CHOK KIN MING v. EQUAL OPPORTUNITIES COMMISSION

HCLA 42/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 42 OF 2015

(ON APPEAL FROM LBTC 543 OF 2015)

____________

____________

_________________

J U D G M E N T

_________________

I.  INTRODUCTION

1.  This is an appeal in point of law brought by the Equal Opportunity Commission as the employer of Mr Chok Kin Ming against a decision of the Labour Tribunal.  The Commission contends that the Tribunal was wrong to order it to pay Mr Chok his contract‑end gratuity in the amount of $867,021.25.  The proceedings have arisen from a dispute concerning what Mr Chok said and did at a forum organised by a church on 16 August 2014.

2.  The questions of law raised are: (i) whether, as a matter of construction, the contract of employment entitled the Commission to take into account the work performance of Mr Chok in deciding whether to pay him the gratuity; and (ii) whether the Tribunal failed to apply the correct legal test in ruling that the Commission wrongfully failed to pay the gratuity.  There is a consequential issue of what the proper relief is if the Commission prevails on the two questions of law.

II.  BACKGROUND

Conditions of employment

3.  Mr Chok began his employment with the Commission in 1996.  The last renewal of his contract with the Commission was for 3 years from 1 November 2011 to 31 October 2014 as a Chief Equal Opportunities Officer.  The contract incorporated the terms contained in a document called “Memorandum on Conditions of Service in the Equal Opportunity Commission Office” (which I shall refer to as the “Conditions of Service”).

4.  The letter to Mr Chok of July 2011 offering the appointment stated, among other things:

“Subject to the terms as set out in the attached [Conditions of Service], you will receive a gratuity for the period of service upon satisfactory completion of the agreement in the opinion of the EOC. ... The gratuity payable for the agreement will be the sum which, when added to the EOC’s contribution to the said MPF Scheme, equals 25% of the total basic salary of substantive office drawn during the period. ...”

5.  Clause 13 of the Conditions of Service is important for present purposes as it governed the payment of the contract‑end gratuity.  It read as follows:

“13.  GRATUITY

13.1  On satisfactory completion of the agreement in the opinion of the employer, or if the agreement is terminated under Clause 11.3 of this Memorandum for reasons other than misconduct, the employee will receive a gratuity in respect of the actual period of service, including periods of vacation leave earned and taken. Such gratuity will be payable at a rate as specified in the letter of appointment.

13.2  The rate of gratuity referred to in paragraph 13.1 above may be reviewed and adjusted to take into account the contributions made by the employer in respect of the employee to a scheme registered under the Mandatory Provident Fund Schemes Ordinance.

13.3  Gratuity will not be payable to an employee who resigns and leave the office within the agreement period.

13.4  The employer may withhold the grand of gratuity while the employee is being subject to any disciplinary or criminal proceedings or investigation into any acts which may affect the grant of gratuity.

13.5  In circumstance where a gratuity is paid to the employee in the mistaken belief that he/she has:

(a)  satisfactorily completed his/her agreement; or

(b)  not been convicted of any of the following offences during and in respect of his/her employment-

(i) any offence under the Prevention of Bribery Ordinance (Cap 201), being an offence related to his/her previous service with the Commission; or

(ii) any other offence that if determined on its own fact, would have led to the employee’s dismissal from the service

the employer shall be entitled, without affecting its other rights, to recover from the employee the whole or part of the gratuity commensurate with all the circumstances of the case including the unsatisfactory nature of the employee’s service and the seriousness of the offence on his/her part. Such right of the employer shall survive any termination of the agreement between the employer and the employee.

13.6  In the event of the employee’s death during the agreement period, the amount of gratuity earned on the basis of Clause 13.1 above will be paid to his/her nominated beneficiar(ies) and in the absence of which to his/her estate.”

6.  It is not in dispute that an employees’ code of conduct (“Code of Conduct”), contained in the Human Resources Manual, applied to Mr Chok in relation to his employment.  Section D1.4 concerning conflicts of interests provided as follows:

“D1.4.1  All employees have an obligation to avoid financial, business or other relationships which might conflict with legitimate business interests of the EOC on the proper performance of its functions and powers. Employees must also avoid even a perceived conflict between their personal interests and those of the EOC.

D1.4.2  A conflict of interest situation arises when the personal interest of an employee competes or conflicts with the interest(s) of the EOC. Such a conflict will exist where an employee compromises his/her ability to act with total objectivity with regard to the Commission’s business interest or the proper performance of its functions and powers. Conflicts of interest may lead to divided loyalty and, in their most serious form, could result in corruption or fraud.

D1.4.3  Examples of conflicts of interest include, but are not limited to, the following:

...

•  where an employee is involved in any activity outside the EOC which is in direct opposition to the work of the EOC (eg: anti‑gay/vilification of AIDS sufferers activist);

...

D1.4.4  It is the responsibility of every employee to report to his/her supervisor in situations where conflicts of interest may arise or have arisen, and make full disclosure of the interest of the employee (Form D1–D1.4.4refers). Failure to do so may give rise to criticism of favouritism, abuse of authority or even allegations of corruption.

D1.4.5  The supervisor should decide, in consultation with the relevant division/unit head or the Chairperson as applicable, whether the employee may deal with, or continue to deal with, the case on situation where the conflict of interest has arisen.”

The DLR consultation

7.  Towards the end of Mr Chok’s employment, the Commission was conducting a 3‑month public consultation on discrimination law review (“DLR”), to be concluded on 7 October 2014.  Mr Chok, who had volunteered to join the team, was one of the key members of the Commission’s taskforce on the DLR.  The DLR was a major exercise intended to be a comprehensive review of all the existing discrimination laws to consider how they could be modernised to meet the society’s needs.  It started in late 2012 and consisted of 5 phases.  Public consultation was the second phase, following an internal review by the Commission and to be followed by an assessment of all the submissions and views received during the public consultation, drafting submissions and recommendations to the Government, and advising the Government on how the recommendations could be implemented.

8.  A total of 77 questions were posed to the public in the consultation document.  There are 6 questions of particular relevance here because on Mr Chok’s own case, they are questions to which he suggested the participants at the forum give a particular response in the consultation:

“6.  Do you think that the protected characteristic of marital status should be amended to apply to “relationship status” and expressly protect persons in de facto relationships?  If so, how should de facto relationships be defined?  Should it be defined to include protection for both heterosexual relationships and same‑sex relationships?  Should this also be extended to protection from discrimination relating to former de facto relationships?

...

8.  Do you think that the protected characteristic of family status should be redefined as “family responsibilities” in order to clarify that it relates to persons who have responsibility for the care of immediate family members?

9.  Do you think that the scope of family status discrimination should be expanded to include protection where persons in de facto relationships care for immediate family members?  If so, how should de facto relationships be defined?  Further, do you think the protection should be extended to situations where a person cares for an immediate family member from a former marriage or de facto relationship?

...

69.  Do you think that the exception permitting sex discrimination in employment and qualification bodies for religious purposes should be extended to permit marital status discrimination?

...

71.  Do you think that:

-  the Human Reproductive Technology Ordinance should be amended to remove a requirement that a person is married to be provided with IVF treatment; and

-  the exception in the SDO relating to reproductive technology should then be repealed?

72.  Do you think that the exception relating to adoption and marital status is no longer necessary because of amendments to the Adoption Ordinance and should be repealed?”

9.  According to the Commission, its role in canvassing the views of the public in the DLR consultation was to be impartial.  Mr Chok was responsible for explaining the objectives and proposals of the DLR to the public in consultation forums scheduled on 9, 16, 23 and 30 August 2014.  He attended the first public consultation meeting on 9 August as the Commission’s representative and speaker and, following the church forum described below in the morning of 16 August, he attended the second public consultation meeting in the afternoon of the same day.

Decision to end the employment

10.  Meanwhile, the Commission had decided in July 2014 not to renew Mr Chok’s contract of employment when it expired in 3 months’ time in October.  The Chairperson of the Commission, Dr York Chow, told Mr Chok the decision at a meeting on 22 July and also handed him a letter which stated that his performance and behaviour did not sufficiently match with the requirements of his position.  At the end of the meeting Mr Chok promised to continue to act professionally during the remainder of the term of employment and in the DLR.  Dr Chow further explained the decision to Mr Chok in a memorandum dated 13 August 2014 in terms that were critical of Mr Chok’s leadership ability and his behaviour towards and working relationship with his colleagues.

The forum on 16 August 2014

11.  During the period of public consultation on the DLR, on 16 August 2014, Mr Chok attended and gave a talk at a forum organised by a church called Tsung Tsin Mission of Hong Kong (香港崇真會) (“the Church”) to introduce and explain the DLR consultation.  The forum was called “Briefing on DLR Consultation” (「歧視條例檢討」諮詢簡介會).

12.  In the Tribunal, the Presiding Officer found that Mr Chok had been invited to the forum in his personal capacity and because of his Christian religion.  The forum was open to members of the branches of the Church and the schools run by it.  It appears that those who attended included headmasters, teachers, and parents of students of the schools.  Members of the media had not been invited.  There is an indirect reference in the transcript of the recording suggesting over 200 people attended it, though Mr Chok said there was no evidence of that number and only admitted there were over 50 people.  The Tribunal made no finding of the precise number of participants.  The Tribunal concluded it was a private function.  It was not seriously disputed that parts of the forum including Mr Chok’s speeches were recorded by someone without his knowledge and without the organisers’ authorisation, though Mr Chok did not formally admit the accuracy of the recording.

13.  Mr Chok had given some written materials to the participants at the forum but they were not in the evidence.  The transcript of the recording of the forum was placed before the Tribunal.  The Tribunal also heard evidence from Mr Chok and another speaker at the forum, Mr Roger Wong.  From the transcript of the recording, it can be seen that Mr Chok did the following:

(1)  He told the audience that in other countries, enforcement of equal opportunities laws had often targeted churches or schools.

(2)  He told the audience that he had tried very hard to insert Question 69 into the consultation document, but its scope was not wide enough.  He appealed to them to answer “Yes” to that question and to ask for an expansion of the exemption.

(3)  He urged the audience to answer “No” to certain other questions posed in the consultation document.  The Commission said this applied to all the other questions but Mr Chok said he did so only for 5 questions, namely, Questions 6, 8, 9, 71 and 72.

(4)  He suggested a strategy of giving a very large number of responses to the consultation (“人海戰術”).  He gave the participants advice on how to make their views look independently formed and thus attract more weight with the Commission.  He told them that the Commission had earlier received over 1,000 letters from “pro‑gay” groups expressing their views, but since their letters were produced by “cut and paste”, they were only counted as one voice.

(5)  He offered to help the participants present their views in a manner that would not be similarly discounted, suggesting that when they sent their views to the Commission, they could use the template drafted by him with suitable variations.

(6)  He told the audience that he had objected to the Commission’s proposal to include same‑sex relationship within the protection of de facto marriage, and encouraged them to oppose the proposal.

(7)  He suggested that the ultimate aim of such legislation was to protect “sexual minorities”, which might ultimately lead to the removal of prohibition against all kinds of sexual practices including incest and bestiality.

(8)  He characterised the actions of the Commission on sexual orientation discrimination as pointless (“阿茂整餅”).

(9)  He mentioned to the participants at the forum about a previous incident of alleged discrimination involving the International Christian School and said that the Commission had caused it nuisance; and

(10)  He described the Commission as autocratic (“一言堂”).

14.  On 26 August 2014, the newspaper Apple Daily reported what Mr Chok said at the forum with verbatim quotes, and criticised him for compromising the integrity of the Commission and the credibility of the DLR consultation.  On the same day and the days that followed, Mr Chok and the Commission came under a great deal of criticism in the media along the same lines because of what he said at the forum.  There were even calls for the Commission to retract the entire DLR consultation.

15.  In response, the Commission issued a media statement on 26 August acknowledging the incident might have caused potential misunderstanding and expressing regret and apology.  It stated that Mr Chok’s personal views on same‑sex marriage did not represent the position of the Commission and would not affect the DLR.  It was also announced that in order to alleviate public concerns, Mr Chok would be discharged from his DLR duties with immediate effect.  The Commission also stated that it had reminded its employees that they could request to withdraw from a duty if there were conflicts between the Commission’s position and his or her personal position, which would help them avoid committing acts or delivering remarks that might undermine the credibility of the Commission. 

16.  The matter also attracted the attention of certain members of the Legislative Council.  On 29 August, the Hon Cyd Ho wrote to the Commission questioning its impartiality in the DLR consultation and to request an extension of the consultation period.  On 3 September the Panel on Constitutional Affairs of the Legislative Council asked the Commission for a written response to Cyd Ho’s letter, which the Commission duly provided on 15 September.

Internal investigation

17.  Following the Apple Daily report on 26 August, Dr York Chow instructed Mr Joseph Li, Director of Operations and the direct supervisor of Mr Chok, to investigate into the matter.  Mr Li immediately started an email correspondence with Mr Chok on this subject, asking for his views and comments on Apple Daily’s report.

18.  Mr Chok replied, asking what the purpose and nature of this enquiry was and under what authority it was conducted.  He also suggested Mr Li ask Apple Daily for the original evidence.  Mr Li replied that as a supervisor, he wished to advise Mr Chok to protect himself and had the duty to make things clear.

19.  On 1 September, Mr Chok replied that the instruction was not clear as it simply asked him to address the content of the Apple Daily report without specific questions raised.  He provided his response by saying that he put Apple Daily to strict proof by producing the full recording, that he invoked the protection of his “religious right to be free from discrimination”, and that he relied on his freedom of expression, freedom and privacy of communication and freedom of conscience and religion under Art 27, 30 and 32 of the Basic Law.  He said that his sharing at the forum was a totally private religious sharing on his religious belief with a group of restricted number of Christians of or related to that denomination, during his own time and without remuneration.

20.  On 3 September, Mr Li wrote Mr Chok to say that he did express his opinion on the Commission’s work to an external audience.  Mr Li asked him to address the specific acts that Apple Daily said he did at the forum.

21.  On 12 September, Mr Chok replied, refuting certain allegations in the Apple Daily report and stating that the Commission was infringing his privacy.  He also stated that Mr Li should abstain from the investigation which should be carried out by external investigators.

22.  After the Commission had received from an anonymous source a recording of segments of Mr Chok’s speech at the forum, Mr Li wrote a memorandum on 26 September to Mr Chok, enclosing the recording and raising some additional questions for Mr Chok.

23.  On 7 October, Mr Chok gave what he called a “final reply”, complaining that he was being pestered for information and that Mr Li and Dr Chow were not impartial.  He refused to comment on the recording as it was supplied anonymously, incomplete and not authenticated, reserving his right against the Commission for infringing his personal data privacy.  He maintained that his speech at the forum was a private sharing and complained of encroachment on his privacy and freedom of religion and expression.

24.  Mr Li produced a report to Dr Chow on 7 October.  It stated that an audience of over 200 attended the forum and while enrolment might be restricted, it was in substance an activity in public.  Mr Chok would not have been invited but for his employment with the Commission.  His involvement in the DLR consultation was highlighted by the organiser in introducing him.  Mr Chok did not state his private capacity clearly but instead referred to his participation in the DLR working group and in the public consultation including his arguments with colleagues on matters related to the DLR.  The recording showed that he was steering the participants and made condescending comments on gay and cross‑dressed groups.  The report then set out certain matters Mr Chok told the forum, before concluding that the occasion was an activity in public, he held himself out as a person closely connected with the Commission and the DLR, and his criticism of the Commission conveyed a negative image which caused people to doubt the intention of the DLR exercise.  The report stated that Mr Chok had:

“i. Inappropriately and/or wrongly divulged office information taking advantage of his position and participation in DLR Working Group;

ii. Misled participants on the objective of DLR and relevant proposals;

iii. Misled participants on EOC’s operation, complaint mechanism, legal assistance function and decision‑making process. All these tarnished the public image of the Commission;

iv. Not only failed to clarify and defended EOC’s operation publicly, but also created negative publicity intentionally on the organisation and people;

v. Acted in conflict with the Commission’s interest intentionally or unintentionally; and

vi. Breached the code of conduct expected from each and every EOC staff member.”

25.  On 10 October, as a disciplinary action, Dr Chow issued a formal warning notice to Mr Chok, which set out the details of the misconduct found and stated that the internal investigation had concluded that (1) he had breached the Code of Conduct in that he had, inter alia, placed himself in a position of conflict by expressing his personal views rather than remaining impartial in the consultation process; and (2) he had breached his duty of fidelity and good faith in that he had, inter alia, misled the forum about the Commission’s consultation methodology, operations and decision‑making process. 

26.  According to the statement of Dr Chow filed in the Tribunal, the Commission took the view that Mr Chok’s conduct warranted summary dismissal.  That course had actually been considered but was not taken as it was by then very close to the end of his contract on 31 October and the Commission took into account Mr Chok’s long employment since 1996.

27.  In the warning notice, Mr Chok was advised to familiarise himself with the Code of Conduct to avoid similar situations in future.  It was also stated that its contents would be taken into consideration by the Commission in deciding whether there had been “satisfactory completion” of his employment agreement which might have repercussions on the gratuity.  Mr Chok was reminded that he could appeal against the issue of the warning notice within 14 days.[1]

28.  On 13 October, Mr Chok counter‑signed the warning notice stating that he denied and disagreed with the outcome of the internal investigation.  He did not however lodge any appeal.  The 14‑day period for appeal against the warning expired on 27 October.

29.  The Commission decided not to grant the contract‑end gratuity to Mr Chok under clause 13.1 of the Conditions of Service because he had not, in its opinion, satisfactorily completed the employment agreement. According to Dr Chow’s statement, the decision was based on Mr Chok’s breach of the Code of Conduct policy, breach of his duty of fidelity and good faith and breach of his promise made at the meeting on 22 July 2014 to continue to act professionally during the remainder of the term of employment and particularly in the DLR. Dr Chow said that Mr Chok had acted most unprofessionally at the forum.  He had deliberately attempted to smear the credibility, integrity and public image of the Commission in the presence of a group of church leaders.

30.  Nevertheless, the Commission said that because Mr Chok was a long‑serving employee, it wished to offer him a chance. Accordingly, on around 30 October, the Commission prepared a draft deed of release, according to which the gratuity would be paid to Mr Chok on a discretionary basis provided he accept the terms in that document including a requirement for a written apology for his actions at the forum and a provision that whether before or after the termination of his employment, he shall not make any negative statement concerning the Commission or say or do anything prejudicial to the management or policies of the Commission.  Mr Chok refused to sign the deed of release.  The Commission did not pay him the gratuity.

III.  THE TRIBUNAL’S DECISION

31.  On 16 February 2015, Mr Chok brought a claim in the Labour Tribunal.[2] By the time of the trial in July and August 2015, the only claim that required adjudication was his claim for the contract‑end gratuity in the sum of $867,021.25.  On 2 November 2015, the Presiding Officer[3] upheld Mr Chok’s claim for the following reasons[4]. 

32.  As a matter of construction, the phrase “satisfactory completion” in clause 13.1 of the Conditions of Service refers to temporal completion of the contract, ie in this case the completion of the 3‑year term.  The Commission could not take into account Mr Chok’s work performance in deciding whether to pay him the gratuity under clause 13 of the Conditions of Service.

33.  In any event, even if her construction of clause 13.1 was wrong, the Presiding Officer considered Mr Chok’s claim should be upheld because:

(1)  There were deficiencies and shortcomings in the investigation procedure and report by Mr Li including: (a) Mr Li did not know it was a disciplinary inquiry, and took it as a general internal investigation; (b) certain information was not included by Mr Li in his report; (c) the Commission did not seek information from the Church and other relevant persons such as Apple Daily.  The procedure and report infringed the requirements of natural justice.  The Tribunal should not place any weight on the content of the report and its conclusions.

(2)  Mr Chok was invited to and attended the forum in a personal capacity with his religious background.  It was a private function attendance at which was restricted.  It was not a public function and the media had not been invited.  Mr Chok’s attendance at a private function in his own time had nothing to do with his work performance.

(3)  As a member of the public, Mr Chok had the freedom, protected by the Basic Law, to express his opinions in his personal capacity about the DLR consultation at a private function.

(4)  What Mr Chok did and said at the forum did not raise any conflict of interests with the Commission.  Nor did it impact upon his work performance.

IV.  QUESTION 1

34.  On the first question I respectfully differ from the conclusion of the Presiding Officer.  It seems to me that the expression “[o]n satisfactory completion of the agreement in the opinion of the employer” in clause 13.1 plainly includes the manner in which the agreement has been completed. 

35.  Although the sum in question is termed a “gratuity”[5], clause 13.1 provides for a contractual entitlement to it because of the words “will receive”, but this is subject to a condition, namely, satisfactory completion of the agreement in the opinion of the employer.  The reference to the employer’s opinion introduces an element of discretion or judgment on the part of the employer.

36.  The Presiding Officer considered it significant that the phrase “work performance” did not appear in clause 13.1. Applying a literal interpretation and the contra proferentem maxim,[6] she held that in the absence of a clear reference to work performance, the meaning of the clause did not encompass any such consideration.

37.  In my opinion, this approach takes too narrow a view of the meaning of “satisfactory completion” and fails to construe the provision in the context of the contract as a whole.  The contract imposed various obligations on Mr Chok and his position required him to perform various duties.  Completion of the agreement implies discharge of the obligations by performance.  There is no warrant to confine the meaning of “satisfactory completion” to simply sitting out the appointment.  The word “satisfactory” imports scope for judgment by the employer, in line with “opinion”.  It is apt to refer not so much to finishing the term but to the level of performance of the obligations attendant with the appointment.

38.  The Presiding Officer took the view that “satisfactory” is equally applicable to refer to the temporal completion of the contract, giving two examples.  First, she considered that where the employee had to terminate the employment early because of health or personal reasons, the Commission would be entitled not to pay the gratuity; and yet the Commission had paid pro‑rated gratuity in such cases in the past on compassionate grounds.  I do not think this supports the Presiding Officer’s interpretation of clause 13.1.  Clause 13.3 expressly stipulates that gratuity is not payable to an employee who resigns and leaves the office within the period of employment.  In my opinion, past examples of payment of gratuity in special circumstances are best viewed as instances of the Commission waiving its rights and making ex gratia payment, rather than as cases in which the Commission formed an opinion of satisfactory completion of the contract.

39.  Secondly, the Presiding Officer referred to the situation where the employee took prolonged sick leave, leave on account of injury at work, or unpaid study leave.  She pointed out that there could be a dispute as to whether there was injury.  Hence the employer was given the power to form an opinion as to whether the contract had been satisfactorily completed in a temporal sense in such cases.  Again I respectfully disagree.  If the contract was not terminated, then it would have lasted its full term.  It would strain the language to suggest that in such a case the employer could say that the contract had not been completed in a temporal sense.

40.  The meaning contended for by the Commission is strongly supported by clause 13.4.  The word “withhold” in that sub‑clause implies that the gratuity would otherwise be payable — in other words, where the contract has been completed in point of time.  Yet it expressly envisages there might have been acts that may affect the grant of gratuity.  The payment can be withheld pending investigation into such acts or pending disciplinary proceedings.  This plainly contemplates that payment could eventually be refused depending on the outcome.

41.  Clause 13.5 relevantly provides that where the gratuity has been paid to the employee in the mistaken belief that he or she has “satisfactorily completed his/her agreement”, then the employer can recover from the employee the whole or part of the gratuity commensurate with all the circumstances including the “unsatisfactory nature of the employee’s service”.  I agree with Mr Lui who appeared for the Commission that this also suggests that, in forming an opinion as to satisfactory completion of the contract under clause 13.1, the employer is entitled to have regard, not only to the length of employee’s service, but also to its “nature”.

42.  Mr Khaw SC relied upon the alternative scenario mentioned in clause 13.1, namely, where the agreement is terminated under clause 11.3 for reasons other than misconduct.  Clause 11.3 provided:

“For an employee who has passed the trial period or who has been appointed without the requirement to serve a trial period, his/her service may be terminated by the employer by giving him/her a minimum of three months’ notice or by paying him/her three months’ salary in lieu of notice.”

43.  In my view this part of clause 13.1 does not support the Presiding Officer’s interpretation.  It deals with the situation where the contract has been cut short.  It does not imply that if the contract has not been cut short, then the gratuity is payable irrespective of the quality of the employee’s service. 

44.  In construing clause 13.1, the Presiding Officer had not, as far as one can see from her reasons, considered clauses 13.3, 13.4 or 13.5.  Nor was her attention drawn to these clauses. For the above reasons, I disagree with the Presiding Officer’s interpretation.  In my view, “satisfactory completion” does not only refer to the dimension of time.  The quality of the employee’s performance may be taken into account by the employer in forming an opinion under clause 13.1 as to whether there has been satisfactory completion of the employment agreement.

45.  As his fall‑back position, Mr Khaw SC submitted that even if standard of performance could be taken into account by the Commission, clause 13.1 did not confer an “unfettered” discretion, but only disentitled the employee to the gratuity if there had been such “misconduct” as would justify summary dismissal.  He pointed out that in the second scenario contemplated in clause 13.1, if a “low‑performing” employee is given three months’ notice for early termination, a pro rata gratuity will still be payable to him except where he is terminated for “misconduct”.  It would be anomalous if by keeping him employed, the employer could refuse to grant any gratuity at the end of the contract.  Therefore, according to the argument, there must at least be misconduct justifying summary dismissal before the employer could refuse to pay the gratuity at contract end.

46.  This argument assumes that the word “misconduct” in clause 13.1 refers to misconduct that warrants summary dismissal.  But it should be noted that the context is termination by 3 months’ notice or payment of 3 months’ salary in lieu of notice, rather than summary dismissal.  It seems to be assumed that an employee summarily dismissed will not be entitled to the gratuity, which is perhaps why the clause is silent on that situation.  The exception to the relevant part of clause 13.1 (ie “terminated under Clause 11.3 ... for reasons other than misconduct”) is the situation where the employer has terminated the contract by notice or payment in lieu for the reason of misconduct.  It does not necessarily follow that such misconduct must be misconduct justifying summary dismissal at common law.

47.  Even if (without deciding) one proceeds on the basis of Mr Khaw’s assumption, the problem with the argument is, in my view, that it seeks to read into clause 13.1 a restriction on the phrase “satisfactory completion of the agreement in the opinion of the employer”, so as to turn it to mean “completion of the agreement without any misconduct justifying summary dismissal in the opinion of the employer”.  There is no warrant for so limiting the plain words of this provision whether by way of construction or implication of terms.  The clause is not unworkable or absurd without such implication.  The authorities show that the opinion as regards satisfactory completion of the agreement by an employee cannot be formed by the Commission in bad faith or irrationally. I therefore also reject Mr Khaw’s fall‑back position on the construction of clause 13.1.

V.  QUESTION 2

48.  Assuming her construction of clause 13.1 was in error, the Presiding Officer went on to consider whether the Commission, taking into account Mr Chok’s work performance, was entitled to refuse to pay him the gratuity.  In this connection she decided not to give any weight to the report of Mr Joseph Li because of the deficiencies she perceived in its contents and in the process leading to it.  She took the view that the forum was a private event and that an employee of the Commission was entitled to express his personal views in private events that he attended in his personal capacity. She held, “on the balance of probabilities”[7], that what Mr Chok said and did at the forum did not give rise to any conflict with his work and did not have any impact on his work performance.

49.  As Mr Lui submitted, the authorities have established that where the employer has a discretionary power under the contract of employment such as in relation to the payment of a bonus, a breach of contract is to be established by showing that the employer’s decision was irrational or perverse.  The court does not substitute its own opinion.  Of course that discretion is not to be treated as wholly unfettered.  It must not be exercised in a manner which is perverse or irrational or, in other words, where no reasonable employer would have exercised the discretion in the same way: Clark v Nomura International plc [2000] IRLR 766, §40; Commerzbank AG v Keen [2007] IRLR 132, §52; Mallone v BPB Industries plc [2002] ICR 1045, §§36–39; Post Vanessa Jane v Nomura International (Hong Kong) Ltd (unrep, HCA 7259/1997, 29 May 2001), §47; Wong Huey Lan v Colgate‑Palmolive (HK) Ltd (unrep, HCLA 77/2001, 11 March 2002), §8.

50.  In my view the same principle applies to clause 13.1 in the formation of the opinion by the Commission as to whether Mr Chok had satisfactorily completed his contract of employment.  Mr Khaw did not seriously argue to the contrary.  The question for the Presiding Officer was therefore whether it was shown that the Commission’s conclusion that that Mr Chok had not satisfactorily completed the contract of employment was irrational or perverse.

51.  Mr Lui submitted that the Presiding Officer did not approach the matter in that way.  Unfortunately the authorities were not drawn to the Tribunal’s attention.  I agree with Mr Lui that there was no indication in the record that the Presiding Officer adopted that test. 

52.  As Mr Khaw rightly pointed out based on Jones v Mid‑Glamorgan County Council [1997] ICR 815, depending on the facts and circumstances, where it can be shown that a tribunal has correctly directed itself in law, its decision is not necessarily vitiated by misused expressions in the body of the decision that may be inconsistent with the correct direction.  In the present case, however, there is nothing to show that the Presiding Officer correctly directed herself on the applicable approach as set out above.

53.  On the contrary, there are passages in the transcript of hearing that suggest that she regarded the question before her to be whether, in the view of the Tribunal, there was misconduct justifying non‑payment of the gratuity and, in particular, misconduct within the meaning of s 9 of the Employment Ordinance (Cap 57) justifying summary dismissal.  This led the Presiding Officer to think that it was irrelevant to see how Dr Chow came to the decision not to pay the gratuity to Mr Chok.  It was on that basis that she proposed and the parties eventually agreed to put Dr Chow’s statement into evidence without cross‑examination. Further, the use of the phrase “balance of probabilities” in her Reasons (see §48 above) suggests that the Presiding Officer considered it a matter for her to make a finding whether the forum had any effect on the work performance of Mr Chok.

54.  Mr Khaw relied heavily on the Presiding Officer’s criticisms of the investigation process and report.  As I read her decision, however, she only concluded that as a result of those deficiencies she would place no weight on the contents and conclusions of the report.[8] She did not rule that because there were those deficiencies, the decision not to pay the gratuity was perverse or irrational.

55.  It follows that, in my judgment, the second question of law is to be answered in the affirmative: the Tribunal had failed to apply the correct test in ruling that the Commission breached the contract of employment in deciding not to pay Mr Chok the gratuity.

VI.  DISPOSITION OF THE APPEAL

(1)  The rival contentions

56.  Having reached this point and concluded that there was misdirection of law in the decision below on both counts, it would ordinarily be appropriate to remit the matter to the Tribunal.  But both parties submit I should go further, albeit in opposite directions.  On behalf of the Commission, Mr Lui submitted that it was plain that the Commission’s decision not to pay Mr Chok the gratuity was neither irrational nor perverse, and that Mr Chok’s claim must therefore be dismissed.  He submitted that this court should therefore allow the appeal and dismiss the claim without remitting the case to the Tribunal.  For his part, Mr Khaw submitted that even if there had been a misdirection of law, the Tribunal’s decision was plainly right, and that notwithstanding any misdirection this court should simply dismiss the appeal and leave intact the Tribunal’s order. 

(2)  The principles

57.  To deal with the parties’ respective submissions it is necessary to examine the powers of the Court of First Instance on appeal from the Labour Tribunal and the proper approach to the exercise of these powers.

58.  S 7 of the Labour Tribunal Ordinance (Cap 25) provides:

“(1) The tribunal shall have jurisdiction to inquire into, hear and determine the claims specified in the Schedule.

(2) Save as is provided in this Ordinance, no claim within the jurisdiction of the tribunal shall be actionable in any court in Hong Kong.”

In other words, the Labour Tribunal has exclusive jurisdiction over the kind of claim brought by Mr Chok in this case; except as provided in the Ordinance, the High Court has no jurisdiction to adjudicate upon such claims.

59.  An appeal from the Labour Tribunal to the Court of First Instance is not a general appeal but an appeal on point of law or jurisdiction only: see s 32 of the Labour Tribunal Ordinance (Cap 25).  Under s 35(1), the Court of First Instance may (a) allow the appeal; (b) dismiss the appeal; or (c) remit the matter to the tribunal with directions.  S 35(2) specifies:

“(2) On an appeal for which it has granted leave under section 32, the Court of First Instance may-

(a) draw any inference of fact; and

(b) make such order as to costs and expenses as it thinks fit,

but may not-

(i) reverse or vary any determination made by the tribunal on questions of fact; or

(ii) receive further evidence.”

60.  These provisions should be construed in the light of the statutory scheme as a whole.  As Godfrey JA said in Lee Tim v Leung Hui Wing [1997] 1 HKC 470, 475:

“S 7 of the Ordinance provides the background to the exercise by the High Court of the jurisdiction conferred on it by s 32 and 35 of the Ordinance. It is obvious from s 7 that the legislature intended to ensure, no doubt in the interests of economy, speed and finality, that the Labour Tribunal should have a plenitude of jurisdiction over claims such as those made here. And it is equally obvious, from s 32 and 35, that the legislature intended severely to circumscribe the powers of the High Court to interfere with a decision of the Labour Tribunal. The High Court may not reverse or vary any determination made by the Labour Tribunal on questions of fact (although it may draw any inference of fact, which must, I suppose, mean any inference consistent, but not at variance, with the Labour Tribunal’s findings of primary fact).”

61.  RHC O 55 contains general rules on appeals to the High Court from tribunals.  While those rules are prima facie applicable in an appeal from the Labour Tribunal, they have to be read subject to the provisions of the Labour Tribunal Ordinance. Thus although r 7(5) provides, inter alia, that the Court of First Instance “may give any judgment or decision or make any order which ought to have been given or made by the ... tribunal”, any exercise of such power is necessarily circumscribed by the nature of the appeal being one on questions of law only.  The same applies in the case of O 55 r 7(7), which provides:

“(7) The Court shall not be bound to allow the appeal on the ground merely of misdirection, or of the improper admission or rejection of evidence, unless in the opinion of the Court substantial wrong or miscarriage has been thereby occasioned.”

62.  R 7(7), which is applicable to appeals from the Labour Tribunal, does not empower the Court of First Instance to reverse or vary any findings of fact by the Tribunal: Ip Wah v Cheung Chun Chiu formerly trading as Hang Tat Motor Company (unrep, HCMP 251/2007, 22 June 2007), §§21 & 23.  Moreover, although r 7(7) may on its face suggest a fairly wide discretion for the court not to allow an appeal or remit a case despite a misdirection below, in practice in appeals from the Labour Tribunal that option only arises in limited circumstances.  This is not surprising given that the provision is found in a rule which confers on the Court of First Instance on appeal from a tribunal very wide powers, some of which (such as the power to receive further evidence under r 7(2)) have no application in an appeal from the Labour Tribunal.

63.  Thus in Wong Yin Fong & Others v ISS Hong Kong Services Ltd [2005] 2 HKLRD 648, at §74, where the Labour Tribunal had wrongly refused to allow the employee claimant to inspect certain documents of the employer defendant, the court applied the test adumbrated by Sir John Donaldson MR in Dobie v Burns International Security Services [1985] 1 WLR 43, at 49B–D, as follows:

“Once you detect that there has been a misdirection, and particularly that there has been an express misdirection of law, the next question to be asked is not whether the conclusion of the Tribunal is plainly wrong, but whether it is plainly and unarguably right notwithstanding that misdirection. It is only if it is plainly and unarguably right notwithstanding the misdirection that the decision can stand. If the conclusion was wrong or might have been wrong, then it is for an appellate Tribunal to remit the case to the only Tribunal which is charged with making findings of fact.”

This passage from Dobie has also been referred to by the Court of Appeal in Ip Wah, supra, without disapproval.

64.  This approach has been developed and refined in the UK.  In Hellyer Brothers Ltd v McLeod [1987] 1 WLR 728, 747, Slade LJ, giving the judgment of the English Court of Appeal, said that the passage in Dobie must be read subject to an implicit qualification (stated by Waite J in the Employment Appeal Tribunal in that case) as follows:

“If we are satisfied that a conclusion reached as a result of a misdirection is plainly and unarguably wrong upon the facts found by the industrial tribunal and those facts do not require further amplification or reinvestigation, then we are entitled and bound to substitute our own conclusion as to what those findings require in law.”

65.  Sir John Donaldson MR himself also said in McLaren v National Coal Board [1988] ICR 370, at §22:

“... There is also a category of case where it is quite clear that (a) there has been a misdirection, and (b), if the tribunal had directed itself correctly, it must have reached the opposite conclusion. In those circumstances it is obviously absurd to send it back to the industrial tribunal, telling them what the proper direction is and if by any chance they do not arrive at the inevitable answer on the basis of that direction, to hear another appeal and set that aside and send it back again. In those circumstances, of course, it is for the Employment Appeal Tribunal to substitute what must inevitably be the answer by the industrial tribunal rather than to remit it. ...”

66.  In Jafri v Lincoln College [2015] QB 781 at §21, Laws LJ re‑affirmed the conventional approach in the following terms:

“... It is not the task of the EAT [Employment Appeal Tribunal] to decide what result is ‘right’ on the merits ... The EAT’s function is (and is only) to see that the ET’s [Employment Tribunal’s] decisions are lawfully made. If therefore the EAT detects a legal error by the ET, it must send the case back unless (a) it concludes that the error cannot have affected the result, for in that case the error will have been immaterial and the result as lawful as if it had not been made; or (b) without the error the result would have been different, but the EAT is able to conclude what it must have been. In neither case is the EAT to make any factual assessment for itself, nor make any judgment of its own as to the merits of the case; the result must flow from findings made by the ET, supplemented (if at all) only by undisputed or indisputable facts. Otherwise, there must be a remittal.”[9]

Expressing some reservation on the use of the phrase “plainly and unarguably right” in Dobie, Laws LJ suggested (at §23) that what Donaldson MR meant by that phrase was situation (a).  Despite some misgivings, the statement of law in Jafri was accepted as correct by a differently constituted English Court of Appeal in Burrell v Micheldever Tyre Services Ltd [2014] ICR 935 at §19.

67.  As these authorities were not canvassed before me, however, I would not express any view as to whether the approach set out by Laws LJ in Jafri represents the law in Hong Kong.  For present purposes I proceed on the basis of the passage above from Dobie, as applied in Wong Yin Fong, subject to the qualification set out in Hellyer. 

68.  Moreover, it should be borne in mind that the Court of First Instance has expressly conferred on it by s 35(2)(a) of the Labour Tribunal Ordinance the power to draw any inference of fact.  How this power operates, without reversing or varying any determination of fact by the Tribunal, which is prohibited by s 35(2)(i), is not entirely clear.  It may be that, as Godfrey JA suggested in Lee Tim, the court may draw an inference of fact consistent, but not at variance, with the Labour Tribunal’s findings of primary fact.  Before the court draws any such inference, however, it has to be satisfied that the relevant evidential basis is complete.

69.  An example of the use of this power can be found in Lui Lin Kam v Nice Creation Development Ltd trading as Fu On Seafood Restaurant (unrep, HCLA 106/2002, 9 July 2003) and on appeal [2006] 3 HKLRD 655.  There was a dispute there as to whether the employment had been continuous for the purpose of deciding the employees’ entitlement to severance payment.  In particular, it was disputed whether or not the employees worked for the employer during a particular 2‑week period.  The Labour Tribunal did not resolve this factual dispute, ruling in favour of the employees instead for a reason which the Court of First Instance held to be erroneous.  The court drew an inference, which it regarded as an “inescapable conclusion on the evidence”, that there had been an agreement or tacit understanding that the employees would be re‑engaged after the expiry of the contracts, giving rise to a “global contract”, and the break during the disputed period was therefore an artificial one.[10] On appeal, however, the Court of Appeal disagreed that the inference of a global contract was inescapable or even possible on the evidence.[11]  Since the facts might not have been “fully explored” by the Tribunal, the case was remitted to it for decision.[12]

70.  The Court of First Instance, as a supervisory court over error of law, should in general remit a case if there was a misdirection of law, except where the error could not have affected the outcome (ie it was immaterial), or where the Tribunal properly directed could have come to only one legitimate conclusion on the evidence and findings (including findings that the court may make by inference pursuant to s 35(2)(a)), and then only if one could be practically certain that the relevant evidence could not have been materially affected by the misdirection. 

71.  With the above in mind I turn to consider the contentions of the parties.

(3)  The Commission’s contention

72.  On behalf of the Commission Mr Lui submitted that as all the evidence is now before this court, it can and should simply decide the question whether the decision not to pay the gratuity was irrational or perverse.  Mr Lui placed reliance on Dr Chow’s witness statement below and submitted that it was unchallenged.  It was unchallenged, however, precisely because the Presiding Officer adopted an approach which Mr Lui has now criticised as, and which I accept to be, erroneous.  The evidence was thought irrelevant because the Presiding Officer took the question to be whether in her view there was misconduct justifying non-payment of the gratuity.

73.  As Mr Lui submitted, on the proper approach, the test is in part subjective: Joanne Kay Wood v Jardine Fleming Holdings Ltd (unrep, HCA 12524/1998, 16 February 2001), p 16.  Capriciousness (connoting arbitrariness or domineeringness) and lack of good faith can vitiate the exercise of discretion and found a breach of contract: Clark v Nomura International plc, supra, at §§40‑41; Commerzbank AG v Keen, supra, at §56.  Without the parties’ consent, I cannot proceed on the basis that Dr Chow’s evidence is relevantly uncontentious, or rule out the possibility that, on a remission, his evidence will be challenged and impugned.  Accordingly I reject the Commission’s contention.

(4)  Mr Chok’s contention

74.  On behalf of Mr Chok, Mr Khaw took the position that on the evidence adduced in the Tribunal, the only permissible conclusion is that the Commission breached the contract in not paying the gratuity.  There is therefore no need to remit the matter to the Tribunal.  As I understand his submissions, Mr Khaw made three main points. 

75.  First, he referred to various aspects of breach of natural justice or deficiencies in the processes, as found by the Presiding Officer, leading to Mr Li’s report and to the warning notice issued as a disciplinary sanction.  There was therefore no proper basis for the Commission to find misconduct on the part of Mr Chok.

76.  On the case of the Commission, however, as appears from Dr Chow’s statement, the decision on the gratuity was not part of the disciplinary process.  It was a decision arrived at independently, having taken into account a number of matters.  The disciplinary warning, which was not appealed, was a matter considered.  Dr Chow also stated he listened to the recording himself.  I do not think that on this evidence (which remains to be tested) it can be said that the decision not to pay the gratuity must be perverse or irrational because of the deficiencies in the investigation and report.  Nor did the Presiding Officer so conclude (see §33 above).

77.  Secondly, relying on the decision of the Federal Court of Australia in Bennett v President, Human Rights and Equal Opportunity Commission (2003) 134 FCR 334, Mr Khaw submitted that as a matter of law and fundamental human rights, an employee is entitled to express opinions that are against the policies of his employer, and that freedom of expression cannot be overridden by a contractual duty of fidelity.

78.  In Bennett, the applicant was a public servant employed by the Australian Customs Service and was also the federal president of the Customs Officers Association.  He made various media statements criticising the operations of the Customs and calling for its restructuring.  Pursuant to a regulation that restrained disclosure by a public service employee[13], the Customs issued a direction to him not to make media comments as a customs officer which involved disclosure of information about public business or of anything about which he had official knowledge.  The applicant did not comply and was disciplined.  He complained to the Human Rights and Equal Opportunity Commission but it declined to take action.  The applicant thereupon applied for judicial review of the decision of the president of that commission.

79.  Finn J held that the regulation pursuant to which the Customs had issued the direction was invalid because it infringed the implied constitutional freedom of political communication.[14] However, he held that the applicant’s freedom of expression might be capable of being limited by the requirements of his duty of loyalty and fidelity.  As the Human Rights and Equal Opportunity Commission had not considered and made findings in relation to the question whether the direction issued by the Customs was actually justifiable on that basis, he remitted the matter to the commission since this was an “instance‑specific” question.  The judge nevertheless referred to

“the precepts of loyalty, neutrality and impartiality which are hallmarks of a public service in a system of responsible government and which have been relied upon in other jurisdictions (most notably Canada) in justifying the imposition of restrictions on public servants in exercising freedom of expression, etc”

and said that

“to consider the duty [of loyalty] in a setting such as the present without regard to such precepts would involve a flight from reality”.[15]

80.  Can it be said that the Commission cannot, without acting perversely or irrationally, form an opinion that Mr Chok’s acts at the forum rendered his performance of the employment agreement unsatisfactory?  Satisfactory completion of the agreement is not confined to work within the office premises but extends potentially to all the terms of the agreement.  In my view, the fact that Mr Chok attended the forum on a Saturday morning in his own time does not mean that it could have no impact upon his performance of the agreement. The Code of Conduct specifically refers to activities outside the Commission which may give rise to a perceived conflict or compromise the employee’s ability to act with total objectivity with regard to the Commission’s business, including activities outside the Commission which are in direct opposition to the work of the Commission (see §§D1.4.2 & 1.4.3 of the Code of Conduct quoted in §6 above).

81.  Nor does the fact that the forum could not be freely attended by any member of the public mean that it could have no relation at all to his employment.  The nature of the occasion and number of participants are parameters that the Commission may take into account in forming the relevant opinion under clause 13.1.  It is one thing for an employee to criticise his employer during a private dinner with friends — and the employer may well be acting perversely if he withholds the gratuity for this reason — but it is in my opinion quite another thing for the employee (who has a key role in a supposedly impartial public consultation exercise and who is introduced to the forum as an insider) to denigrate the DLR in front of 50 or 200 seminar participants, to urge them to respond to a number of questions in a particular way, and to offer assistance to make their response appear independent and attract weight.

82.  It seems to me the Code of Conduct does not seek to suppress the freedom of expression of the employee.  It seeks to avoid potential conflict situations between an employee’s outside activities and his work in the Commission.  It requires prior notification of such situation to the supervisor so that the supervisor can decide if the employee should continue to work on the case or project in question (see §§D1.4.4 & 1.4.5 of the Code of Conduct quoted in §6 above).

83.  In my opinion, the answer to the question posed at the beginning of §80 above is “No”.

84.  Thirdly, Mr Khaw submitted that the allegations of breach of confidence were untenable because, insofar as the Commission’s method of counting responses was concerned, Mr Li accepted in the Tribunal proceedings that it had been publicly announced, and insofar as the discussion within the Commission’s working group was concerned, Mr Li accepted it was not of a confidential nature.  Mr Lui accepted that the Commission is bound by that evidence but it does not appear from Dr Chow’s statement that these are matters of major concern leading to the decision not to pay the gratuity.

85.  For these reasons I do not accept the contention that, applying the correct approach, the only possible legitimate conclusion is that the Commission’s decision not to pay the gratuity was perverse or irrational.  In other words, I do not accept that the Tribunal’s order was in any event “plainly and unarguably” the right result notwithstanding the legal errors already discussed.

VII.  CONCLUSION AND ORDERS

86.  For the above reasons, I have come to the conclusion that the Tribunal has erred on the construction of clause 13.1 of the Conditions of Service and on the proper approach to the question whether the Commission breached the contract by not paying the gratuity.  The appeal is therefore allowed.  The order of the Tribunal is set aside and the matter will be remitted to the Tribunal for determination in the light of this court’s judgment.

87.  Having regard to the considerations taken into account in Ali Shoukat v Hang Seng Bank Ltd (unrep, HCLA 112/2004, 20 June 2005) at §§20-24, I would direct on a nisi basis that there be no order as to the costs of the appeal.