Thomas Vincent v. South China Morning Post Publishers Ltd.
Read the full judgment text of HCA 6233/1999 on BabelCite. This High Court CFI judgment was delivered on 2 May 2002.
1. The plaintiff, a journalist, was employed by the defendant which is the publisher of the South China Morning Post newspaper ("SCMP") as a sports sub-editor since 1 February 1994. He was given one month's notice of dismissal on 11 December 1998, effective on 10 January 1999. He brought these proceedings against the defendant in the Labour Tribunal, and they were later transferred to this Court.
Cited by 4 cases · Cites 1 case
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HCA006233/1999 HCA6233/1999 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO.6233 OF 1999 -------------------------
------------------------- Coram: Deputy High Court Judge Muttrie in Court Dates of Hearing: 8 - 10 April, 15 - 16 April 2002 Date of Judgment: 2 May 2002 ------------------------- J U D G M E N T ------------------------- 1.The plaintiff, a journalist, was employed by the defendant which is the publisher of the South China Morning Post newspaper ("SCMP") as a sports sub-editor since 1 February 1994. He was given one month's notice of dismissal on 11 December 1998, effective on 10 January 1999. He brought these proceedings against the defendant in the Labour Tribunal, and they were later transferred to this Court. The pleadings 2.The plaintiff's pleaded case, as amended, is that his dismissal was wrongful and unreasonable and that by reason of it he has been deprived of long service payments, pension rights and bonuses to which he would otherwise have been entitled. He does not identify the relevant statutory provisions. He claims :
3.The plaintiff further pleads that in its unreasonable and wrongful dismissal of him the defendant acted in breach of the mutual obligation of trust and confidence owed to him when it failed to adopt the normal and/or a fair process of disciplinary action, such that additional damages were suffered by him. What those damages are is not entirely clear. 4.The defendant pleads that the plaintiff was in breach of implied terms of his contract of employment which required him, inter alia, to obey the lawful instructions of the defendant and not to infringe copyright or pass off others' work as his own. In the 4 December 1998 edition of Premier Soccer, a magazine supplement to the Friday edition of the SCMP, he produced an article attributed to himself, of which the vast majority had been copied from an article written by a Mr McIlvanney and published in The Sunday Times on 29 November 1998. He did this in wilful contravention of instructions from his Editor that he was not entitled to use copy from The Times or The Sunday Times; he was in deliberate breach of copyright; he deliberately plagiarised another's article; and there was a complete breakdown of trust and confidence in the plaintiff due to his refusal to admit that he was at fault or recognise his wrongdoing. It avers that it therefore had and has valid reasons for the plaintiff's dismissal for the purposes of section 32K of the Employment Ordinance, Cap. 57. 5.The defendant admits that there exists a mutual obligation of trust and confidence but does not admit its extent, nature or content and denies any breach of it. 6.The plaintiff pleads by way of reply that it was a common practice, condoned by the defendant, to use material published elsewhere without attribution and further that it had established a procedure and guidelines for warnings before dismissal, which procedure it failed to follow. He says that in the circumstances the reasons given for dismissal do not amount to sufficient or valid reasons for the purposes of section 32K. 7.In fact, as the case has developed, it now appears that the plaintiff is claiming the end of year payment as a contractual entitlement, rather than under the Employment Ordinance. He claims loss of wages, long service payments and pension rights under the provisions of Part VIA of the Ordinance. He claims damages for the breach of the mutual obligation of trust and confidence under the principles set out in Malik v. Bank of Credit and Commerce International SA [1998] AC 20, applied in Hong Kong by the Court of Appeal in Bachicha v. Poon Shiu Man Henry, [2000] 3 HKC 452. The Facts 8.The following facts are not in dispute or incontrovertible. The plaintiff was employed by the defendant under a written contract of employment dated 1 February 1994, subject to the terms and conditions in a letter of appointment and the defendant's staff regulations. The latter provided that the defendant could terminate the services of an employee on giving one calendar month's notice in writing, or payment in lieu of notice. 9.The plaintiff was originally employed as Sports Sub-Editor, but in 1996 he proposed that the defendant launch a supplement called "Premier Soccer" to be issued each Friday with the SCMP, for the coverage of football news and information. The defendant accepted this proposal and in July appointed the plaintiff (though not in writing) to be the Editor of Premier Soccer. Premier Soccer was successful; it generated significant funds in advertising revenue during the plaintiff's time as its editor. Subsequently the number of pages was increased, and it continued in production for nearly three years after his dismissal. 10.The dispute between the parties arose because the plaintiff wrote an article entitled "Stage set in Theatre of Dreams" and caused it to appear under his own byline as the centre-spread of the edition of Premier Soccer published on 4 December 1998. Substantial portions of this article were copied directly from an article entitled "Giants square up for the Cup" by the British sports writer Hugh McIlvanney, which had been published in The Sunday Times. 11.Premier Soccer relied significantly on copy obtained from other sources such as news agencies and other newspapers. In particular the defendant had a licensing agreement with Times Newspapers Ltd of London, the owner of the newspapers The Times and The Sunday Times, for the printing or reproduction of matter complied by staff writers and overseas correspondents of those newspapers. This agreement provided inter alia that the defendant should ensure that it made acknowledgment to The Times or The Sunday Times as appropriate copyright owners of any such matter which it printed or reproduced. 12.This licensing agreement was, however, no longer in effect as at 4 December 1998. By a letter dated 14 August 1998 from the defendant's then Editor, Mr Jonathan Fenby, this agreement was terminated on three months' notice, i.e. on 14 November 1998. This termination had been brought to the notice of the plaintiff by internal electronic mail sent on 27 November 1998, when the plaintiff was not on duty, and read by him on his return to duty on 29 November. 13.The offending article was brought to the notice of Mr Fenby, who wrote to the plaintiff on 7 December 1998 referring to the cancellation of the defendant's agreement with Times Newspapers Ltdcopyright infringement .... , characterising the copying as "a clear case of also a clear plagiarism on a large scaleexplanation. The plaintiff " and asking for an replied by letter on comprehensive reworking of the 9 December 1998 that his work was "a source materialcontend, copyright infringement , hence the use of my byline, and not, as you or 'plagiarism on a large scale'". 14.Mr Fenby, having received the plaintiff's letter, wrote to the plaintiff on 11 December 1998 relieving him of the editorship of Premier Soccer with immediate effect, and giving him one month's notice of termination of employment. In fact another staff member, Mr Niall Donnelly was immediately appointed to the editorship of Premier Soccer. The plaintiff's employment with the defendant was terminated after the month's notice on 10 January 1999, a date some three weeks short of the 5th anniversary of his commencement of employment. 15.In fact the plaintiff now accepts, on legal advice, that his publication of this material was plagiarism and amounted to breach of copyright. However, there is no evidence of any complaint against the defendant by Times Newspapers Ltd or of any loss caused to the defendant by this breach. Further, there is no evidence of any similar transgression or indeed of any other misconduct on the plaintiff's part, during his employment with the defendant. The issues 16.The issues as set out by Mr Coleman for the plaintiff and re-worked by me are :
The first two issues depend on the evidence; the third on interpretation of the contract. Was the dismissal wrongful and unreasonable? 17.This depends on the evidence but before considering it I think it is necessary to look at the "Employment Protection" provisions of Part VIA of the Employment Ordinance, Cap. 57 which provide protection for employees on dismissal or variation of contract in certain circumstances. The statutory scheme is relatively new; it only came into being on the enactment of the Employment (Amendment) (No.3) Ordinance on 27 June 1997. The great majority of cases brought under it are dealt with by the Labour Tribunal so there is no body of Hong Kong case law on the subject. The cases cited before me all come from the English courts where they were brought under the statutory provisions in the Employment Rights Act 1996 or earlier legislation relating to unfair dismissal. I will therefore first outline at this stage the Hong Kong statutory scheme, note the differences between it and the United Kingdom scheme and consider whether the United Kingdom authorities can properly be followed here. The Hong Kong Statutory Scheme 18.Section 32A provides :
In this case we are only concerned with the provisions of subsection (1)(a). 19.Section 32K provides :
20.Section 32L provides :
21.Section 32M(1) provides :
22.Section 32O provides :
The Statutory Scheme in the UK 23.Section 94 of the Employment Rights Act ("ERA") provides that an employee has a right not to be unfairly dismissed. 24.Section 98 provides :
25.In the United Kingdom scheme there are two stages. The employer must first show that he had a reason for dismissal within subsection (2) or some other substantial reason of a kind such as to justify the dismissal. These may be regarded as "potentially fair reasons"; see The Law of Termination of Employment, Robert Upex, 4th Ed., para 4.01. The court or tribunal must then decide whether in the circumstances the employer acted reasonably in dismissing for that reason. That is so even where one of the potentially fair reasons is a "substantial reason of a kind such as to justify the dismissal"; obviously the decision as to whether a reason existed which could potentially justify the dismissal existed does not pre-empt the decision as to whether or not the reliance on it was reasonable. 26.The courts in the United Kingdom have held that the correct approach in deciding whether the employer acted reasonably in dismissing the employee is "to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band or reasonable responses which a reasonable employer might have adopted"; per Browne-Wilkinson LJ in Iceland Frozen Foods Ltd v. Jones [1983] ICR 17 at pp. 24-25. This was affirmed by the Court of Appeal in Foley v. Post Office [2000] ICR 1283, overruling Haddon v. Van Den Bergh Foods Ltd [1999] ICR 1150 in which the Employment Appeals Tribunal had held that the task of the tribunal was to pronounce judgment on the reasonableness of the employer's actions, and whenever they upheld an employee's complaint they were in effect substituting their judgment for that of the employer. 27.In the Hong Kong scheme there is only one stage. The court or tribunal must decide whether the employee has shown a "valid reason" within the meaning of section 32K. In deciding whether the reason is valid the court or tribunal must by section 32L take into account the circumstances of the claim including in particular the length of actual service and the length of service needed to qualify for some right, benefit or protection. 28.So far so good; but what "valid" means is not clear. There is no statutory definition. According to the New Shorter Oxford English Dictionary, "valid" has the primary meaning of "possessing legal authority; executed with the proper formalities; legally acceptable or binding." When applied to an "argument, assertion, objection, etc." which I take to include "reason" it means "well-founded and applicable; sound, defensible" or in the general sense "effective; having some force, pertinency or value". 29.On the face of section 32K it appears to be sufficient to establish a valid reason if the employer shows that the dismissal was by reason of one of the matters listed in subsections (a) to (d). That makes sense if the dismissal is by reason of the fact that continued employment will break the law; but it does not in the case of conduct, because then any kind of conduct, however trivial, would amount to a "valid reason" and there would be no need for the court or tribunal to take anything else into account. Clearly, at any rate where conduct is concerned, the court or tribunal must make a value judgment as to whether the conduct amounted to a valid reason for dismissal. But on what basis does it make that value judgment? The answer where the employer shows "some other reason of substance" under subsection (e) is clearer; in that case if the court or tribunal decides that, in its opinion, the reason shown was sufficient cause to warrant the dismissal then the reason is a valid one. That means that the court or tribunal substitutes its own opinion for that of the employer; it decides how he should run his business. Such a situation may be acceptable in some situations but it is surely undesirable where the employee's conduct or his capability, or questions of redundancy and the genuine operational requirements of the business are concerned. These are matters for the employer. It is difficult to see that the legislature would have intended the court or tribunal to have the power in all cases to substitute its opinion for that of the employer. 30.If one looks at the Hong Kong statutory scheme as a whole it is clearly intended to strike, not at unfair dismissal generally but at unfair dismissal in circumstances where the employer dismisses the employee to save money at the employee's expense by getting rid of him before he becomes entitled to some kind of benefit. Looked at from that perspective one would think that the employer would simply have to rebut the presumption that he is dismissing for that reason, by showing that he is in fact dismissing for some other genuine reason. If that is right the onus on the employer should not be a heavy one. The court or tribunal should not have to go into a minute examination of whether or not the employer's action was reasonable, but merely whether or not it was some colourable reason other than that of cheating the employee out of the right, benefit or protection for which he had worked. But if that were so, there would be no need to take into consideration all the circumstances of the claim and section 32L would be redundant. 31.The Hong Kong statutory scheme is somewhat uncertain. It is quite different from the United Kingdom scheme and cases decided on that scheme in that jurisdiction can only be of limited value in Hong Kong. The concept of "the band of reasonable responses which a reasonable employer might have adopted" is rather complicated; it has the potential to give rise to a lot of appeals. However it is difficult to see how a reason for dismissal on the ground of conduct could be a valid one if did not come within the band of reasonable responses which a reasonable employer might have adopted. To that extent the concept is of some assistance in Hong Kong and I will apply it in this case. It still has to be applied in the Hong Kong context where by section 32L(2) the court or tribunal must take into account the actual and qualifying length of service. 32.It is argued that the issue of whether the dismissal was wrongful and unreasonable has two sub-issues here, namely whether the dismissal itself was unreasonable and whether the process by which the defendant arrived at it was unreasonable; see Whitbread plc v. Hall [2001] IRLR 275. I think this must also be right in the Hong Kong context. It is difficult to see how an employer can show a valid reason for dismissal if he cannot show that he gave proper consideration to the decision to dismiss. This would involve a consideration of all the relevant circumstances. I will return to this below. 33.Evidence for the plaintiff came from the plaintiff himself and from Mr Nury Vitacchi, who said that he worked on and off for the SCMP for some 11 years. In addition there was a statement from a Mr Kenneth James Haley, who had worked for the SCMP but and been dismissed, about the procedure which led to his dismissal. Evidence for the defendant came from Mr Niall Donnelly, currently the Sports Editor; Mr Robin Bowman, the Deputy Editor; Mr Ray Bashford, at the relevant time the Business Editor, and Mr Stan James who worked for a while with the plaintiff on Premier Soccer. In addition there were two statements from Mr Jonathan Fenby, at the relevant time the Editor of the SCMP. 34.All the witnesses made written statements, which they adopted as evidence, and all gave oral evidence-in-chief as well. In their statements, the defence witnesses in particular take issue with points raised in the statements of the plaintiff and his witnesses. I do not propose to rehearse the evidence in detail but will simply give a brief outline of it and deal with salient points later as the need arises. 35.In brief, the thrust of the plaintiff's evidence was that his dismissal was unfair because although he now admits that he was in breach of copyright and guilty of plagiarism, he did not think he was doing this at the time, and in any event plagiarism, breach of copyright and the "lifting" of material from other newspapers and news agencies was commonplace at the SCMP. Mr Vitacchi's evidence goes to support this contention. Further the plaintiff says that his article was published with the knowledge and tacit approval of Mr Stan James who was in some kind of supervisory position. He was not given any warning about his conduct; Mr Fenby did not speak to him and indeed avoided him once he had written the letter demanding an explanation. 36.The defendant's witnesses all say in effect that the conduct of the plaintiff in lifting material for his own article directly from Mr McIlvanney's article amounted to grave professional misconduct. They say that there was no general culture of plagiarism and no condonation of plagiarism at the SCMP although they admit that this could happen on occasion. All the others say that Mr Fenby was a very approachable Editor and would not have sought to avoid the plaintiff. They deny any kind of ulterior motive in the dismissal of the plaintiff, be it for Mr Donnelly to get a position from which he could (and did) advance to be Sports Editor, or for the purpose of taking away the plaintiff's right to his long service payment. Indeed Mr Fenby says in his second statement that he simply did not know that the plaintiff was about to qualify for that benefit, so that it was not in his mind when he made the decision to dismiss him. 37.The plaintiff's conduct which led to the dismissal is admitted. There is no doubt that the plaintiff's actions in respect of the offending article amounted to disobedience of a general instruction concerning the use of material from The Times or The Sunday Times, breach of copyright and plagiarism. The evidence of the defendant's witnesses is that this sort of plagiarism was a particularly heinous misconduct on the part of a journalist. Mr Fenby calls it "grave professional misconduct". As Mr Donnelly put it, "It cuts to the bone of what the profession is about". There is really no evidence on the plaintiff's side to contradict this. The plaintiff's evidence and that of Mr Vitacchi is rather that plagiarism was commonplace; if that is so, it does not mean that the misconduct was any less serious when judged from a professional standpoint. I accept that what the plaintiff did amounted to serious professional misconduct for a journalist. 38.The plaintiff wrote on 9 December 1998 to Mr Fenby a letter of explanation in which he sought to characterise his article as "a comprehensive reworking of the source material". It was obviously nothing of the sort. Further he sought to explain his use of the material by the lack of available copy at the time. He says in evidence that there was such a lack, but Mr Donnelly says quite clearly that there was not. Mr Donnelly was quite clear and specific on this and I prefer his evidence to that of the plaintiff. 39.The plaintiff says that he showed both articles to Mr James who was in some sort of supervisory position to himself, and who did not disapprove the article. Now I have heard the evidence of Mr James on this point. He seemed to me to be entirely truthful. He said that his function was to deal with the layout of the supplement and not its content and that he was required to put in a relatively small amount of time on this. More than not being concerned with content, he says that he was not very interested in football. He appeared to me to be a very straightforward and believable witness and I prefer his evidence to that of the plaintiff on this matter. I do not believe that he was in any kind of supervisory position over the plaintiff or that he did in any way allow the plaintiff to produce his own article in the knowledge that it contained plagiarism. 40.Overall it seems to me that the plaintiff's letter of 9 December is a rather hollow attempt at self-justification. It appears from Mr Fenby's first statement that it must have annoyed him. Certainly he took it as compounding the plaintiff's original conduct. 41.Granted that the plaintiff's actions constituted grave professional misconduct, the next question is, was this sort of thing commonplace at the SCMP? I treat this as a separate question from the question of gravity; in a situation where misconduct is commonplace the fact that it is so, and condoned by those in authority does not lessen its gravity in moral or professional terms. It only goes to what those in authority may reasonably do in dealing with an individual case. 42.The question of whether this kind of misconduct was commonplace is relevant because if it was commonplace, and others were allowed to get away with it, this would affect the question of whether the dismissal of the plaintiff was a reasonable response. In The Post Office v. Fennell [1981] 1 IRLR 221 the Court of Appeal held in effect that employees who commit similar offences should receive more or less the same punishment so that dismissal of an employee for an offence for which similar offenders have not been dismissed may be regarded as unfair. In Hadjioannou v. Coral Casinos Ltd [1981] IRLR 352 the Employment Appeal Tribunal held that an argument by a dismissed employee that the treatment he received was not on a part with that meted out in other cases is relevant in determining fairness in three sets of circumstances. The first is where employees have been led to believe that certain categories of conduct will be overlooked or treated with punishment less than dismissal and the second where evidence in relation to other cases supports an inference that the stated reason for the dismissal is not genuine. In the third situation, evidence of decisions made by an employer in truly parallel circumstances may be sufficient to support an argument that dismissal was not reasonable in the particular case. 43.The plaintiff's own evidence of the general culture of plagiarism and condonation is rather vague. So far as it condescends to particulars, it deals with an article by Mr Bashford which prompted a dispute with the Bloomberg agency, copying by a Mr Gordon Watts and Mr Donnelly of material from newspapers such as with which the SCMP had no syndication agreements The Sun, The Daily Star and The Daily Mail, and accrediting it to unnamed "Agencies", and the unauthorised reproduction of material from London newspapers by Mr James in his column entitled "Weird and Wonderful". Mr Vitacchi's evidence is also rather vague except that he specifically accuses a Mr Stephen Leather, the one-time Business Editor, of wholesale plagiarism. He called Mr Fenby the "king of cut-and-paste" though he was unable to support that by reference to a book by Mr Fenby of which excerpts were put to him in cross-examination. 44.The statements of the defence witnesses denying the culture of plagiarism and condonation are all very similar in terms though they claim to have written the statements themselves; this seems to be relied on as suggesting collusion. Mr Donnelly had to admit that he himself had breached copyright in respect of material taken from the UEFA website, and that he had used unattributed quotations in his own article. However Mr Bashford has explained in great detail and to my mind adequately the circumstances of the two disputes which Bloombergs had with the SCMP. There is no question of plagiarism in his article. In the other case there appears to have been a simple mistake. 45.The difficulty here, to my mind, is that whether the copying of another's material in a particular case amounts to plagiarism or professional misconduct must be a matter of degree. It is said that the copying of one author is plagiarism and the copying of many is research. It appears that if something is reported by one writer, he should have a repetition of it attributed to him but if it is reported by many it is acceptable to attribute it to "Agencies". It is entirely possible for two people to write a factual piece in similar words without copying. The evidence on the plaintiff's side is rather vague; it is on the basis of "Everyone was doing it". That on the defendant's side takes the moral high ground; "We were all whiter than white". Obviously among 300 or more journalists some are going to copy material some of the time and get away with it. What I have not heard is any evidence of an employee committing a specific offence of the same nature and gravity as that committed by the plaintiff, and getting away with it. There is no evidence of "truly parallel circumstances". The only case of dismissal was that of Mr Haley; the relevance of that being that he received a warning first; but he was dismissed ultimately for a "shouting match" with his head of department. Nor in my view is there sufficient specific evidence to show that Mr Fenby or the SCMP let journalists believe that they could commit wholesale plagiarism and get away with it. 46.As to the suggestion that the removal of the plaintiff was for an ulterior motive, I cannot see that there is sufficient to support this either. It is true that Mr Donnelly wanted to get back into sports writing which he had done for other papers in the past. As he admitted, in bringing the plaintiff's article to Mr Bowman he "loaded the gun but did not pull the trigger" and he no doubt gladly stepped into the plaintiff's place when it was offered to him. Mr Bowman having been shown the article then brought the matter to Mr Fenby. Now perhaps Messrs Donnelly and Bowman had in mind some scheme to oust the plaintiff, though there is no direct evidence or admission of that; but if there was such a scheme there is certainly no evidence that Mr Fenby lent himself to it. There is nothing on which I could infer that it is more probable than not that Mr Fenby dismissed the plaintiff for any reasons other than those given in his statement. 47.The question of whether the dismissal itself was reasonable has therefore to be looked at only in the light of the gravity of the offence itself, set against the facts that the this was a first offence and caused no actual loss to the defendant, and the fact of the plaintiff being very close to completing the qualifying period for a long service payment. In fact these matters are also relevant to the question of whether the process by which the dismissal was arrived at was reasonable. 48.As I have said the plaintiff's offence caused no loss to the defendant. There have been no proceedings against the SCMP. Indeed, an e-mail to the plaintiff from a Mr Butler at The Sunday Times dated 18 March 1999, while giving the opinion that the wholesale lifting of material was unethical and ill-advised, showed quite simply that "The Sunday Times doesn't have a position in your case". Just how much the plaintiff's article would have brought the SCMP into disrepute, if at all, is not clear; I suspect that not too many of its readers would have read both Mr McIlvanney's article and the plaintiff's, and that of those who did some would not remember the first one well enough to notice the copying in the second, and of those who did that, not too many would care. After all, Premier Soccer was a supplement; they were paying for the Friday edition anyway. There is certainly no evidence of any consequent drop in sales or subscriptions. 49.In the light of this and the fact that it was the plaintiff's first offence, my own reaction is that the more reasonable course would have been to give the plaintiff a warning. After all dismissal is the most serious sanction. The plaintiff in his letter, however unsatisfactory it might have been to Mr Fenby, did promise not to use copy from The Times in future, and to be vigilant about copyright issues. I do not think that dismissal was one of the reasonable responses open to a reasonable employer in the circumstances. If it was, it was very much on the borderline even if there had been no question of loss of benefit. 50.Looking however at the process by which Mr Fenby arrived at his decision, it appears from the evidence of how Mr Haley was dealt with and how the plaintiff was dealt with that only Mr Fenby ran the disciplinary side of things and that only as he thought fit in the circumstances. It is rather difficult to see that as being a reasonable approach to discipline in a newspaper with over 300 journalists and no doubt many other staff as well. One would have thought that some formal disciplinary process should have been put in place. None was. 51.As I indicated above it is difficult to see how an employer can show a valid reason for dismissal in the Hong Kong context if he has not considered all the circumstances in arriving at the decision to dismiss. Mr Fenby, according to his second statement, did not know and did not consider that the plaintiff had nearly completed the period of qualifying service. This is a relevant circumstance particularly in the light of section 32L(2). In fact the whole thrust of the legislation strikes at the employer who dismisses an employee in order to deprive him of some right. If the employer cannot show a valid reason for dismissal he is taken to have dismissed the employer with that intention. It cannot be enough for the employer to say "Well, the qualifying period never crossed my mind"; if that were enough, it would constitute a complete defence and make nonsense of the legislation. It seems to me that in order to establish a valid reason for dismissal shortly before the completion of a period of qualifying service, a Hong Kong employer must be able to show that he took that into consideration in deciding that in the circumstances dismissal was the proper course. Mr Fenby did not take it into consideration, so his decision was flawed. Even if dismissal was a reasonable response in the context of a first offence which caused no loss, which I do not think it was, it seems to me that this flawed decision means that in any event I must find that the defendant has not shown a valid reason for the dismissal of the plaintiff. Terminal Payments 52.In the premises the plaintiff is entitled to terminal payments under section 32O of the Employment Ordinance. This means in effect that he must be put into the position in which he would have been, if he had been dismissed on due notice after his 5th anniversary of commencement of employment. 53.A terminal payment to cover wages may be awarded under section 32O(3)(a). The plaintiff if dismissed after the 5th anniversary would have earned a further three weeks wages, i.e. $29,670 and this is awarded. 54.The long service payment under section 31V(1) would be calculated at the 5th anniversary at $75,000. However the parties agree that under section 31Y, which provides for the long service payment to be reduced by amount of gratuities and benefits in certain cases a figure of $109,844.91 would fall to be deducted; therefore the amount of award in respect of the long service payment must be and is reduced to nil. 55.The wrongful dismissal also reduced the pension payment which the plaintiff received. At the five-year point, the multiplier on leaving increases from 1.00 to 1.25. He actually received $184,613.30; at the five-year point he would have been entitled to $247,250. The difference is $62,636.70 and this is awarded under section 32O(3)(e). The end of year payment 56.Regulation 8 of the defendant's Staff Regulations and Conditions of Service provides :
57.The plaintiff was not paid the bonus. The defendant takes the view that it had the discretion to refuse it and did refuse it. This is perhaps not surprising, given that the plaintiff was guilty of serious misconduct. However the plaintiff's argument is that this was not, on the wording of the Regulation, an individual bonus. It was payable to a class, i.e. employees who did not receive commission. Once the decision to pay was made, it applied to all employees who qualified under sub-regulation (2), which the plaintiff did. The decision was made to pay the bonus because on the evidence of the plaintiff other employees received a bonus of two months' salary. Therefore the plaintiff should have two months' salary also. 58.It seems to me that on any reading of the Regulation the plaintiff's argument must be correct. It refers to a class, not an individual. In my view the plaintiff is contractually entitled to this bonus of two months' salary and he is awarded $79,120 under this head. Damages for the breach of the mutual obligation of trust and confidence 59.It is agreed that there is a mutual obligation of trust and confidence between employer and employee under a contract of employment. The plaintiff argues that this requires that an employee be treated fairly, appropriately and consistently with other employees. The defendant breached this when it failed to adopt the normal and/or a fair process of disciplinary action. The mutual obligation would include an appropriate use of meetings and warnings within the overall consideration of a decision how to discipline the particular individual for a particular misconduct, if proved. 60.Counsel for the plaintiff argues that in Malik v. Bank of Credit and Commerce International SA [1998] AC 20, the House of Lords decided that if the breach of a contract of employment relates to a breach of some other obligation than that merely giving rise to unlawfulness in the termination, damages may properly be recovered in respect of whatever losses are suffered, provided they are causally attributable to the breach and not too remote. This was applied in Hong Kong by the Court of Appeal in Bachicha v. Poon Shiu Man Henry, [2000] HKC 452. On this principle the plaintiff is entitled to damages for the loss of income which he has suffered since his dismissal. 61.In Malik, two employees of the Bank of Credit and Commerce International S.A. lost their jobs when that bank collapsed in 1991. They sought to prove in the liquidation for damages because their association with the BCCI had placed them at a serious disadvantage in finding new jobs; what has been called "stigma damages". The liquidator refused. They sued. The registrar directed the trial of a preliminary issue, whether the evidence disclosed a reasonable cause of action or a sustainable claim for damages. Ultimately the House of Lords held that there was an implied obligation on an employer that he would not carry on a dishonest or corrupt business, and where it could be shown that it was reasonably foreseeable that inconsequence of his corruption there was a serious possibility that an employees future entitlement prospects were handicapped, damages were recoverable for any such continuing financial losses sustained. 62.Bachicha was a case of a constructive dismissal of an ill-treated domestic helper. The Court of Appeal held that the conduct of the defendant had been such as to constitute both a constructive dismissal and a breach of the implied trust and confidence term. The plaintiff was held to be entitled to damages for wrongful dismissal on the usual measure. She was also held entitled to damages to the extent that she suffered any additional pecuniary loss which was not too remote as a result of the breach of the implied trust and confidence term by driving her out of her employment. She was awarded loss of a chance of earnings for a period during which she did not have the permission of the Immigration Department to seek alternative employment. 63.The circumstances of this case are obviously far different from those in Malik or Bachicha. Here we have a plaintiff who was dismissed on notice according to the terms of his contract of employment, in particular Regulation 6(a) of the Staff Regulations. There is no question of summary dismissal though it might have been open to the plaintiff to rely on Regulation 4(c) of its Staff Regulations which allows for summary dismissal for serious misconduct or alternatively on section 9 of the Ordinance. There is no question of constructive dismissal. In fact, if the defendant had dismissed the plaintiff on notice after the 5th anniversary of his commencement of employment there would be no question of wrongful dismissal and no question of remedy. The matter only comes before the court because of Part VIA of the Ordinance. 64.There is no doubt that there is, in a contract of employment, a mutual obligation of trust and confidence. The judgment in Malik endorsed it. It is a term implied by law and as such a default rule which the parties are free to exclude or modify. See the judgment of Lord Steyn in Malik at page 45. But in any event an implied term must not contradict an express term of the contract. Here in the contract we have an express term allowing either party to terminate on one month's notice. They can do it on a whim, if they wish. But if the mutual obligation is taken as requiring consultation and warning before dismissal, that contradicts the express term; it takes away the defendant's right to terminate the contract and by the same token, because the obligation is mutual it would no doubt take away the plaintiff's right to terminate the contract, for instance if he saw a better job somewhere else, without some form of consultation with the defendant first. That cannot be right. In any event it would get the plaintiff nowhere. If he had been consulted and warned, and had kept his job, the defendant would still have been under no contractual duty to keep him on, and could still have dismissed him on notice in any event. 65.A further point is this. If the defendant's failure to consult and warn the plaintiff amounted to a breach of the implied term which entitled the defendant to damages, what damages flow directly from the breach? The plaintiff says that he has suffered a loss of earnings. No doubt he has. He lost his job and he could not get as good a job. That is unfortunate. But there is nothing to suggest that, if he had been consulted and warned, and then contractually dismissed, even after his 5th anniversary, his position in the job market would have been any different. Leaving aside any question of foreseeability there is no evidence of any actual loss flowing directly from what the plaintiff claims is a breach of the implied term. 66.When I allowed the amendment of the Statement of Claim to I said that I thought the plaintiff's claim under this head was tenuous. In fact I cannot see that there is anything in it, at all. Summary 67.The plaintiff is entitled to the following awards:
68.There will be judgment for the plaintiff in the sum of $171,426.70 with interest from the date of dismissal until payment at the judgment rate, and costs (nisi) to be taxed if not agreed. The plaintiff's own costs are to be taxed in accordance with the Legal Aid Regulations.
Representation: Mr Russell Coleman, instructed by Messrs Miller Peart, assigned by the Director of Legal Aid, for the Plaintiff Mr Daniel Wan, instructed by Messrs Deacons, for the Defendant Remarks: Appeal by the Defendant to the Court of Appeal. Appeal allowed. Please refer to the appeal judgment of CACV000253/2002. |
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