NIGEL JONATHAN DEMERY v. CATHAY PACIFIC AIRWAYS LTD

HCA1327/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1327 OF 2009

(TRANSFERRED FROM LBTC 2323 OF 2009)

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J U D G M E N T

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1.  This is an appeal by the plaintiff acting in person against the order of Master Kwang given on 15 March 2010 striking out paragraphs 6 to 12 and also paragraphs 15 to 21 of the Statement of Claim.

2.  The Master had also ordered a stay of the balance of the action (i.e. the determination of Off-duty allowances issue) pending the outcome of LBTC5528/2009.  This part of the Master’s order was not appealed against by the plaintiff.

3.  This appeal and therefore this judgment only concerns the striking out of paragraphs 6 to 12 and paragraphs 15 to 21 of the Statement of Claim.

Background

4.  The plaintiff was employed by the defendant as a commercial airline pilot from 16 April 1988 until 30 January 2009.  In the course of that employment with the defendant, the plaintiff’s final position of office was that of Senior Captain.

5.  It is common ground that the contract of employment between the plaintiff and the defendant relevant to the present case was contained in the defendant’s Conditions of Service 1999 (“CoS 99”).

6.  Condition 36.1 of CoS 99 states:

“Retirement 36.1   The normal Retirement Age is fifty five (55) years of age.  An Officer will be deemed to have reached normal Retirement Age on the day on which the Officer reaches his/her fifty fifth (55^th) birthday.”

7.  The plaintiff reached his fifty-fifth birthday on 30 January 2009 and was retired by the defendant in accordance with Condition 36.1 of CoS 99.  The defendant did not offer any extension of employment to the plaintiff beyond his fifty-fifth birthday.

The plaintiff’s claim

8.  The plaintiff’s claim relevant to the present dispute is for breach of contract and for ‘unreasonable and unlawful dismissal’ under Part IVA of the Employment Ordinance, Cap. 57.  Those claims are contained in paragraphs 6 to 12 and paragraphs 15 to 21 respectively of the Statement of Claim which were struck out by the Master.

9.  The plaintiff also claimed for Off-duty allowances including compensation for statutory holidays, annual leave and sick leave.  As already indicated above, this part of the claim has been stayed by the Master and do not form any part of this appeal.

10.  In so far as the plaintiff’s claim for breach of contract goes, the plaintiff relies on Condition 35.3 of CoS 99 which reads as follows :

“An Officer’s employment may be terminated at any time after the probationary period by either party, giving to the other party not less than three (3) months’ written notice or payment in lieu thereof”.

11.  Paragraphs 6 to 12, being the plaintiff’s claim for breach of contract is pleaded as follows :

“WRITTEN CONTRACT & COMPANY POLICY

6.   It has, however, been normal practice and written and published Company policy since 2007 for the Defendant to offer every Officer approaching the age of 55 an extension to his/her employment but on reduced terms from those in CoS99, until a higher normal retirement age, e.g. the General Manager Aircrew’s Update of 7 March 2008, ‘… we will continue with the existing extension policy, which is … Line pilots will be offered positions on the Freighter Fleet’.

7.   At the time of the contract and due to the Defendant widely publicising its extension of service policy, the Defendant knew or ought to have known that the Plaintiff had a reasonable and legitimate expectation of being offered further employment until a higher normal retirement age subsequent to the Plaintiff’s 55^th birthday on 30 January 2009.

8.   Clauses 1-12 of Appendix 1 provides for contractual Disciplinary and Grievance Procedures [‘DGP’] concerning those matters, amongst others, ‘which directly affect the conditions of employment of one or more Officers or which relate to some action taken by the Company, apparently in violation of an Officer’s Conditions of Service or contract of employment, work rules and existing laws or regulations of common or established practice.’

NOTICE CLAIM

9.   In breach of clause 35.3 of the contract, the Defendant failed to give the Plaintiff 3 months’ written notice or payment in lieu thereof, that payment totaling 3 times the Monthly Wage i.e. $709,984.50.

DGP CLAIM

10. At the time of the contract, the Defendant knew or ought to have known that the Plaintiff was contractually entitled to exercise the provisions of the CoS99 DGP.  An average period to undertake previous DGPs is 2½ months, with a reasonable and conservative estimate being 1 month to hear the Plaintiff’s Grievance of not being offered further employment until a higher retirement age.

11. In breach of clause 12 of Appendix 1 of the contract, the Defendant failed to hear and act upon the Plaintiff’s Grievance and failed to pay wages pending that DGP, that payment reasonably totaling 1 times the Monthly Wage i.e. $236,661.50.

BREACH OF CONTRACT SUMMARY

12. By reason of the Defendant’s 2 breaches of contract, the Plaintiff has suffered loss and damage, that loss and damages detailed above totaling 4 times the Monthly Wage i.e. $946,646.50.”

12.  Paragraphs 15 to 21 of the Statement of Claim deals with the claim under Part IVA of the Employment Ordinance and is pleaded as follows :

“E.O. PART IVA CLAIM

15. Furthermore, the termination and dismissal of the Plaintiff was without any valid reason, as defined in the Employment Ordinance, and therefore that dismissal is defined as ‘Unreasonable Dismissal’.

16. Furthermore, the Plaintiff was an active trade union member and an officer of both the registered trade unions: the Cathay Pilots Union and the Hong Kong Aircrew Officers Association.  As such and under Section 21B of the Employment Ordinance, he is entitled to protection against anti-union discrimination in that he is entitled:

(i)    to be a member or officer of such a trade union; and,

(ii)   to take part in the activities of the trade union; and,

(iii)   to associate with other persons for the purposes of forming or applying for the registration of a trade union.

17. According to the same Ordinance, the employer shall not:

(i)    prevent or deter an employee from exercising any of the above rights; or,

(ii)   dismiss, penalize or discriminate against an employee for exercising the above rights.

18. The Plaintiff believes that he was dismissed and discriminated against by the Defendant.

19. By dismissing the Plaintiff without a valid reason and also in contravention of Section 21B(2)b of the Employment Ordinance, Cap. 57, therefore that dismissal would be defined as ‘Unreasonable and Unlawful Dismissal’.

20. Having been dismissed both unreasonably and unlawfully, the Plaintiff is entitled to employment protection remedies including an order for reinstatement or re-engagement, an award of terminal payments and award of compensation.

21. The Plaintiff seeks such remedies.”

Plaintiff’s contention

13.  It is contended by the plaintiff that since at least 1988, extension of employment has been offered by the defendant to a number of officers employed by the defendant and who have reached the retirement age of 55.  The plaintiff further relies on the practice of the defendant since at least 2007 to offer every officer (except the plaintiff) extension of employment beyond age 55—some for a further two years and others for one-year extensions.

14.  In this respect, the plaintiff argues that the ‘normal retirement age’, notwithstanding it being stated to be 55 in Condition 36.1 of CoS 99, has changed to being at least 56 if not more.

15.  In support of that contention, the plaintiff draws the analogy to a number of judgments in employment cases decided in the United Kingdom which include the following :

(a)  Waite v Government Communications Headquarters [1983] 3 WLR 389;

(b) Hughes v DHHS [1985] I.C.R. 419 H.L.(E.);

(c) Brooks v BT (CA 92) [1992] I.C.R. 414;

(d) Age Concern Scotland v Hines [1983] I.R.L.R. 477; and

(e)  Crofts v VETA [2006] UKHL 3

16.  The plaintiff submits that the termination of his employment contract by the defendant upon his reaching his 55^th birthday was therefore a dismissal which was an “unfair dismissal” by the defendant on the basis that the normal retirement age was no longer 55.

17.  On the same basis therefore, the plaintiff further contends that in so dismissing him, the defendant failed to give him the three months notice of termination or payment in lieu thereof as was required under Condition 35.3 of CoS 99, thereby being in breach of contract terms under which the plaintiff was employed by the defendant.

18.  As for the plaintiff’s claim under the Employment Ordinance, the basis for that claim is also the contention he had been “dismissed” by the defendant for the reasons given above.

19.  In so saying, the plaintiff relies on Part IVA of the Employment Ordinance which makes provision for protection against anti-union discrimination.

20.  It is the case of the plaintiff that because he has been involved in trade union activities and has been an active trade union member of both Cathay Pilots Union as well as the Hong Kong Aircrew Officers Association, he has been discriminated against and dismissed from his employment by the defendant.  The plaintiff seeks to invoke section 21B(2)(b) to say that his dismissal by the defendant because of his active involvement with the two trade unions is unlawful.

21.  The plaintiff further contends that no valid reason (or any reason) has been given by the defendant for his dismissal under section 32K of the Employment Ordinance.

Defendant’s contention

22.  The defendant says that by reason of Condition 36.1 of CoS 99, once the plaintiff attained the retirement age of 55, his employment comes to an end by effluxion of time due to his retirement.  There is and can be no question of “dismissal” or “termination of his employment” and the defendant is not required to given any notice of termination either.

23.  In those circumstances, the entire basis upon which the plaintiff’s case is premised falls to the ground, whether for breach of contract or for any claim under the Employment Ordinance, since both limbs of the plaintiff’s claim are based on the plaintiff’s “dismissal” by the defendant.

24.  The defendant further submits that although there is a policy of the defendant to offer extension of employment to certain employees upon reaching the normal retirement, that is a matter of agreement between those retiring employees and the defendant.  The fact that the defendant may have offered or in fact extended the employment of some employees does not give any contractual right or entitlement to the plaintiff to demand for an extension in the absence of any agreement between them.

25.  Accordingly, the defendant submits that the Master was correct to have struck out paragraphs 6 to 12 and 15 to 21 of the Statement of Claim since the plaintiff cannot have any reasonable cause of action in relation to the paragraphs struck out.

Decision

26.  I have no hesitation in accepting the arguments put forth by the defendant that the plaintiff has no reasonable cause of action for his claims, both in respect of the breach of contract as well as in respect of the Employment Ordinance.

27.  The entire basis of the plaintiff’s claim, namely his “dismissal” by the defendant, is premised upon a wholly misconceived basis.

28.  It is not difficult to see that such misconception arose due to the plaintiff being misled into thinking that what was said in those judgments of the UK courts referred to by the plaintiff may have some application in Hong Kong.  However, the legal position in the UK is very different from that in Hong Kong.  Such differences between the two jurisdiction can be summarized as follows.

29.  In the UK, employment law is premised upon the concept that an employee has the right not to be unfairly dismissed by his employer.  That right not to be unfairly dismissed is largely entrenched in statute law and those statutory provisions consolidated into Part V of the Employment Protection (Consolidation) Act 1978.  There were further subsequent amendments and the present law in the UK is mainly contained in the Employment Rights Act 1996.

30.  In the UK, case law concerning the interpretation of the unfair dismissal provisions is very extensive.

31.  The first four of the UK cases referred to by the plaintiff were all claims for unfair dismissal under the statutory regime governing employment in the UK and all those four cases were decided on section 64(1)(b) of the Employment Protection (Consolidation) Act 1978.  The fifth case referred to by the plaintiff, being Crofts v VETA, was decided pursuant to section 94(1) of the Employment Rights Act 1996.

32.  No equivalent, parallel or even similar statutory provisions to the UK provisions exist in Hong Kong.

33.  In the UK, section 64(1)(b) of the Employment Protection (Consolidation) Act 1978 provides :

“Subject to section (3), section 54 does not apply to the dismissal of an employee from any employment if the employee—

(a) …

(b) on or before the effective date of termination attained the age which, in the undertaking in which he was employed, was the normal retiring age for an employee holding the position which he held, or , if a man, attained the age of sixty-five, or, if a woman, attained the age of 60.”

34.  ‘Section 54’, which is referred to in the provision cited above, makes provision that an employee shall have the right not to be unfairly dismissed from his employment.

35.  Given the wording in section 64(1)(b) of the Employment Protection (Consolidation) Act 1978, it was held in Waite v Government Communications Headquarters that the “normal retiring age” for the purpose of that section was prima facie the retiring age laid down in the terms and conditions upon which the employee was employed, being the contractual retiring age, but that it might be displaced by evidence that it was regularly departed from in practice, although in that case that the evidence did not establish that there was any practice to the contrary.

36.  In Hughes v DHSS it was held that as a matter of principle, although the presumption that the normal retiring age was the contractual retiring age, that could be rebutted by administrative policies to the contrary leading the employees to a reasonable expectation of a higher normal retiring age but that such expectations could only exist as long as those policies were in force and would be ended by notification of new policies to the contrary effect.

37.  As the law stands in the UK, it is theoretically possible for an employer to have “unlawfully dismissed” an employee if his employment was terminated upon his reaching the contractual retirement age, but that it can be shown that the normal retiring age in the undertaking in which that employee was employed is higher than the contractual retirement age.

38.  It is not difficult to see that the plaintiff has borrowed the phraseology as well as the reasoning in the judgments in Waite’s case and Hughes’s case in the plaintiff’s contention in formulating the basis for his present claim.  That basis upon which the plaintiff premised his claim however can have no solid foundation in Hong Kong which does not have any similar statutory provisions to those applicable in the UK.

39.  In UK, the “normal retiring age” stated in section 64(1)(b) of the Employment Protection (Consolidation) Act 1978 refers to the normal retiring age of the undertaking in which the employee is employed.  No specific age is stated in the UK statutory provision as to the normal retiring age, albeit that the statutory retirement age (65 for men and 60 for women) is stated.  It is therefore incumbent upon the court to determine the normal retiring age of the particular undertaking in each case.  Moreover, the normal retiring age can change with the change of company policies affecting it.  With such policy changes, it can give rise to the employee having a reasonable expectation of a higher normal retiring age.

40.  All of this arise from the wording of that particular statutory provision.

41.  In the present case, the normal retirement age which is stated to be 55 in CoS 99 is contractually binding on both the plaintiff and the defendant until and unless it is varied by agreement between them.  In the absence of any such agreement, age 55 will be binding on both of them as being the normal retirement age of the plaintiff.

42.  There can be little doubt that the word “normal” is used in the sense that it is subject to any further agreement between them as to any extension.  But that can only come about by agreement between both and not by way of any right or entitlement exercisable unilaterally.

43.  Neither can the policy change of the defendant in granting extensions to other of its employees give rise to any right or entitlement on the part of the plaintiff to demand for such extension.  Much less the plaintiff’s own reasonable expectation arising from extensions granted or offered to other employees.

44.  Stripped to its bare essentials, the present claim by the plaintiff is no more than a complaint by him that he was not offered any extension of his employment by the defendant upon his reaching his agreed retirement age.  However, the plaintiff has no contractual right or entitlement upon which he can make that complaint.

45.  For the reasons given, I have no hesitation in coming to the conclusion that the Master was entirely correct to have struck out paragraphs 6 to 12 and paragraphs 15 to 21 of the Statement of Claim in that the plaintiff can have no reasonable cause of action to make those claims therein.

46.  Accordingly, this appeal must be dismissed and the order of the Master is to stand in its entirety.

Costs

47.  As I can see no good reason why costs should not follow the event, there will be a costs order nisi that the plaintiff is to pay the defendant’s costs of this appeal to be taxed if not agreed.