LEE KAM CHAN v. LONGWOOD INDUSTRIES LTD.

1996, No. LTA 103

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

LABOUR TRIBUNAL APPEAL

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J U D G M E N T

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THE AWARD

1. The Claimant, Lee Kam Chan ("the employee"), was employed by the Defendant, Longwood Industries Ltd. ("the employers"), from March to June 1995 when he was dismissed. He applied to the Labour Tribunal for 3 months' wages in lieu of notice. The hearing of the application took place on 21st March 1996 before the Presiding Officer, Ms. Maggie Poon. At the end of the hearing, she announced her finding that the employee's claim for 3 months' wages in lieu of notice succeeded. She also ordered the employers to pay the employee's costs of $2,000.00. The award was served on the employers on 27th March 1996.

THE HISTORY OF THE PROCEEDINGS SINCE THE AWARD

2. The employers decided to appeal against the award. They filed an application for leave to appeal to the High Court on 9th April 1996. That application was out of time. Section 32(1) of the Labour Tribunal Ordinance (Cap.25) provides that the time limit for applications for leave to appeal is 7 days after the date on which the award is served. The Registrar has power to extend the time, but no application for such an extension was made to him. Be that as it may, the application for leave to appeal came before Deputy Judge Bokhary (as she then was) on 16th May, when the application for leave to appeal was withdrawn.

3. The application for leave to appeal was presumably withdrawn because the employers had already applied on 2nd April to the Presiding Officer to review the award. Presiding Officers do not have that power of review unless a pending application for leave to appeal has been withdrawn. On 11th June 1996, the review hearing took place. At the conclusion of the hearing, the Presiding Officer decided to confirm the award. The order made by the Presiding Officer was served on the employers on the following day.

4. The employers decided to appeal against the confirmation of the award. They filed an application for leave to appeal to the High Court on 4th July 1996. That application for leave to appeal, like the previous one, was out of time. Despite that, the application for leave to appeal came before Deputy Judge Pang on 12th August 1996. Plainly, he was not told that the application was being made out of time, because he granted the employers leave to appeal. That is the appeal before me today.

5. This history of the proceedings since the award reveals two things:

(i) The appeal is in form an appeal against the Presiding Officer's confirmation at the review hearing of the award. It is in substance an appeal against her award.

(ii) There is at present no properly constituted appeal before me because the employers' time for applying for leave to appeal has not been extended. Technically, therefore, Deputy Judge Pang's order on 12th August 1996 was a nullity, and the appeal cannot proceed without leave having been obtained.

However, there is a way out of these difficulties. I could hear the appeal on its merits today. If I would have dismissed the appeal, I could declare that that is what I would have done if I had had jurisdiction to do so. If I would have allowed the appeal, I could adjourn the case to enable the employers to apply to the Registrar for an extension of time. If that application is granted, the case could then be re-listed before me. I could then grant leave to appeal, and I could make such order on the appeal as I thought appropriate. That was the course of action which I adopted in Parfitt v. Hopewell Construction Co. Ltd. (SCTA 5/93), an appeal from the Small Claims Tribunal in which precisely the same problem arose.

THE ISSUES WHICH THE PRESIDING OFFICER DECIDED

6. The only issues which the Presiding Officer thought she had to decide related to the notice to which the employee was entitled of the termination of his employment and the notice which he had in fact been given. His case was that he was contractually entitled to 3 months' notice but that he was dismissed without any notice at all. The employers' case was that the employee was dismissed toward the end of his probationary period, during which time he was only entitled to 7 days' notice, and that he was given 7 days' notice of his dismissal. The Presiding Officer decided that the employee was contractually entitled to 3 months' notice, but that he had been given no notice at all. There is no appeal from those findings.

THE ISSUES ON THE APPEAL

7. The basis of the appeal is that there was another issue which the Presiding Officer had to decide. The employers wanted to argue that even if the employee was contractually entitled to 3 months' notice, he was in the circumstances entitled to no notice at all. That was because of section 9 of the Employment Ordinance (Cap. 57) which provides:

"An employer may terminate a contract of employment without notice or payment in lieu-

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

(i) wilfully disobeys a lawful and reasonable order;

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

(iii) is guilty of fraud or dishonesty; or

(iv) is habitually neglectful in his duties; or

(b) on any other ground on which he would be entitled to terminate the contract without notice at common law."

Whether the employers had been justified to terminate the contract of employment without notice was an issue which the Presiding Officer did not address, despite the fact that para. 11 of the employers' Statement of Defence read as follows:

"Events leading to termination of employment: Basically, we have found the claimant not a suitable employee for our company for the following reasons, so we decided to terminate his service before reaching the end of the three-month's probationary period.

(a) When handling a dismissal case of a senior staff, he quarrelled and came close to fighting with the dismissed staff in the office. This was totally unacceptable to the company and the Chairman found him an unsuitable person for the job of Director-Finance & Administration in our company.

(b) the claimant never started up the computer on his desk. As a senior executive like the claimant himself, this was unacceptable and incredible. The claimant had actually been pushed by the Chairman quite a few times to look into the existing computer set-up and find ways to refine the networking systems. However, this was never done.

(c) Therefore, in view of the approach of the end of three months probation period, the Chairman informed the claimant personally by phone 7 days before terminating him on Jun 8, 1995."

Indeed, an affirmation has been filed on behalf of the employers accusing the Presiding Officer of refusing on a number of occasions during the hearing to permit the employers' representative to raise the question of the employee's conduct and performance.

8. In my view, two issues arise on this appeal:

(i) Did the Presiding Officer prevent the employers from raising the issue of their entitlement to dismiss the employee summarily?

(ii) If not, was the Presiding Officer entitled to assume, despite para. 11 of the Statement of Defence, that the employers were not seeking to rely on the right of summary dismissal afforded to them by section 9?

THE RESOLUTION OF THESE ISSUES

9. As for the first of these two issues, I am bound to say that the allegations against the Presiding Officer look very much like an afterthought. If the complaint is a genuine one, I would have expected it to have been made at the review hearing. The Notes of Proceedings show that it was not. I am not surprised. It would be an extraordinary state of affairs for a Presiding Officer deliberately to shut out a party from raising an issue which it wanted to.

10. However, I do not need to make any final decision on the first question, because I think that the answer to the second question must be that the Presiding Officer was not entitled, in all the circumstances of the case, to assume that the employers were not seeking to rely on the right of summary dismissal afforded to them by section 9. The Presiding Officer would not have been entitled to make such an assumption without confirming that with the employers' representative at the hearing.

11. Mr. Paul Lee for the employee, in a careful and succinct submission, contends that the Notes of Proceedings show that the employers' representative did confirm that the employers were not relying on their right of summary dismissal. He referred me to pp. 20-21 of the Notes of Proceedings which end up with the following exchange:

"Presiding Officer: You didn't summarily dismiss him?

Employers' representative : No I didn't."

I do not believe that the employee can place any reliance on that passage for two reasons. First, the passage relates not to whether the employers were entitled to dismiss the employee summarily, but whether they in fact did so. Secondly, giving the employee 7 days' notice was not inconsistent with the employers' entitlement to give him no notice at all. The entitlement under section 9 to dismiss the employee without notice is not inconsistent with an employee being dismissed with some notice, though less than the contractual notice to which he was entitled.

12. I have not overlooked the point that a literal reading of para. 11 of the Statement of Defence shows that it does not allege an entitlement to dismiss the employee summarily, but seeks to explain why the employers were not going to employ the employee beyond what they said his probationary period was. That point is technically correct, but since the employers were saying in their Statement of Defence that the employee's performance was the reason for his dismissal, it was incumbent, I think, on the Presiding Officer in these inquisitorial proceedings to check whether the employers were saying that para. 11 went only to the reasons why the employee's employment was not going to continue beyond the probationary period, or whether para. 11 also went to the question whether the employers could have dismissed the employee summarily if they had wanted to.

13. Accordingly, the Presiding Officer was not entitled to assume that the employers were not contending that they had been entitled to dismiss the employee summarily. It follows that the employers should have been permitted to present their case on the point. Having said that, the Presiding Officer can, I think, be forgiven for making the assumption which she did: if the Notes of Proceedings are anything to go by, the employee was not cross-examined at all about his performance and conduct.

CONCLUSION

14. I do not think that the facts set out in para. 11 of the Statement of Defence amount to a particularly strong case for justifying summary dismissal. But I cannot say that the employers' case will inevitably be dismissed. In those circumstances, had I had jurisdiction to do so, I would have ordered that the claim be remitted to the Labour Tribunal for determination of the question whether the employers were entitled to dismiss the employee without notice by reason of section 9 of the Employment Ordinance. Since the proceedings before the Presiding Officer would have been part-heard, I would have ordered that the remitted hearing takes place before her. However, for the reasons I gave at the beginning of this judgment, I set aside the order of Deputy Judge Pang of 12th August (which was a nullity because the jurisdiction of the High Court had not been engaged), and I adjourn this case to a date to be fixed, with a time estimate of 1/4 hr., pending any application which the employers may wish to make to the Registrar for an extension of time to apply for leave to appeal.