LEE PIK SHAN v. THE HEALTHY CHILDREN (HONG KONG) FUND LTD. t/a MAY YAN ANGLO CHINESE KINDERGARTEN

DCCJ17054/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 17054 OF 2000

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Judgment

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The Plaintiff commenced working for the Defendant as kindergarten teacher in August 1998 on the basis of a written contract dated 8th August 1998 ("The First Contract"). The First Employment Contract is a proforma with general terms and conditions printed.

2. The school year for 1998/99 ended after the graduation ceremony which took place on 20th July 1999. After the graduation ceremony, Madam Ngo Mei Sim, the Principal of the kindergarten ("the Principal") and all the teachers including one Ms. Hung, one Ms. Chan and the Plaintiff returned to the school to hold a meeting. Madam Ngo was also the supervisor of the kindergarten. At the meeting, the Principal asked all the teachers if they would continue their teaching work at the kindergarten for the following school term. All the teachers replied that they would continue to work for the kindergarten. Then the Principal fixed the working schedule of the teachers for the summer holiday. The First Contract was discharged at the end of July 1999 due to effluxion of time.

3. On 4th August 1999, all the teachers returned to the kindergarten to prepare lessons for the new school year. The Principal met the teachers individually for the signing of a new employment contract. Ms. Hung, Ms. Chan and the Plaintiff signed the new contract. On 9th August 1999, all the teachers returned to the kindergarten for presentation of mock lessons to the Principal. Then they had a school affairs meeting during which the Principal allotted non-teaching duties to all the teachers. The Plaintiff was assigned to take the whole-day pupils of all the K1 to K3 classes to have lunch in the classroom of the K2 classs at noon, and to lead the half-day pupils of the K2 and K3 classes to the classroom of K1 class to line up and wait for their parents to pick-up. The Plaintiff would stay at the K1 classroom and watch the pupils.

4. The new school term commenced on 10th August 1999. On 18th August 1999 at about 11:35 a.m., the half-day pupils were about to leave the kindergarten as usual. The pupils were queuing up inside the K1 classroom and listening to the speech being given by the Principal. Suddenly a pupil of the K1 class called Lam Wai Biu ("Lam") left the queue and ran round a desk placed nearby. The Plaintiff immediately chased after him trying to stop him. However, when Lam reached the corner of the desk, he fell down on the floor and got hurt ("the accident"). The Plaintiff saw blood around his mouth and so she lifted up and placed him to lie on the desk. As the Plaintiff was trying to help Lam stop bleeding with tissue paper, the Principal stopped her and she helped to stop the bleeding using Chinese medicine oil and cotton buds. At the time of the accident, Lam was wearing a pair of over-sized black leather shoes. After the accident, Lam did not attend school again.

5. On 21st August 1999, the Principal and all the teachers had another school affairs meeting. At the beginning of the meeting, the Principal read out the terms of the new employment contract. Then the Principal gave some instructions to the Plaintiff and other teachers regarding their specific duties. The Principal also mentioned about the accident which occurred on 18th August 1999 and said that she did not want to see any negligence on the part of the teacher. However, the Principal did not identify which teacher she was referring to.

6. On Sunday, 22nd August 1999 at about 8:00 a.m. the Plaintiff received a phone call from a female who claimed to be the Principal. The female said that a letter of termination of employment had been sent to the Plaintiff and she was not required to go to work. The Plaintiff demurred and further said that she had not received any dismissal letter. On 23rd and 24th August 1999, all schools in Hong Kong were closed because of Rainstorm Black Warning. So the Plaintiff returned to the kindergarten on 25th August 1999.

7. On 25 August 1999, back at the kindergarten, the Principal gave a letter of termination of employment dated 20th August 1999 to the Plaintiff. When the Plaintiff pointed out that the letter was unsigned and without the school chop, the Principal immediately affixed the school chop on it but still did not sign on it. Then the Principal requested the Plaintiff to hand over all the items which belonged to the school including textbooks and cassette tapes. After complying with this request of the Principal, the Plaintiff packed her own belongings and left.

8. On 4th September 1999, the Plaintiff on notification from the Principal returned to the kindergarten to collect her salary for August 1999 in the sum of HK$8,532.00. The Plaintiff asked the Principal how the sum was arrived at. The Principal explained that the salary was calculated pro rata for the period from 1st to 21st August 1999 on the basis of the monthly salary of HK$12,595.00. At the request of the Plaintiff, the Principal specified in the receipt that her monthly salary was HK$12,595.00 and that the amount of the cheque of HK$8,532.00 was for salary from 1st to 21st August 1999.

9. After dismissal by the Defendant, the Plaintiff tried to find in vain a new job as a kindergarten teacher. She remained unemployed until starting work as a customer service officer with a building management company on 6th December 1999 at a monthly salary of HK$6,400.00. Alleging wrongful dismissal, the Plaintiff claims loss and damage as follows :-

10. As to the new employment contract signed by the Plaintiff on 4th August 1999 ("the Second Contract"), it was identical with the First Contract except in four respects. First, the salary was revised to HK12,595 per month. Secondly, the term was for one year to terminate by the end of July 2000. Thirdly, there was handwritten a new clause that if the teacher caused any pupil to leave the kindergarten, the employment contract would be terminated without any compensation. Fourthly, there was handwritten another new clause that the teacher could not quit during the one year term. On the day the Plaintiff signed the Second Contract, the document did not bear any signature on behalf of the employer and the Principal refused to give the Plaintiff a copy of the document. Thereafter, despite repeated requests, the Principal refused to let the Plaintiff have a copy of the Second Contract.

12. The Plaintiff's case as I have described is supported by the Plaintiff's evidence under oath. The original of the First Contract has been produced as exhibit. The aforesaid Ms Hung and Ms Chan also gave evidence. They confirmed that they did on 4th August 1999 sign contracts similar to the Second Contract and that they were not given copy of the contract they signed. There is no doubt that the kindergarten ceased operation in the summer of 2000.

13. Until shortly before the trial, the Defendant contested the claim through solicitors on record. Those solicitors have since ceased acting. The Defendants did not attend the trial. The Defence filed and served alleged that the Plaintiff was summarily dismissed for cause.

Liability

14. The burden of proof of dismissal for cause is on the Defendant. The Defendant has made no attempt to discharge this burden. Since the Defendant did not adduce any evidence and since the evidence adduced for the Plaintiff was not challenged by the Defendant, I have no reason to disbelieve the Plaintiff's case. Indeed, the Plaintiff's case is well supported by independent witnesses and documents. Although the Second Contract, through no fault of the Plaintiff, could not be produced, I believe that the Plaintiff and the two witnesses told the truth and that the terms and conditions of the Second Contract were as stated by the Plaintiff.

15. It does not matter whether the Second Contract had been signed for and on behalf of the Defendant. The Defendant had paid the Plaintiff salary for work done under the Second Contract. The Second Contract must be binding on the parties. In the premises, I find the Plaintiff's case proven and I find the Defendant liable.

Quantum

16. In essence, the Plaintiff claims loss of salary from 22 August 1999 (the day after the date of dismissal) to 31st July 2000 (the contractual date of termination) giving credit for salary earned by the Plaintiff in her new employment as a customer service officer from 6th December 1999. I was skeptical as to that part of the Plaintiff's claim in excess of salary in lieu of notice. I therefore requested Mr. Wong representing the Plaintiff to produce authorities.

17. Mr. Wong shows that the law is quite clear. Thus Chitty on Contracts, Volume 1, 28th edition, paras 39-179 to 39-180 read :-

(d) Damages of Wrongful Dismissal

Damages for loss of earnings following wrongful dismissal. The remedy of an employee who has been wrongfully dismissed is an action for damages. The normal measure of damages is the amount the employee would have earned under the contract for the period until the employer could lawfully have terminated it, less the amount he could reasonably be expected to earn in other employment. The dismissed employee, like any innocent party following a breach of contract by the other party, must take reasonable steps to minimise his loss. In the case of wrongful dismissal these reasonable steps mean that the employee must seek and accept any reasonable offer of other employment, if he fails to take other employment when he ought reasonably to have done so, damages will be assessed on the basis of the difference between the salary or wages under the broken contract, and what he would have received from the substituted employment. A reasonable offer of alternative employment may come from the defendant himself. A deduction must be made, however, on account of the accelerated receipt of damages for loss of future earnings.

The onus of proof is on the defendant employer to produce evidence to show that the dismissed employee ought reasonably to have obtained alternative employment. If the defendant has a right to terminate the contract before the expiry of the term, damages for the wrongful dismissal should be assessed only up to the earliest time at which the defendant could validly have terminated the contract. Thus, if the contract expressly provides that it is terminable upon, e.g. a month's notice, the damages will ordinarily be a month's wages. In Gunton v. Richmond L.B.C. it was held that where a dismissal was wrongful by reason of a failure to comply with a contractually binding dismissal procedure, the damages were to be assessed only up to the expiry of the contractually due notice of one month notionally served on the day when the proper disciplinary procedure, if followed, could have been concluded. Except in cases of alleged bad faith on the part of the employer, the court is not to analyse the chances that the employee would not have been dismissed had the procedure been followed. If the employee's claim is on the ground that the employer dismissed him with insufficient notice, in an action for damages the defendant employer is entitled to particulars of the period of time claimed by the plaintiff to constitute reasonable notice. Similarly, the amount of damages for loss of salary and commission which would have been earned during a period of reasonable notice, had it been given, must be specially pleaded.

18. It has been seen that the Plaintiff prays for one month's salary in lieu of notice of termination. Since the Plaintiff accepts that her contract of employment could be terminated by one month's notice, what is the basis for claiming loss of earnings beyond the notice period?

19. Mr. Wong further relies on Semana Bachicha v. Poon Shiu Man [2000] 2 HKLRD 833. In that case, a Filipina maid had a two year employment contract prematurely and wrongfully terminated by the employer. The Court of Appeal applied the decision of the House of Lords in Malik v. Bank of Credit and Commerce International SA (in liquidation) [1998] AC 20 which held that damages for breach of contract of employment is not restricted to damages for wrongful dismissal, other types of pecuniary loss can be awarded. Thus in the Bachicha case, the Court of Appeal found that the employee suffered additional loss in that her ability to enter the job market to mitigate her loss was curtailed as it was not easy to obtain the Immigration Department's approval to process a new contract of employment. The Court of Appeal did observe that in the case under consideration little evidence was available to substantiate the claim of difficulties with immigration procedure. Nonetheless the Court of Appeal practically took judicial notice. In the premises, additional damages were awarded.

20. I do not really see how the maid in Bachicha's case can be distinguished from that of any other employee who after wrongful dismissal had difficulty finding alternative employment due to general economic recession despite all diligence in job searching. I believe the House of Lords in the Malik case held that other damages can be awarded on other grounds (i.e. grounds in addition to wrongful dismissal). Their lordships did not hold that additional damages may be awarded for wrongful dismissal. I suspect the Court of Appeal in Bachicha decided the case on the peculiar facts of that case. Thus, I do not think Bachicha is relevant.

21. However, looking at the First Contract, I find that Clause 1 thereof provides that should the Plaintiff resigns at any time within one year, the employer is entitled to recover "payment in lieu of notice and damages". Clause 7 also provides that should the Plaintiff commits certain breaches, she is deemed to have been automatically terminated and the employer is entitled to "payment in lieu of notice and damages". The Second Contract includes these clauses and an additional provision that the Plaintiff may not resign. All these provisions read together indicate that the parties agreed that damages for pre-mature wrongful termination is not limited to payment in lieu of notice, but include general and special damages that may follow from wrongful termination. In the premises, I find as a matter of contract that the Plaintiff is entitled to recover damages by way of loss of earnings for the remainder of the duration of the contract in addition to payment in lieu of notice.

22. Accordingly, I give judgment for the Plaintiff at $105,035.16 as prayed, with interest thereon as provided by section 49 of the District Court Ordinance, Cap 336 and costs to be taxed if not agreed. The Plaintiff is legally aided. I also order the Plaintiff's own costs to be taxed in accordance with legal aid regulations.