JOHN SIMPSON WARHAM AND OTHERS v. CATHAY PACIFIC AIRWAYS LTD AND ANOTHER

HCMP 4400/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4400 OF 2001

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AND

HCA 2822/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2822 OF 2002

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BETWEEN

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AND

HCA 299/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 299 OF 2006

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BETWEEN

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AND

HCA 1405/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1405 OF 2006

____________

BETWEEN

____________

AND

HCA 807/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 807 OF 2007

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BETWEEN

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J U D G M E N T

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I.       INTRODUCTION

1.  The Plaintiffs complain about having been unfairly and wrongfully dismissed from their employment as pilots by the Defendants in July 2001.

2.  By the time of the trial, some of the original Plaintiffs had settled with the Defendants.  The trial therefore only concerned 18 Plaintiffs.  Of those, one (Mr. Gregory Stephen England) had died on 29 January 2002.  His claim has been continued by his mother (Ms. Terry Ann England) as personal representative.  In this Judgment, I shall use the expression “the Plaintiffs” to refer to the 18 remaining Plaintiffs (that is, including Mr. England as represented by his mother).   

3.  The Defendants are related companies.  Pilots flying planes within the Cathay Pacific network are employed by Cathay Pacific, Veta or USA Basing depending on where they are based.  Pilots based in Hong Kong are employed by Cathay Pacific, those in the UK by Veta, and those in North America by USA Basing.  For the purposes of these proceedings, the employment contracts (the Conditions) of the pilots employed by each of the 3 companies may be treated as identical.  In this Judgment, I shall refer to the Defendants collectively as “Cathay”.

4.  Cathay’s case is that the Plaintiffs were dismissed without cause between 9 and 11 July 2001 upon payment of 3 months’ wages in lieu of notice pursuant to the Conditions.  Cathay stresses that in these proceedings it does not allege misconduct on the part of any of the Plaintiffs as a ground for termination.

5.  But, notwithstanding such disavowal of misconduct, between 9 and 10 July 2001, Mr. Anthony Tyler (then Cathay’s Director of Corporate Development) and Mr. Philip Chen Nan Lok (then Chief Operating Officer and a Director of Cathay) made statements to the public and to Cathay cabin crew in particular which were critical of the Plaintiffs.  Those statements accused all the pilots (including the Plaintiffs) whom Cathay had just dismissed of having seriously disrupted Cathay’s operations; of having shown a lack of professionalism in their actions; of “holding Hong Kong to ransom”; and of having failed to act in Cathay’s best interests.

6.  The issues which I have to decide may be broadly summarised as follows:-

(1)     Unfair dismissal:-

(a)    Whether Cathay dismissed the Plaintiffs on account of their membership in the Hong Kong Aircrew Officers Association (the union to which the majority of Cathay’s pilots belonged) and their participation in the union’s activities? 

(b)   If so, whether the dismissals were unfair?

(c)   If the dismissals were unfair, what compensation are the Plaintiffs entitled to receive?

(2)     Wrongful termination:-

(a)    Whether Cathay terminated the Plaintiffs’ employment contracts on account of misconduct? 

(b)   If so, whether such terminations were wrongful, especially in light of the “Disciplinary and Grievance Procedures” (DGP) in Appendix 1 of the Conditions.  There is no dispute that Cathay was contractually obliged to follow the DGP before dismissing any pilots on disciplinary grounds. 

(c)  If Cathay was in breach of the DGP, what is the measure of the Plaintiffs’ damages?

(3)     Defamation:-

(a)    Whether the statements by Mr. Tyler and Mr. Chen were defamatory of the Plaintiffs? 

(b)   If so, whether Cathay may raise justification and qualified privilege in its defence?

(c)   If the statements are defamatory and Cathay has no defence, what damages are the Plaintiffs entitled to in consequence?

II.      BACKGROUND

7.  The Plaintiffs and their respective positions at the time of their dismissal by Cathay are as follows (listed alphabetically by surname):-

(1)     Mr. Campbell Blakeney-Williams, First Officer.

(2)     Mr. Kenneth Carver, Senior Captain.

(3)     Mr. George Crofts, Captain.

(4)     Mr. John Dickie, Senior Captain.

(5)     Mr. Gregory England, Junior First Officer (represented by his mother).

(6)     Mr. Michael Fitz-Costa, Senior Captain.

(7)     Mr. Douglas Gage, Senior Captain.

(8)     Mr. Quentin Heron, First Officer.

(9)     Mr. Brian Keene, Senior First Officer.

(10)   Mr. Pierre Morissette, Senior First Officer.

(11)   Mr. Damon Neich-Buckley, Junior First Officer.

(12)   Mr. Matthew Rogers, First Officer.

(13)   Mr. Michael Steven Shaw, First Officer.

(14)   Mr. Christopher Sweeney, First Officer.

(15)   Mr. Hendrik Van Keulen, Senior Captain.

(16)   Mr. John Simpson Warham, Senior Captain.

(17)   Mr. Brett Wilson, First Officer.

(18)   Mr. Craig Young, Senior Captain.

8.  In July 2001 Cathay dismissed some 49 pilots.  The Plaintiffs are therefore sometimes referred to as “49ers”.  All the Plaintiffs were union members.  Some were more committed and active in relation to union matters than others.

9.  Mr. Tyler’s press statement in relation to the sackings is set out in Appendix 1 to this Judgment.  The statement was made on 9 July 2001.  The statement was accessible by the public on Cathay’s website until 12 September 2009.

10.  Mr. Chen’s statements were made on 9 and 10 July 2001.

11.  On 9 July 2001 Mr. Chen wrote a letter addressed to Cathay’s flight crew.  That letter is set out in Appendix 2 to this Judgment. 

12.  On 10 July 2001 Mr. Chen publicly stated:-

“[W]e cannot allow this group [that is, the 49 dismissed pilots] to disrupt the airline, its employees, our customers or the reputation of Hong Kong.  Nor can we allow this group to let much larger numbers of flight crews who are showing the total professionalism we require -- suffer.”

13.  From at least mid-1999 onwards, Cathay’s management and the union had been locked in a dispute over rostering practices and pilots’ contract entitlements.  The dispute had reached an impasse in mid-2000 when, from the union’s point-of-view, management was refusing to budge from its stance.

14.  In the union’s view, management was running Cathay’s airline network with insufficient capital and staff.  Management (the union contended) was seeking to do more and more with less and less. 

15.  The consequence (as far as the union was concerned) was that pilots were flying longer hours with shorter breaks in between duties.  This meant (the union argued) that, in addition to having less time to spend with their families, pilots were experiencing greater and greater levels of stress and fatigue as a result of inadequate rest.  

16.  The union reasoned that Cathay was only able to operate according to its flight schedules because pilots were prepared to afford a large measure of goodwill to the company.  Pilots (according to the union) were routinely performing duties over and above those which they were contractually bound to do under their Conditions.

17.  In July 2000, believing that Cathay was abusing pilots’ goodwill by failing to address perceived problems with rostering and by failing to offer better compensation packages for pilots, the union (by a 95% majority) voted to re-instate a “contract compliance” campaign.  This essentially entailed a withdrawal of goodwill from the company.  In evidence, the Plaintiffs colourfully characterised the campaign as one of WOE (withdrawal of enthusiasm).

18.  The campaign was not something new.  The union had resorted to similar tactics before, also during difficult negotiations with management.  Contract compliance may have been in use as early as 1993.  But, regardless of when it actually started, the campaign had been suspended at various times, including in around 1999, whenever it seemed as if negotiations with management might bear some fruit.

19.  In July 2000 “contract compliance” came back in force.  This time with the object of getting management to the negotiating table to address the union’s grievances on rostering and compensation.

20.  The campaign advocated “rigid adherence” by union members to the letter of their employment contracts.  Some examples will give a feel for what the campaign entailed. 

21.  The union urged members not to make themselves contactable by Cathay’s Crew Control staff on a Guaranteed Day-Off (GDO).  There was no contractual requirement (the union noted) to make oneself available on a GDO and so alleviate any sudden rostering predicaments that Crew Control might find themselves in connection with scheduled flights.  The union asked its members to invest in phones with duplex ringing or call display functions in order to know when Crew Control was calling on a GDO and when the phone should be left unanswered.   

22.  The campaign encouraged members to consider whether they were truly fit to fly on an actual or reserve duty day.  The union observed that, under the Air Navigation (Hong Kong) Order (ANO), a pilot should not fly as part of an aircraft crew “if he knows or suspects that his physical or mental condition renders him ... unfit to perform such functions”.  The union advised that, if one had the slightest doubt about fitness to fly, one should not go to work and give the company the benefit of that doubt.  Instead, one should call in sick, as otherwise one could be committing a criminal offence under the ANO.  The union also warned that to report for work when fatigued may jeopardise the safety of passengers.

23.  Pilots on reserve were allowed 45 minutes preparation before leaving home if called to duty.  The union pressed members to take the full 45 minutes “to make sure that you are in the right frame of mind for the task you are about to undertake”.

24.  Management required a pilot to sign in at Chek Lap Kok Airport 80 minutes prior to departure.  The union instructed its members “not [to] sign on or make yourself available before this time” since that would “make you available for poaching onto other flights”.  One should not rush a job (the union cautioned) simply to comply with Cathay’s “On Time Performance” (OTP) programme.

25.  In newsletter after newsletter, the union hammered home its message.  The following are typical:-

(1)     From Issue No.47 dated 12 March 2001:-

“Contract compliance is still very much in force.  Remember the following:-

...

--      It is against the spirit of contract compliance to perform voluntary or discretionary duties.

--      Do not waive 5-4-3 protections [that is, the right to 5, 4 or 3 days off after certain Ultra Long Haul (ULH) flights across the Pacific or to Europe].

--      Closely monitor your fatigue levels.  As roster instability increases, so will fatigue.  It is difficult to assess your own level of stress and fatigue.  Ask friends and family for their opinion.  Remember, never place commercial concerns ahead of safety.

--      Fly fatigue and stress free.  These are not just catchphrases.  If you have been flying full rosters with high levels of instability, you are a very real risk.  If you feel unfit for duty, advise Crew Control and if necessary, consult a doctor.  Remember that a doctor’s certificate is required for a period of illness exceeding 72 hours.  Remember to advise Crew Control when you are once again fit for duty.”

(2)     From Issue No.48 dated 9 April 2001:-

“‘I’ll do my best.’  That is the answer you should give to any and all questions regarding your travel time to Cathay City after a HKG reserve call out.

‘When will you arrive?’ ‘I’ll do my best.’

‘How long will it take you once you’re ready?’  ‘I’ll do my best.’

‘Can you catch the next bus?’  ‘I’ll do my best.’

‘Can you make it in time for scheduled sign-on?  I’ll do my best.’”

26.  On occasion, the union’s newsletters would allege that contract compliance was having a deleterious effect on Cathay’s day-to-day operations.  But it was still necessary (the union urged) to soldier on with the campaign.  For instance, in Issue No.45 dated 22 December 2000, the union newsletter asserted:-

“Contract compliance continues to increase its effectiveness as reserves are exhausted and management’s options wither.  Multiple cancellations and extensive delays continue to increase on a weekly basis.  Although it is with regret that we must continue this stance, we do so not out of choice, but in direct response towards management’s failure to address our needs.  Members’ resentment to intolerable roster, and unsatisfactory efforts by management to improve remuneration and benefits, mean that contract compliance will remain until positive progress has been made.  Your continued perseverance will be rewarded with a fair and reasonable contract.”

27.  The campaign was reinforced by the threat of sanctions (including expulsion from the union) against those pilots found to be acting contrary to the spirit of contract compliance.

28.  From the viewpoint of Cathay’s management, contract compliance was severely disrupting day-to-day airline operations. 

29.  Mr. Nicholas Rhodes was Cathay’s General Manager Aircrew in charge of Flight Operations at the relevant time.  He denied in his evidence that there had been a shortage of resources or manpower:-

“Q:    [Some of the Plaintiffs] have all said something in their evidence about rostering instability as being due to under-crewing by Cathay Pacific.  Would you like to say something about that?

A.      ....

The company position is that we were not under-crewed....

But the number of crew that are required to operate a service does have an assumption about how many crew may be off-duty, sick at any one time.  You have to have an assumption as to how many crew are either on long-term sick with disabilities, or short-term sick with some ailment.  That assumption is based on a particular percentage or a particular number.

So obviously, if the number of crew sick at any one time is more than double the estimates we would have when we were calculating our crewing levels, then clearly we are going to have a problem where we are short of crew.  But the basic numbers are correct for the task that we had at hand.  We can always balance the crew a little bit during the year by allocating annual leave.  You may have too few crew in one month and will have less leave allocated.  We may have too many crew in another month and we will allocate more leave.

So leave is our ability to balance the number of crew with the task.  So at any one time we should have the right number of crew for the task.

....”

30.  Mr. Rhodes then described the substantial effects of contract compliance on day-to-day flight operations in 2000 and 2001 as perceived by Cathay’s management:-

“Q:    ....  [W]ould you please summarise to his Lordship, in a nutshell, what, if any, consequences flowed from non-contactability of pilots on their non-duty and non-reserve days, as far as the airline operator’s perception goes?

....

A:      The general answer is obviously with that high level of sickness, much higher than budgeted, you would be short of crew for the task on a particular day and you would have to call out crew from reserve.  So if you call out crew from reserve, that’s fine, but if the crew on reserve have also gone sick or are being used up, there will be occasions where you haven’t got a pilot for a flight.  Now, it’s not so simple as just having enough captains and first officers and second officers, you have to have them on each aircraft type, 747s, 777, Airbus, whatever the different types were at the time.  So there may be a category of crew which is short, we may not have a captain on a 747 on that particular afternoon because we have too many crew sick and not enough left on reserve.

So what we will then do is call a guy who is on a day off, and it may be that he is due to fly the next day.  So we’ll ring him up and say, ‘Instead of flying tomorrow, will you fly to Malaysia today and we’ll give you a day off tomorrow?’  So you do rely on calling crew to make sure all of the flights will depart.  So of course, if you cannot contact crew on a day off, it does mean that the flight is going to be cancelled or delayed significantly.  So the contactability is important to keep the schedule in place.”

31.  To deal with the increased number of pilots calling in sick, Cathay had instituted an Absence Management Programme (AMP).  Under AMP, letters would be sent to pilots who frequently called in sick.  The letters invited the pilots to discuss their sickness record with management to see whether something could be done to improve the same.  The union objected that AMP was a means of pressurising pilots to go to work, even though fatigued or ill, contrary to the ANO.

32.  In any event, the net result was that contract compliance campaign did not bring management back to the negotiating table as the union had hoped.  This failure prompted the union to gear up pressure by proposing “limited industrial action”.

33.  The union called an EGM for 20 June 2001.  The purpose of that EGM was to vote on the following motion:-

“Be it resolved that, following Cathay Pacific Airways’ management’s failure to resolve long outstanding issues on Rostering, Remuneration and Benefits, all Full Members of the Hong Kong Aircrew Officers Association will undertake limited industrial action with effect from 1st July, until further notice.”

34.  Before the EGM on 20 June 2001 the union in fact never spelled out exactly what “limited industrial action” it had in mind.  Several of the Plaintiffs in their evidence suggested (and this may well have been the situation) that the union deliberately left the matter vague.  The union might have calculated that the threat of an unknown form of limited industrial action, something more than contract compliance, but falling short of a strike, would persuade management to negotiate further. 

35.  There is evidence that the EGM (for instance) was deliberately called by the union leadership for 20 June 2001, some 10 days before any limited action would come into effect, in the hope that serious negotiations would take place in the interval.

36.  On 15 June 2001 the union issued an open letter to “Hong Kong’s travelling public”.  In that letter, the union expressed its sincere regret at having to resort to limited industrial action and at “the inconvenience this will cause to you, our passengers”.   

37.  At the EGM on 20 June 2001, the resolution to undertake limited industrial action passed by a majority of 92%.  But the commencement date for such action was changed to 3 July 2001, in deference to those members of the Hong Kong public travelling during the 1 July Reunification Day long weekend.

38.  Even during the EGM, the union leadership was coy about precisely defining the type of limited industrial action which it envisaged.  The action (the leadership said) would be within the bounds of members’ contracts.  But to say more (the leadership suggested) would be like “giving your tactics in advance to the other side”.  Whatever it was, the action would involve “incrementally increasing pressure” on Cathay.

39.  Most of the Plaintiffs appear to have voted for the resolution either in person or proxy.  The exception among the Plaintiffs was Mr. Carver who thought the resolution lacked definition.  Remarkably, the other Plaintiffs were in favour of the resolution, even though they had no clear idea at the time of the EGM what limited industrial action would involve.  Asked why they did so, they typically responded that they had confidence in the union’s leadership and believed that, whatever form the action eventually took, it would be within the terms of their contracts. 

40.  On 29 June 2001 the union leadership informed members by a letter that “limited industrial action” would take the form of a “Maximum Safety Strategy” (MSS).

41.  MSS was in essence a form of strict “work to rule”.  The following excerpt from the union’s 29 June 2001 letter gives a flavour of what the union leadership had in mind:-

“Slowing the Operation -- A Safety Necessity

Much of the policy laid out in our Operational Manuals can be expedited or abbreviated safely in normal operation.  Due to mismanagement, we are no longer in a normal operation.  It is time to radically review our personal procedures.

Maximising safety begins at home.  Ask yourself before each duty if you are fit to fly, both physically and mentally.  To ensure that you are in the right frame of mind for your duty, fully utilise the 45 minutes allowed for preparation time after reserve callouts in Hong Kong (or the 120 minutes allowed to reach the airport after reserve callouts for based crew).

Current sign-on times and briefing times will be wholly inadequate to complete the level of preparation now required to maximise safety.  This advice is designed to protect you and the travelling public.  Do not sign on early to compensate for the additional planning time required.  Circumventing duty period limitations in this manner will only dilute carefully calculated safety margins.

The previous pace of flight preparation is no longer conducive to maximum safety.  Each and every action in the manuals must now be carried out precisely and methodically.  Each and every action must now be crosschecked thoroughly by each and every crewmember to minimise the margin of error.

Regrettably ‘Maximum Safety’ will incur significant delays.  WE ANTICIPATE THAT FLIGHTS WILL COMMONLY INCUR DELAYS OF 15 - 60 MINUTES OR MORE.  The actual extent of each delay will depend on the nature of the flight.  ULH and ETOPS flights have considerably more pre-flight briefing material and will necessarily incur longer delays.

If you are departing without incurring delays, it is most likely that you are subconsciously acting at your previously abbreviated pace and not maximising safety.  Resist the temptation to rush pre-flight planning.  Do not allow anyone to pressure you to rush.  Take a step back and review the procedures to ensure that you have not missed an important safety check.  Every professional airline operations uses checklists for good reason -- do not be embarrassed to pull out the expanded checklist in your operations manual to ensure that nothing has been missed.”

42.  Cathay’s management read the union newsletters (which were regularly sent to management).  Like the union members prior to the 29 June 2001, management did not know what form the proposed limited industrial action would take.  Last minute negotiations were attempted.  But these broke down irretrievably on 30 June 2001.  Management then resolved to take vigorous measures to forestall further disruption of Cathay’s operations.

43.  Management initiated an internal review of every aircrew officer employed by Cathay.  A review panel of 20 was formed, chaired by Captain Kenneth Barley (then Cathay’s Director of Flight Operations).  The review team comprised various senior officers from various sections of Cathay’s Flight Operations.

44.  The review took place in 2 stages.

45.  In the first stage, the panel identified pilots:-

(1)     who had an attendance problem;

(2)     who had a warning letter on file in connection with a disciplinary matter; or,

(3)     who were considered by Crew Control to be unhelpful and uncooperative in the performance of their duties or to be difficult to deal with from a management perspective or in terms of relations with other staff.

46.  In the second stage, the pilots identified in the first stage were ranked, with those having the worst track record being placed on top of a Short Master Crew List.  Each pilot was then discussed by the review team.  Where the review team came to a consensus that a particular pilot was not working in Cathay’s interest and could not be relied upon in the future to work for those interests, the pilot was selected for termination.

47.  In the course of the review discussions, each panel member was invited to draw from one’s own experience or to assess other panel members’ experiences with the pilot in question.  According to Mr. Rhodes, at no time during the review deliberations was a pilot’s affiliation with the union or his participation in union activities discussed.

48.  The review lasted for 3 days, from Thursday 5 July to Saturday 7 July 2001.  After the exercise, panel members were told not to keep copies of the papers used during the meeting.  Most destroyed their papers.  But Mr. Ian Wilkinson (then a Flight Training Manager) did not.  His copy of the Short Master Crew List was produced to the Court in the course of trial.

49.  On 9 July 2001 Cathay issued letters terminating the employment of all the Plaintiffs (with the exception of Mr. Keene).  Mr. Keene being on sick leave until 10 July 2001, his employment was terminated on 11 July 2001.  In all cases, termination was with payment of 3 months’ salary in lieu of notice.  No cause for dismissal was stated in any termination letter.

50.  On 2 March 2009 I delivered a Judgment on preliminary issues in these proceedings. 

51.  In that Judgment, I held that the provision in the Conditions permitting dismissal without cause upon making payment in lieu of notice could not be used to by-pass the DGP where an underlying reason behind a dismissal was misconduct.  I further held that, once disciplinary proceedings pursuant to the DGP had been carried out and a final outcome reached, Cathay could invoke the provision allowing termination of a pilot without cause upon payment in lieu of notice.

52.  Mr. Crofts makes no claim for unfair or wrongful dismissal in these proceedings.  He sued Veta for unfair dismissal before the Employment Tribunal in London.  In September 2006 the Tribunal awarded him a total of £70,291.49 (of which £52,780 was compensation for unfair dismissal and £14,434.97 was for breach of his employment contract by Veta.  In these proceedings, Mr. Crofts simply sues Cathay for defamation.

III.     DISCUSSION

53.  The parties’ counsel (led by Mr. Clive Grossman SC for the Plaintiffs and Mr. Adrian Huggins SC for Cathay) have broken down the broad issues which I identified at the start of this Judgment into 21 questions.  In this section, I propose to go through those 21 questions.  On the basis of my determinations on the latter, I will conclude by answering the broad issues posed by me.

A.      Unfair dismissal

54.  The first 7 questions may be considered together.  They concern the Plaintiffs’ entitlement to statutory compensation under Parts IVA (Protection Against Anti-Union Discrimination) and VIA (Employment Protection) of the Employment Ordinance (Cap.57) (EO).

55.  The specific questions are as follows:-

Question 1:-

Whether the Plaintiffs are entitled to compensation under EO, Part VIA, s.32A(1)(c) as a result of the Defendants terminating their employment?

Question 2:-

Whether the termination of any Plaintiffs’ employment was for one or more of the 5 reasons in EO s.32K?

Question 3:-

Whether s.32K would be satisfied by the Defendants if they considered that the Plaintiffs could not be relied upon to act in the Defendants’ best interests in future by reason of their employment records, history and/or attitude irrespective of the evidential basis for so considering?

Question 4:-

Whether the Defendants are right in contending that, if the employer proves that the dismissal/ termination was ‘by reason of’ one of the 5 valid reasons provided for in s.32K, then there would be no need for any additional discretionary consideration as to whether it was reasonable or fair to have terminated the contract or whether there should been some formal process first?

Question 5:-

Whether the termination of any Plaintiffs’ employment was by reason of his exercising his right to be a member of the union?

Question 6:-

Whether the termination of any Plaintiffs’ employment was by reason of his participation in the contract compliance campaign or the MSS and, if so, whether such participation constituted the taking part in the activities of a trade union at an appropriate time as protected by EO s.21B(1)(b)?

Question 7:-

If the Plaintiffs are entitled to remedies under Part VIA, what compensation ought to be awarded to them?

56.  Relevant sections of the EO are as follows:-

(1)     Part IVA, s.21B:-

“(1)   Every employee shall as between himself and his employer have the following rights:-

(a)     the right to be or to become a member or an officer of a trade union registered under the Trade Unions Ordinance (Cap.332);

(b)     where he is a member or an officer of any such trade union, the right, at any appropriate time, to take part in the activities of the trade union;

(c)     the right to associate with other persons for the purpose of forming or applying for the registration of a trade union in accordance with the provisions of the Trade Unions Ordinance (Cap.332);

...

(2)     Any employer, or any person acting on behalf of an employer, who:-

(a)     prevents or deters, or does any act calculated to prevent or deter, an employee from exercising any of the rights conferred on him by subsection (1); or

(b)     terminates the contract of employment of, penalizes, or otherwise discriminates against an employee by reason of his exercising any such right,

shall be guilty of an offence and shall be liable to a fine at level 6.

(3)     In this section:-

‘appropriate time’ means, in relation to an employee taking part in any activities of a trade union, time which either:-

(a)     is outside his working hours; or,

(b)     is a time within his working hours at which, in accordance with arrangements agreed with or consent given by or on behalf of his employer, it is permissible for him to take part in those activities;

‘working hours’ means, in relation to an employee, any time when, in accordance with his contract with his employer, he is required to be at work.”

(2)     Part VIA, s.32A:-

“(1)   An employee may be granted remedies against his employer under this Part:-

...

(c)     where he is dismissed by the employer other than for a valid reason within the meaning of s.32K and in contravention of:-

(i)      section ... 21B(2)(b) ...;

...

whether or not the employer has been convicted of an offence in respect of the dismissal.

....

(4)     For the purposes of subsection (1)(c):-

(a)     it shall not be necessary for an employee to show in relation to:-

(i)      subsection (1)(c)(i), that his contract of employment was terminated by reason of his exercising any of the rights vested in an employee by or by virtue of section 21B(1)...

(b)     an employee who has been dismissed by the employer shall be taken to have been dismissed without a valid reason unless a valid reason is shown for that dismissal within the meaning of section 32K.

....”

(3)     Part VIA, s.32K:-

“For the purposes of this Part, it shall be a valid reason for the employer to show that the dismissal of the employee ... was by the reason of:-

(a)     the conduct of the employee;

...

(e)     any other reason of substance, which, in the opinion of the court or the Labour Tribunal, was sufficient cause to warrant the dismissal of the employee...”

(4)     Part VIA, s.32P:-

“(1)     Subject to section 32M, the court or Labour Tribunal may ... make an award of compensation to be payable to the employee by the employer as it considers just and appropriate in the circumstances if:-

...

(b)   the employee is dismissed by the employer in contravention of section ... 21B(2)(b) ..., whether or not the employer has been convicted of the offence in respect of the dismissal.

(2)       In determining an award of compensation and the amount of the award of compensation under this section, the court of Labour Tribunal shall take into account the circumstances of the claim.

(3)       Without affecting the generality of subsection (2), the circumstances of a claim include:-

(a)   the circumstances of the employer and employee;

(b)   the length of time that the employee has been employed under the contract of employment with the employer;

(c)   the manner in which the dismissal took place;

(d)   any loss sustained by the employee which is attributable to the dismissal;

(e)   possibility of the employee obtaining new employment;

(f)    any contributory fault borne by the employee; and

(g)   any payments that the employee is entitled to receive in respect of the dismissal under this Ordinance including any award of terminal payments under section 32O.

(4)       The amount of an award of compensation under this section shall be such amount as the court or Labour Tribunal considers just and appropriate but no such award shall exceed an amount of $150,000.

...”

57.  Cathay’s case is that the Plaintiffs:-

(1)     were terminated by reason of their conduct or “other reason of substance”; and,

(2)     were not terminated for exercising their right to take part in union activities.

58.  According to Cathay, the Plaintiffs were dismissed for a “valid reason” within the terms of EO s.32K and not in contravention of EO s.21B(2)(b).  It follows (Cathay says) that there is no basis for granting the Plaintiffs remedies under EO s.32A(1)(c).

59.  What is the “conduct” which Cathay alleges?  Mr. Huggins says that the conduct was the Plaintiffs’ unusually high rates of calling-in-sick on duty or reserve days, their failure to discuss with management the reasons as to why such was happening, and their perceived negative attitude towards Cathay and fellow employees (especially those in Crew Control).  This conduct (Mr. Huggins submits) indicated to Cathay’s review team that the Plaintiffs could not be counted on to act in the best interests of Cathay.

60.  I am unable to accept that Cathay had a valid reason to dismiss the Plaintiffs under EO s.32K.

61.  In Thomas Vincent v. South China Morning Post Publishers Ltd. [2005] 4 HKLRD 258 the Court of Final Appeal (CFA) unanimously held (at §28) that, for an alleged reason for dismissal to fall within s.32K, the reason must “first of all, be true”.  Further, the Court of Appeal noted (at §29) that “the employee’s conduct relied upon by the employer [as a ground for dismissal] must be relevant to the question of whether or not to dismiss the employee”.  It is not just any type of conduct of the employee which will constitute “valid reason”.  Otherwise, “any conduct ... could be used against the employee qua employee”.

62.  I understand the foregoing dicta to mean that, where s.32K is concerned, I must discern the “true” reason for an employee’s dismissal.  I do this by an objective consideration of all relevant circumstances surrounding a dismissal. 

63.  Typically, a person acts from a variety of motives.  An employee’s “conduct” may be one of a whole range of reasons (running the gamut from major to minor with everything in between) driving an employer to dismiss a person.  Consistently with the CFA’s decision in Thomas Vincent, it seems to me that I have to ascertain the predominant motive for an employer’s act of dismissal.

64.  I say “consistently” because it will often be the case that an employee’s “conduct” will be at least one of many reasons why an employee is dismissed.  If the alleged “conduct” plays only (say) an incidental role in an employee’s decision for firing the employee or if such “conduct” is trivial, I do not think that the “conduct” can as a matter of law qualify as a “valid reason” within s.32K.  Otherwise, as the CFA warned in Thomas Vincent, just about any conduct could with apparent legitimacy be used to justify a dismissal and the protection afforded to employees by the EO would be emasculated.  The Legislature could not have meant the EO to be so easily circumvented.

65.  I accept that considerations of the nature underscored by Mr. Huggins (namely, the suspected or supposed anti-company or anti-social tendencies of the Plaintiffs) played a part in the deliberations of the review panel.  Those considerations could well have been part of the reason for Cathay dismissing the Plaintiffs.  But I do not think that such considerations were by any means the whole (or even a predominant part) of the picture.

66.  In my view, Mr. Rhodes conceded as much in the course of his cross-examination by Mr. Grossman. 

67.  Mr. Grossman referred Mr. Rhodes to a letter dated 27 June 2001 from Captain Barley.  Although he could not be certain, in all probability, Mr. Rhodes had discussed the letter with Captain Barley.  The letter stated:-

“As you may be aware, I delivered a letter to the HKAOA on Monday setting a firm deadline to conclude negotiations by midnight Thursday 28 June unless the HKAOA withdrew their intention to distribute their disruption plan [that is, the document outlining MSS] to members the following day....

The distribution of this plan would undermine good faith negotiations and signal the HKAOA’s desire to abandon negotiations and begin industrial action.  The Labour Department has advised the Company that it has urged the HKAOA to withhold preparations for its planned action.

While we are committed to reaching a negotiated settlement, I feel I must also convey to you our determination to protect the interests of our passengers.  Cathay Pacific is a customer service company.  Our reputation and future success depends on how we treat our customers.  If industrial action does commence we will take firm action against any staff member who deliberately acts against the interests of our passengers.

HKAOA members should also clearly understand that Hong Kong labour ordinances do not permit an employee to take part in any trade union activity during his or her working hours without the consent and agreement of the employer.  Appropriate action will be taken against such misconduct.

Over many years working at the airline I have had the good fortune to make many excellent friends among you.  I have seen the Company change as it has grown from a relatively small regional carrier to a significant player on the world airline stage.  I have seen times of great expansion and other times of little or no growth, but throughout my time the one constant has been that we have had probably the best pilots in the world working at Cathay.  I am sure the vast majority of us will act professionally and not inconvenience our passengers.

....”

68.  Mr. Grossman continued with Mr. Rhodes:-

“Q:    Was it still the intention ... when this document was signed, 27 June, was it the intention at that stage to sack people, to dismiss people?

A:      No.

Q:     It wasn’t?

A:      We had no intention at this stage to sack people.

....

J:       I think the way Mr. Grossman wishes it to be put: if the negotiations had succeeded, was the intention on 27 June 2001 that anyone would be sacked?

A:      My wish, my desire, was to reach a negotiated settlement round the table, in which case the threat of industrial action would be lifted, contract compliance would be lifted, and we’d return to normal.  That was our hope.

....

Q:     So it was your hope, was it, that everybody could get round the table, everything would be sorted out, nobody would need to be dismissed?

A:      Absolutely.  That was my wish.

Q:     These 49 people, then, were dismissed because you didn’t get around the table and come to an agreement?

A:      Well, I think once we failed to reach an agreement and the limited industrial action was launched, and we started to lose those hundreds of millions of dollars, that’s when the patience of my seniors ended.  I’d been under a lot of pressure for the past 18 months from some of my seniors, who couldn’t believe how patient we were being in trying to reach a deal, while all of the increased sickness was going on, and I said, ‘Look, give me time, give me time.  When we reach a deal, the sickness levels will come down.  If we reach a deal, the crew will start cooperating’, and I pushed and pushed for time to reach an agreement.  I think once the limited industrial action started and we failed to reach an agreement, that was the catalyst for the senior management to say, ‘No more time.  We don’t wish to employ crew working against our interests’.

Q:     49 people were dismissed because you didn’t reach an agreement?

A:      No, 49 people were dismissed because of their actions over the previous 30 months.

Q:     What did that have to do with whether you reached an agreement or not?

A:      Well, if we’d reached an agreement, the hope was they would stop the sickness and stop the contract compliance and everything would return to normal and we’d be able to crew our flights and passengers would stop cancelling bookings.

Q:     Those 49 people, those 49 would stop their misbehaviour, as it were?

A:      Well, all -- yeah, all crew members who were participating in contract compliance or the sick-out campaign would stop and come back to normal behaviour.  That would be the hope.

Q:     I’m talking about the 49 people.

A:      Well, the 409 people are the ones during the review on 5/6/7 July who were thought the most active participants in the contract compliance and the --

Q:     They were the most active participants in the contract compliance scheme?

A:      In being uncooperative and unhelpful and poor attendance, those were the ones we assessed as being the most unhelpful to the company during that period.

Q:     But they would not have been dismissed had you reached an agreement with the union?

A:      If we’d reached an agreement that day and limited industrial action was called off, and contract compliance was lifted, of course there would have been no further action.

Q:     I see.  Thank you.”

69.  What I derive from this is that the 49ers (including the Plaintiffs) were principally dismissed because management was unable to make headway in last minute negotiations with the union.  Cathay’s intention was to show union members that management was prepared to take tough action against pilots who participated in MSS. 

70.  The 49ers were singled out by the review panel as persons who by reason of their sickness records and ostensibly argumentative character (as reported by Crew Control to the review panel) were probably the most active supporters of the union cause.  By dismissing them, Cathay hoped to send a strong signal to other union members to comply with management’s line or else face a similar fate as the 49ers.

71.  This appears to me to be why, repeatedly throughout their evidence, Cathay’s witnesses stressed that the union’s decision to engage in limited industrial action was “the trigger” or “the catalyst” to Cathay acting as it did.  The whole point of dismissing the 49ers was, by a vigorous response, to forestall the limited industrial action.  The alleged conduct of the 49ers (including the Plaintiffs) could not have been the predominant reason for the sackings.  This is because, as Mr. Rhodes accepted, if a deal had been reached with the union, no one would have been dismissed.

72.  Let me amplify on this through 6 observations.

73.  First, I have referred to the “alleged conduct” of the 49ers (including the Plaintiffs).  This is because in reality Cathay appreciated that it had no hard evidence of such anti-company or anti-social conduct as it alleges.  Certainly, Cathay had no evidence of the sort that could pass muster in proceedings under the DGP for misconduct or gross misconduct.

74.  Second, one must call a spade “a spade”.  Cathay has throughout the trial studiously denied that it dismissed the Plaintiffs for “misconduct” as opposed to mere “conduct”.  But let there be no doubt about the matter.  In effect, both at trial and in the comments of Mr. Tyler and Mr. Chen at the time of the mass dismissal, Cathay was accusing the 49ers (including the Plaintiffs) of “gross misconduct” within the terms of the DGP.

75.  Under DGP cl.8.5, the sanction of dismissal “is normally reserved for more serious offenses or for the repetition of less serious offenses”.  An officer may, however, be dismissed for a first offence which constitutes “gross misconduct”.

76.  “Gross misconduct” according to the DGP includes:-

(1)     “Habitual neglect of duty or neglect resulting in serious consequences”;

(2)     “Wilful misconduct or disobedience of lawful and reasonable orders”;

(3)     “Conduct considered by the Company to be prejudicial to its interests”; and,

(4)     “Wilful neglect of the Company’s interest”.

77.  Thus, the alleged anti-social and anti-company conduct plainly fall within the ambit of “gross misconduct” calling for dismissal under the DGP.

78.  Third, dismissal under the DGP for gross misconduct is subject to an important qualification. 

79.  Cathay must first institute procedures under the DGP which would enable the officer facing possible dismissal with the chance to put forward one’s side of a matter and clear one’s name.  The DGP stresses (in cl.3) that “[t]he principles of common sense and natural justice should be followed when applying these procedures”.  Moreover, the DGP requires that Cathay “strive at all times to: ... accord fair and equitable treatment to all Officers” and “provide Officers with a right of appeal”.

80.  Contrary to the DGP, none of the Plaintiffs were given a chance to put forward their case prior to dismissal on the basis of their alleged conduct.  No opportunity was given to them to explain any supposed abnormality in their sickness records or any alleged anti-social behaviour as reported by Crew Control or anyone else to the review panel.  None of the Plaintiffs were given a chance of appeal.  Thus, the basic tenets of natural justice were ignored contrary to the Plaintiffs’ employment contracts incorporating the DGP.  I shall come back to this in my discussion of wrongful termination below.

81.  Fourth, in the course of trial, it became apparent that, in relation to the anti-company and anti-social “conduct” being alleged by Cathay against the Plaintiffs, Cathay could not identify a single instance where any of the Plaintiffs manifested such behaviour.

82.  Mr. Huggins, for instance, never put to any given Plaintiff that:-

(1)     he had malingered, that is, in any specific instance called in sick when he was in fact fit to fly;

(2)     he had a sick leave record which was unusual and could not be explained otherwise than by malingering;

(3)     he had refused to meet management to discuss his sick leave record (whatever that might have been);

(4)     he had in any particular instance been negative to anyone at Cathay (including anyone in Crew Control); or,

(5)     he had failed in any particular instance to act in Cathay’s best interests.

83.  The evidence from Cathay’s own staff as to the “negative attitude” of given Plaintiffs was itself vague and unparticularised.  The following passage from the Witness Statement of Mr. Sherman Lam of Crew Control (which came in as evidence by agreement of the parties without the need to call Mr. Lam) was typical:-

“Of the Plaintiffs, the individuals I had direct experience of behaving in an unhelpful and uncooperative way were the following:-

(1)     Mr. Kenneth Gordon Carver: he was troublesome, uncooperative and often not contactable;

(2)     Mr. Michael John Fitz-Costa; he often gave me a difficult time, argumentative, destructive and generally disruptive of the operation of [Cathay].

(3)     Mr. Quentin James Lee Heron: he was uncooperative and often not contactable;

(4)     Mr. Michael Steven Shaw: he was argumentative, troublesome and rude;

(5)     Mr. John Simpson Warham: he often gave me a difficult time, was generally not contactable, and was argumentative over matters such as flight time limitations and rostering practices.

(6)     Mr. Brett Alexander Wilson: he was uncooperative and often not contactable;

(7)     Mr. Hendrik van Keulen: he was uncooperative, bad mannered and often not contactable;

(8)     Mr. Brian David Keene: he was rude, often not contactable.

(9)     Mr. Pierre John Roger Morissette: he was uncooperative and not contactable when not on duty;

(10)   Mr. Craig Michael Young: he was uncooperative and not contactable when not on duty;

(11)   Mr. Douglas Gage: he expressed anti-company views; he was argumentative about almost everything, including matters such as flight time limitations and rostering practices, resulting in a flight delay on at least one occasion; he rarely answered phone calls and never returned calls; he was always complaining and refused to accept necessary roster changes; and

(12)   Mr. John Wallace Dickie: he was argumentative, uncooperative and not contactable when not on duty.”

84.  Mr. Lam’s statement amounts to no more than embarrassing assertion and name-calling.  No specific details are mentioned, so that it was impossible for the Plaintiffs concerned to rebut the same at trial.  The statement was of no help to the Court at all.

85.  Mr. Rhodes himself candidly admitted that Cathay lacked hard proof in relation to the Plaintiffs’ alleged “conduct”.

86.  In relation to sickness, Mr. Grossman pointed out to Mr. Rhodes that, in a May 2001 meeting with the union, Cathay had accepted that the alleged abuse of sick leave was a matter to be dealt with through the DGP process.

87.  Mr. Grossman went on:-

“Q:    .... You didn’t go through that [DGP] process with the 49ers, did you?

A:      No.

Q:     Why not?

A:      We chose not to.  We chose to terminate the 49ers through the clause that allows us to give them three months’ notice.

Q:     You had stated there [at the May 2001 meeting], given an undertaking that you were going to deal with it on a disciplinary matter, and you did not do it, not with a single one of them.

A:      That’s correct.

Q:     So there’s no possible way of knowing whether they were culpable or not.

A:      But there’s no possible way of identifying whether the employee was abusing sick leave, that’s the problem.

Q:     That’s absolutely right.

A:      Yes.  If we knew for certain they were abusing sick leave, we would take them through the D&G.  I we knew for one second that they were falsifying sickness and they were not reporting for work, saying they were sick and they were perfectly fit, if we had proof of that then they would be dismissed and probably summarily dismissed without payment.

Q:     Come on, Mr. Rhodes.  You know what you are saying now: ‘We didn’t know, we weren’t sure, so we sacked them?’

A:      No, I disagree.  If we have any evidence that people are abusing the sick leave, then we would have to go through the D & G and we would have to terminate them without pay.

Q:     All right, Mr. Rhodes.  You sacked these people without having any evidence that they were malingering, that they were abusing it?

A:      No.  Just based on the probabilities.  We couldn’t definitely prove that they were falsifying sickness.”

88.  Later, Mr. Rhodes told the Court:-

“J:     ...  [W]hat you’re saying is, ‘Well, we can’t prove it, we don’t really have any rigorous or even any real proof about this, so we’ll just get around the difficulty of the disciplinary and grievance procedure by giving three months’ notice.’

A:      Well, that, as I’ve tried to explain, is the entire reason why the union and why many pilots felt that having the sick-out and having contract compliance was the perfect weapon to put pressure on the company, because the company can’t prove anything in a disciplinary hearing.

J:       This was your response to that perfect weapon?

A:      Well, the only response we have is to monitor their behaviour and hope we would get a deal around the table, and then the behaviour would all disappear overnight --

J:       But this dismissal of the 49 was your response to the difficulties of proof raised by the perfect weapon indulged in, engaged in, by the union?

A:      Well, we often talked about the different weapons that the union and company held.  The union knew they could pressure on us through sickness, they knew they could put pressure on us through contract compliance, they knew they could put even more pressure on us through MSS and delaying flights, and they felt that the company couldn’t do anything about it.

We always said we feel, if a crew member has withdrawn his enthusiasm, has stopped working in the company’s best interests, we can give three months’ notice.  That was our belief.  We always said it shouldn’t come to that; we’ve got to reach an agreement, we’ve got to almost put these weapons down.”

89.  Fifth, essentially, the 49ers seem to have been chosen, because it was thought that their sickness records and their encounters with Cathay staff (especially Crew Control) were indicative.  Those records and encounters were thought to show that, on a balance of probability, the 49ers were actively engaged in the contract compliance campaign and would likely be actively engaged in the MSS limited industrial action. 

90.  On this hypothesis, management appears to have reasoned that, if negotiations with the union were fruitful, there would be no need to sack any of the 49ers.  The 49ers would then individually (management hoped) drop their debilitating campaign, cease to be abnormally sick, and restore the goodwill withdrawn under contract compliance.

91.  But if so, how (one asks oneself rhetorically) could the “conduct” of the 49ers be the underlying or true reason for their dismissal? 

92.  Management had no real idea whether any of them were genuinely malingerers or troublemakers.  There was merely the probability that they were.  That was deemed a sufficient basis for management despite the strictures of the DGP.  That could only have been because the real target behind the mass dismissals was not the individuals concerned, but the union. 

93.  The sackings of the 49ers were meant to discourage the union and its members from proceeding further with MSS.  For this purpose, it was necessary to act decisively and swiftly.  That was what Cathay did.

94.  Cathay’s witnesses have insisted that the union was not the real target.  They say that, during the review panel’s deliberations, a person’s affiliation with the union was not considered.  They deny knowing whether a given pilot was or was not a member of the union.

95.  However, the fact is that the overwhelming majority of Cathay’s pilots belonged to the union.  It was therefore unnecessary to know whether a given person was or was not a member.  If probability was the name of the game, in all likelihood a person selected by the review panel for dismissal would be a union member. 

96.  Further, given the contract compliance campaign, Cathay’s reasoning appears to have been that a high degree of calling in sick, was likely to be reflective of a high level of commitment to the union cause in general and to contract compliance in particular.  In those circumstances, I do not think that a lack of specific knowledge about a person’s union affiliation falsifies the conclusion which I have reached.

97.  I am fortified in this conclusion by Mr. Chen’s grudging admission in the course of his cross-examination that at least “part” of the reason for the Plaintiffs’ dismissal had to do with contract compliance.  By this I understand that, as far as Mr. Chen was concerned, despite a lack of hard evidence, the review panel was singling out the 49ers as likely activists in the contract compliance campaign.

98.  In my view, this admission was an understatement.  Far from playing only a small “part”, the Plaintiffs’ perceived involvement in union activities had a significant role in Cathay’s decision.

99.  Sixth, Mr. Huggins submits that the dismissals also fall within s.32K(e).  He submits that the Plaintiffs were dismissed for “other reason of substance”. 

100.  I am unable to accept this.

101.  If the Plaintiffs were dismissed because of alleged malingering or anti-social conduct, there is simply no credible evidence of such behaviour before the Court. 

102.  If (as I have found) the Plaintiffs were principally dismissed because it was thought that their records showed that they were engaging in union activities (whether within or outside of “any appropriate time”), there is equally no evidence of this in any of the Plaintiffs’ cases. 

103.  If the Plaintiffs were dismissed because they were merely active supporters of the union, they were entitled to belong to a union and take part in its lawful activities under EO s.21B. 

104.  Accordingly, on no basis could any of the foregoing possibilities be said to be “other reasons of substance”.

105.  Let me return to Questions 1 to 7.  In light of the discussion above, I would answer the questions as set out below.

106.  Question 1.  The Plaintiffs are entitled to compensation under Part VIA.  They were not dismissed for a valid reason within s.32K.  The Plaintiffs appear to have been dismissed predominantly (albeit not solely) for supporting the union. 

107.  Question 2.  The Plaintiffs were not dismissed for a valid reason within the terms of s.32K.

108.  Question 3.  This question does not arise on the findings which I have made.  In fact, Cathay apparently considered that the Plaintiffs might be relied upon to act in Cathay’s best interests in the future, despite whatever blemishes Cathay may have perceived in their employment history.  Mr. Rhodes’ evidence was that, if negotiations with the union had achieved a settlement in late June 2001, no one would have been sacked.

109.  Question 4.  This questions does not arise on the findings which I have made.  Note, however, that in Thomas Vincent at Court of Appeal level ([2003] 4 HKC 119) Yuen JA stated (at §59): “[O]nce one of the reasons [in s.32K] has been proved, it is not for the court or tribunal to embark on an additional, discretionary examination to see if it was reasonable or fair or ‘valid’ to terminate the contract.”  The CFA’s decision did not disturb the validity of this dictum.

110.  Question 5.  The Plaintiffs were partly terminated because it was thought likely that they were committed union supporters who had actively engaged in contract compliance and who were likely to participate in the MSS action.  In fact, although union supporters, there is no evidence of the Plaintiffs having engaged (actively or otherwise) in the union’s contract compliance or MSS campaigns.

111.  Question 6.  There is no evidence that the Plaintiffs engaged in union activities otherwise than at “appropriate times” as defined in EO s.21B(3).

112.  Question 7. 

(1)     The predominant reason for dismissing the Plaintiffs was for their having been a member or engaged in union activities.  The Plaintiffs were chosen for dismissal as likely participants in the contract compliance campaign and the intended limited industrial action.

(2)     There is no evidence that the Plaintiffs had actually so participated.  Cathay dismissed them without giving them a chance to be heard or to clear their name.  Due process was not followed contrary to the strictures of the DGP (which formed part of the Plaintiffs’ contract with Cathay). 

(3)     In the premises, with the exception of Mr. Crofts, it is just and appropriate for the Plaintiffs each to receive the maximum award under EO s.32P of $150,000.

B.      Wrongful termination

113.  The next 4 questions may be considered together.  They concern the Plaintiffs’ entitlement to damages for breach of their Conditions.

114.  The specific questions are as follows:-

Question 8:-

Whether ‘any misconduct or disciplinary matters’ were alleged by the Defendants against any Plaintiff or whether the Defendants had decided to dismiss any Plaintiff for misconduct or disciplinary matters?

Question 9:-

If so, whether the Defendants were in breach of the DGP by failing to instigate and complete the disciplinary procedures?

Question 10:-

For the purpose of calculating damages for the Defendants’ failure to invoke the disciplinary procedure of the DGP, what is the earliest time the Defendants could have exercised their rights to dismiss the Plaintiffs and, by reference to the answer thereto, what is the quantum of damages for each Plaintiff for the Defendants’ failure to invoke such procedure?

Question 11:-

Whether any damages can be claimed for depression, stress, anxiety, emotional turmoil, emotional instability or sever adverse affect on personal life allegedly caused to a Plaintiff or a member of his family by the termination of that Plaintiff’s employment as alleged?

115.  Cathay has maintained that the Plaintiffs were dismissed without cause.  But, in the same breath, Cathay says that it could not rely on them to act in its best interests.  Through Mr. Tyler’s statement, Cathay has accused the Plaintiffs of showing a lack of professionalism in their conduct.  By this is plainly implied that the Plaintiffs have not discharged their duties at Cathay in the manner in which they should.

116.  I do not think that Cathay can have it both ways, on the one hand to say “no cause” and on the other to make serious allegations of professional failings on the part of the Plaintiffs such that they could not be relied upon to further Cathay’s best interests.  In actuality, Cathay was terminating the Plaintiffs’ on account of alleged misconduct on their part.  That may not have been the predominant reason for the purposes of the EO.  But allegations of misconduct certainly formed part of Cathay’s motivation for the sackings.

117.  As I have mentioned, the conduct alleged by Cathay against the Plaintiffs amounts to “gross misconduct” under the DGP.  By the DGP Cathay was obliged to give the Plaintiffs a fair chance to be heard before dismissing them for any such gross misconduct.  Cathay failed to give the Plaintiffs an opportunity to rebut their supposed abnormal absence record and the accusations of unacceptable behaviour levied against them by other staff.  It follows that Cathay breached the Conditions.

118.  The measure of damages would depend upon the time required for proceedings against the Plaintiff under the DGP to take place.  Given the lack of evidence against the Plaintiffs, I must assume that any proceedings would have failed in the first instance.  At that stage, in accordance with what I held in my earlier Judgment, Cathay could then give 3 months’ notice dismissing the Plaintiffs without cause.

119.  Under the DGP, a disciplinary case having been notified to an aircrew officer, a hearing is to take place within 7 days (excluding weekends) of notification.  The hearing would presumably last for no more than a day or so.  Written notification of the result of the hearing is to be communicated to the officer within 7 days (excluding weekends) after the hearing.

120.  If one assumes that the deadlines just mentioned may be somewhat tight and double the times, one arrives at roughly a month for the entire process.  After that month, Cathay would have been able to terminate the Plaintiffs’ employments without cause by giving 3 months’ notice.

121.  Cathay gave 3 months’ notice to the Plaintiffs in lieu of notice.  That did not cover the 1 month for disciplinary hearing.  This means that, with the exception of Mr. Crofts, the Plaintiffs should be entitled to damages of one month’s pay as a result of Cathay’s failure to observe the DGP process.

122.  Mr. Huggins pointed out that there was no direct evidence before the Court of what each Plaintiff earned immediately before his dismissal.  But he fairly accepted that the Court could proceed in a rough-and-ready manner by the expedient of taking the individual figures mentioned in each Plaintiff’s termination letter.  Those figures represented 3 months’ pay in lieu of notice.  To arrive at an amount for an additional month’s damages, one can divide the figures in the relevant letters by 3.

123.  Mr. Grossman suggested that the hearings would take at least 7 months.  He cited an instance where a hearing took longer than that in support.  But I do not think that I can infer much from one-off examples.  The safest guide to the length of a disciplinary process must be the times stipulated in the DGP itself.

124.  I would therefore answer Questions 8 to 11 as set out below.

125.  Question 8.  Despite its denials of having done so, as a matter of fact Cathay dismissed the Plaintiffs in part for misconduct.

126.  Question 9.  Cathay was in breach of the DGP by failing to instigate and complete disciplinary procedures in relation to each Plaintiff.

127.  Question 10.  The quantum of damage is the pay each Plaintiff would have received for a month’s work.

128.  Question 11.  This is no longer an issue.  The Plaintiffs no longer seek damages for depression, stress, anxiety or other condition said to be consequent upon their dismissal.

C.      Defamation

129.  The remaining 10 questions can be considered together.  They concern the statements made by Mr. Tyler and Mr. Chen.

130.  The specific questions are as follows:-

Question 12:-

Whether, in addition to his words set out in Appendix 1, Mr. Tyler also said that “the sackings [of the 49ers] had nothing to do with the labour action ... they would have happened anyway because of an examination of the pilots’ records”?

Question 13:-

Whether the statements complained of bore (if false) any of the defamatory meanings relied upon by the Plaintiffs (as opposed to the meanings pleaded by the Defendants) and, if so, which?

Question 14:-

Whether the Defendants establish their pleas of justification in relation to each Plaintiff?

Question 15:-

If not, whether the Defendants are protected by qualified privilege?

Question 16:-

If the Defendants are liable to any Plaintiff in defamation:-

(1)   the quantum of general damages to be awarded to such Plaintiff;

(2)   whether any aggravated damages stand to be awarded to any Plaintiff and, if so, the quantum thereof?

Question 17:-

Whether the Plaintiffs are entitled to be compensated in general damages for claimed loss of earnings by reference (albeit by way of illustration) to what they say they would have earned had they continued to be employed by the Defendants?

Question 18:-

Further and in any event, whether each Plaintiff’s claimed loss of income is due to factors other than the statements complained of, including:-

(1)   the seniority system and promotion structure of international airlines;

(2)   the publication given to the termination of the Plaintiffs’ employments by the HKAOA and/or IFALFPA (International Federation of Air Line Pilots Associations);

(3)   subsequent downturns in international airline passenger traffic; and/or,

(4)   a lack of opportunities for the employment of pilots at more senior levels.

Question 19:-

In relation to Mr. Carver, whether he is entitled to make any claim in general damages reflective of any loss suffered from August 2003 to March 2004 due to an injured foot?

Question 20:-

In relation to Mr. Warham, whether he is entitled to make any claim in general damages reflective of any loss suffered by reason of a myocardial infarction suffered in July 2002?

Question 21:-

In relation to Mr. Crofts, whether he is entitled to make any claim in general damages reflective of any loss suffered by reason of his medical condition requiring open heart surgery that resulted in a loss of his flying licence from December 2008?

131.  Question 12 raises a preliminary issue. 

132.  A CNN web-site article dated 10 July 2001 reported: “The airline insists the sackings had nothing to do with the labor action, that they would have happened anyway because of an examination of the pilots’ records”.  The Plaintiffs have in their pleadings attributed the underscored text to Mr. Tyler.  Mr. Tyler denies having made such a statement.  There is no evidence that he actually made the statement.  The CNN article does not actually attribute the remarks to him. In those premises, I am unable to find that Mr. Tyler said words along the lines of the underscored text.

133.  The precise words of Mr. Tyler’s press statement (see Appendix 1) about which the Plaintiffs complain are as follows:-

“Cathay Pacific simply cannot stand by and allow the AOA’s selfish action to cause such damage.  Nor is Hong Kong prepared to tolerate such disruptions by the AOA on what seems to be a repeated basis.  Under the circumstances, we need to take prompt and firm action to resolve the situation for the good of all of our employees, our customers, our shareholders, the tourism industry and the whole of Hong Kong.

....

... Sadly, we have also taken the very painful decision to terminate the employment of 49 of our pilots.  This is in addition to the three cases previously announced.

Thus, today, we have issued letters of termination to these pilots ....

We have taken this very serious step only after extremely careful consideration.  We have undertaken a detailed review of the employment history of all our pilots and identified those who, we feel cannot be relied upon to act in the best interests of the company in the future.  We have, essentially, lost confidence in those employees who have been terminated and decided that their continued employment with the company is no longer in the best interests of the company as a whole.

....

Hong Kong is tired of being held to ransom.  The time has come for prompt and resolute action.  That is what we have done....”

134.  In relation to Mr. Chen’s statements, the Plaintiffs’ complain about the following words in his letter to flight crew (see Appendix 2):-

“The company and the Hong Kong community are unable to acquiesce to such tactics.  We cannot be held to ransom indefinitely and, as you may now be aware, the company has chosen to act to protect its future and its people, including the majority of pilots who I know are strong supporters of the airline.  Today, after a review of the employment history of all our flight crew, the company has terminated the employment contracts of 49 pilots.

This has been a very painful decision and one that has not been entered into lightly.  However we are only prepared to take this airline forward with pilots who we believe have the best interest of the company at heart.”

135.  The Plaintiffs further complain about Mr. Chen’s public statement of 10 July 2001 already quoted above.

136.  The Plaintiffs contend that, on their ordinary construction, the statements of Mr. Tyler and Mr. Chen which I have just identified bear the following meanings:-

(1)     The Plaintiffs were unprofessional.

(2)     The Plaintiffs had such bad employment records that they had to be dismissed with immediate effect.

(3)     The Plaintiffs did not care about the interests of their employers and of Hong Kong.

137.  Cathay accepts that one or other of the statements complained of are capable of bearing the following defamatory meanings:-

(1)     The pilots threatening industrial action against Cathay (including the Plaintiffs) were threatening to disrupt the airline and those affected by its operations and in that respect were not showing the level of total professionalism required by the Defendants.

(2)     The Plaintiffs did not have Cathay’s best interests at heart.

(3)     Cathay considered on reasonable grounds that the Plaintiffs could not be relied upon to act in Cathay’s best interests in the future.

138.  In my view, on any reading of Mr. Tyler’s press statement, the 49ers (including the Plaintiffs) were being accused of being unprofessional, of being bad employees, and of not caring for Cathay’s best interests or those of Hong Kong.

139.  Let me set out in a little more detail how precisely I read the press statement:-

(1)     The statement opens with an indictment of the union’s leadership.  The latter are said to have employed “guerilla-style tactics” which have had the effect of severely disrupting Cathay’s operations.  The union leadership is accordingly characterised as “selfish,” that is, as only acting to further their agenda as opposed to the interests of Cathay, its passengers and the wider Hong Kong public.

(2)     To respond to the union’s selfish acts, Cathay needed “to take prompt and firm action to resolve the situation for the good of all”.  Therefore, Cathay took 2 actions. 

(3)     The first action was implement a relatively generous new pay, benefits and rostering package for pilots with immediate effect.  Such package was intended as a reward for pilots who “want to work for the success of the company”.

(4)     The second action was to fire the 49ers.  The juxtaposition of this second measure with the statement’s opening critique of the union implies that the 49ers are the persons behind the union’s selfish acts.  The new benefits package is not intended for them because they cannot be counted on to work for the success of the company.  On the contrary, they are the ones who have been doing their best to disrupt Cathay’s operations through the tactics described in the earlier half of the press statement.

(5)     Cathay did not fire the 49ers (including the Plaintiffs) lightly.  It reviewed their employment history.  It found that history wanting.  The Plaintiffs (Cathay concluded “after extremely careful consideration”) had bad employment records.  Those bad records supported Cathay’s view that the Plaintiffs (among others) could not be counted on to act in Cathy’s best interests and so their continued employment by Cathay was undesirable.

(6)     The above construction of the press statement is reinforced by the statement’s closing section referring to “Hong Kong being held to ransom”.  Plainly, the reference means that the 49ers have been “holding Hong Kong to ransom” by their selfish and disruptive acts.  It is for this reason that Cathay has taken “prompt and resolute action” (as described in the body of the statement) against them.

(7)     If pilots are being characterised as “selfish,” “holding people to ransom,” “bad employees” and “disruptive,” the implication must be that they have been acting in a wholly unprofessional manner unbefitting of pilots.  I therefore construe the statement as accusing the Plaintiffs of a blatant lack of professionalism.

140.  I read Mr. Chen’s statements of 9 and 10 July 2001 as being in a similar vein to Mr. Tyler’s press statement.

141.  By any reckoning where a pilot is described as unprofessional, a bad employee, and someone who does not care about his company or Hong Kong, such statement would lower the pilot in the esteem of right-thinking members of the public.  The statement would, if false, be defamatory.

142.  Cathay relies on a defence of justification.

143.  Mr. Huggins submits that contract compliance and the threat of limited industrial action were disruptive of Cathay’s operations or at least perceived by the union as potentially so.  To the extent that the Plaintiffs supported and voted for contract compliance or limited industrial action, then they might justifiably be regarded as not acting in Cathay’s best interests.  Nor, in that case, could they be counted on to act in Cathay’s best interests in the future.

144.  I am unable to accept Mr. Huggins’ contention.

145.  To begin with, the reasoning which he advances would not justify labelling someone as unprofessional or a bad employee. 

146.  Nor is it apparent how such reasoning could justify characterising someone as “not having Hong Kong’s best interests at heart”.  It is true that Cathay Pacific is a Hong Kong airline.  But it does not logically follow from a pilot voting for contract compliance or for limited industrial action within the bounds of his contract with Cathay, that such pilot does not care about Hong Kong.  There is more to Hong Kong than just Cathay.  A pilot may sincerely vote for what he believes to be right in the context of his union’s dispute with management and still care deeply about Hong Kong.

147.  As for caring about Cathay’s best interests, the evidence is that, rightly or wrongly, the Plaintiffs (some with more conviction than others) supported the union’s stance against management.  Rightly or wrongly, the Plaintiffs thought that the union’s demands would, if accepted by management, make Cathay a stronger company with a better working environment.  According to the Plaintiffs, pilots would then be more motivated to work for the organisation.  The problems of stress and fatigue associated with the then current rostering practices would also be resolved.    

148.  On contract compliance, those Plaintiffs who voted in favour of the campaign did so because that was what they believed they were supposed to do in any case, namely, comply with their contracts.  Even in relation to limited industrial action, the pilots were assured by the union membership at the 20 June 2001 EGM that, whatever the industrial action might be, it would be within the bounds of the pilots’ contracts.  A desire to abide by the terms of one’s contract can by no stretch of the imagination be treated as equivalent to an anti-company attitude.

149.  There is discussion in employment law cases and literature in relation to the exercise of a discretion by an employee.

150.  Suppose a pilot is required to do x, y and z before a flight and is allotted up to 30 minutes for those tasks.  In the normal course of events, the pilot might (say) complete x, y and z in 5 minutes.  But what happens if, because of contract compliance, he decides to take the full 30 minutes for x, y and z even though in his judgment 5 minutes is more than ample?  He does this in order to cause disruption in the ordinary functioning of the company through the cumulative effect of small delays here and there. 

151.  In that situation, even if strictly within the terms of an operations manual or contract, it might be argued that the pilot has not acted in accordance with his duty of fidelity to the company.  See further Harvey on Industrial Relations and Employment Law §§NII 310-339; Secretary of State for Employment v. ASLEF (No.2) [1972] 2 QB 455; Ticehurst and Thompson v. British Telecommunications plc [1992] IRLR 219 (especially, Ralph Gibson LJ at §§50 ff.); Burgess v. StevedoringServices Ltd. [2002] UKPC 39 (especially, Lord Hoffmann at §27).

152.  But I do not think that Cathay can justifiably accuse the Plaintiffs of anti-company tendencies merely because, in their own time, the Plaintiffs voted as they did in union meetings.  The Plaintiffs must be entitled to express views in a union meeting and to vote for or against resolutions.  See EO s.21B(1)(b).

153.  How the Plaintiffs conduct themselves afterwards as a result of whatever resolution a meeting might have adopted may be a different question.  However, here, there is no evidence that the Plaintiffs carried out their work in any particular instance with a disruptive intent.  There is nothing that suggests that any of them exercised their discretions as pilots otherwise than as usual.

154.  There is an additional difficulty with Cathay’s plea of justification.

155.  Large majorities of pilots voted in favour of contract compliance and limited industrial action, not just the 49ers.  But Mr. Tyler’s and Mr. Chen’s statements distinguish between the 49ers (who were terminated) and everyone else (who were rewarded with an enhanced pay benefits package). 

156.  Cathay cannot be suggesting that all pilots who voted in favour of contract compliance or limited industrial action were anti-company in their attitude.  If Cathay looked upon such voting as a sufficient sign of an anti-Cathay attitude, it would presumably have fired some 90% of its aircrew officers, not just the 49ers.

157.  Clearly, Cathay did not fire 90% of its pilots, because it did not regard voting in favour of contract compliance or limited industrial action as sufficient indication that a pilot did not have Cathay’s interests at heart.  But if Cathay itself did not regard how union members voted as justifying an anti-company label, how can the Court conceivably do so?

158.  Cathay also relies on qualified privilege in its defence.

159.  Let me assume (without necessarily accepting) that, in light of the threatened limited industrial action, the public and Cathay’s own flight crew had a right to know how management was going to respond.  Thus, I shall assume that Mr. Tyler’s and Mr. Chen’s respective statements were made on an occasion of privilege.

160.  One cannot say just anything on an occasion of qualified privilege.  It would still be necessary for Cathay to establish that it acted responsibly in what it said about the 49ers (including the Plaintiffs) on such occasion.  See Yaqoob and others v. Asia Times Online Ltd. andanother [2008] 4 HKLRD 911 (at §§17-35).

161.  I am unable to hold that Cathay acted responsibly.

162.  One of the factors which the Court takes into account when evaluating whether a person has acted responsibly is “whether comment was sought from the person who is the subject matter of the allegation being made” (see Yaqoob at §29). 

163.  Here Cathay’s management were making serious allegations about the professionalism, character and employment of the Plaintiffs.  Such allegations would obviously have serious repercussions on their careers. 

164.  Especially given its contractual obligation under the DGP to abide by the rules of natural justice, Cathay should at least have tried to ascertain the Plaintiffs’ side on the matters being alleged against them.  Cathay made no attempt to do so.  It simply went ahead and published the statements.  This is despite (as Mr. Rhodes acknowledged in cross-examination) Cathay being alive to the fact that there was no hard evidence supporting the allegations against the Plaintiffs which could pass muster in a disciplinary hearing under the DGP.

165.  Cathay having failed to hear the Plaintiffs’ side of the story before essentially accusing them of serious misconduct, I do not think that the statements of Mr. Tyler or Mr. Chen can be said to attract qualified privilege.

166.  That leaves the question of general and aggravated damages for defamation.  The Plaintiffs do not seek special damages.

167.  Take general damages first.

168.  Mr. Grossman submits that, had the Plaintiffs simply been dismissed without aspersions being cast on their professionalism, they would have earned substantial sums totalling at least between $7 and $17 million from July 2001 and the present.  Instead, the Plaintiffs have only earned between $0 (in the case of Mr. Warham) and $7 million (in the case of Mr. Fitz-Costa).  I should take such figures as a guide (Mr. Grossman says) in awarding general damages.

169.  I am not persuaded by Mr. Grossman’s submission.  There is no evidentiary basis for his conclusion, for instance, that the Plaintiffs would have earned between $7 and $17 million if they had not been defamed.  Mr. Grossman arrives at his figures of what might have been, by calculating what the Plaintiffs would have earned had they remained in Cathay Pacific and then deflating the amount so calculated by 25%.  The latter discount is supposed to reflect factors such as taxes, loss of seniority (that is, having to start all over in a new company upon dismissal), economic downturns, etc.

170.  But I do not see why one should take what the Plaintiffs might have earned at Cathay as a starting point.  Cathay, for instance, may have paid above the industry average.  Further, the 25% discount factor is (as Mr. Grossman himself accepts) wholly arbitrary.

171.  General damages for defamation serve 3 purposes: to console one for the distress suffered as a result of a publication; to compensate one for the loss to reputation consequent upon the publication; and to vindicate one’s reputation.  See Gatley on Libel and Slander (10th ed.) at §9.2.

172.  I think that the safest approach would be to see what awards the Court has made in similar cases where a person’s professional reputation has been defamed.  In this respect, 2 cases are notable. 

173.  In Yaqoob I made an award of $1 million at counsel’s suggestion.  I thought the suggestion was fully justified in light of Mr. Yaqoob (a gold trader) having been accused of being a money launderer, a terrorist and a drug trafficker.

174.  In Chu Sik Kuk Yuen v. Apple Daily Ltd. and others [2002] 1 HKLRD 1 Yuen J awarded $3 million to a solicitor in Yuen Long who had been alleged to be a thief.  As a result of the publication against her, the solicitor suffered depression and gave birth to a premature child.  The child was in a life-threatening condition for some time after being born.

175.  In Yaqoob and Chu the defendants’ reputations would have been heavily compromised by the defamatory statements against them.  In the latter case, as here, a professional was involved with potentially damaging effects on her practice as such a professional.

176.  Here the evidence is that the world of pilots is a small one.  Aspersions cast on a pilot’s professionalism and employment record are bound to have a serious effect on one’s career.  News spreads around quickly in a small industry and one may encounter enormous difficulty finding employment due to the loss of reputation arising from defamatory statements.  A pilot so defamed is likely to experience considerable distress and anxiety in relation to his job prospects.  I also bear in mind that Mr. Tyler’s statement remained published on Cathay’s web-site until September 2009. 

177.  Taking such factors in the round, I think that on balance I should follow the Chu case and award each Plaintiff (with the exception of Mr. England) general damages of $3 million.

178.  In Yaqoob counsel was content only to ask for $1 million.  I, therefore, do not regard Yaqoob as indicating a maximum figure where loss of reputation is concerned. 

179.  In Chu there was medical evidence that the accusations against the solicitor brought about depression.  There was no such evidence here.  But I think that it can be safely assumed that pilots who are said to be unprofessional are bound to experience some considerable emotional distress as a result.

180.  Obviously some of the Plaintiffs were more senior than others.  But I think that it would be invidious to compare the reputations of a Junior First Officer with that of a Senior Captain.  One cannot say that the former’s reputation is worth more than that of the latter.  General damages are a rough and ready means of compensation.  They are not susceptible to fine gradations or distinctions.  Thus, each of the Plaintiffs (save for Mr. England) should receive $3 million by way of general damage.

181.  In the case of Mr. England, his cause of action in defamation would not have survived his death.  See Law Amendment and Reform (Consolidation) Ordinance (Cap.23) s.20(1).

182.  Move on to aggravated damages.  In my view, this is an appropriate case for such an award for 2 reasons.

183.  First, aggravated damages are sometimes awarded where a defendant has raised a plea of justification, but has failed.  See Gatley §9.14. 

184.  I do not regard Cathay’s justification plea as having been meritorious.  Cathay has not adduced any evidence of misconduct on the part of a single Plaintiff.  Nonetheless, Cathay attempted to justify its statements (which amounted to accusations of misconduct against the Plaintiffs) simply by reference to how they voted at union meetings.

185.  Second, aggravated damages may be awarded where a defendant has refused to apologise.  See Gatley §9.14.  I think the absence of an apology from Cathay, despite the lack of evidence to back its statements about the Plaintiffs, is bound to have increased the Plaintiffs’ hurt at being accused of disloyalty.

186.  I would therefore award aggravated damages of $300,000 (that is, 10% of $3 million) to each Plaintiff (with the exception of Mr. England).

187.  I now answer Questions 12 to 21.

188.  Question 12.  The Plaintiffs are not entitled to rely on the statement wrongly attributed by them to Mr. Tyler.

189.  Question 13.  The statements of Mr. Tyler and Mr. Chen complained of by the Plaintiffs are defamatory.  They accuse the Plaintiffs of being unprofessional, having bad employment records, and of failing to care for the interests of Cathay or Hong Kong.

190.  Question 14. Cathay fails on justification.

191.  Question 15. Cathay fails on qualified privilege.

192.  Question 16.  General damages of $3 million will be awarded to each of the Plaintiffs (with the exception of Mr. England).  Aggravated damages of $300,000 will be awarded to each of the Plaintiffs (with the exception of Mr. England).

193.  Question 17.  The general damages awarded have not been calculated by reference to the Plaintiff’s alleged loss of earnings.  The available evidence does not support the contention that the Plaintiffs’ submitted calculations truly reflect their loss of earning.

194.  Question 18.  This question does not arise.  The Plaintiffs do not seek special damages.  See also the answer to Question 17. 

195.  Question 19.  There is no evidence linking Mr. Carver’s foot injury to Cathay’s defamatory statements.

196.  Question 20.  There is no evidence, apart from Mr. Warham’s assertion in evidence, that it would have taken 2 years for him to recover a licence following his myocardial infarction.  In any event, there is no evidence linking his heart problem to Cathay’s defamatory statements.

197.  Question 21.  There is no evidence linking Mr. Crofts’ heart surgery to Cathay’s defamatory statements.

IV.     CONCLUSION

198.  I return to the issues I set out at the start.  I would answer the Issues as follows:-

(1)     Unfair dismissal:-

(a)    The predominant reason for the Plaintiffs’ termination by Cathay was their perceived participation in union activities.

(b)   The Plaintiffs were unfairly dismissed.

(c)   $150,000 is awarded to each Plaintiff (with the exception of Mr. Crofts) for unfair dismissal.

(2)     Wrongful termination:-

(a)    The reasons which Cathay publicly gave when dismissing the Plaintiffs in July 2001 amounted to accusations of “gross misconduct” within the terms of the DGP.

(b)   The Plaintiffs’ employments with Cathay were wrongly terminated since the procedures mandated by the DGP were not followed.

(c)   A month’s pay is awarded to each Plaintiff (with the exception of Mr. Crofts) as damages for wrongful termination of their contracts.

(3)     Defamation:-

(a)    The statements were defamatory.

(b)   Cathay has no defence of justification or qualified privilege.

(c)   General damages of $3 million and aggravated damages of $300,000 are awarded to each Plaintiff (with the exception of Mr. England).

199.  The Plaintiffs have substantially prevailed.  Accordingly, there will be an Order Nisi that Cathay pay the Plaintiffs’ costs.  Such costs are to be taxed if not agreed.  There will be certificate for 2 Counsel.

200.  Mr. Grossman asks for costs on an indemnity basis.  But I do not think that a higher scale of costs is justified.

201.  It is true that I have found Cathay’s defence at trial to be contradictory.  Its defence tried to be different things at different times.

202.  On the one hand, Cathay maintained that it dismissed the Plaintiffs without cause.  On the other hand, Cathay argued for the purposes of the EO that it fired the Plaintiffs for reasons of conduct.  Those reasons would, if correct, amount to “gross misconduct” within the terms of the DGP.

203.  On the one hand, for the purposes of the EO, Cathay denied that it had dismissed the Plaintiffs on account of their participation in union activities.  On the other hand, when it came to arguing defences to defamation, Cathay seemed to be suggesting that it was entitled to make the statements which it did, merely because the Plaintiffs voted positively on union resolutions which management perceived to be potentially disruptive in their execution.  However, at no point did Cathay adduce positive evidence to show that any of the Plaintiffs actually carried out disruptive activities.

204.  Nonetheless, it cannot be said that Cathay’s defence has been wholly ineffective.  The Plaintiffs obtained significantly less in damages than they were originally seeking.  Even at the stage of closing submissions, the Plaintiffs were asking for individual sums well in excess of $5 million. 

205.  I therefore do not think that Cathay can be said to have been so unmeritorious in the conduct of its defence that a higher scale of cost award is called for here.