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

CACV355/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 355 OF 2001

(ON APPEAL FROM HCA 8395 OF 1997)

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J U D G M E N T

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Hon Leong CJHC (giving the judgment of the Court):

1. The plaintiff was employed by the defendants as a Project Officer on 19 January 1991. She worked in the Tsuen Wan Centre. The terms of her employment included the Centre's Staff Manual. The Manual had been amended a number of times. The version existing when the plaintiff was employed was the 1987 version. The Staff Manual was amended again in 1992 and this improved the benefits of the employees at the Centre in some areas. During her employment, a Mr Lo Kwok Kuen was the Director and was responsible for the management of the Centre. The Centre closed down on 13 January 1997 and the plaintiff's employment was terminated.

2. During her employment, the plaintiff had to work over time for which compensation leave would be given. Because of the workload, the plaintiff was unable to clear her annual leave and compensation leave from time to time and by the time her employment came to an end, apart from her entitlements that had been agreed to by her employers, she still had a credit balance of 37.5 days annual leave and 43.5 days compensation leave. Payment for them should be $29,420.89 and $36,050.96 respectively. The defendants maintained that the annual leave and compensation leave claimed had been cancelled because they were in excess of what could be accumulated under the terms of her employment. The defendants refused to pay her these amounts on her termination of employment.

3. The plaintiff claimed these two amounts at the Labour Tribunal but the claims were transferred to the Court of First Instance for trial. At the trial, the plaintiff maintained that the Staff Manual applicable to her employment was the 1987 version. Under the terms of the Manual relating to compensation leave, with the permission of the Director, her excess compensation leave could continue to accumulate and the Director had given her such permission. After trial, Chung J gave judgment for the plaintiff in her claim for annual leave payment but dismissed her claim for compensation leave payment holding that the version of Staff Manual applicable to the plaintiff's employment was the 1992 version under which the Director had no power to grant permission for excess compensation leave to accumulate.

4. The plaintiff appealed against the dismissal of her claim for compensation leave payment on the ground that the judge was wrong to hold the 1992 version of the Staff Manual was applicable to her employment.

5. In the respondents' notice, the defendants argued that even if the 1987 version applied to the plaintiff, the Director had no power to allow compensation leave to accumulate beyond 30 sessions or 15 days.

6. The relevant terms in the 1987 version of the Staff Manual on accumulation of annual leave and compensation leave are as follows:

"3.1 Annual Leave

3.1.3 annual leave can only be accumulated for one year to a maximum of 36 working days (see example 1), application to postpone the annual leave may be made if there are special circumstances.

3.2 Overtime work leave

3.2.1 ......overtime work compensation leave should not accumulate in excess of 30 sessions (i.e. 15 working days). Any excess would be cancelled automatically. The Centre encourages colleagues to take compensation leave as soon as possible after overtime work to avoid compensation leave being cancelled if it could not be taken within the time limit.

3.2.2. Any staff, old or new, must take his/her overtime work compensation leave before the 31st of March each year. From 1st April all overtime work compensation would be automatically cancelled. If there are special circumstances, permission should be obtained from Director."

7. At a meeting on 8 April 1992, the management committee of the Centre resolved to amend the Staff Manual by deleting paragraph 3.2.2 of the Manual. The effect of this was to remove the Director's power to grant permission for compensation leave to accumulate to over 15 days and carried beyond 31st March of each year. The amendment also added a paragraph 4.19 which made it compulsory for any staff member employed after 8 April 1992 to accept the Staff Manual as amended as part of the employment terms. It was resolved that the amendments should be effective on 8 April 1992, and put before the executive committee for its confirmation at the meeting on 22 May 1992. In the meantime, Director Lo was to consult staff members of the amendments and if there were sufficient reasons for variation, such should be reflected at the executive committee meeting on 22 May 1992.

8. The executive committee met on 22 May 1992 and unanimously confirmed and approved the amendments to the Staff Manual.

9. The question is which version of the Staff Manual should apply to the plaintiff's employment, should it be the 1987 version or the 1992 version. If the 1987 version applied, whether the plaintiff was entitled to the excess compensation leave she claimed.

10. The judge found that paragraph 3.1.3 of the Staff Manual, which was not altered in the 1992 version, "has given the authority of permitting "excess" leave to the Centre's Director" and the Director would be acting within his power unless fraud or bias or mistake had required him "to depart from his instructions in a material aspect". The judge also found that the power of the Director was similar to that of a public authority and he would be acting within his power if he exercised it reasonably. He found the Director had given permission and was acting within his power, to allow the plaintiff to accumulate her annual leave and for the leave to be carried beyond the 31st of March. But as to compensation leave, he found that the 1992 version of the Staff Manual applied to the plaintiff's terms of employment and under this version the Director had no power to grant permission for the plaintiff to accumulate her excess compensation leave. Any permission by the Director to the plaintiff to accumulate excess compensation leave would be of no effect.

11. The reason for this finding is in the following paragraph of his judgment (p.5):

" 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.

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. 1 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."

12. In our opinion, although the amendments to the Staff Manual were approved after consultation with the staff, they had not been put to the staff nor to the plaintiff for acceptance. Before the amendments could apply to the plaintiff who was employed on terms incorporating the 1987 Staff Manual, there must be evidence that she had accepted the amendments which changed her terms of employment but there is no such evidence. Consultation with the staff does not amount to the plaintiff accepting the new terms.

13. In our view, the judge's finding does not support his conclusion that the revised Staff Manual was part of the terms of the employment of the plaintiff. Our conclusion is that the version of the Staff Manual applicable to the plaintiff's employment was the 1987 version and not the 1992 version.

14. Although we had said that the 1987 version applied, this must be understood in the context of the claim for overtime compensation. It appeared during submission by counsel, that the plaintiff's claim for annual leave was in fact based on the calculation contained in the 1992 version. However, no point was taken at the trial that the plaintiff was not entitled to base her claim for annual leave on the 1992 version and her claim for overtime compensation on the 1987 version. As this point was not taken, no finding was made by the judge in this regard. In any event, the plaintiff's case as presented at the trial was that she was entitled to choose from these two versions terms which would be to her most advantage. As the matter now stands, there is no inconsistency that the plaintiff's claim for annual leave was based on the 1992 version. There was no appeal by the defendants from the judgment on annual leave.

15. The defendants argued that even if the 1987 version applied to the plaintiff, the power under paragraph 3.2.2 to give permission is confined to allow accumulated compensation leave to carry beyond 31st of March each year but not to permit such leave to accumulate for more than 15 days. Mr Chan, counsel for the defendants, submits that the wording of the two paragraphs is clear. Paragraph 3.2.1 contains no such power. The two paragraphs should be read separately.

16. It is common ground that under paragraph 3.1.3, the Director may in special circumstances give permission not only to allow annual leave to accumulate beyond one year but also in excess of 36 days. In paragraph 3.2.1, the maximum compensation leave allowed to accumulate is 15 days and in paragraph 3.2.2 all accumulated leave for the year must be cleared before 31st March of each year but in special circumstances, this restriction may be removed with the permission of the Director. On a strict interpretation of these paragraphs, it would appear that the contention of the defendants is correct. However, reading the Part III provisions on "leave" as a whole, it would appear that the maker of these rules contemplated there could be circumstances such as workload that could prevent an employee from taking his leave. As a result, his leave might accumulate in excess of the maximum days allowed to accumulate or there might be no opportunity for him to take his leave before the time limit. To cancel his leave in such circumstances would not do the employee justice. Giving the Director the power to relax the restrictions on time limit and maximum accumulation, in appropriate special circumstances, would maintain fairness between the Centre and its employees. The same restrictions on time to take leave and maximum accumulation are present in annual leave and compensation leave. It would be illogical that the Director has no power to relax the restriction on maximum accumulation in compensation leave.

17. In any case, where an employee has to work overtime in order to cope with the workload and for the good of the Centre and the public and under his terms of employment he would be compensated for the loss of time and work done, it would not be fair and equitable that his entitlements would be forfeited because he has no opportunity to take the compensation leave, the cause of which is attributed to workload or mismanagement of the Centre.

18. In our view, the two paragraphs 3.2.1 and 3.2.2 must be read together and the power of the Director in paragraph 3.2.2 is equally applicable in the circumstances in paragraph 3.2.1.

19. We conclude that the appeal must be allowed and the judgment dismissing the claim for compensation leave payment is set aside. We order that judgment in the sum of $36,050 be entered for the plaintiff with order nisi on costs to the plaintiff at the trial as well as in this appeal.

20. Before we depart from this judgment, mention must be made, as the judge has aptly commented in his judgment, that this is a case for the Labour Tribunal in every respect. We agree entirely with the judge that the cause of action in the present case arose not when the compensation leave had accumulated in excess of the amount permitted under the Staff Manual, but when the plaintiff claimed her entitlement for leave payment on termination of her employment and the defendants refused to pay. The cause of action was therefore not outside the 12 months time limit in the Labour Tribunal. In any case, any claim outside the 12 months time limit may still be entertained at the Labour Tribunal by agreement of the parties. Even if the Presiding Officer was in doubt as to when the cause of action arose, having regard to the amount claimed, if an agreement as to jurisdiction could be agreed by the parties, the transfer of the case to the High Court would have been obviated. The amount involved does not justify the costs incurred in proceedings in the High Court.