the usual provisions generally applicable to the position for which Ms Choi was engaged would apply to her.  This is particularly so when Ms Ho and/or Ms Choi could and should have corrected, but had inexplicably not seen fit to correct, Ms Yiu’s assumed error when Ms Yiu informed them about it when she spoke to them respectively on 16 June 2016 (see paragraphs 15 and 17 above).

37.  Third, Ms Lok also stressed that Ms Yiu replaced the material page of Ms Choi’s contract without the prior consent of both signatories.  Such submission is inconsistent with the Presiding Officer’s findings that Ms Choi voluntarily handed over her copy of the contract to Ms Yiu for the replacement of the material page (see paragraph 17 above) and that Ms Yiu had sufficiently obtained HLB’s consent in advance through taking instructions from her immediate supervisor Ms Lee (see paragraphs 14 and 18(3) above).  The Presiding Officer’s analysis of the relevant contractual relationship as summarised in paragraph 18(3) above cannot be faulted.

38.  Fourth, as to the suggestion that Ms Yiu had proceeded as she did in an attempt to conceal her negligence from Mr Cheng, the Managing Director.  I see no scope for such a suggestion, which does not sit well with the fact that Ms Yiu had reported her assumed mistaken to her immediate supervisor Ms Lee and Mr Cheng’s personal assistant Ms Ho.  While Ms Yiu freely admitted to the Tribunal that she did ask Ms Ho not to disclose the matter, the requested embargo was clearly intended to be temporary so that Ms Yiu could talk to the party most affected, i.e. Ms Choi, first.  See [13] of the Decision.

39.  Fifth, it was also claimed that Ms Yiu’s handling of Ms Choi’s contract did not accord with HLB’s past practice.  In this connection, HLB had adduced the following evidence regarding its relevant past practice through:

(1)  paragraph 20 of Mr Cheng’s supplemental witness statement dated 9 December 2016:

“根據本人理解，如遇上僱傭合約的出錯，不論出錯的地方是什麼，都必須先通知負責簽署該僱傭合約的雙方，在獲得他們同意後，才可進行修改或作進一步跟進。更何況目前涉及的是合約中的重要條款，是員工的待遇及權利。”

(2)  paragraph 11 of Ms Lee’s supplemental witness statement also dated 9 December 2016:

“就此，按照本人於公司工作的經驗及理解，如遇上僱傭合約出錯或其他情況而導致需要修訂僱傭合約，則不論出錯的地方是什麼或錯處的大小與多寡，相關人事部職員都必須先通知簽署該僱傭合約的雙方。在知會他們後並得到他們同意後，才可進行修改或作進一步跟進，並需簽署作實。”

(3)  a WhatsApp message from a former employee, Ms Natalie Lau:

“如果錯既，雙方同意，再簽名作實。”

40.  I reiterate the Presiding Officer’s findings that Ms Choi voluntarily handed over her copy of the contract to Ms Yiu for the replacement of the material page and that Ms Yiu had sufficiently obtained HLB’s consent in advance through taking instructions from her immediate supervisor (Ms Lee).  On such premises, I am afraid I cannot detect any or any material difference in nature between what Ms Yiu had actually done and what HLB’s witnesses suggested she should have done.

41.  For the reasons stated in paragraphs 35 to 40 above, as a primary point, I cannot discern any act or omission on Ms Yiu’s part that can be termed “misconduct” in the proper sense of the word.  I therefore agree with the Presiding Officer’s conclusion.  Ground 4 goes.

42.  Further, in support of Ground 2, in section VII of her written submission, Ms Lok conducted a minute examination of the propriety, relevance and/or proper implications of these 4 findings on which the Presiding Officer was said to have based his finding that there was neither dishonesty nor misconduct:

(1)  that Ms Yiu had informed Ms Lee and Ms Ho about her assumed mistake and intention to rectify it;

(2)  that Ms Lee (and/or Ms Ho ) had “acquiesced in” Ms Yiu to deal with the assumed mistake in accordance with HLB’s past practice;

(3)  that Ms Choi agreed to the change of her contract;

(4)  that Ms Yiu’s genuine motive (in altering Ms Choi’s original contract based on her assumed and unverified mistake) was to protect HLB’s interest.

43.  With no disrespect to counsel, I do not propose to prolong this already lengthy judgment by dealing with each and every point made by Ms Lok. 

44.  All I need to say is, firstly, the Presiding Officer concluded that there was no dishonesty or misconduct by Ms Yiu not just on these 4 facts but, as he should, on an overall view of all the facts and accepted evidence as well as all the findings that he had come to with care, as summarised above.

45.  Taking such appropriate view, the conclusion of no dishonesty or misconduct by Ms Yiu appears to me to be not only reasonable, but compelling.  It is certainly one that I would have reached on the findings made below.  Ground 2 is unarguable.

46.  That being the case, Ground 1 does not really matter, though, for the avoidance of doubt, I am not saying that it is valid.

Single incident or series of misconduct?

47.  Even if Ms Yiu had somehow misbehaved or misconducted, I am unable to view this case as anything other than a dismissal over a single incident.  The mere fact that the events in question developed over a period of time from 2 to 16 June 2016 does not, in my view, turn this case into one involving a series of misconduct, as suggested in paragraph 45 of Ms Lok’s written submission.

48.  It is trite that an employee can be summarily dismissed over one single act of misconduct only in exceptional circumstances, of which Jupiter General Insurance Co Ltd v Ardeshir Bomanji Shroff [1937] 3 All ER 67 is a rare example.  See at Lord Maugham at 73H-74C.  See also Tsang Tak Chi v China Wall Ltd [1999] 1 HKC 366, per Yeung J (as he then was) at 371C-I; Law Ying-chung v Lo Chun-kie, CACV 28/2004, 15 October 2004, per Yeung JA (as he then was) at [33]-[34].

49.  On the facts as found by the Presiding Officer, this case is nowhere near exceptional, not to mention that it is altogether questionable whether there was any “misconduct” or “misbehavior” on the part of Ms Yiu. 

50.  As I see it, the events leading to Ms Yiu’s dismissal was really a storm in a teacup, which could have been calmed down by a bit of understanding but had unfortunately been blown out of all proportion by the employer trying to make a mountain out of a molehill.

Failure to investigate?

51.  The relevant matter that the Tribunal was said to be required, but had failed, to investigate into was HLB’s past practice in dealing with amendment to contracts. 

52.  I do not follow this argument.  As stated in paragraph 39 above, the Presiding Officer had before him paragraph 20 of Mr Cheng’s supplemental witness statement, paragraph 11 of Ms Lee’s supplemental witness statement and Ms Lau’s WhatsApp message, all dealing with the past practice in question.  What other investigation was the Presiding Officer supposed to conduct?  What was he expected to find?  And to what end?

53.  I certainly do not read the Presiding Officer to be saying in [31] of the Decision that he was excluding HLB’s past practice from his consideration.  He was just saying that, although Ms Yiu might have appeared to go down a somewhat different route, it was not invalid or inappropriate.

54.  Ground 3 thus has no merit.

Disposition

55.  In the premises, I dismiss HLB’s application for leave to appeal.  I make no order as to costs.