TAM KA v. LAM HUNG KWONG AND OTHERS

HCA4389/96

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4389 OF 1996

----------------------

-----------------------

-----------------------

J U D G M E N T

-----------------------

The Plaintiff's claim

1. The Plaintiff claims against the Defendants for the sum of $230,000 being long service payment payable under the Employment Ordinance, Cap.57 by the Defendants to the Plaintiff upon dismissal of the Plaintiff by the Defendants on 13th December 1995. The Plaintiff was employed from 15th March 1972 to 13th December 1995 and at the day of his dismissal was earning a daily wage of $660.

The Defence

2. The Defence was that on 11th December 1995, at the office of the Defendants, the Plaintiff evinced his intention not to be employed by tendering his resignation to the 1st Defendant who was and is the manager of the Defendants' firm.

3. The Defendants also say that by a letter dated 13th December 1995 sent to the Plaintiff by the Defendants' firm, the 1st Defendant, acting in the capacity of manager of the said firm, accepted the Plaintiff's resignation with effect from 13th December 1995.

4. The 2nd Defendant also counterclaims against the Plaintiff for the sum of $101,335 which was the total of the amounts said to have been inflated by the Plaintiff in his claims for wages for the period from 9th April 1994 to 13th December 1995.

The issues

5. The first issue that I have to deal with is did the Plaintiff resign on 11th December 1995, or was he dismissed by the Defendants on 13th December 1995. The evidence on this issue is as follows :

The Plaintiff's evidence :

6. The Plaintiff's evidence was that on 11th December 1995, which was a pay day, he was at the office of the Defendants together with the 1st Defendant and two secretaries. The 1st Defendant instructed him that in future he should charge time that he spent on purchasing materials to the account of Maxim's. He said that he refused. He explained to the 1st Defendant that he would not follow his instruction because he considered that he was employed by the Defendants and not Maxim's and it would be unreasonable to charge Maxim's. The 1st Defendant said three times "Why not", so the Plaintiff took the cheque that he was given and left the office and resumed his duties. He did not resign. He went to the bank to cash the cheque. He said that to his mind what the 1st Defendant said amounted to cheating. He said that he then did two jobs on 11th December and one more job on 12th December and on 13th December, he was paged and informed to attend the office where he was given a letter by one of the secretaries. This is the letter which is at page 14 of the Agreed Bundle and which purported to say that the company had considered the resignation tendered by the Plaintiff on 11th December 1995 and accepted the resignation with effect from the day of the letter, 13th December 1995. Further on in his evidence, the Plaintiff clarified that what the 1st Defendant said on 11th December 1995 was that he said that if the Plaintiff bought materials for Maxim's, then the Plaintiff should charge Maxim's account.

The Defendants' evidence :

7. The 1st Defendant gave evidence that on 11th December 1995, he asked the Plaintiff "Where is the material you purchased on 1st December", he said that he told the Plaintiff that if the material he purchased was used in connection with a project at Maxim's, he should write it down, similarly Sun Tong Lok. The 1st Defendant said that the Plaintiff then said that the 1st Defendant was prejudiced against him, and he [the Plaintiff] had no explanation. D1 said he was persistent and asked the Plaintiff again. The Plaintiff replied in a loud voice "Now I resign. You make calculation and give me my wages." D1 said he should complete his work first and he [D1] then accepted the Plaintiff's resignation.

Defence witnesses

8. The 1st defence witness Miss Chan Siu Ying gave evidence that on 11th December 1995 she saw D1 ask the Plaintiff about his work record on 1st December, about the purchase of materials and how he used the materials. She said the Plaintiff gave no reply and the Plaintiff said "Whenever I do not get assignments very often, I will put down purchasing materials." D1 said that would not be alright and then the two of them had an argument. The Plaintiff then asked the 1st Defendant to make calculations and pay him what was in arrears and he resigned. Then the Plaintiff left.

9. Another defence witness Mr Cheng Lai Man, who was employed by the Defendant company as a carpenter, gave evidence that on the day in question he heard D1 ask the Plaintiff about the receipt that he presented for purchase of materials, and how he used the materials. Then they had an argument about the use of the receipt of purchase of materials. They talked on how or at which shop the materials purchased were used. The Plaintiff then said that he would resign and asked D1 to make calculations and to pay him what he was entitled to.

Assessment of the evidence

10. The two witnesses called on behalf of the Defendants gave no evidence of hearing the 1st Defendant allegedly accepting the Plaintiff's resignation or the 1st Defendant requesting the Plaintiff to finish the jobs that he had already been assigned before leaving the employment of the Defendants. If the Plaintiff in fact tendered his resignation, why would the 1st Defendant bother to ask him to stay on until he finished off the work already assigned to him? The jobs which had been assigned to the Plaintiff could easily have been assigned or reassigned to another cement worker and the Defendant company had two of those in their employ at the time. If there was a resignation tendered on 11th December 1995, which was readily accepted by the 1st Defendant, why did the 1st Defendant, when he wrote to the Plaintiff on 13th December 1995, write in these terms :

"As you have not reported to our company the accurate number of days of work in accordance with the fact, the wages payable for the number of working days have been exaggerated. Our company has given repeated warnings but you have not been able to give a reasonable explanation. There is suspicion of deceiving our company. Moreover you have failed to observe the rules of the company to start working at 9:00 a.m. and finish working at 6:00 p.m. resulting in a loss suffered by the company. On 11th December 1995, our company inquired of you again. Instead of giving a reasonable explanation, you tendered your resignation. After our company has considered it, we accept your resignation with effect from today."

Furthermore, on 12th December, the Plaintiff did some work for the Defendants at Maxim's Palace Restaurant and on 11th and 12th December, he also did work at the Maxim's Shanghai Garden Restaurant, also for the Defendants. In my view, if the Plaintiff did offer to resign on 11th, it is most unlikely that he would have done two more days of work for the Defendants. I therefore find it more probable than not that the Plaintiff did not tender his resignation on 11th December 1995.

11. According to the 1st Defendant, on that day, he asked the Plaintiff where was the material that the Plaintiff purchased on 1st December. The Plaintiff's reply was that he had no explanation. When the 1st Defendant persisted and asked the Plaintiff again, according to the 1st Defendant, the Plaintiff replied in a loud voice "Now I resign". This act of refusing to explain to the 1st Defendant where the material was that he had purchased on 1st December was, at the very worse, one single act of disobedience which did not justify the Defendants' two days later summarily dismissing the Plaintiff. The act on the part of the Plaintiff was not an act showing a wilful disregard of the essentials of the contract of service which amounted to a repudiation of the contract by the Plaintiff - Laws v. London Chronicle (Indicator Newspapers) Ltd. [1959] 1 WLR 698.

Conduct on the part of the employee

12. In So Ching t/a South Sea Co v. Kwan Hang Ching & Anor [1987] 2 HKC 297, Barnett J., at p.299 said :

"What must be looked for, therefore, is whether what has been done by an employee is something which is expressly or impliedly a repudiation of the fundamental terms of the contract such as to justify an instant dismissal. Authority for this is to be found in at least two cases; Pepper v Webb [1969] 2 All ER 216 ...,"

At p.300, Barnett J. said :

"The conduct which is relied upon by an employer for dismissing an employee may be a single incident, such as one wilful refusal to obey lawful order, or it may be the cumulative effect of a series of incidents on the part of an employee. This is illustrated by Pepper v Webb to which I have just referred and which might well be termed 'the last straw case'."

The Plaintiff's conduct

13. The Plaintiff is 67 years of age, and was employed by the Defendants as a cement worker. He said that his main duties were as a plasterer and he also had to carry out removal of tiles. He started working for the 3rd Defendant in March 1972 and he was employed by the 3rd Defendant under an oral agreement. The initial daily wage that he first earned was about $23 to $25. Cheques were issued to him in the name of Ming Tat Decoration Company. He first started to see the 1st Defendant who is the 3rd Defendant's son in the 70's and early 80's. He had not been told by D3 what position D1 occupied in the business, nor had he been told that D3 had transferred his business to his wife, the 2nd Defendant or his son, the 1st Defendant. The Plaintiff knew the 2nd Defendant as Mrs Lam but never saw her in the office of the Defendants.

14. The Plaintiff said that when he worked for D3, he did not have to fill in any records to claim his wages. He was paid according to the work which was done and at that time D3 was the only person who supervised the Plaintiff's work. He said that prior to 11th December1995, he had never been reprimanded by the 1st Defendant. He said that his relationship with the 1st Defendant was cordial and harmonious.

15. As regards the 2nd Defendant's counterclaim for excesses in the claims for wages submitted by the Plaintiff, the Plaintiff gave evidence that for all the time that he worked in the company, on each pay day he was never challenged and he was never warned. He said that it was only after the Defendants sacked him that they came up with the counterclaim. The Plaintiff asked rhetorically why from 1990 to 1993 there were no excessive claims and why is it that the alleged excessive claims only occurred in 1994 and in 1995? He said that after the late 1980's, the 3rd Defendant returned to the company only from time to time and only once every few days and only for a short time.

16. The 1st Defendant gave evidence that he came to Hong Kong in December 1976 and after his arrival in Hong Kong, he started to work for his father, the 3rd Defendant. He said that on 1st April 1990, his father retired because of old age and ill health and his mother, the 2nd Defendant took over the business. His duty was to be the manager and the person in charge of the business. The 2nd Defendant authorised the 1st Defendant to manage the business and the 1st Defendant received a fixed monthly salary of $13,200. He said on 31st March 1990 at 9:00 a.m., the employees were asked to attend the office to receive the wages and at that time the 3rd Defendant and he announced that the 3rd Defendant would retire as from 1st April 1990 and that his mother would take over the business.

17. The 1st Defendant gave evidence that starting from the time the 2nd Defendant took over the business, the system of having to submit records began. He said that he wanted to improve the system so he made it a rule that employees had to fill out work records. He said that before 11th December 1995, the first time that the Plaintiff was warned about the accuracy of his job records, was on the pay day of 1st September 1995. He said on that day the Plaintiff submitted his work record for payment of his wages and D1 noticed that the Plaintiff claimed half a day's wages for a day when there was a typhoon. D1 then warned the Plaintiff that he should keep an accurate record and not exaggerate. He said that the second warning to the Plaintiff arose from the repair works which were done at the home of a Mr Yuen at Pinewood Villas, and these works were done on 12th to 15th inclusive of September 1995. D1 said that the Plaintiff again exaggerated his claim for his work on this particular job. He said he warned the Plaintiff that he should submit records based on actual fact and in detail.

18. D1 said that at the time of initiation of making work record sheets, he had told the Plaintiff that he had to record each job done by him in a day. When he was given a job order, the Plaintiff would be told to make a factual record of the job that he performed.

19. The 1st Defendant admitted that before 1st September 1995, he only spoke to the Plaintiff indirectly in that he instructed the staff of the office to write the job records clearly and he said on many occasions after the Plaintiff obtained his wages, he, D1, instructed the office ladies to phone the Plaintiff to remind him about the accuracy of his job records. He admitted that he allowed the situation to continue for almost five years until he talked to the Plaintiff on 1st September 1995. He admitted that he never before told the Plaintiff to reduce his claims for wages because in the 1st Defendant's view, the work which was claimed should not have taken so long. In respect of the work at Pinewood Villas, the 1st Defendant said that even though he was of the view that the Plaintiff should only have claimed for two days' wages, he, the 1st Defendant, did not seek to deduct two days' wages out of the four claimed by the Plaintiff.

20. The subject matter of the counterclaim by the 2nd Defendant only became apparent to the Defendants after 13th December 1995 when the Plaintiff left the employ of the Defendants. The 1st Defendant in his evidence said that he only started to check the receipts submitted by the Plaintiff after that day.

Conclusion

21. On the evidence as stated above, up to the time when the Plaintiff left the employ of the Defendants on 13th December 1995, the Plaintiff had been warned by the 1st Defendant on only two occasions about inadequacies or excesses in his claims for wages - the first occasion being 1st September 1995 when he was warned by the 1st Defendant that he should keep an accurate record and not exaggerate, and the second occasion in relation to the works done between 12th to 15th September 1995 at Pinewood Villas when he was again warned by the 1st Defendant that he should submit records based on actual fact and in detail. It is noteable that on neither of those two occasions did the 1st Defendant attempt to deduct or withhold from the Plaintiff the amounts that he regarded as being excessive. In the circumstances, it can hardly be said that there was a series of incidents involving the Plaintiff which had the cumulative effect of either a wilful refusal to obey lawful orders or which amounted to a repudiation of the fundamental terms of the contract. The fundamental terms of the contract between the Plaintiff and the Defendants was that he was employed as a cement worker by the Defendants and insofar as that was concerned, he did carry out all the assignments allotted to him by the 1st Defendant. I therefore find that there were no acts on the part of the Plaintiff which was in law sufficient to justify the Defendants summarily dismissing the Plaintiff under s.9 of the Employment Ordinance, Cap.57. I therefore find that the Plaintiff is entitled to be paid the sum of $230,000 for long service payment payable under the Employment Ordinance, Cap.57.

The Counterclaim

22. The counterclaim totals $101,335 and is the total of all the items for wages claimed by the Plaintiff which the 2nd Defendant says are either excessive or had no factual basis. All the items disputed by the 2nd Defendant had been set out in the table submitted to the Court from which it can be seen that the first item is dated 9th April 1994 and the last 7th December 1995. What the 2nd Defendant has done is where she feels that a claim is excessive, she has deducted half a day's wages in respect of that claim, namely, $285 and where she feels that the claim should not have been made, she has deducted one day's wages in respect of the claim, namely, $570. These claims for wages submitted by the Plaintiff were handed into the office of the Defendants on each pay day and the two secretaries working in the office would check these claims, and if they are satisfied that the claims should be paid, would then proceed to pay the Plaintiff. Throughout the time that the Plaintiff was employed by the Defendants, he was never challenged or queried, or had any of his claims rejected by the Defendants. According to the 1st Defendant, the only two occasions when the Plaintiff was warned about inadequacies in his pay claims were the two occasions mentioned above. It was only after the Plaintiff left the employ of the Defendants that the 1st Defendant began to analyse retrospectively the pay claims of the Plaintiff. Even though it is said that the demand for the counterclaim was made seven days before the Plaintiff commenced his Labour Tribunal claim, in my view, the Defendants must have realised that once the Plaintiff left the employ of the Defendants, under controversial circumstances on 13th December 1995, it was inevitable that a claim of some sort would be lodged with the Labour Tribunal.

23. The 2nd Defendant in Court has tried to demonstrate, by going through the details of most of these disputed claims, that a claim was either excessive or had no basis in fact. However I bear in mind that under the employment contract between the parties, the minimum unit for payment to the Plaintiff was half a day's wages, so that even if he did only half an hour's work in a half day he would still receive a full half day's pay. The other matters that I take into account are :

(1) The flexibility of the nature of the Plaintiff's work as a cement worker and as a decoration worker. This means that months after the event, the Court should not accept the contention that a particular job would only have required at the maximum a half day's work because the job description described it as, for instance, "replacing ten tiles". There are many factors which come into play and which would be impossible for the Plaintiff at this late stage to be able to remember in fine detail, for instance, whether the work could have commenced at a particular time because of a variety of factors like whether the restaurant where the work to be done was comparatively free for the work to be done, or whether there were other matters which impeded the work, for instance, the materials were not present or the materials did not fit the particular work which was required. There might have been other factors which have a bearing, for instance, some preliminary works had to be done which took longer than expected, or the Plaintiff had to wait for cement to dry, or the Plaintiff had to wait for the arrival of another worker and matters such as these.

(2) In purchasing materials, it is not as easy as the 2nd Defendant has attempted to demonstrate in Court, for instance, when the 2nd Defendant produced a receipt to show that on a particular day the materials were purchased at a shop in Wan Chai, therefore the Plaintiff's claim for a day's wages in respect of the purchase of those materials would be excessive. As I pointed out earlier, because of the lapse of time, the Plaintiff would not be able to remember all the details. It may well be that before the materials were in fact purchased from a particular shop, the Plaintiff had to spend a lot of time going around shops to find the suitable material and if that could be found in a particular shop, the shop might not have the material in stock.

(3) It was accepted by the 1st Defendant that if the Plaintiff did do preparation work in respect of an assignment in the future, then the Plaintiff should be entitled to be paid for that preparation work. According to the Plaintiff, and I accept his evidence, quite often he had to do preparation work for future assignments of work and quite often he had to transport tools, or materials necessary for that particular job to the site in question.

Because of the delay on the part of the 2nd Defendant in prosecuting this claim against the Plaintiff, I find that it would be unjust and unfair to the Plaintiff to allow the 2nd Defendant to pursue this claim at this late stage. For all of the above reasons, I will dismiss the 2nd Defendant's counterclaim.

Which Defendant should be liable

24. On the evidence adduced before me, I find that the sum of $230,000 payable to the Plaintiff should be paid by the 2nd Defendant as the person who is on record as the owner of the business. As regards the 3rd Defendant, the evidence is after 1st April 1990, he retired from the business and very rarely returned to the Defendant company and stopped giving orders to the employees on how the work should be done. The evidence is that the 1st Defendant acted as the manager and the person in charge of the business and was in full control of the business. However, in view of the relationship between him and the 2nd Defendant of mother and son, it is only natural that he should have acted as the person in charge of the business since his mother never returned to the company and clearly was not a person who had any knowledge of the business. The evidence however does not show that the 1st Defendant shared in the profits of the business. Even if he was receiving money from the 2nd Defendant, that would be quite natural, having regard to the relationship between the two.

25. In my judgment, therefore, the evidence does not establish that the 1st Defendant is a secret partner of the firm. I therefore rule that liability to pay the $230,000 to the Plaintiff should rest only with the 2nd Defendant. I accept the Plaintiff's evidence that the change of ownership of the business was not announced to him or to the other employees of the company, and that he, the Plaintiff, was never aware of the 2nd Defendant becoming the owner of the business until after the commencement of these proceedings. The 3rd Defendant was his initial employer and as far as the Plaintiff was concerned, the 3rd Defendant was still around and the business was run by his son, the 1st Defendant. The Plaintiff was entitled to suspect that the 1st Defendant was a secret partner of the firm. In the circumstances, I will make a sanderson order that the 2nd Defendant should pay the costs of the 1st and 3rd Defendants and the Plaintiff's costs of prosecuting the claim against all the Defendants. There will be judgment for the Plaintiff in the sum of $230,000 together with interest at 10% per annum from 13th December 1995 to the date of judgment and thereafter at the judgment rate to date of payment.