FERNANDO M RAMOS JR v. LA TRATTORIA RESTAURANT & BAR O/B LA TRATTORIA LTD.

HCA 6152/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6152 OF 1998

(Transferred from Labour Tribunal Claim No. LT339 of 1998)

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J U D G M E N T

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1. This is a claim for damages for breach of a contract of employment.

Background

2. The Plaintiff is called Fernando M Ramos Jr. (Mr Ramos). He is a national of the Philippines, is 45 years old and married. His wife began working in domestic service in Hong Kong in 1984. Since then he visited her in Hong Kong. One of those visits was in January 1993 when he was introduced through his wife's niece, Tessie Gutierrez, to her fiancé Donald Soviero (Mr Soviero) general manager of a restaurant that was soon to open to be called La Trattoria. Mr Soviero told him there might be a job for him and he expressed interest. Nothing transpired until November 1994 when his wife telephoned him from Hong Kong to say that Mr Soviero was prepared to give him employment. On the strength of that he came to Hong Kong on 5 December 1994 and the next day reported to Mr Soviero at the restaurant, called in full La Trattoria Restaurant & Bar O/B La Trattoria Limited (La Trattoria). It was by then up and running. Mr Ramos was invited to start immediately. He was thereafter to work for La Trattoria until 21 November 1997, but in a position and for a remuneration which is in dispute giving rise to this litigation.

3. On 8 December, that is the third day of work, Mr Soviero put before him a letter of that date on La Trattoria letterhead addressed to him and signed by Mr Soviero. On its face it confirmed his appointment as F. & B. (food and beverages) Budget Controller Manager at La Trattoria, on a salary of $11,000 per month for the remainder of 1994 and 1995. It recorded that it was to run for two years from the date of approval by the Hong Kong Immigration Authorities of the employee's employment, with extensions by agreement subject to the employee's visa being extended by the Immigration Authorities and his passport remaining valid. It provided for paid leave after completion of the first year, a return ticket to the Philippines after two years and a bonus month's salary at Chinese New Year after one year. It recorded he would be given accommodation and was entitled to medical, hospital, life insurance and pension coverage after completing a probationary period. Above the signature were recorded the words:- This contract is subject to employment approval being given by the Hong Kong Immigration Department. A separate document set out the job description as follows:-

"Job Description

F&B Budget Controller Manager

1. Over all incharge of food cost and budgeting programme for the restaurant.

2. Laison (sic) with executive chefs in day to day work and maintain the food cost control (in Tagalog). Supervise the operation of the Pasticerria.

3. Cost Accounting.

4. Interal auditing of daily taking according to menu mix programme.

5. Laison with supplier.

6. Control store room, ordering, receiving, issuing, record keeping and financial reports."

4. That also was signed by Mr Soviero.

5. Mr Ramos was asked to sign it and did so.

6. Then it was that towards the end of that month, December 1994, the then assistant manager of La Trattoria put before him another letter, again on La Trattoria letterhead addressed to him and signed by Mr Soviero. This was dated 30 December 1994. Its tenor was the same as that of 8 December in that it purported to confirm Mr Ramos' appointment. But this was on terms markedly less favourable. The position was not that of F. & B. Budget Controller Manager, but Pasticerria Comptroller. The monthly salary for the remainder of 1994 and 1995 was not $11,000 but $8,000 with annual review. There was no return air passage provided for. There was no accommodation provided for. It was not for any particular period. It was not made subject to prior approval by the Hong Kong Immigration Authorities, or to extensions being dependent upon the employee's visa being extended. Mr Ramos was required to sign and did so.

7. So, now on the face of them, there were in existence two contracts of employment which I shall refer to as the first contract and second contract respectively. This is for identification purposes only and does not presuppose their status.

8. The Immigration Department, to whom the first contract was submitted for the purpose of giving consideration to Mr Ramos' application for an employment visa, approved his right to work for one year from the date of approval, namely 9 March 1995. By then he had in fact been working since 6 December, but under the terms of the second contract not the first. So it was he was getting $8,000 per month not $11,000, and there was no housing provided him or housing allowance paid to him. This continued throughout 1995. From 1 January 1996 his pay was increased to $8,500 per month.

9. In February 1996 Mr Ramos applied for an extension to his employment visa and in due course that was granted to 21 November 1997. In September 1996 Mr Soviero retired and left Hong Kong. His position was taken over by one Francis Craig Rourke (Mr Rourke) a position he still holds. In January 1997 Mr Ramos tendered his resignation citing as his reasons an offer to work in another restaurant for a higher salary. When however this did not eventuate Mr Rourke invited him to remain and he did so. In November 1997 there was a reorganization of the staff and Mr Ramos' employment then came to an end. He disputed the amount of his severance pay and took that up with the Labour Tribunal. He filed a claim against La Trattoria. In the event that came to be settled and forms no part of this litigation.

10. But then Mr Ramos made it known that he had a further grievance. He complained to the Labour Tribunal that he had been paid a salary and other entitlements under the terms of the second contract when he was contractually entitled to a far greater amount under the first. In January 1998 he filed another claim in the Labour Tribunal naming La Trattoria as defendant. For technical reasons the Tribunal lacked the jurisdiction to deal with Mr Ramos' claim; hence its transfer to this court.

11. But then there was an unexpected development. In August last year Mr Ramos was charged with having given a false statement to an Immigration Officer at the time he applied for an extension to his visa in February 1996. He pleaded guilty. The facts which he admitted said he had falsely represented he was still employed by La Trattoria as F. & B. Budget Manager when in fact he had been working all along as a Pasticerria Comptroller (i.e. store keeper) for $8,000 odd. The Immigration Department prosecuted him because it regarded this misrepresentation as crucial to his having been given the extension. He was convicted and sentenced to 3 months' imprisonment, suspended for two years. It was a first offence.

The Pleadings

12. Mr Ramos claims the parties came to be contractually bound by the terms of the first contract from the date it came into force; namely the date upon which his visa was granted on 9 March 1995 until his employment was concluded on 21 November 1997. From that date he was persistently paid an insufficient salary, holiday pay and end of year bonus, received nothing at all for his accommodation and was not given a return flight to the Philippines. His claim is for a sum total of that shortfall amounting in all to $121,826, interest and costs.

13. La Trattoria's defence is that the parties were contractually bound by the second contract not the first. If, which is denied, the first contract ever had the status of a contract it was extinguished when the second contract was entered into. Mr Ramos having received in full all that he was entitled to under the second contract, it denies liability for any further relief.

14. Mr Ramos' reply is that the first contract is bona fide between the parties; it was submitted to the Immigration Department and became binding upon the parties once his employment visa was approved. The second contract was intended by La Trattoria to perpetrate a fraud on the Immigration Department and is thereby illegal and void. In the alternative if, which he denies, there was a purported contract evidenced by the parties executing the second contract, he signed it because he was coerced into doing so, by reason of undue influence exerted by Mr Soviero; hence it is voidable and unenforceable.

The Issue

15. Was Mr Ramos employed by La Trattoria under the terms of the first contract, and thereby entitled to enforce its terms against La Trattoria?

The Evidence

16. Mr Ramos was the only witness called in support of his case.

17. He came to Hong Kong to work because his wife told him Mr Soviero was offering at least $10,000. He was the holder of conjoint degrees in Science and Business Administration achieved locally, and on the strength of those had held responsible positions at local and then national government levels. But the maximum he was paid was the equivalent of only HK$2,000 per month; a fraction of what Mr Soviero was offering. When he was presented with the letter which was to become the first contract he was enthusiastic about signing. The pay was even more than that promised and there were the other recorded benefits as well. By virtue of his not having worked in Hong Kong before its labour laws were not known to him. As far as getting approval to work here was concerned he put himself in the hands of Mr Soviero whom he regarded as his sponsor. There was no reference made to this being a document intended only for the Immigration Department or that it would be replaced by another contract. He believed then it was the contract which set out the terms of his employment. When he started work his duties broadly encompassed those set out in the attached job description.

18. Then it was that he was presented with the letter that was to become the second contract. I repeat verbatim that part of Mr Ramos' witness statement which sets out his reaction to that.

"When I asked Mr Soviero about the change in terms, he told me that the first contract was for immigration purposes only. I signed this second contract because I believed I would otherwise lose my job. However, I was not happy about the matter and I went to Tessie Gutierrez- and asked her to talk to Mr Soviero on my behalf. She promised to discuss the matter with Mr Soviero but nothing happened. On another occasion in January 1995, I tried to raise the issue with Mr Soviero personally but he reprimanded me and shouted at me. He said that I had no right to question his decisions. I realised that if I reported the facts and raised the matter with the Immigration Department, I was likely to lose my job. Also, as Mr Soviero is quite a temperamental character, I had no doubt that he would fire me if I complained about the reduced terms. I therefore had no choice but to accept the situation."

19. So it was that Mr Ramos came to be paid and receive a monthly salary of $8,000 (increased to $8,500 during the course of his employment) and had to pay for his own housing of $1,000 per month. Though aggrieved by this turn of events he was to take no steps to seek a redress or voice his protest, even when Mr Soviero departed and was replaced, for above all he feared he would be sacked. But he never lost sight of his entitlement to claim under the first contract.

20. The defence called two witnesses; the first was Mr Rourke.

21. When he first came to La Trattoria in September 1996 he examined all the staff contracts including that of Mr Ramos. That on file was the second contract, dated 30 December 1994. He did not know of the existence of the earlier document because there was no record of it or reference to it. Mr Ramos did not speak to him about it at any time during their working together. Certainly he could have done so, as he adopted from the outset an open door policy and was on friendly terms with all the staff including Mr Ramos. Had this or any other matter troubled Mr Ramos he believed he would have told him; a golden opportunity would have been when he offered his resignation as he, Mr Rourke, made a point of asking him why he was wanting to leave. Even then Mr Ramos made no mention of another contract or of being short paid or of any other grievance. On the contrary, his letter of resignation expressed how he had been treated in glowing terms. His only explanation for leaving was that he was to be paid a bit more.

22. Asked to describe Mr Ramos' duties, he said that the title of Pasticerria Comptroller was a rather fanciful title for a food and beverages clerk and that was the job he did. The starting salary of $8,000 rising to $8,500 was if anything on the generous side in the trade. He demonstrated this by producing a chart showing the pay levels of the staff at the time.

23. After he had been in office for a little while he made some adjustments of his own, relieving Mr Ramos of some of his clerical duties whilst assuring him his job was secure if he was agreeable to the proposed changes. Mr Ramos readily did agree. Once again that would have been an opportunity for him to air a grievance if he had one.

24. It was put to him that his predecessor Mr Soviero might have been regarded as a prima donna, a perfectionist, a forceful man, a martinet. He chuckled and said all these might be apt. He described him as a character, who referred to himself as IL Pardrone and MC for Master Chef. But he treated everybody in the same way. He was fair and had no favourites.

25. When he first came to learn of the so-called first contract following Mr Ramos' complaint to the Labour Tribunal, he wrote to Mr Soviero, by then living in Hawaii, to see if he could throw any light on the issue. The response by letter in July 1998 included the following passage that I quote verbatim:-

"In the event there might have been another document I signed for the immigration people since as I remember, they required a more important position and salary in order for him to remain in Hong Kong. At no time, however did he expect or ask for more than the $8,000.

I hop this statement may be of help to you since I would certainly hate to see him unjustly enriched."

26. Mr Rourke's own view is recorded in a witness statement he made and I quote verbatim from that:-

"I am informed by persons involved in the restaurant trade in Hong Kong that at the time [Mr Ramos] was initially employed with [La Trattoria], there was a severe shortage of local staff to fill positions. Therefore, it was necessary in certain instances to employ overseas workers. In order to obtain an immigration working visa, restaurateurs in Hong Kong would have to indicate that salaries were around HK$11,000 per month."

27. In the witness box he conceded from what he now knows that but for Mr Ramos' stated position, salary and other emoluments recorded in the first contract he would not have been given an employment visa and been permitted to work here.

28. The second and remaining witness for the defence was one Michael Thomas Henderson. He was employed for a short time in 1996 as assistant manager of La Trattoria. As far as he was aware it was the second contract, held in the records of the restaurant, that represented Mr Ramos' contract of employment. He did not know of any earlier contract and Mr Ramos made no reference to that. Nor did he ever raise any complaint to him about his terms of employment or any other matter.

29. That was the evidence, from which it is now my task to adduce where the truth of the matter lies, and from there decide Mr Ramos' entitlement or otherwise to what he is claiming.

Findings of Fact

30. The first contract has all the trappings of a binding and bona fide contract of employment between a local employer and a foreign national employee. It embodied within its terms that it was conditional upon the approval of the Immigration Department and that included any extended terms. On its face it was for a position in management with a salary to match and provided for accommodation and return flights home. But I am satisfied that Mr Soviero, delegated by La Trattoria the task of hiring staff, had a job only for a food and beverages clerk for $8,000. From his stand point the enhanced position and higher pay and perquisites in the job offer were a fiction designed to encourage a favourable outcome to Mr Ramos' application for an employment visa.

31. That quite improper motive does not invalidate the contract per se. When the condition that Mr Ramos get his visa was satisfied on 9 March 1995 he became entitled thereafter to insist on due performance by the other contracting party; unless that is he was a party to the subterfuge, either at the outset or subsequently. His case as I have summarized is that he was not a party to the deception, that he himself was deceived. He claims to be the innocent dupe, brought over from the Philippines under false pretences, promised a management position and a generous salary and then bullied into having to accept a lesser pay under threat, actual or implied, of the sack if he did not.

32. Mr Soviero having departed Hong Kong there is no direct evidence to counter Mr Ramos' account. But I am of course entitled to look at all the surrounding circumstances including the parties' conduct to establish where the truth lies.

33. Mr Ramos was unconvincing when portraying himself as a wide-eyed innocent from abroad who had fallen prey to a manipulative and dominating sponsor. His BSBA degrees, the responsible positions he held in government in the Philippines, his wife's work history in Hong Kong and his competence in the English language all give a lie to this.

34. There is limited direct evidence to counter Mr Ramos' claim that Mr Soviero was a domineering and temperamental man brooking no challenge. However even if that was so and he really was forced into signing the second contract or face the sack it hardly warrants his remaining buttoned up and silent for three years, broaching no complaint or grievance, not even to the new guard of 1996, particularly if, as he claimed, he really was doing the job as set out in the description of a Food and Beverages Budget Controller Manager. But I do not believe that was his position. When Mr Rourke came on the scene he was a food and beverages clerk and no more and was paid accordingly; indeed quite generously. And there was nothing from Mr Ramos or otherwise in the evidence to suggest he had been relieved earlier of more responsible duties. Mr Rourke was to make some changes but that all was to come later.

35. But the most compelling and revealing evidence going to Mr Ramos' state of mind when he joined La Trattoria was his reaction in September last year to the charge brought by the Immigration Department. If he really was employed as Food and Beverages Budget Control Manager and entitled contractually to $11,000 per month why did he confess that he was a storekeeper earning $8,000 odd? Why if he was an innocent dupe coerced as he said did he not take the opportunity to protest that innocence? After all, there was no longer the fear of a sacking as he had long since left and had already filed his complaint with the Labour Tribunal. Why instead plead guilty to the charge which resulted in a prison sentence and a blot on a previously clear record?

36. The answers are immediately apparent. He was well aware that the first contract was a sham; a device that would gain for him a visa that would allow him to take employment as a food and beverages clerk and earn $8,000 per month; not $11,000, but still some four times more than he could make back home. He pleaded guilty and faced the consequences because he was a party to the fraud and had been all along. He was no less responsible for the subterfuge than his so-called sponsor, Mr Soviero.

The Law

37. Though the first contract has the appearance of being bona fide the fact that it was entered into by the parties as a sham intended not to be honoured and to defraud the Hong Kong Government renders it void ab initio and unenforceable. Mr Ramos' claim fails. I mention in passing that the second contract has no better status. It was entered into in breach of the Immigration Laws as both parties knew. It is illegal and void ab initio also.

Costs

38. In the normal course these are awarded in favour of the victor. But both parties behaved unsatisfactorily in the sorry saga which ultimately led to these proceedings. I hasten to add that no criticism attaches to the present management of La Trattoria. On the contrary Mr Rourke was refreshingly frank and helpful. But I believe a proper order is that both parties should bear their own costs. As this at first instance is without the benefit of submissions the parties shall have the usual right to return to argue this course.

Judgment

39. The Plaintiff's claim is dismissed.

40. There is no order for costs save that the Plaintiff's own costs are to be taxed under Legal Aid Regulations.

41. The costs' orders are nisi at first instance.