LO SUK LING VILLY v. THE METHODIST CHURCH HONG KONG AND OTHERS

HCA 8395/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8395 OF 1997

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J U D G M E N T

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Introduction

1. This is the plaintiff's claim for annual leave and over-time compensation leave pay allegedly due and payable under her former employment contract with the defendants. Quantum has been agreed at:-

(1) payment for annual leave	HK$29,420.89
(2) payment for over-time leave	36,050.96
TOTAL	65,471.85

The only dispute at trial related to the defendants' liability. Further, the relevant facts are largely (if not entirely) undisputed.

The Background Facts

2. Prior to 13 January 1997, the defendants were the members of a "Tsuen Wan Ecumenical Social Service Centre" (荃灣合一社會服務中心) ("the Centre"). The Centre was an unincorporated association established in May 1974. Its primary aim was to develop neighbourhood relationship and to enable people to co-operate towards a better and peaceful community. According to its constitution, the Centre was to be managed by an executive committee and the executive committee was to appoint a director (總幹事) who in effect was in charge of the daily operation of the Centre.

3. Before setting out the other relevant background facts, I pause here to observe that the main issue in this action relates to the authority or power of the Centre's director regarding the annual leave and over-time compensation leave of the Centre's staff.

4. A Mr Wong Man Tai, James ("Wong") was appointed the Centre's director from about 1984 to 31 December 1991. He was taken over by Mr Lo Kwok Kuen ("Lo") who remained in that position until 13 January 1997. The plaintiff was employed by the Centre from 1991 to 13 January 1997 as a Project Officer.

5. Without the need to go into the details, it is undisputed that during the time when Lo was the Centre's director, the workload was such that the plaintiff was unable to take all of the annual leave or over-time compensation leave.

6. When Mr Chan for the defendants cross-examined the plaintiff, he put to her that there were times during her employment with the defendants when she could have taken the leave she accumulated. No averments have been made in the defence pleadings that the plaintiff failed to perform her duties in accordance with her employment contract, or that she acted other than bona fide. No reliance has been placed by Mr Chan on this aspect in his final submissions. In any event, I do not consider that this should affect the outcome of this action.

7. It is irrelevant to this action but it appears that before the Centre was closed down on 13 January 1997, the relationship between the executive committee and the staff of the Centre deteriorated. The testimony mentioned demonstrations or protests being held.

The Relevant Documents

(1) The Plaintiff's Letter of Appointment

8. The first document is the plaintiff's letter of appointment dated 17 May 1991. The relevant part reads:-

"... The post offered to you is Project Officer ...

The date of appointment is Sept 1, 1991 ...

A copy of the staff manual and job description is provided for your reference. Should you find the terms and conditions acceptable, please sign in the space provided below ... ".

Para. 2 of the Reply herein states that the Staff Manual did not form part of the plaintiff's employment contract. However, this point was abandoned at trial and the action proceeded on the basis (and, insofar as it may be necessary, I find as a fact) that it formed part of the employment contract.

(2) The Staff Manual

9. As provided for in the Staff Manual, the plaintiff was entitled to annual leave and over-time compensation leave. There were 2 relevant versions of the Staff Manual, one in 1987 and the other in 1992.

(2)(a) The Revisions of the Staff Manual

10. It is undisputed that the Staff Manual was formulated/promulgated by the Centre's executive committee on 27 July 1983. Further, (as is apparent from the face of the documents) it was revised by the Centre's executive committee respectively on 24 September 1985, 25 June 1987 and 8 April 1992.

11. The manner in which the Staff Manual was revised in April 1992 was dealt with in some detail in evidence because it is relevant to the extent of Lo's authority (as the Centre's director) regarding the staff's annual leave and over-time compensation leave.

12. The undisputed evidence on this aspect is that when the draft revision of the Staff Manual was being prepared, it involved not only the executive committee and the director but also the staff of the Centre. After the director has held a meeting with the staff to gather their views over the proposed revisions, he would present their views to the executive committee at the committee's meeting. The final revisions were approved by the executive committee after considering all matters including the staff's view so gathered. The plaintiff also participated in the process of the gathering of the staff's views and she knew that the final revisions needed to be approved by the executive committee.

13. In these circumstances, I do not accept the plaintiff's case that Lo told the staff (in short) that the 1992 version of the Staff Manual was only binding on the staff who joined after April 1992. Even if Lo had so told the plaintiff, I do not accept that he was authorized to do so by the executive committee. I also do not accept that the plaintiff believed that Lo was authorized to make this representation or that she believed the representation was made by (or for) the executive committee.

(2)(b) The Relevant Provisions of the Staff Manual

Annual Leave

14. The part of the Staff Manual relating to annual leave relevant to this issues in this action is as follows. In the 1987 version:-

"3.1 年假

3.1.1 凡於中心服務滿十二個月,均享有十八個工作日之年假 ...

3.1.3 年假只可累積一年,最多不超過三十六個工作天 ... 如遇特殊情况,始可申請延期 ... " (emphasis supplied).

In the 1992 version:-

"3.1 年假

3.1.1 凡於中心服務滿十二個月,均享有二十一個工作日之年假 ...

3.1.3 年假最多只可累積兩年, ... 如遇特殊情况,須由總幹事批准,始可期放假 ... " (emphasis supplied).

15. Insofar as is relevant to the issues raised herein, the difference between the 1987 and 1992 version of the Staff Manual is that the 1992 version specified that only the director could approve leave in excess of the prescribed number of days to be accumulated and he could do so by reason of special circumstances.

Over-time Compensation Leave

16. The part of the Staff Manual relating to over-time compensation leave relevant to this issues in this action is as follows. In the 1987 version:-

"3.2 超時工作假期

3.2.1 每星期之工作節數為十一節,如每週工作超過十一節 ... 每一節有半天超時工作假期,超時工作假期不得累積超出三十節 ... 超岀者將自動取消 ...

3.2.2 無論任何一位新舊職員,均要在每年三月三十一日前補放超時工作假期,自四月一日起所有未享用之超時工作假期將自動取消,如遇特殊情况,須由總幹事批准

3.2.5 在離職前一個月,所有未享用之超時工作假期,亦同時自動取消" (emphasis supplied).

In the 1992 version:-

"3.2 超時工作補假

3.2.1 每星期之工作節數為十一節,如每週工作超過十一節 ... 每一節有半天超時工作補假,超時工作補假不得累積超出三十節 ... 超岀者將自動取消 ...

3.2.4 在離職前一個月,所有未享用之超時工作補假,亦同時自動取消" (emphasis supplied).

17. Insofar as is relevant to the issues raised herein, the difference between the 1987 and 1992 version of the Staff Manual is that the 1992 version has in effect removed the director's power not to cancel compensation leave accumulated up to 31 March if it was not taken by 1 April.

18. Further, the provisions of the Staff Manual stated that the compensation leave would be cancelled if not taken 1 month before a staff leaves his/her employment (clauses 3.2.5 (1987 version) and 3.2.4 (1992 version)). No reliance was placed on these provisions in this action.

(3) Lo's Letter of Appointment

19. The letter of appointment of Lo dated 31 December 1991 was similar to the plaintiff's (see above). In particular, it also provided a copy of the Staff Manual to Lo for his reference and Lo was asked to sign in the space provided should he find the terms and conditions (of the Staff Manual) acceptable.

20. Similar to the plaintiff's case, I find that the Staff Manual formed part of Lo's employment contract with the defendants.

The Plaintiff's Annual Leave Pay

21. It is common ground that when the plaintiff was dismissed on 13 January 1997, she was paid all the sums due except the annual leave pay (and over-time compensation leave pay) now disputed in this action. The disputed amount represents the annual leave (and over-time compensation leave) in excess of the maximum number of days of leave stated in the Staff Manual.

22. The dispute regarding the plaintiff's annual leave pay related to the period when Lo was the Centre's director. It is the plaintiff's case that (1) Lo was authorized to permit the plaintiff to accumulate annual leave in excess of the maximum number of days specified in the Staff Manual and (2) Lo has in fact permitted the plaintiff to do so. On the other hand, the defendants deny both points.

(1) The Extent and Nature of Lo's Authority

23. The plaintiff argues that Lo's authority to give permission for the accumulation of "excess" annual leave stemmed from (a) the provisions of the Staff Manual, and (b) his authority as the Centre's director.

24. The provisions in the 1992 version of the Staff Manual relating to annual leave have been set out above. Clause 3.1.3 reads:-

"年假最多只可累積兩年, ... 如遇特殊情况,須由總幹事批准,始可延期放假 ... ".

25. Mr Chan argues that although the director was given the authority by clause 3.1.3 to permit "excess" annual leave to be accumulated, his authority was restricted to cases involving special circumstances. In this action, the plaintiff was unable to take annual leave because her workload was so heavy that she could not do so. That lasted for a sustained period of time. He contends that this could not have amounted to "special circumstances".

26. I do not agree with this argument. Clause 3.1.3 of the Staff Manual has given the authority of permitting "excess" leave to the Centre's director. In order to exercise his power properly, the director would have to decide whether "special circumstances" were involved. It is therefore obvious that this clause intended that the director was the person to decide whether there were special circumstances such that the accumulation of "excess" annual leave ought to be permitted.

27. I conclude that when such kind of power was vested in the director, it would be for him to decide the matter and the nature of his power would be akin to that of an arbitrator. Hence, he would be acting within his power:-

"unless there has been fraud or bias ... or he has been guilty of 'mistake' ... [which] in this context requires [him] to have 'departed from his instructions in a material respect"

(see, for example, Chitty on Contracts (1999) 28th Ed., para. 17-047). Alternatively, his power is similar to the discretionary power exercisable by a public authority (see, for example, Associated Provincial Picture Houses Ltd. v. Wednesbury Corp. [1948] 1 KB 223). Hence, the director's exercise of his power would be within the terms of the clause unless he exercised it in a way which no reasonable director could reasonably have exercised it in the circumstances.

28. As stated earlier, the plaintiff accumulated "excess" annual leave because of her workload. It was not suggested that her work was unrelated to the kind of work to be performed by the Centre, or that she was acting otherwise than as instructed by her superiors. Indeed, it was put by Mr Chan to Lo in cross-examination that Lo was responsible for this action because it was his mis-management which resulted in the Centre's staff not being able to take their leave. The defence has not accused Lo of fraud, bias or guilty of "mistake"; the evidence rather shows that Lo might have been over-zealous in his work. It is irrelevant whether or not Lo's mis-management brought about this action because even if it was, it is not open to the defendants, having vested the authority of management to Lo, to raise a defence to the plaintiff's claim on the ground of their delegate's default or neglect.

29. The issue of Lo's authority as the Centre's director will be dealt with under the heading "The Plaintiff's Over-time Compensation Leave Pay" below. For the reasons given there, I conclude that Lo did not have authority to permit the accumulation of "excess" annual leave apart from that conferred on him by the Staff Manual.

(2) Did Lo Authorize the "Excess" Leave?

30. Para. 10 of the Statement of Claim avers that the accumulation of leave was authorized and permitted by Lo, the Centre's director. Para. 4(a) of the Reply states that the director "expressly represented to [the plaintiff] and/or authorized" the accumulation of "excess" leave. Mr Chan submits that the plaintiff's evidence (after cross-examination) fails to establish the above averments.

31. The relevant part of the plaintiff's testimony can be summarized as follows. The staff's leave records (including hers) were kept in the Centre's office and they were checked by Lo from time to time. After Lo found out that their leave had exceeded the prescribed maximum, Lo only reminded the staff of this or urged the staff to take leave as soon as they could. This applied to the plaintiff.

32. The above testimony was in effect confirmed by Lo. He testified in cross-examination that he did not expressly permitted the "excess" leave but he encouraged the plaintiff to take her leave and he did not cancel any of her leave.

33. I agree with Mr Chan's submission that the plaintiff's evidence on this point does not support the averments in her pleadings about express permission having been given. However, it is unlikely that prejudice would be caused to the defendants if leave is given to the plaintiff to amend her pleadings to state that Lo had permitted the accumulation of "excess" leave impliedly and/or by conduct. Insofar as it may be necessary, I will give leave to the plaintiff to so amend her pleadings. I find that the plaintiff's evidence has established that Lo had permitted the plaintiff's "excess" leave impliedly and/or by conduct.

The Plaintiff's Over-time Compensation Leave Pay

34. The issues raised regarding this aspect are the same as those raised in relation to the plaintiff's annual leave pay.

(1) Did Lo Have Authority to Permit "Excess" Leave?

The Staff Manual

35. As stated above, there were 2 relevant versions of Staff Manual, one for 1987 and another for 1992. I already found (under the sub-heading "(2)(a) The Revisions of the Staff Manual") that the 1992 version governed the plaintiff's terms of employment from April 1992 onwards. The director's power to permit the accumulation of "excess" over-time compensation leave was removed in the 1992 version. The director clearly could not rely on the Staff Manual as giving him any such authority after the 1992 version came into effect.

36. Mr Chan argues that even under the 1987 version, the director's authority was merely to permit compensation leave (which was cancelled after 31 March each year) to be taken after 1 April where there were special circumstances. That might be the primary purpose of that clause. However, if the director should give such permission in relation to leave which (but for the permission) was to be cancelled for all the preceding years (instead of one year), the net effect would be to increase the amount of leave which could be accumulated. However, since I already found that the 1992 version of the Staff Manual was the applicable version, it is strictly unnecessary to consider if Mr Chan's above argument is correct.

Actual Authority

37. Mr Pun for the plaintiff contends that even if the Staff Manual did not empower the director to permit "excess" leave, the director still has the power to do so by virtue of his position as the Centre's director.

38. I agree with Mr Chan's submissions that a director, being an agent of the executive committee of the Centre, could only possess one or more of the following types of authority: actual, apparent (or ostensibly) and incidental (or implied): see, for example, Bowstead & Reynolds on Agency (1996) 16th Ed., para. 3-001 and 3-006.

39. Mr Pun argues that the director has actual authority to permit "excess" leave. He says that only the Centre's constitution and the "Director's Scope of Work" (總幹事的工作範圍) are relevant to this point. The relevant parts of the constitution read:-

"總幹事 ... 負責發展中心之一切有關行政任務與工作 ...

他的工作包括 ...

人事管理,訓練與招募".

The relevant parts of the "Director's Scope of Work" read:-

"製訂行政系統

人事管理

檢討及製訂職員須知和守則 ... ".

40. Mr Pun argues that since the director was responsible for:-

(a) all administrative duties and work;

(b) personnel management;

(c) reviewing and setting up the Staff Manual,

he was authorized by the executive committee to deal with everything relating to the above matters. This (so the defence argues) includes permitting the plaintiff to accumulate "excess" leave even though this exceeded the maximum prescribed in the Staff Manual.

41. I do not agree. First, the above were statements of principle or policy and only indicated the general areas for which the director was responsible.

42. More importantly, the employment contract of Lo, and that of the plaintiff, with the Centre were subject to the terms and conditions of the Staff Manual: see their letters of appointment. Furthermore, when the Staff Manual needed to be revised, the undisputed evidence is that after Lo had collected the views of the staff regarding the draft Staff Manual, Lo would have to present the draft and the staff's view before the executive committee. It was up to the executive committee to decide whether to approve the draft Staff Manual.

43. In these circumstances, I do not agree that the extent of Lo's authority was only to be found in the Centre's constitution or the "Director's Scope of Work". Lo's authority was also defined by the terms and conditions of the Staff Manual.

44. In fact, Lo appreciated this because he said in both para. 4 of his witness statement and his testimony that while he was not in a position to change the Staff Manual, he could implement the Staff Manual "flexibly". But no matter how "flexible" Lo wanted to implement the Staff Manual, he was not empowered to go beyond its terms and conditions.

Apparent Authority

45. Mr Chan submits that in order that the plaintiff can successfully set up a case of apparent authority, she must establish that there was an appearance of authority emanating from the principal (in this case, the executive committee) and not the agent (the director): Bowstead, para. 8-022.

46. In this action, however:-

(1) the plaintiff knew that the Staff Manual formed part of her terms of employment;

(2) the plaintiff knew from her participation in the discussion relating to the revisions of the Staff Manual that the revisions needed to be approved by the executive committee.

47. In these circumstances, not only was there no representation by the defendants to "clothe" the director with authority regarding leave, it must have been obvious to the Centre's staff that if matters were expressly stated in the Staff Manual, those matters would be governed by the provisions of the Staff Manual and the director has no authority to go beyond those provisions. I do not accept that the plaintiff thought that Lo had the authority to permit "excess" leave.

48. The plaintiff also suggested during the trial that a member of the executive committee, one Madam Leung Yuk Fung, was aware of the plaintiff's workload. I consider this to be irrelevant. First, Madam Leung was not at the time acting as a member of the executive committee. More importantly, it was not suggested that she knew the exact leave situation of the Centre's staff. She only knew that the staff was busy and was working hard.

Incidental Authority

49. In the context of this action, I do not find that permitting "excess" leave was within the incidental (or usual) authority of the director: compare Bowstead, para. 3-018 and 3-024. This is particularly so taking into account the provisions of the Staff Manual and the way in which they were revised by the executive committee.

(2) Did Lo Permit the "Excess" Leave?

50. Although strictly unnecessary, I would make the same finding that Lo had permitted the "excess" leave (see the sub-heading "(2) Did Lo Authorize the 'Excess' Leave?" under the heading "The Plaintiff's Annual Leave Pay").

Conclusion

51. By reason of the above matters, I find for the plaintiff in relation to annual leave pay. There will be judgment in the sum of $29,420.89 in the plaintiff's favour. Her claim for over-time compensation leave is dismissed.

52. Interest should run at judgment rate from 27 March 1997 (the date of the plaintiff's claim in the Labour Tribunal) to the date of judgment and thereafter also at judgment rate until payment.

The Transfer from the Labour Tribunal

53. This action was transferred from the Labour Tribunal to the High Court on 15 April 1997 (over 2-1/2 years before this trial). A similar claim brought by 2 of the plaintiff's colleagues is yet to be tried by the High Court. On the other hand, I understand that a similar claim of another of the plaintiff's colleagues was already dealt with by the Small Claims Tribunal much earlier on.

54. It is unclear as to why the Labour Tribunal transferred the claim. It would appear from the documents from the Labour Tribunal that it was considered that part of the plaintiff's claim fell outside the time period prescribed in (the then) s. 9 of the Labour Tribunal Ordinance, Cap. 52 which reads:-

"... the tribunal shall not have jurisdiction to inquire into or determine a claim or part of a claim if the cause of action arose more than 12 months before the date on which the claim is filed ... ".

S. 9 Cap. 25 has been repealed by Ord. No. 25 of 1999 (s. 3) and so any problem with regard to the Tribunal's jurisdiction will no longer arise.

55. In the present case, however, I do not see how it could be said that the annual leave pay or over-time compensation leave pay was a claim (or part of a claim) relating to a "cause of action" which arose more than 12 months before the date on which the claim was filed.

56. The plaintiff's "Form 1" was dated 27 March 1997 (about 2 months after her dismissal on 13 January 1997). According to the defence case, the plaintiff's "excess" leave exceeded the maximum prescribed by the provisions of the Staff Manual. If this is correct, the plaintiff's claim would have to be dismissed for that reason (without the need to consider the question of jurisdiction under s. 9 Cap. 25). The plaintiff's case, on the other hand, is that her "excess" leave was permitted to be accumulated (in effect) up to the time of her dismissal. The accumulated leave would either be taken before the plaintiff's dismissal (if that was possible), or payment in lieu would have to be made upon her dismissal. In other words, the sum was only payable on her dismissal. The "cause of action" therefore only arose on 13 January 1997.

57. I mention this matter because this is not the first time I encountered cases involving relatively small sums of money (especially when compared to the amount of legal fees which the parties may need to spend in either the High Court or District Court) being transferred from the Labour Tribunal. Litigation in the High Court and District Court usually involves more elaborate procedural steps in preparation for trial. The time taken for them to be tried is usually much longer than that in the Labour Tribunal. Legal representation is allowed. It is precisely for those reasons that the Labour Tribunal was set up to overcome the problem. If the Labour Tribunal is too ready to transfer cases to the higher courts, the purpose of the legislation will be frustrated. This view was shared by the Court of Appeal when similar comments were made regarding cases transferred from the Small Claims Tribunal:

(a) Thomas Arthur Chapman v. Thai Airways International Ltd, Civ App No.1 of 1995;

(b) Ho Siu Mei v. Solution House Ltd, SCT Appeal No.5 of 1997;

(c) Leung Muk Lan v. Country Club Publishing Co. Ltd, HCMP No.4851 of 1998.

58. There is no "good or sufficient reason" for transferring this claim to the High Court and it should have been dealt with in the Labour Tribunal.

Costs

59. There will be a costs order nisi that the defendants are to pay the costs of this action to the plaintiff to be taxed if not agreed.