LAU CHI KIN v. CHI SHING HONG FUEL OIL CO. LTD.

Labour Tribunal Appeal No. 6 of 1994

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

LABOUR TRIBUNAL APPEAL

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J U D G M E N T

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1. This is an appeal by the Appellant/Defendant, pursuant to leave granted by P. Chan J. on the 4th March, 1994 against the Judgment of Mr. Paul Chiu, a Presiding Officer of the Labour Tribunal, given on the 3rd January, 1994 in favour of the Respondent/Claimant for the sum of $25,625.00.

The Respondent's Claim against the Appellant

2. On the 9th December, 1993, the Respondent filed a Claim in the Labour Tribunal against his former employer, the Appellant, for 3 items making a total of $30,625.00 as shortfalls for one month's wages in lieu of notice, arrears of wages and pro-rata double pay.

The Respondent's Statement

3. In the translation of the Statement made by the Respondent, the Respondent stated that (emphasis added):-

"Mr. Pang [i.e. Mr. Pong Yuen-hei of the Appellant] and I held a meeting in late August of 1993 when he admitted that the company had lost clients because of previous wrong decisions and he hoped that I would continue to develop the fuel business of the company. However, I had no confidence in the company and Mr. Pang's decisions on the clients were incorrect. I therefore hoped Director Pang Yuan-xi [Pong Yuen-hei] could renew my contract and adjust my salary before further co-operation. Mr. Pang then carefully studied the contract before signing it for me. The new contract began on 1st September under mutual agreement."

The 1/9/93 Document

4. The document relied on by the Respondent was dated the 1st September, 1993 ("the 1/9/93 Document"). According to the English translation, it recites and states that (emphasis added):-

"A revised employment contract stated below is accepted upon the mutual agreement made in the meeting at Chi Shing Hong Fuel Oil Co. Ltd. [i.e. the Appellant] on 31st of August 1993:

1) From 1st of September 93 onwards, the employee Lau Chi Kin's [i.e. the Respondent's salary] is HK$30,000 ..."

Termination of Respondent's employment

5. The Appellant terminated the employment of the Respondent on the 2nd October, 1993 and paid him off on the footing that his monthly salary was $16,5000.00. The Respondent lodged his claim with the Labour Tribunal on the basis that his monthly salary was $30,000.00, and thus was entitled to the shortfalls.

Appellant's Statement of Defence

6. The Appellant dealt with the oral agreement and the 1/9/93 Document in the translation of the Statement of Defence in these terms (emphasis added):-

"... the claimant's failure to execute his verbal agreement, namely to achieve a turnover for the company above $500,000 ... This verbal agreement further set a turnover of five ["fifty" being an error in translation"] hundred thousands dollars as a bottom line and he then could get a salary of thirty thousands dollars. The verbal agreement was brought in under this circumstance. As a director, I had to deal with the numerous business and since I excessively trusted him, such a negligence was then caused. To sign on the employment contract drafted by him was my carelessness and lack of consideration ..."

Further factual dispute

7. The Appellant further alleged that the Respondent failed to achieve a turnover of $500,000.00. The Respondent did not and does not appear to dispute this, but maintains that the fault was the Appellant's, not his.

The Summary of Facts

8. According to the Summary of Facts dated the 22nd December, 1993 prepared by one K. W. Ho, Ag. Tribunal Officer:

(a) The Respondent alleged that (emphasis added):-

"On 1-9-93, a new contract of employment was agreed and signed by both parties (Exhibit C3) whereby the monthly wages was increased to $30,000.00 ... After the signing of the new contract, claimant managed to secure a potential customer with monthly business of about $500,000. The transaction with the said customer became unsuccessful because of Mr. Pong's failure to agree on the price with the customer."

(b) The Respondent alleged that (emphasis added):-

"At the end of July, 1993 prior to the signing of the new contract (Exhibit C3), defendant company intended to decrease the wages of the claimant. Parties eventually came to oral agreement that commencing from September 93, if the business turnover made by the claimant should exceed $500,000.00, claimant's wages would be $30,000.00 ... The new written contract (Exhibit C3) which contained no provision of the oral agreement made in July 93 was signed by the defendant inadvertently."

The Labour Tribunal hearing and summary determination "as all the relevant facts are not in issue"

9. The matter came before the learned Presiding Officer on the 3rd January, 1994.

10. According to the record, the learned Presiding Officer commenced by asking if there was any settlement, and when told by the Appellant's representative that no settlement was offered, he commenced to deal with the matter in the following manner. After stating that the Summary of Facts and all statements and documents furnished by both parties had been read, the learned Presiding Officer said (emphasis added): -

"Court is minded to deal with the matter summarily as all relevant facts are not in issue, unless parties wish to cross-examine each other. This course is permissible under the practice & procedures of this Court.Parties here are for adjudication and that they shall get without need to spend more time than necessary in Court.

Before proceeding to judgment, Court will hear both parties if they should have anything else to add to their facts and any point of law that they wish to raise. Claimant to go first as this is his claim. Do you understand?"

The respondent said that he had nothing to add on facts and nothing on the law to say. The Respondent's representative said that the Respondent had nothing to add, that "it was an oral contract", and that there was nothing else to say. The learned Presiding Officer then stood the matter down for judgment and after writing out his Judgment, delivered his Judgment as per pp. 4 - 7 of the Notes of Proceedings and Judgment in the presence of both parties orally.

11. There is a record that the hearing commenced at 9:45 a.m. but there is no record of the time when the learned Presiding Officer commenced writing his Judgment or the time when the proceedings concluded after the delivery of the Judgment of the learned Presiding Officer. According to the Respondent who appeared before me in person, the hearing that day took about an hour, from beginning to end, including the Appellant's representative being given "a short lesson" by the learned Presiding Officer.

The Labour Tribunal Judgment

12. The defence of the Appellant was set out in the Judgment of the learned Presiding Officer in these terms:-

"The defence is one of denial on the basis that the dismissal of the Claimant was justified on the ground that the variation of terms as to remuneration was obtained by way of misrepresentation on the promise that the Claimant would be able to secure additional business of over $500,000.00 a month on an increase of pay from $16,500.00 to $30,000.00 a month as from 1st September 1993. The Claimant failed to secure such business and his service was terminated on payment of one month's wages in lieu of notice on his old salary. For good measure, the defence contends that Exhibit 'C3' the agreement for variation of the payment terms had been signed inadvertently by the Defendant Company representative and therefor obliquely pleading non-est-factum."

The learned Presiding Officer did not find it necessary to decide the question whether the failure of the Respondent to achieve a monthly turnover of not less than $500,000.00 was due to the default or inability of the Appellant to secure a good price with the oil companies. The learned Presiding Officer found in favour of the Respondent on the 1st & 2nd heads of his claims, i.e. shortfalls for 1 month's wages in lieu of notice and arrears of wages.

In respect of the 3rd head, i.e. for pro-rata double pay, the learned Presiding Officer held that the Respondent was not entitled to pro-rata double pay, dismissed the Respondent's claim under this head and held that the Appellant was entitled to set-off the sum of $1,375.00 paid by it to the Respondent under this head. There is no appeal by either party from this part of the Judgment of the learned Presiding Officer which will therefore not be further dealt with in this Judgment.

Nature and effect of the 1/9/93 Document

13. In my judgment, it is clear from the 1st sentence in the passage quoted above from the 1/9/93 Document that the intention of the parties in signing the document was to evidence and to give effect to the oral agreement made by the parties in the 31st August, 1993 meeting. Thus the 1/9/93 Document is evidence of that oral agreement, but is not conclusive as the written contract. In my judgment, it is wrong to regard the 1/9/93 Document as the contract between the parties or to regard it as necessarily containing all the terms agreed between the parties. That the parties had had a meeting in which the question of the Respondent's continued employment with the Appellant was discussed and that such meeting took place prior to the signing of the 1/9/93 Document was admitted by the Respondent in the passage quoted above from his Statement. Thus the learned Presiding Officer fell into error by regarding Exhibit 'C3' as "the agreement for variation of the payment terms" (emphasis added).

Non est factum not Appellant's defence

14. The case of the Appellant, as set out in the Summary of Facts, was that the Appellant's agreement to pay the Respondent a monthly salary of $30,000.00 was conditional upon his achieving a monthly turnover of not less than $500,000.00, and that the 1/9/93 Document did not comprehensively or exhaustively set out all the terms of the oral agreement reached between the parties in that the condition subject to which the Respondent was to be paid a monthly salary of $30,000.00 had been left out. I do not think the Appellant was putting forward non est factum as a defence, "for good measure" or otherwise, obliquely or at all, and the learned Presiding Officer erred in regarding non est factum as a (or the) defence of the Appellant.

 "Triable issues"

15. In my judgment, there were material and relevant issues of fact between the parties, or "triable issues", to borrow a well-known phrase in an application for summary judgment under Order 14 of The Rules of the Supreme Court, Cap. 4. If the proceedings in the Labour Tribunal had been brought by the Respondent in the High Court and if the Respondent had applied for summary judgment under Order 14 on the basis of the same materials before the learned Presiding Officer, then I would have had no hesitation in dismissing the Order 14 application with costs to be paid by the Respondent forthwith. This is clearly not a case for disposal summarily. With respect, the learned Presiding Officer erred in regarding all relevant facts as being not in issue.

16. In order to do justice to the parties, the Tribunal should hear oral evidence from the parties to resolve, inter alia, the following issues of fact:-

(a) Whether there was an oral agreement between the parties, and if so, when and what were the terms agreed?

(b) In particular, whether the parties had agreed orally that the Respondent's monthly salary of $30,000.00 was conditional on him bringing in business with a turnover above $500,000.00?

(c) If such term was agreed orally, did the Respondent satisfy this condition in September, 1993, and if not, was it due to the failure of the Respondent to secure sufficient business turnover or was he prevented or excused by the Appellant in the performance of this condition?

The 1/9/93 Document is evidence against the Appellant on issue (b), but it does not preclude the Appellant from adducing evidence to show what were the full terms of the oral agreement between the parties.

17. In my judgment, the learned Presiding Officer erred in dealing with the Respondent's Claim summarily. Having come to this conclusion, it is not necessary for me to deal with the other reasons given by the learned Presiding Officer for finding in favour of the Respondent after conducting what was in effect a trial by written statements and documentary evidence. I do, however, have considerable difficulty in understanding what the learned Presiding Officer meant when he said that:-

"The Defendant Company's signatory contention that he had signed it in haste an [d] inadvertently because he was too busy with the Company's affairs goes a long way to sustain a plea of non-est-factum."

Conclusion

18. For the reasons given, I will allow the Appeal, set aside the Judgment of the learned Presiding Officer save and except that part of the Judgment in relation to the Respondent's claim for pro-rata double pay, and order that the 2 claims for alleged shortfalls for 1 month's wages in lieu of notice and arrears of wages to be remitted back to the Labour Tribunal for a new hearing by another Presiding Officer.

19. The Appellant asked for costs if it should succeed on the Appeal, and the Respondent had nothing to say on costs. I have some sympathy for the Respondent as the learned Presiding Officer took it upon himself to dispose of the matter summarily. In the exercise of my discretion, I make an order nisi, to be made absolute within 14 days, that the Appellant's costs of the appeal be costs in the Appellant's cause in the re-trial before the Labour Tribunal.

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