EVELYN SEMANA BACHICHA v. POON SHIU MAN HENRY

CACV 55/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 55 OF 2000

(ON APPEAL FROM DCCJ 1546/99)

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J U D G M E N T

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Ribeiro JA:

1. This is an appeal involving an employment dispute between the plaintiff, a domestic helper from the Philippines, and her employer, the defendant.

2. Proceedings having been commenced by the plaintiff in the Labour Tribunal on 1 December 1998, the matter was transferred (for reasons mentioned later) to the District Court on 7 January 1999. After a three day trial at which neither party was legally represented, H H Judge C B Chan gave judgment for the plaintiff on 10 September 1999, holding that she had been constructively dismissed and awarding her damages totalling $51,629.00, plus interest and fixed costs in the sum of HK$896.00.

3. The defendant appeals against that judgment on two principal grounds. First, he contends that the parties had reached a binding settlement agreement at a conciliation meeting at the Labour Department on 20 October 1998, which should have precluded her claim (but which agreement the Judge wrongly ordered to be set aside). Secondly, he contends that the quantum of the damages awarded cannot be justified.

4. The plaintiff also appeals, complaining that the costs awarded should not have been confined merely to fixed costs.

A. The facts found by the Judge

5. At the trial, there was a considerable conflict of evidence. Most of the events giving rise to the dispute concerned incidents involving the plaintiff and Wong Wai-kwan ("Madam Wong"), the defendant's wife, who on a day-to-day basis acted as the plaintiff's boss. The Judge accepted all the plaintiff's evidence and rejected conflicting evidence given by the defendant or by Madam Wong.

6. The Judge's findings, including her finding of constructive dismissal, are not the subject of appeal. The issues raised by Mr Luiz da Silva Pedruco, appearing on the defendant's behalf, concern the legal consequences which flow from her findings. Accordingly, the facts may be summarised as follows, taken largely from the Judge's recitation of the plaintiff's evidence.

7. The contract whereby the plaintiff took up employment with the defendant was dated 30 September 1997 and appears to have been signed by the plaintiff on 7 October 1997, verified by a Philippines Labour Attache. It was of a two year duration commencing from the date of the plaintiff's arrival in Hong Kong, at the monthly salary of $3,860.00, terminable on one month's notice or payment in lieu. Material clauses included the following, namely :-

(1) Clause 3, which required the plaintiff to work and reside in the defendant's residence at G/F, 3B Lok Lo Ha Village, Fo Tan, New Territories.

(2) Clause 6, which drew attention to the plaintiff's entitlement to all rest days, statutory holidays and paid annual leave as specified in the Employment Ordinance.

(3) Clause 8, which obliged the defendant to pay or reimburse to the plaintiff :-

"the costs of preparing all necessary documents, which include medical examination fees, authentication fees by the relevant Consulate, visa and other processing fees".

(4) Clause 11, which provided for termination by notice or payment in lieu as follows :-

"Either party may terminate this contract by giving not less than one month's notice in writing or by paying the equal number of month's wages in lieu."

(5) Clause 13, which provided :-

"In the event of termination of this contract, both the Employer and the Helper shall give the Director of Immigration notice in writing within 7 days of the date of termination. A copy of the other party's written acknowledgment of the termination shall also be forwarded to the Director of Immigration."

(6) Clause 14, which stated : -

"Should both parties agree to enter into a re-engagement contract, the Helper shall, before any such further period commences and at the expense of the Employer, return to his/her place of origin for a paid/unpaid vacation of not less than 7 days, unless prior approval for extension of stay in Hong Kong is given by the Director of Immigration."

(7) Clause 16, dealing with contractual variations as follows :-

"Save for the following variations, any variation or addition to the terms of this contract during its duration shall be void unless made with the consent of the Commissioner for Labour in Hong Kong:

(a) a variation of the Employer's residential address stated in clause 3 by mutual agreement and upon notification in writing being given to the Director of Immigration;

(b) a variation of the period of employment stated in clause 2 through an extension of the said period by mutual agreement."

8. On 26 February 1998, the Plaintiff came to Hong Kong to commence work. It follows that in the ordinary course, her contract would have run until 26 February 2000.

9. However, the employment relationship lasted only just over 6 months before the plaintiff's constructive dismissal. It is in fact clear that from the start, the plaintiff was subjected by her employers to an oppressive and exploitative work regime, in disregard of her legal rights. The Judge described her working conditions as follows :-

" ...... her employer and his wife had 2 children, one boy aged 9 and one girl aged 8. They also had two dogs as well as 20 boxes of pet mice. The animals were kept on the balcony.

Her female employer was always bad-tempered with her. Even for a small matter she would get angry with her, push her, shout at her and pull her hair. The two kids were always kicking her and punching her.

She had a lot of work each day. She woke up at 6 a.m. in the morning. Her work included taking the 2 dogs for walks 3 times a day; washing and cleaning 20 boxes wherein the pet mice were kept including putting in the feed and fresh water. Cleaning the balcony and things therein, taking the daughter to school from Fo Tan to Yau Ma Tei; washing clothes, ironing, cooking breakfast, lunch and dinner, general cleaning of the house; tidying up; helping the children to bathe; help the children with their home work; washing the dishes and pots and pans after meals. She had to cook for the two dogs in the evening and feed them before taking them out for a walk. She often found that she would not finish work until late into the evening because of the volume of work.

On her rest days, she was required to work from 6 a.m. until 10:30a.m. before she could go out. When she returned at 8:30 p.m. she had to work until mid-night ......

...... she was required to clean three other premises from time to time. The addresses were:-

1. Flat C, 10th Floor, Hope Yick Centre in Hop Yick Road, Yuen Long, N.T.

2. Flat E, 3rd Floor, Block E, On Ning Building, Shatin Centre, N. T.

3. Flat B4, 23rd Floor, in a flat in Pok Fu Lam near St. Paul's College.

In respect of above three premises she had to clean the floor, all the windows, cabinets, walls, kitchen and bathroom.

She was feeling very tired all the time. Of course, she was unhappy. She denied the allegation of the Defendant that she was slow in her work. She stated that there was just too much work to do."

10. Madam Wong was unhappy with the plaintiff's work. It appears that her dissatisfaction had much to do with her own notions of status and of a perceived lack of respect shown by the plaintiff. For example, as found by the Judge:-

"She found the Plaintiff's ability to understand her was very low. She found the Plaintiff was impolite because she did not greet her and her children 'Good Morning' each morning. She felt that was the appropriate way for the Plaintiff as a domestic helper to behave. The Plaintiff stated that she did not intentionally fail to say 'Good Morning' but she was usually very occupied with work and was so busy that she failed to say 'Good Morning' only sometimes. DW1 also stated that she asked her daughter as to whether the Plaintiff smiled when she saw the daughter when picking her up from school and the daughter had informed her that she did not. DW1 stated that when they take the daughter to school together, when the Plaintiff got off the bus, the Plaintiff did not say goodbye to her."

11. Madam Wong also complained that the plaintiff was too slow in her work and accused her of lacking security consciousness. However, none of these complaints were of any weight and in truth, Madam Wong had apparently, for whatever reason, developed somewhat violent feelings of personal antagonism towards the plaintiff. She decided to replace the plaintiff with a new domestic helper from the Philippines and was informed by an employment agency on 26 August 1998 that the replacement would be arriving in early October.

12. Madam Wong thereupon gave the plaintiff notice to terminate her employment. A handwritten letter dated 1 September 1998 and signed by the defendant was handed to the plaintiff (according to the defendant on 30 August, but according to the plaintiff on 2 September) stating that her last day of work would be on 30 September 1998. The plaintiff was pressed to sign at the foot of the letter under the words "Accepted & agreed". She refused.

13. On 6th September 1998 Madam Wong again pressed the plaintiff to sign, leading to an incident described as follows by the Judge:-

"On the 6th Sept. 1998, DW1 asked the Plaintiff to sign it. She insisted that the Plaintiff signed it then. The Plaintiff refused. DW1 lost control because she was very angry with her. She pushed the Plaintiff and the Plaintiff fell and she hit against the metal arm of the sofa and her right rib got hurt. When the Plaintiff got up, DW1 pulled her hair many times and spat on her face. Then the Plaintiff told DW1 that she wanted to telephone the agency to ask if she signed the one month's notice or not. She did not tell the agency that DW1 had hurt her as DW1 was standing next to her. The agency told the Plaintiff to sign it. The Plaintiff signed it."

14. It was the plaintiff's evidence that she was very frightened by this episode. When, on 8th September 1998, Madam Wong instructed her to prepare to go to clean the flat in Shatin, the plaintiff refused on the basis that such work would be a breach of her visa conditions. The plaintiff called the police, telling them that she was very scared of her employer. After the police left, Madam Wong vented her anger on the plaintiff, pushing her and "pointing her finger on her cheeks". This led to the plaintiff again summoning the police, after which she became too scared to remain at her employer's premises and moved instead to a shelter for domestic helpers run by the Philippines Consulate.

15. On the basis of the abovementioned facts, the Judge found that the plaintiff had been constructively dismissed on 8 September 1998. As I have indicated, that conclusion and the findings which underlie it are not challenged.

B. The alleged compromise

16. Mr Pedruco argued that the plaintiff was precluded from bringing her claim because, even assuming that she had been constructively dismissed, the parties had subsequently entered into a binding agreement whereby all claims had been settled. He also complained that his client had been prejudiced by the Judge deciding to enter into the question of whether the compromise agreement should be set aside without proper notice to his client. I shall deal first with the substantive complaint before considering the procedural objection.

17. There is no doubt that a document which purported on its face to be an agreement compromising all the plaintiff's claims was signed by the parties. The question is whether the Judge was right to hold that such agreement had to be set aside. In my view, she was.

18. The agreement relied on was signed on 20 October 1998 at a conciliation meeting conducted at the Labour Department by a Labour Relations Officer ("the Officer") and attended by the plaintiff, the defendant, Madam Wong and a representative of the Philippine Consulate who helped with translation.

19. The document states that the plaintiff agreed to accept the sum of $975.00 in cash in full and final settlement of all claims against the defendant. It was signed by the Officer as witness.

20. The evidence was that before the document was signed, the Officer had informed those present that she was not a judge and could not resolve disputed factual allegations. However, she indicated a willingness to offer advice as to the parties' rights on the basis of facts which were undisputed. It appears that she then proceeded on the footing that whereas the plaintiff's allegations of constructive dismissal were contested and therefore outside her ambit, it was not in dispute that the employer had given the plaintiff a month's notice and that the plaintiff had, during that period, left her employers' premises.

21. It seems that it was on that basis that the Officer told the plaintiff that the latter had a net financial liability to her employer as a result of her walking out on her job and that it was in her interests to accept her employer's offer of air and bus fares back to the Philippines in settlement of her claim.

22. This advice, which echoed the defendant's own assertions at the meeting, obviously failed accurately to convey the legal position. As a matter of commonsense, legal advice cannot be given on the foundation of only such part of the facts as may happen to be undisputed. The disputed facts, subsequently found by the Judge in our case to have been proved and not now challenged, entirely changed the picture: the employee did not wrongfully walk out on her employers, she was unlawfully driven out of her job and so had been constructively dismissed.

23. The plaintiff had been led to believe that she was in law taken to have walked out on her job and had consequently incurred a net liability to the defendant, her claim being disregarded. She therefore signed the compromise agreement in the mistaken belief that it represented a concession by her employer going beyond anything she was entitled to. She would not have signed the document if she had realised that her version of events would be entertained and if accepted, would lead to liability falling on the defendant.

24. Given the Judge's unchallenged finding of constructive dismissal, the fact that the plaintiff was labouring under such mistake must have been known to the defendant since he knew the facts behind the plaintiff's leaving, which constituted the constructive dismissal.

25. The defendant argued that any misrepresentation was made by the Officer and was not attributable to the defendant. The Judge rejected this submission. She applied In re Roberts [1905] 1 Ch 704, where a family solicitor was held to be the common agent of members of a family being simultaneously advised. It was held that wrong advice given by such solicitor as to the rights of any of the family members, inducing them to enter into an agreement with the others would be grounds for setting aside such agreement.

26. I doubt whether this is a sufficiently similar case to justify a finding of agency. Nonetheless, in my view, the compromise agreement cannot be allowed to stand because it was, in the circumstances, an unconscionable bargain.

27. The Privy Council in Hart v O'Connor [1985] AC 1000, explained the doctrine of unconscionable bargains in the context of the principles of equity as follows :-

"In the opinion of their Lordships it is perfectly plain that historically a court of equity did not restrain a suit at law on the ground of 'unfairness' unless the conscience of the plaintiff was in some way affected. This might be because of actual fraud (which the courts of common law would equally have remedied) or constructive fraud, ie conduct which falls below the standards demanded by equity, traditionally considered under its more common manifestations of undue influence, abuse of confidence, unconscionable bargains and frauds on a power. (cf Snell's Principles of Equity, 27th ed (1973), pp 545 et seq) An unconscionable bargain in this context would be a bargain of an improvident character made by a poor or ignorant person acting without independent advice which cannot be shown to be a fair and reasonable transaction." (at p 1024)

28. Lord Brightman, who gave the advice of the Board, stressed (at pp 1024 and 1028) the need, not merely for inequality and an improvident bargain, but also an element of equitable fraud, victimisation, taking advantage, overreaching "or other description of unconscionable doings" to justify intervention by the court.

29. In my judgment, such unconscionability was present in this case. Neither party was legally represented when the agreement was signed. The plaintiff was a person with an economic and social disadvantage, and with a marked inequality of bargaining power, when compared with her employer. At the meeting, the defendant, while knowing full well the circumstances which, as the Judge later found, led to the plaintiff being driven out of her job, contended that the plaintiff was liable to compensate him for walking out of the job and sought and obtained the Officer's support for his position. In consequence, the plaintiff was led to accept an improvident agreement limiting her compensation to a paltry $975 in purported full and final settlement of all claims against the defendant. The employer therefore took advantage both of the ignorance of the plaintiff and of the Officer's faulty advice to secure for himself an oppressive bargain by unconscionable means. To my mind, this suffices to bring the case into the exceptional class of cases where the court will intervene to set the bargain aside. In Arrale v Costain Civil Engineering Ltd [1976] 1 Lloyd's Rep 98 at 102-103, Lord Denning MR applied the principles in a similar case involving an employee purportedly signing away common law rights of suit. (See also generally, Chitty, op cit, §7-075 to §7-088).

30. Turning to the procedural complaints, Mr Pedruco argued that the Judge's determination of the application to set aside the agreement had taken the defendant by surprise and that he was prejudiced by not having had the opportunity of calling the Officer in question.

31. I do not consider that complaint justified. The matter came before the Labour Tribunal on two occasions. Each time, the defendant sought to rely on the compromise agreement and each time the plaintiff indicated that she had entered that agreement under a misapprehension as to the viability of her claim for constructive dismissal. The Presiding Officer transferred the matter to the District Court on the express and sole ground that his tribunal lacked jurisdiction to deal with setting aside the settlement agreement.

32. It is therefore impossible to see how the defendant can have been taken by surprise when, at the start of the District Court hearing the first issue raised by the Judge was as to whether the agreement should be set aside. The defendant had ample opportunity to arrange for the Officer to give evidence. He did not ask for any adjournment and did not tell the Judge that he wanted to call the Officer.

33. Moreover, Mr Pedruco was unable to indicate what material evidence not before the Judge the Officer would have been called to give. Before this Court, there appeared to be no dispute as to what had transpired at the conciliation meeting, the relevant facts being as set out above. I am therefore unpersuaded that any prejudice was suffered by the defendant as a result of the Judge determining the setting aside issue at the start of the hearing,

The award of damages

34. The Judge's award totalling $51,629.00 (plus interest and fixed costs) comprised (i) $46,577.00 representing damages for constructive dismissal equivalent to the wages payable under the employment contract between the date of the constructive dismissal (8th September 1998) and the date of the judgment (10th September 1999); (ii) outstanding wages of $1,672.00 for the period from 27th August 1998 to 8th September 1998; (iii) $1,305.00 representing the air fare back to the Philippines; (iv) $400.00 as reimbursement for a medical examination payable under clause 8 of the contract; and (v) reimbursement of $1,675.00 representing the air fare to Hong Kong paid for by the plaintiff plus a day's travel allowance of $30.00 to cover the expenses of her travel to Hong Kong.

35. The only surviving ground of appeal in the defendant's Notice of Cross-Appeal is that the Judge was "wrong in law in holding that the Plaintiff has suffered continuing financial losses as a result of the constructive dismissal." The appeal is therefore limited to challenging the award of $46,577.00 as damages for constructive dismissal mentioned above. That was an award which the Judge based on the decision of the House of Lords in Malik v Bank of Credit and Commerce International SA [1998] AC 20 and the question is therefore whether on the present facts, the Judge's award is justified by the principles referred to in that authority. As Malik is a recent decision in an area where the law is still developing, it is necessary to examine the principles presently discernible from the cases.

C. Damages for wrongful dismissal

36. Before the Malik decision, discussion of the remedy at common law for breach of an employment contract tended to focus almost exclusively on damages for wrongful dismissal. Such relief was generally modest in nature and extent. As it is put in Chitty, 28th Ed, §39-179 :-

"The normal measure of damages is the amount the employee would have earned under the contract for the period until the employer could lawfully have terminated it, less the amount he could reasonably be expected to earn in other employment."

That principle reflects two well-established rules as to the measure of damages for breach of contract. The first is that an award of damages aims at placing the innocent party financially in the same position he would have been in if the contract had been duly performed. Thus, in Radford v De Froberville [1977] 1 WLR 1262 at 1268, Oliver J stated as follows :-

"As to principle, I take my starting point from what, I think, is the universal starting point in any inquiry of this nature - that is to say, the well known statement of Parke B in Robinson v. Harman (1848) 1 Exch 850, 855 which is in these terms:

'The rule of common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.'"

37. The second well-known principle reflected in the usual measure of damages for wrongful dismissal is expressed in Chitty, op cit, §27-036, as follows :-

"If the defendant fails to perform, when he had an option to perform the contract in one of several ways, damages are assessed on the basis that he would have performed in the way which would have benefited him most, e.g., at the least cost to himself."

38. Applying those principles, it has long been the case that where an employer repudiates a contract of employment by wrongful dismissal and where the contract could otherwise have been lawfully determined by giving proper notice or making payment in lieu, damages for the wrongful dismissal are measured by what the employee would have received if the employer had instead lawfully terminated the employment by such notice or payment in lieu. One does not, for instance, compute the damages by postulating that the employer would have kept the employee in the job until the contract lawfully expired (assuming that damages so computed would have been greater). Such principles continue to govern cases which one may describe as involving "wrongful dismissal simpliciter".

D. The Malik decision

39. What the Malik decision stresses is that the remedy in damages for breach of a contract of employment is not restricted to damages for wrongful dismissal. The general measure of damages rules in the law of contract are applicable to other types of breaches giving rise to other types of pecuniary loss.

40. Thus, in Malik, the plaintiffs' entitlement to notice money and statutory redundancy pay was not in issue (see [1998] AC 20 at 33 and 44). The nature of their claim was summarised by Lord Steyn (at p 43) as follows :-

"The claim was for damages for pecuniary loss allegedly caused by the bank's breach of an implied contractual obligation of mutual trust and confidence. The foundation of the claim was the assertion that the bank had been operated in a corrupt and dishonest manner and that, despite the personal innocence of the employees, they have subsequently been unable to obtain employment in the financial services industry. The applicants described their claims as being for 'stigma compensation.'"

The House of Lords upheld the existence of the implied obligation relied on. In Malik the term took the form of "an implied obligation to its employees not to conduct a dishonest or corrupt business", but as Lord Nicholls pointed out (at pp 34-35), such a term was :-

" ...... no more than one particular aspect of the portmanteau, general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner the employment contract implicitly envisages."

Lord Steyn also stated the obligation in general terms, based on formulations developed by the lower courts, as follows :-

"It is expressed to impose an obligation that the employer shall not:

'without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee:' see Woods v W M Car Services (Peterborough) Ltd [1981] ICR 666, 670 (Browne-Wilkinson J), approved in Lewis v Motorworld Garages Ltd [1986] ICR 157 and Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 1 WLR 589."

Given the generality of the implied duty, breaches may involve conduct taking many forms. Lord Nicholls (at p 35) put it as follows :-

"The trust and confidence required in the employment relationship can be undermined by an employer, or indeed an employee, in many different ways ...... The conduct must, of course, impinge on the relationship in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer. That requires one to look at all the circumstances."

As Lord Steyn put it (at p 46) :-

" ...... the implied obligation as formulated is apt to cover the great diversity of situations in which a balance has to be struck between an employer's interest in managing his business as he sees fit and the employee's interest in not being unfairly and improperly exploited."

However, the obligation has its limits (p 53):-

" ...... the implied mutual obligation of trust and confidence applies only where there is 'no reasonable and proper cause' for the employers conduct, and then only if the conduct is calculated to destroy or seriously damage the relationship of trust and confidence."

If a breach of the implied obligation is established, the usual requirements of establishing causation linking the breach with a loss that is not too remote and taking due mitigation into account, will apply :-

"In order to succeed at trial the applicants will have to establish not only a breach of the obligation, which caused them financial loss, but also that such loss is not too remote...... Mitigation is, of course, another potential limiting principle to the employees' claims." (per Lord Steyn at pp 49-50)

E. Malik and Addis

41. There was much discussion in their Lordships' speeches (and also subsequently in cases like Johnson v UNISYS Ltd [1999] ICR 809) of the extent to which the earlier House of Lords decision in Addis v Gramaphone Co [1909] A.C. 488 was inconsistent with the approach adopted in Malik. As Lord Nicholls (at p 38) stated of Addis :-

"...... The case [i e, Addis] is generally regarded as having decided, echoing the words of Lord Loreburn LC, at p 491, that an employee cannot recover damages for the manner in which the wrongful dismissal took place, for injured feelings or for any loss he may sustain from the fact that his having been dismissed of itself makes it more difficult for him to obtain fresh employment. In particular, Addis's case is generally understood to have decided that any loss suffered by the adverse impact on the employee's chances of obtaining alternative employment is to be excluded from an assessment of damages for wrongful dismissal ...... "

He distinguished Addis (at p 39) as follows :-

"In my view these observations cannot be read as precluding the recovery of damages where the manner of dismissal involved a breach of the trust and confidence term and this caused financial loss. Addis v Gramophone Co Ltd was decided in the days before this implied term was adumbrated. Now that this term exists and is normally implied in every contract of employment, damages for its breach should be assessed in accordance with ordinary contractual principles. This is as much true if the breach occurs before or in connection with dismissal as at any other time."

Lord Steyn also distinguished Addis (at p 51) :-

"There is a common proposition in the speeches of the majority. That proposition is that damages for breach of contract may only be awarded for breach of contract, and not for loss caused by the manner of the breach. No Law Lord said that an employee may not recover financial loss for damage to his employment prospects caused by a breach of contract. And no Law Lord said that in breach of contract cases compensation for loss of reputation can never be awarded, or that it can only be awarded in cases falling in certain defined categories. Addis's case simply decided that the loss of reputation in that particular case could not be compensated because it was not caused by a breach of contract: Nelson Enonchong, 'Contract Damages for Injury to Reputation' (1996) 59 MLR 592, 593. So analysed Addis's case does not bar the claims put forward in the present case."

42. The basis upon which the House of Lords in Malik distinguished the Addis decision illuminates the principle that their Lordships were laying down. Addis was decided solely on the basis of a wrongful dismissal, the implied trust and confidence term not having then been adumbrated. It was therefore what I have referred to as a "wrongful dismissal case simpliciter".

43. The plaintiff in Addis was employed by the defendants as manager of their business at Calcutta for a fixed weekly salary plus a commission on the trade done. He could be dismissed by six months' notice. The employer terminated the employment by giving him six months' notice, immediately appointed a successor and prevented him from continuing to act manager. This was a wrongful dismissal since the employers thereby deprived him of a chance to earn commission. In such circumstances, the House of Lords confined his remedy to damages representing the commission he was estimated to have lost.

44. In other words, in Addis the breach related simply to the unlawfulness of the termination. The employer failed properly to operate the notice provisions of the contract so as to enable the employee to earn his due salary and commission over that period or to compensate him fully in lieu. The contract damages principles mentioned above therefore dictated that he be compensated by being awarded the commission which he would have earned if the contract had been lawfully performed by the employer properly invoking the notice provision.

45. The Malik decision emphasises that where the breach does not relate merely to unlawfulness in the termination but involves a breach of some other obligation causing the employee loss going beyond the "premature termination losses" that usually flow from a wrongful dismissal, damages may properly be recovered in respect of such different or further losses, provided they are causally attributable to the breach and not too remote.

46. This approach to contract damages, namely, one which relates the quantum of recoverable damages to the particular breaches constituting the cause of action, was recently stressed by the House of Lords in a different context in Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191. That was a case about the extent of the liability for breach of contract of a valuer who had provided a lender with a negligent overvaluation of property offered as security for the loan. Lord Hoffmann, with whom the other Law Lords agreed, stated (at p 210) as follows :-

"Much of the discussion, both in the judgment of the Court of Appeal and in argument at the Bar, has assumed that the case is about the correct measure of damages for the loss which the lender has suffered. The Court of Appeal began its judgment, at pp. 401-402, with the citation of three well known cases (Robinson v. Harman (1848) 1 Exch. 850, 855; Livingstone v. Rawyards Coal Co. (1880) 5 App.Cas. 25, 39; British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co. of London Ltd. [1912] A.C. 673, 688-689) stating the principle that where an injury is to be compensated by damages, the damages should be as nearly as possible the sum which would put the plaintiff in the position in which he would have been if he had not been injured. ...... I think that this was the wrong place to begin. Before one can consider the principle on which one should calculate the damages to which a plaintiff is entitled as compensation for loss, it is necessary to decide for what kind of loss he is entitled to compensation. A correct description of the loss for which the valuer is liable must precede any consideration of the measure of damages. For this purpose it is better to begin at the beginning and consider the lender's cause of action."

Accordingly, it is necessary in the employment context first to identify the specific obligation breached and the extent of loss caused by the breach before considering what damages are recoverable under the measure of damages rules. As Lord Hoffmann stated in the Eagle Star case (at p 212) :-

"In the case of an implied contractual duty, the nature and extent of the liability is defined by the term which the law implies."

Adopting this approach, one sees that the House of Lords' restricted view of what damages were available in Addis flowed from the fact that the claim was founded simply on wrongful dismissal. That decision therefore does not encompass and should not be taken to exclude the recoverability of differently calculated damages based on breach of a different obligation, resulting in a different kind of pecuniary loss.

47. In my view, it follows from the foregoing analysis that a given set of facts may constitute both kinds of breaches giving rise simultaneously to separate entitlements to damages, each independently computed, but subject obviously to the avoidance of any double recovery. The employer's wrongful conduct might constitute a wrongful dismissal (particularly in the form of a constructive dismissal) and at the same time, a breach of the implied trust and confidence term, the latter causing continuing financial loss not confined by the usual wrongful dismissal measure. This was recognised in Malik (at p 36) by Lord Nicholls as follows :-

"The starting point is to note that the purpose of the trust and confidence implied term is to facilitate the proper functioning of the contract. If the employer commits a breach of the term, and in consequence the contract comes to an end prematurely, the employee loses the benefits he should have received had the contract run its course until it expired or was duly terminated. In addition to financial benefits such as salary and commission and pension rights, the losses caused by the premature termination of the contract ('the premature termination losses') may include other promised benefits, for instance, a course of training, or publicity for an actor or pop star. Prima facie, and subject always to established principles of mitigation and so forth, the dismissed employee can recover damages to compensate him for these promised benefits lost to him in consequence of the premature termination of the contract. ...... Exceptionally, however, the losses suffered by an employee as a result of a breach of the trust and confidence term may not consist of, or be confined to, loss of pay and other premature termination losses. Leaving aside injured feelings and anxiety, which are not the basis of the claim in the present case, an employee may find himself worse off financially than when he entered into the contract. The most obvious example is conduct, in breach of the trust and confidence term, which prejudicially affects an employee's future employment prospects. The conduct may diminish the employee's attractiveness to future employers."

F. Applying the principles to this appeal

48. In my judgment, the conduct of the defendant, through Madam Wong to whom he had delegated day-to-day supervision of the plaintiff employee, was such as to constitute both a constructive dismissal and a breach of the implied trust and confidence term. As described in detail by the Judge, the plaintiff was subjected to an oppressive work regime, denied proper rest days to which she was lawfully entitled and regularly pressed to obey work instructions which were neither reasonable nor lawful. She was subjected to physical and psychological abuse of a degrading and frightening nature culminating in the incidents of 6th and 8th September 1998 which constituted a constructive dismissal. In my view, such conduct, taken as a whole and culminating in such constructive dismissal, was also clearly inconsistent with and calculated to undermine the trust and confidence required for the employment relationship to continue in the manner that the employment contract implicitly envisaged.

49. Such conduct by employers is wholly unacceptable. This is particularly so in relation to a class of employees such as foreign domestic helpers who often find themselves in a peculiarly vulnerable state, being foreigners and possibly newcomers to Hong Kong, unable to speak the local language, without family or friends here, having little money and being wholly dependent on their employers for food, shelter, income and eventual repatriation. In this context, the implied obligation of mutual trust and confidence is of particular importance, as Lord Nicholls noted (at p 37) :-

"An employment contract creates a close personal relationship, where there is often a disparity of power between the parties. Frequently the employee is vulnerable. Although the underlying purpose of the trust and confidence term is to protect the employment relationship, there can be nothing unfairly onerous or unreasonable in requiring an employer who breaches the trust and confidence term to be liable if he thereby causes continuing financial loss of a nature that was reasonably foreseeable."

Plainly, in consequence of her employer's conduct the plaintiff is entitled to damages for wrongful dismissal on the usual measure. She is also entitled to damages to the extent that she suffered any additional pecuniary loss which is not too remote as a result of the defendant's breach of the implied trust and confidence term by driving her out of her employment in the circumstances discussed.

50. The Judge found that she had indeed suffered such additional loss as follows :-

"The Plaintiff's ability to enter into the job market to mitigate her loss was curtailed as it is not easy to obtain the Immigration Department's approval to process any contract of employment which she may enter into whilst she is staying in Hong Kong in order to await the outcome of her action until such time as her case is completed. This was reasonably foreseeable by the Defendant as the policy of the Immigration Department which renders it difficult for a foreign domestic worker to process a contract of employment in Hong Kong under circumstances as in this case is generally known. Although the Plaintiff states that she has since June been permitted by the Immigration Department to seek employment in Hong Kong owing to the fact that she has been called as a witness in a criminal trial and has to remain in Hong Kong until then, she states that she had not been able to find alternative employment until now. ......"

As neither of the parties was represented below, it is perhaps unsurprising that the evidence as to such loss was only minimally explored. The plaintiff testified that she did not start looking for a replacement job until June 1999 :-

"Because I am not allowed to look for a job unless, until this case has been finished."

51. Mr J F D Collins, who appeared for the plaintiff on the hearing of the appeal, submitted in his skeleton argument that it was a matter of notoriety (in no pejorative sense) that a foreign domestic helper who leaves her employment before the end of her contract :-

" ...... will inevitably face an uphill battle to obtain Immigration Department approval of new employment, if she can find any, and only after a prolonged period during which the onus will effectively be on her to convince the Immigration Department that she is deserving of its 'special consideration' - ie she will have to show that she was justified in leaving, and that will usually only be possible if she is unequivocally successful in labour claim litigation against her employer. ......"

52. Hong Kong has now had the benefit of the services of foreign domestic helpers over many years so that the basic employment arrangements affecting such helpers are a matter of general public knowledge. The Judge would, in my view, have been entitled to take judicial notice of such general employment arrangements for example, to the extent of noticing that there is strict Immigration Department control over foreign domestic helpers; that any attempts such helpers may make to change employment before the end of a current contract are subject to close scrutiny; that there has been a widely publicised policy against "job-hopping" by such helpers; and that foreign domestic helpers who are dismissed may be subject to the so-called "14 day rule" whereby they are repatriated on very short notice.

53. Such matters of general notoriety obviously do not amount to specific evidence of decisions affecting a particular employee's immigration status in any particular case. However, I would nonetheless be prepared to accept as a matter of commonsense and in the absence of contrary evidence that an employer's accusation that a foreign domestic has walked out on the job in breach of contract, is likely to militate against that helper obtaining Immigration Department permission to seek fresh employment, even where the accusation is denied and the helper contends that she has been constructively dismissed by the employer. I would also expect, again as a matter of simple commonsense, that an employee whose employment is lawfully terminated without any unfavourable allegations made against him or her, would have better prospects of securing Immigration Department permission to seek fresh employment, such prospects being real and substantial and not merely speculative.

54. No one from the Immigration Department was called to give evidence on this question. I would, however, not expect an officer of the Immigration Department to be able to testify to more than a policy of reviewing each case on its merits and of applying rational criteria to decisions affecting the foreign domestic helper's ability to remain in Hong Kong and to seek fresh employment. While I would expect such an officer to confirm that adverse allegations by an employer may have a potentially negative impact, I would not expect him to say that permission to take on a new job would have been given as a matter of course in the absence of such adverse allegations. Everything would no doubt depend on the circumstances of the particular case to be given careful consideration.

55. On the available evidence and applying the approach described above, it is my view that there was insufficient evidence to justify the Judge's award of damages for constructive dismissal (which I take to have been awarded on the basis of a concurrent breach of the implied trust and confidence term). I am unable to see a basis for holding that such breach of the trust and confidence term in fact caused the plaintiff to suffer loss of the entirety of the anticipated earnings from an alternative employment over the period in question.

56. In my judgment, what the evidence does establish is that as a result of the defendant's constructive dismissal and the allegations made against her prior to her vindication by the Judge (together constituting the defendant's breach of the trust and confidence term), the plaintiff was deprived of a significant and not a merely speculative chance of securing alternative employment with the permission of the Immigration Department during the period between 8 September 1998 and June 1999.

57. The Judge's award must accordingly be varied to reflect loss of a chance of securing the relevant earnings rather than actual loss of such earnings. I am also of the view that the Judge erred in taking as the relevant period of compensation the period up to the date of the judgment. Since permission was in fact granted to the plaintiff by the Immigration Department to seek alternative employment in June 1999 (because the plaintiff's testimony as a witness in an unconnected murder case was sought), the adverse effects of the breach must be taken to have ended in June. No additional period should be allowed after that date to allow time for a job-search since there would have been no recovery in respect of such a period if the contract had been lawfully terminated.

58. The Judge found that loss of earnings from alternative employment was foreseeable. While I do not think that the Judge was justified in going so far, the evidence in my view clearly shows that loss of a chance of securing alternative employment with Immigration Department permission was a foreseeable consequence of the defendant's breach. Both employer and employee were undoubtedly fully aware of the close control exercised by the Department over the plaintiff's immigration status and employment prospects, as reflected by Clauses 13 and 14 of her contract of employment. It must have been obvious that a constructive dismissal would directly put the plaintiff's status and prospects into question.

59. Damages for loss of a chance fall to be assessed by application of the principles laid down in cases like Chaplin v Hicks [1911] 2 KB 786 and Allied Maples v Simmons & Simmons [1995] 1 WLR 1602. In our case, this requires the court, doing the best it can, to quantify the plaintiff's loss on the basis of a robust assessment of the risk that the Immigration Department may in any event have refused the plaintiff permission to secure alternative employment even if there had been no breach by the defendant.

60. In my view, the risk of such refusal should be reflected by an award which takes the total wages which the plaintiff would have earned over the period from 8 September 1998 to 8 June 1999 (taken as a convenient 9 month period, since the evidence is unclear as to when in June permission to work was given) at the monthly salary of $3,860.00, discounted by 50%. Such an award would cover both the constructive dismissal and breach of the trust and confidence term. Arithmetically, such award comes to $17,370.00 which, in my judgment, should stand in place of the Judge's award of $46,577.00 under this head.

The appeal as to costs

61. Although the Judge's decision was wholly in favour of the plaintiff, the Judge only awarded her fixed costs in the sum of HK$896.00, representing the clerical and filing fees incurred in bringing the proceedings.

62. Under Order 62 r 28A of the Rules of the High Court (made applicable in the District Court by r 9 of the District Court Rules) a taxing master is given discretion when taxing the costs of a litigant in person, subject to specific limitations set out in the rule, to allow such costs as would have been allowed if the work and disbursements to which the costs relate had been done or made by a solicitor on the litigant's behalf.

63. In fixing the costs at $896.00 the Judge pre-empted any claim by the plaintiff at the taxation stage for costs under O 62 r 28A. It seems clear that such pre-emption was inadvertent and that the Judge simply never turned her mind to the question, not having been prompted to do so by either of the litigants in person. It therefore appears that the Judge did not in reality exercise her discretion in deciding to make an order for fixed costs. It is indeed difficult to see any reason on the facts of the case for imposing an a priori limitation to recoverable costs. Accordingly, in my view, this court should set aside the Judge's order for fixed costs and, exercising the discretion afresh, order that the costs below be paid by the defendant to the plaintiff to be taxed if not agreed, leaving it open to the taxing master, if necessary and if thought appropriate, to allow more than the sum of $869.00 in respect of the proceedings in the District Court.

64. As to the costs of this appeal, the defendant has succeeded to the extent of having the award of $46,577.00 in respect of the relevant head of damages reduced to the sum of $17,370.00. However, his attempt to overturn the Judge's decision altogether on the basis of the compromise agreement and on the basis that no damages at all under this head should have been awarded have failed. The plaintiff has succeeded on her appeal as to costs. In such circumstances, I consider that the plaintiff should have 75% of her costs of the appeal as a whole and that an order nisi to such effect should be made.

Rogers JA:

65. I agree.

Godfrey VP:

66. I also agree.