KWAN SIU WA BECKY v. CATHAY PACIFIC AIRWAYS LTD

CACV 92/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 92 OF 2010

(ON APPEAL FROM HCLA NOS. 3, 4, 5, 7, 8 & 9 OF 2009)

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HCLA 3/2009

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REASONS FOR DECISION

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Hon Tang VP:

1.  This is Cathay's application for leave to appeal from the judgment of this Court differently constituted (the expression "our judgment" or "this Court" should be read in that context) on the basis that the appeal involves questions of great general or public importance.

2.  The background to these proceedings have been stated in some detail in the decision of the Labour Tribunal dated 12 January 2009, the judgment of Stone J given on 6 November 2009 and in our judgment.

3.  I shall only refer to such of the background as may be necessary in the course of this decision.

4.  Mr Mark Strachan, leading Mr Jeffrey Chau, first submitted that since leave to appeal to this Court was granted because a question of law of general public importance is involved (section 35A of the Labour Tribunal Ordinance (Cap. 25) ("LTO")), leave should be granted for leave to appeal to the Court of Final Appeal since similar questions are involved in the proposed appeal.

5.  With respect, I do not agree that it follows at all.

6.  First, the language of section 35A of the LTO is different from the language in section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance (Cap. 484) ("HKCFAO").  But, more importantly, there have already been two appeals.

7.  These proceedings, brought under the Employment Ordinance (Cap. 57), were first heard in the Labour Tribunal where they were required to be conducted in an informal manner (see section 20(1) of LTO) and legal representations not permitted.  That was followed by an appeal to the Court of First Instance pursuant to leave granted under section 32 of LTO.  Then an appeal to this Court pursuant to leave to appeal granted as noted under section 35A.

8.  Finality in litigation requires that where there have already been a hearing before the Labour Tribunal followed by two subsequent appeals, this Court should be slow to give leave to appeal to the Court of Final Appeal.

9.  Moreover, the Employment Ordinance is not a technical ordinance and was no doubt drafted so that it should be comprehensible to employers and employees without the need of legal advice.  Unfortunately, that is not an objective that is easily or always achieved.  But, be that as it may, I believe constructions of provisions in the Employment Ordinance may not require the depth of analysis which a decision of the Court of Final Appeal will provide. 

10.  Therefore, whether or not it could be said that there is no difference between the threshold for leave under section 35A of LTO and section 22(1)(b) of HKCFAO, I would refuse leave. 

11.  I turn to consider Mr Strachan's submissions that questions of great general or public importance is involved.  Regrettably, the Notice of Motion has put forward a total of 13 questions.  They are repetitive and unhelpful.  I will not repeat them. 

12.  Instead, I will deal with the 3 issues identified by Mr Strachan which are said to be involved in the proposed appeal.  They are:

"(1) Whether Line Duty Allowance ('LDA'), Ground Duty Allowance ('GDA') and Duty Free Sales Commission ('DFSC') should be included in the calculation of statutory holiday pay (under s.41 of the Ordinance) and statutory annual leave pay (under s.41C of the Ordinance).

(2) Whether, where the contracts of employment between the Claimants and CPA provide for periods of annual leave in excess of those prescribed by the Ordinance, the parties must be taken to have intended that the statutory rate of annual leave pay (under s.41C of the Ordinance) would apply to such excess periods unless the contracts provide to the contrary.

(3) Whether the Court of Appeal was right to find that Jenny Ho had worked overtime and right to remit to the Labour Tribunal the question of whether she earned overtime pay in such sum as to fall within the second limb of the exception to the proviso to s.2(2) of the Ordinance, for the purpose of computing her statutory holiday pay under s.41."

13.  So far as the 1^st issue is concerned, Mr Strachan submitted that the LDA, GDA and DFSC lack the requisite quality of dailiness. And that it is reasonably arguable that they do not accrue and are not calculated on a daily basis, albeit that they may be calculable on a daily basis as a matter of a mathematical exercise.

14.  This is what I said in para. 24 of my judgment:

"24. Stone J stressed the importance of daily accrual. Here, LDA was payable monthly. I do not believe accrual is used in the technical sense of an accrual of a cause of action. Daily wages do not need to be payable daily before it could be said to have accrued on a daily basis. It is common for persons who are remunerated on a daily basis to be paid periodically, say monthly or weekly, such that the employee could not sue for payment before the due date. I believe it is sufficient for Lisbeth if the income is calculated and earned on a daily basis."

15.  Another submission made by Mr Strachan in respect of the 1^st issue is better expressed in his own words.

"Sections 41(2) and 41C(2) do not refer to 'wages' which comprise both a 'daily element' and a 'non-daily element'"

"24. Sections 41(1) and 41C(1) address the situation where the employee's wages do not vary from day to day. Sections 41(2) and 41C(2) address the situation when the employee's wages do vary from day to day.

25. Section 41(2) and 41C(2) are not intended to, and cannot, permit the splitting of 'wages' into two elements, namely (a) a monthly basic salary which is fixed in amount and (b) a variable element such as LDA, GDA and DFSC. The decision of this Court presupposes that such splitting of 'wages' into the two said elements is permissible.

26. Were ss.41(2) and 41C(2) to permit the splitting of 'wages' into the two said elements:

(i) There would be no need for ss.41(1) and 41C(1) at all, since ss.41(2) and 41C(2) could cater for the situation in which the employee's wages comprised only element (a), as well as the situation in which the employee's wages comprised both element (a) and element (b).

(ii) There would be an inconsistency between the manner of calculation of element (a) under ss.41(1) and 41C(1) as compared with the manner of calculation of element (a) under ss.41(2) and 41C(2). Under ss.41(1) and 41C(1) element (a) would be calculated using a denominator of 365 days to divide the employee's annual income ie days such as Saturday and Sundays when the employee need not work are included (Leung Lai Bun v San Woo Bore Pile Foundation Ltd [2003] 2 HKC 210, paragraphs 21 to 25). But under ss.41(2) and 41C(2) element (a) would be calculated by reference only to the days on which the employee actually worked during the relevant wage period.

27. It is therefore respectfully submitted that it is reasonably arguable that Stone J was correct in holding that ss.41(2) and 41C(2) do not permit the splitting of 'wages' into the two said elements (paragraphs 66 to 68 of Stone J's Judgment)."

16.  I believe common sense has a place in the Employment Ordinance. It is difficult to understand why for the calculation of holiday pay under section 41, or annual leave pay under section 41C(2), a waiter, who is paid a fixed basic monthly salary but his income varies because he may earn more or less or no tips on a daily basis, should have such income disregarded for the purpose of calculation under sections 41(2) or 41C(2).  Even if, and I will not pause to consider, Mr Strachan is right that in that case there would be no need for section 41(1) or 41C(1), I do not believe that when construing an ordinance which is primarily addressed to lay persons, these arguments carry much weight.

17.  Our decision followed Lisbeth Enterprises Ltd v Mandy Luk (2006) 9 HKFAR 131 as well as the decision of this Court in Lam Pik Shan v Hong Kong Wing On Travel Service Ltd [2008] 3 HKC 578 (see para. 20 of my judgment), as well as the decision of the Appeal Committee given on 19 January 2009 (see para. 21 of my judgment).

18.  Then it is said that any calculation of statutory holiday pay and statutory annual leave pay by reference to LDA, GDA and DFSC would be unworkable.  Mr Strachan submitted that in Lisbeth at para. 22, the court said "the regular payment of holiday pay and annual leave pay" has to be a "simple and certain exercise … if chaos is to be avoided", hence, the requirement of the requisite dailyness.  This submission goes to the calculation and must await the decision of the Labour Tribunal.  It does not raise any point of great general or public importance. 

The 2^nd Issue

19.  As I have made clear in my judgment, it is a question of construction of a contract of employment whether statutory annual leave pay and the contractual annual leave pay (when longer) should be paid at the same rate.  Mr Strachan submitted that although a contract may not have expressly provided for a different rate, it might have done implicitly so.  But, even so, it remains a matter of construction of the particular contract.  There is nothing in our judgment to suggest that in construing a contract of employment, one could or should disregard any necessary implication.

20.  In the case of Jenny Ho, Mr Strachan submitted that her case provides particular difficulty in calculation.  I do not know whether it does or not.  That is for the Labour Tribunal to decide.

21.  It is then said that in respect of each Claimant, there are provisions in the relevant contracts of employment, which require that the computation of contractual annual leave pay (insofar as the contractual annual leave exceeds the statutory annual leave) differently from the computation of statutory annual leave pay.  Whether that is so or not is a matter of construction.  Rightly or wrongly we have come to a conclusion that these contracts of employment had not so provided.  Certainly it was not argued in relation to Becky Kwan or Vera Wu that there are such provisions in their contracts of employment. 

22.  In the case of Jenny Ho, Mr Strachan drew our attention to the written submissions of Mr Ashley Burns, SC dated 8 February 2010, who then appeared for Cathay, in particular to paras. 48 to 50.

23.  I do not believe there was a clear argument by Mr Burns that as a matter of construction, Jenny Ho's contract provided for the contractual holiday pay to be calculated in a particular way.  For example, in para. 50 Mr Burns submitted:

"50. In paragraph 50 of the Claimants' submissions it is observed that no formula was suggested by Stone J as to how contractual ALP should be calculated. This does not however diminish the force of his decision. It is suggested that if a formula is required, contractual ALP should be calculated simply on the basis on which Cathay Pacific had done so in the past and had been accepted by the Claimants up until the commencement of these proceedings. …"

24.  It will be noted that Mr Burns relied on Cathay's practice and Mr Strachan raised, by a footnote in his written submissions, a new argument of estoppel by convention. 

The 3^rd Issue

25.  This raises the question whether this Court was right to find that Jenny Ho might have worked overtime and to remit to the Labour Tribunal the question whether the second limb of the proviso to section2(2) of the Ordinance was applicable.  Mr Strachan pointed out that when leave to appeal was granted to the Claimants by this Court on 16 April 2010, leave was not granted in respect of Jenny Ho's overtime work.  Mr Erik Shum, appearing for the Claimants, has reminded us that the issue was raised in the course of submission by Le Pichon JA.  No objection was raised to that at the time.  Had it been raised, we probably would have given leave anyway.  So I do not believe there is anything in this point, and it is certainly not a point on which leave to appeal to the Court of Final Appeal should be given.

Disposition

26.  For the above reasons, I have dismissed, with costs, the application for leave to appeal to the Court of Final Appeal.

Draft Order

27.  In para. 74 of our judgment, the parties were directed to submit agreed draft minutes of order for approval.  The parties have been able to agree all except para. 2. 

28.  The Claimant's draft:

"2. The decisions made by the Deputy Presiding Officer in the Labour Tribunal that the Defendant should include Line Duty Allowance, Ground Duty Allowance and Duty Free Sales Commission in the calculation of the Claimants' statutory annual leave pay and statutory holiday pay in the manner as set out in paragraphs 102 and 108 of the Reasons for Decision on Liability and that there is no basis to calculate the annual leave pay attributable to the statutory and contractual annual leave pay differently be restored;"

29.  Cathay's draft:

"2. The decision made by the Deputy Presiding Officer in the Labour Tribunal that the Defendant should include Line Duty Allowance, Ground Duty Allowance and Duty Free Sales Commission in the calculation of the Claimants' statutory annual leave pay and statutory holiday pay in the manner as set out in paragraphs 102 and 108 of the Reasons for Decision on Liability be restored; "

30.  The difference in the wording is important because, Mr Strachan explained, Cathay wants to argue in the Lands Tribunal that as a matter of construction, the relevant contracts provided for the statutory annual leave pay and contractual holiday pay to be calculated differently.

31.  For the reasons that I have endeavoured to set out above, I do not believe that this argument is open to Cathay.  Certainly not in relation to Becky Kwan and Vera Wu since it had not been raised before us in relation to them.  So far as Jenny Ho is concerned, as I have explained above, the matter had been raised, but not in such a way as to have persuaded us that the contract had provided expressly or implicitly so.  So for the avoidance of unnecessary dispute, we would adopt the Claimants' draft.

Hon Cheung JA:

32.  I agree.

Hon Sakhrani J:

33.  I also agree.