HKSAR v. Skin Tech Medical Co Ltd and Another

HCMA 164/2018

[2018] HKCFI 2783

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 164 OF 2018

(ON APPEAL FROM ESS 31015-31016 OF 2017)

____________

____________

_______________

J U D G M E N T

_______________

1.The 1^st and 2^nd appellants (“A1” and “A2”) were each convicted after trial of one count of “terminating employment after being served with notice of pregnancy” contrary to sections 15(1) and 15(4) of the Employment Ordinance, Cap 57 ( the “EO”) by a magistrate[1]. They were each fined $20,000. They appealed against their respective convictions.

2.The particulars of the summonses alleged that A1 and A2, being the employers of Yu Ho Yee (“Ms Yu”), after being served a notice of pregnancy on 13 February 2017, did terminate Ms Yu otherwise than in accordance with section 9 of the EO on 16 February 2017.

Facts

3.It was an admitted fact under s 65C of the Criminal Procedure Ordinance, Cap 221 that Ms Yu was co-employed by A1 and A2 under a continuous contract during her employment period for a monthly salary of HK$20,000 per month. 

4.The prosecution called Ms Yu, Dr Cheung (Ms Yu’s obstetrician) and Ms Tsang (Ms Yu’s former colleague) to give evidence.

5.The magistrate summarised the prosecution case in para 7 to 12 of the Statement of Findings as follows : -

“7. It was common ground that, at all material times, Dr Chen Mun Onn (D2) was the sole director of D1.

8. It was Ms Yu’s evidence that she started working for D2 in mid-October 2016. In the beginning of November 2016, D1 was incorporated and she became co-employed by the defendants under continuous contracts. She was about 4-month pregnant when she started working for D2 with her expected due date being 2April 2017. Her pregnancy was visible at the time and D2 knew she was pregnant all along.

9. Ms Yu started liaising with D2 about her maternity leave in January 2017. The negotiation was going nowhere until D2 asked Ms Yu for a notice of pregnancy in mid-February 2017. Upon D2’s request, Ms Yu called the clinic of Dr Cheung for such notice (“the Notice”). The Notice was sent to D2’s clinic through facsimile transmission almost immediately and was picked up by Ms Yu who then passed it to D2.

10. However, Ms Yu was orally terminated by the defendants on 16 February 2017. This was evidenced by a document with the heading of “Termination of Employment” (P7) signed by D2 and Ms Yu.

11. Dr Cheung confirmed that Ms Yu was his patient at the material time. He also confirmed that a notice of pregnancy was issued to Ms Yu at the request of his nurse on 13 February 2017, although he was unsure whether the same was sent to Ms Yu that day.

12. Ms Tsang was at D2’s clinic on the day when Ms Yu was allegedly orally terminated. She accompanied Ms Yu to see D2. At the meeting, Ms Yu requested D2 to sign on a document. The document, according to Ms Tsang, contained Chinese only with images of keys on it. However, she accepted that she only had a glance at the document and did not have a clear view of it.”

6.The magistrate went on to set out the defence case[2] :

“13. The defence called D2, Mr Lau (the company secretary of D1) and Mr Sheung (the person responsible for the defendants’ website) to testify.

14. It was D2’s evidence that the Notice was never served on the defendants. He further told the court that, despite his signing on P7, Ms Yu’s cessation of employment was a mutual agreement between the parties. He also testified that Ms Yu had, in the course of her employment, misconducted herself. Therefore, if the court were to hold that the defendants did terminate Ms Yu, it was nonetheless according to section 9 of the Ordinance. In addition, he said that P6 was a forged document. He produced a similar-looking document (D6) and claimed that this was the document he signed on the day.

15. Mr Lau was at D2’s clinic on 22 February 2017. He told the court that D2 asked him to calculate Ms Yu’s salary and prepare an acknowledgement slip as the employer-employee relationship between the defendants and Ms Yu would be terminated. Since he only had form 5 education, Mr Lau sought help from the internet and finally drafted P7. He told the court that D2 did not mention to him whether the final payment was for salary or for other reasons. As a result, he just wrote down “salary” on P7.

16. Mr Sheung was the provider of on-line website advertising service for the defendants. His evidence was rather brief. In gist, he testified that there were a lot of problems with the defendants’ old website. When he tried to set up a new one, the defendants were unable to give him the information, such as password, he needed.”

Reasons for verdict

7.The magistrate gave detailed reasons as to why he had accepted Ms Yu and Dr Cheung’s evidence, but rejected Ms Tsang’s evidence.  The magistrate also gave detailed reasons as to why he had rejected A2 and Mr Lau’s evidence and found Mr Sheung’s evidence of little help to the defence.  Accordingly, A1 and A2 were convicted. 

Grounds of appeal

8.The grounds of appeal submitted by the appellants consisted of 24 pages covering 192 paragraphs in size 11 font.  The arguments incorporated mainly a duplication of defence counsel’s two closing submissions at the trial.  From my understanding, the following are the grounds of appeal that can be deciphered:

(1)   the magistrate was wrong in not dismissing the defective summonses;

(2)   the magistrate was wrong in amending the defective summonses causing an injustice to the appellants;

(3)   the admitted fact that the employee was co-employed by the appellants under a continuous contract was contrary to the evidence adduced in exhibits P4 to P7 and therefore the magistrate erred in attaching weight to those exhibits;

(4)   The conviction of A2 was wrong in law as the corporate veil of A1 was lifted;

(5)   The magistrate erred in his assessment and acceptance of the evidence of two of the prosecution witnesses (the employee and Dr Cheung) and rejecting the evidence of A2 and

(6)   The magistrate was biased against the appellants.

Discussion

9.The purpose of section 15 of the EO is to protect pregnant employees from being terminated, unless for reasons other than pregnancy.  For example, under section 15(1B) where the employer could prove that the employee was summarily dismissed, in accordance with section 9.  

10.Section 9 of the EO provides that :

“(1) An employer may terminate a contract of employment without notice or payment in lieu—

(a) if an employee, in relation to his employment—

(i) wilfully disobeys a lawful and reasonable order;

(ii) misconducts himself, such conduct being inconsistent with the due and faithful discharge of his duties;

(iii) is guilty of fraud or dishonesty; or

(iv) is habitually neglectful in his duties; or

(b)    on any other ground on which he would be entitled to terminate the contract without notice at common law.”

11.There was no dispute that Ms Yu’s employment had been terminated and at the time she was pregnant. 

Issues at trial

12.The magistrate was alive to the issues at trial.  These were principally whether,

(i)   Ms Yu was a credible witness;

(ii)   if the medical certificate confirming her pregnancy had been served on A1 and A2;

(iii)   if Ms Yu termination of employment, was for reasons of: -

(a)  her pregnancy or;

(b)was it by mutual consent or;

(c)  whether Ms Yu had committed a serious misconduct and/or act of dishonesty that justified her to be summarily dismissed.

13.I turn firstly to deal with the first and second grounds of appeal together to what I refer to as the defective summonses. 

Defective summonses

14.The particulars of the summons against A1 stated that Ms Yu’s period of employment was “19 October 2016 to 16 February 2017”.  A1 was incorporated on 2 November 2016.  The appellant submitted that the summons against A1 was defective because the commencement date of employment on the summons was incorrect when in fact A1 was only incorporated after the date of commencement of employment.  

15.As to A2, Chen Mun Onn trading as Skin Tech Medical Company was dissolved on 2 May 2017 and that the proper name on the summons for A2 should be Chen Mun Onn “formerly” trading as Skin Tech Medical Company.  As the name was incorrect A2 should be acquitted. 

16.On the day when the magistrate was about to deliver his verdict, counsel for the defence sought to advance further submissions.  At an adjourned hearing supplementary submissions were advanced on the above issues.  After considering these submissions, the magistrate exercised his power under section 27 of the Magistrates Ordinance (MO) Cap 227 and amended the summonses. 

17.The magistrate amended the date of employment from 19 October 2016 to 2 November 2016 in relation to the summons against A1. He amended the summons against A2 by adding the word “formerly” so that A2 was Chen Mun Onn formerly trading as Skin Tech Medical Company.

18.Against that background I set out Section 27 of the Magistrates Ordinance Cap 227 which provides the following:

“(1) Where it appears to the adjudicating magistrate that there is—

(a) a defect in the substance or form of any complaint, information or summons; or

(b) a variance between the complaint, information or summons and the evidence adduced in support of it,

he shall, subject to subsection (2)—

(i) amend the complaint, information or summons if he is satisfied that no injustice would be caused by that amendment; or

(ii) dismiss the complaint, information or summons.

(2) The adjudicating magistrate shall amend the complaint, information or summons where—

(a) the defect or variance mentioned in subsection (1) is not material; or

(b) any injustice which might otherwise be caused by an amendment would be cured by an order as to costs, an adjournment or leave to recall and further examine witnesses or call other witnesses.

(3) Following an amendment to a complaint, information or summons, the adjudicating magistrate shall—

(a) read and explain the amended complaint, information or summons to the defendant;

(b) give leave to the parties to call or recall and further examine such witnesses as may be reasonably required by a party having regard to the nature of the amendment;

(c) grant such adjournment as may be reasonably necessary to enable the parties to call or recall witnesses and to prepare their cases;

……..”

19.The power to amend may be exercised at any stage of the trial.  The key question is whether an amendment can be made without injustice to the appellants.

20.The questions answered by the magistrate’s amendment must have been firstly, there was a defect in summonses.  Secondly the defect was material and thirdly, there was no injustice caused to the appellants by the amendments. 

21.As to A1, the commencement date of employment between A1 and Ms Yu was not a central issue since whether the commencement date fell on 19 October 2016 or 2 November 2016, her three months’ probationary period would have finished by 16 February 2017.  Further, in the present case the employment relationship was an admitted fact. 

22.In R v Yeung Lee Transportation and Engineering Limited [1995] 1 HKCLR 144 Keith J (as he then was) held that a defective description of the company can be cured by an amendment.  At paragraph 13 he stated that it is not an injustice for a defendant to be deprived of the windfall of a mistake in an information and a summons:

“The substituted Defendant had believed all along that the summons which had been served on it had been intended for it. It is not an injustice for a defendant to be deprived of the windfall of a mistake in an information and a summons, especially where the court and the prosecution were not told about the mistake for a long time, and were misled by counsel who must have been instructed on behalf of the substituted Defendant (because the original Defendant, being non-existent, could not have instructed him) to make representations to the court which had the effect of concealing the fact that the original Defendant did not exist.”

23.The amendment of the commencement date of employment and as to the name caused no injustice to the appellants.  The magistrate was correct and was obliged to amend the defects under s 27(2) of the MO.  He set out in his statement of findings[3] that the procedures stated in s 27(3) had been followed after the amendments. 

24.There is no merit in these grounds of appeal.

A contradiction between documents

25.Coming to ground 3.  I have paraphrased this ground as a contradiction between exhibits.  The admitted facts stated Ms Yu was co-employed by the A1 and A2 under a continuous contract during her employment period.  The documents exhibited as P4, P5 and P7 stated that A1 was Ms Yu’s employer.  Exhibit P6 was a document evidenced that the employer was Dr Chen Mun Onn who had received the company keys after termination of Ms Yu’s employment. All these documents were signed by Dr Chen Mun Onn. 

26.The magistrate dealt with this ground and stated at paragraph 38 of his Statement of Findings:

“In his 2^nd supplemental closing submissions, counsel for the defence submitted that I should attach no weight on exhibits P4 to P7 and D6 as they were inconsistent with the admitted fact that Ms Yu was co-employed by the defendants. Upon the withdrawal of such admission, I am of the view that the court was no longer required to deal with this. However, I wish to say that I am not persuaded by those submissions. I fail to notice any contradiction between the exhibits and the alleged co-employment. While the court would no doubt consider the cases for and against D1 and D2 separately, it remained from the evidence that the relationship between the 2 defendants were indeed intertwined. The place of work for Ms Yu was the registered address of D1. This address was also the place of business of D2 as stated on P3. Further, P5 was signed between Ms Yu and Dr Chen and, as mentioned earlier, P4 stated that D1 was the employer of Ms Yu. The relevant exhibits clearly did not suggest that Ms Yu was not co-employed. In the circumstance, I am satisfied that my analysis in relation to these exhibits above is correct.”

27.I agree with the magistrate’s findings. Although A1 and A2 are separate legal entities they were closely associated and connected parties.  There was no contradiction between the exhibits and the co-employment.  The fact that they co-employed Ms Yu at the material time was not disputed.  This ground of appeal fails.

Corporate veil of D1 (A1)

28.Turning to the fourth ground of appeal.  It is A1’s case the corporate veil was lifted on A1 and A2 Dr Chen Mun Onn, was prosecuted due to his role as the sole director of A1.  I do not see any merit in this ground.  A2 was prosecuted because he was one of the co-employers of Ms Yu. There was no lifting of the corporate veil.  This ground fails. 

Issue of credibility and bias

29.Lastly I come to the credibility of the witnesses.  The appellants submitted that the Ms Yu was not a credible or reliable witness.  The magistrate was wrong to attach any weight to her testimony as it was totally incredible and unconvincing.  It was submitted that she could not be believed in that she did not serve any notice of pregnancy before the 16 February 2017, the exhibit P6 was a forgery.  It was illogical for a reasonable employer to sign Exhibit P6 to incriminate themselves for future prosecution.  The termination letter Exhibit P7 was not a reliable piece of evidence therefore the magistrate should have placed no weight on it in determining that Ms Yu was fired.

30.The prosecution case rested mainly upon the credibility of Ms Yu.  Credibility of witnesses are questions of fact.  They are best determined by the trier of fact, in this case, the magistrate.  He has the added advantage of having seen the witnesses.  The appellate court will only depart from a magistrate’s finding of fact or determination of a witness’s credibility if satisfied that it is plainly wrong, McWalters J (as he then was) in HKSAR v. IP Chin-kei [2012] 4 HKLRD 383. 

31.The submissions made to the magistrate at trial were reiterated before me.  The magistrate gave detailed reasons for rejecting A2’s evidence. He stated:[4] -

“29. Having carefully considered D2’s evidence, I have no hesitation in rejecting his testimony in its entirety. As a juror, I find his evidence absurd and defies commonsense.

30. In relation to the document he signed on 16 February 2017, D2 said P6 was a forgery and D6 was given to him by Ms Yu on that day. He denied the signature on D6 was his however. His version was that Ms Yu asked him to sign on a piece of paper with key images on it. He followed. Ms Yu then promised to give him a copy of that. However, he was given D6, which he accepted during the course of his evidence to be an original.

31. First and foremost, I find it strange that D2 did not see fit to confront Ms Yu immediately when he saw his signature being forged on D6 as alleged. While D2 testified that he had an injection to do at the time, the fact remains that Ms Yu stayed at the clinic until later that day and she returned again on 22 February 2017. Still, this was not brought up by D2. In my opinion, any right-minded person would not be pleased when he saw his own signature being forged on an important document such as D6. This is particularly so when the relationship between the two was anything but harmonious. D2, in cross-examination, described Ms Yu as “not trustworthy”. I simply fail to comprehend, in situation such as the present one, why D2 did not confront Ms Yu when he found out his signature was forged. In the circumstance, I reject that D6 was given to D2 on the day and I do not accept D2’s evidence in this regard.

32. In the course of the trial, D2 maintained that the defendants did not terminate Ms Yu. The defence did not attempt to challenge the authenticity of P7 but said that the defendants honestly believed that it only meant the employer-employee relationship between Ms Yu and them had ceased. In my judgment, this claim is wholly unsustainable and I reject D2’s evidence in this regard. The first sentence on P7 stated, “… [Ms Yu] was terminated as an employee of this company on February 16, 2017.” The language was so clear and plain that no confusion can possibly be attracted. D2 was conversant in English and he gave his evidence in English. He did not suggest that he had difficulties in understanding or using this language. He had, at the material time, work experience in both public and private sector. He was a director of D1. He was also a trained professional. Against this background, I do not believe that D2 did not read P7 before putting his own signature at the bottom of the document. I am of the firm view that P7 spoke the mind of D2.

33. For the avoidance of doubt, I am aware of the fact that there was only one signature of D2 on P7 which said “for and on behalf of Skin Tech Company”. There was no mention as to which “Skin Tech Company” D2 was signing for. However, having considered the evidence and the relationship among the defendants and Ms Yu, the only irresistible inference to be drawn must be Dr Chen, who was the sole director of D1, was signing for and on behalf of both D1 and D2. In gist, the meaning of P7 was simple: Ms Yu was terminated by both defendants.

34. My view above is fortified by the calculation of one-month salary on P7.

35. D2 claimed that the payment was on compassionate ground knowing that Ms Yu was going to give birth. I have no doubt that this is not the truth. First of all, if such payment was a compassionate one, any calculation would be meaningless. The defendants could have just given Ms Yu a lump-sum amount as a parting gift. Secondly, if the defendants were as generous as they claimed they were, they would not, in my view, deduct the payment of 2-day sick leave which was taken out by Ms Yu in December 2016, which was already 2 months ago at the time of the signing of P7. I am satisfied beyond reasonable doubt that the payment was made in lieu of the required one-month notice of termination. Considering P7 as whole, I am sure that Ms Yu was terminated by the defendants.

36. Another accusation by D2 was that Ms Yu stole $2,000 from petty cash. Ms Yu’s version was that she had informed D2 before taking the money. I have carefully considered the relevant Whatsapp messages (D7). When being confronted with taking the $2,000, Ms Yu’s immediate response was:

“Dr. Chen (D2), I hv (have) ask u (you) before, this month we have 4 design, u (you) say take at petty cash!”

D2 did not deny, there and then, that permission had been sought by Ms Yu. Rather, he replied:

“You still have to inform me first before you take any money. I want an invoice before anything is paid from petty cash…” (my emphasis)

37. In my judgment, even if Ms Yu failed to keep an invoice for the payment, it did not necessarily mean that she stole money from petty cash. It is clear and indisputable from D7 that D2 did not challenge Ms Yu’s version that prior permission had been sought. I am sure the claim against Ms Yu for stealing is unfounded and I have no hesitation in rejecting it.

38. ….as stated above in paragraph ----

39. Having taken into account all the above, I do not believe D2’s evidence to be honest and truthful. Thus, I reject his evidence.”

32.The magistrate gave detailed reasons why he found that the termination was not in accordance with s. 9 of the EO.  In relation to other allegations against Ms Yu the magistrate said this[5]:

“42. Although I have rejected D2’s evidence, I have nonetheless assessed other allegations against Ms Yu for misconduct which was helpfully summarized by the defence in their submissions. As a tribunal of facts, I do not believe that Ms Yu had, at any time, concealed the user name and password of the defendants’ domain. I also reject that she had been absent without notice. I further refuse to accept that her attitude had been poor at work. Had that been true, I see no reason why the defendants would allegedly offer her an ex gratia payment when she left. While Ms Yu admitted that she did not submit any medical certificate to the defendants after she had taken sick leave, I am of the opinion that this alone does not amount to a misconduct under section 9 of the Ordinance which warrants a summary dismissal. I come this view having considered that this only happened twice in the whole period of Ms Yu’s employment and, on each occasion, she informed D2 orally and immediately. She would also make ad hoc arrangement so that the smooth operation of the clinic would not be affected by her absence. According to Ms Yu, D2 even offered to prescribe her medication. In my judgment, her conduct was not inconsistent with the due and faithful discharge of her duties. If such conduct could be considered as neglect of duties, it was certainly not habitual in any event.”

33.The magistrate fully explained why he rejected A2’s evidence.  He was justified in rejecting A2’s evidence.  In doing so he rejected the claim that the termination of Ms Yu’s employment was by mutual consent or that she was summarily dismissed. 

34.In accepting Ms Yu’s evidence the magistrate said[6]: -

“22. Ms Yu was the principal witness for the prosecution. In my view, her evidence was logical with no inherent contradiction. She did not hesitate when answering questions put to her. She remained unshaken under cross-examination. She told the court that she did not keep a copy of the Notice as it was of no use to her. I accept her explanation. The Notice, as confirmed by Dr Cheung, only stated (i) the fact that the patient was pregnant and (ii) the patient’s expected due date. Both were well known to Ms Yu. I do not see any reason why Ms Yu would want to keep a copy of it. I do not have any doubt as to her failure to retain a copy of the Notice.

23. The defence also accused Ms Yu of stealing money from the petty cash. Her explanation was that the money was for the settlement of some outstanding fees and approval had been sought from D2 in advance. Again, I accept her explanation. I am particularly impressed by Ms Yu’s evidence in this aspect as her answer was given before D7 was shown to her. D7, in short, supported her stance.

24. The defence raised the issue of co-employment and submitted that Ms Yu never signed a contract with D1. I accept Ms Yu’s explanation that, at the time of the signing of P5, D1 was yet to be incorporated. However, she had been working for both Defendants until she was terminated. This was supported by P4, which stated that Ms Yu’s employer was D1. I accept that she had been co-employed under continuous contracts by both defendants and I also accept her explanation as to why a written contract was not signed between D1 and her.

25. In my opinion, Ms Yu was both honest and reliable and, as a juror, I accept her evidence in full.”

35.I am satisfied that the magistrate’s approach to the reliability of Ms Yu was sound.  The magistrate’s acceptance of Ms Yu’s evidence and rejection of A2’s evidence had been carefully analysed and a careful assessment was made.  There is no substance in the grounds as to credibility nor in the ground that the magistrate was biased against the appellants. 

Conclusion

36.There can be no criticism of the magistrate’s conclusion that Ms Yu did serve a notice of pregnancy on A2 on 13 February 2017 based on the acceptance of her evidence and that of Dr Cheung’s.  Ms Yu was terminated on 16 February 2017 as supported by the undisputed Termination of Employment signed by A2 (Exhibit P7) and the termination was not in accordance with s 9 of the EO. 

37.In the circumstances, the convictions against both A1 and A2 were neither unsafe nor unsatisfactory.  The appellants’ appeals against conviction are dismissed. 

Mr Jones Tsui, SPP of the Department of Justice, for the respondent

The 1^st appellant appeared in person

The 2^nd appellant appeared in person