Sui Mei Kuen and Others v. Fortune Wigs Manufacturing Ltd
Read the full judgment text of DCCJ 1028/1973 on BabelCite. This District Court judgment was delivered on 22 September 1973.
1. Each of the first six Plaintiffs was employed by the Defendant under a "continuous contract" within the meaning of S.2A(1) of the Employment Ordinance, Cap. 57, and in the absence of any agreement to the contrary, the length of notice required for the Defendant to terminate those contracts was one month by virtue of the provisions of S.4(1) and S.5(2) of the Ordinance.
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DCCJ001028/1973 IN THE DISTRICT COURT HONG KONG HOLDEN AT KOWLOON CIVIL JURISDICTION ACTION NO. 1028 OF 1973 -----------------
----------------- Coram: J.J. Rhind, D.J. Date of Judgment: 22 September 1973 ----------------- JUDGMENT ----------------- 1. Each of the first six Plaintiffs was employed by the Defendant under a "continuous contract" within the meaning of S.2A(1) of the Employment Ordinance, Cap. 57, and in the absence of any agreement to the contrary, the length of notice required for the Defendant to terminate those contracts was one month by virtue of the provisions of S.4(1) and S.5(2) of the Ordinance. 2. All of them were employed on making wigs at piece work rates, and none of them had worked for the Defendant for less than several months when, on 28th December 1972, the Defendant suddenly sent them all home without any good cause or previous warning. The evidence discloses that the Defendant then shut down its operations, with the result that there was no further work for the Plaintiffs to do. Although the Plaintiffs all appear to have been ready, willing and able to return to work, the call never came, and whilst in mid-January the Defendant paid them for the work they had done up till 28th December, they have received nothing further. 3. It being clear that the Defendant by its conduct terminated their contracts without notice on 28th December, the question of their entitlement to damages arises. 4. As, despite reasonable efforts to that end, none of the Plaintiffs was able to find alternative employment before 9th February 1973, there is no doubt that, whatever approach the Court adopts in determining damages, the Plaintiffs will be entitled to an award of at least the equivalent of one month's earnings. Moreover, Mr. Fairbairn for the Plaintiffs has expressly limited their claims to the amount of one month's earnings. 5. Thus, such questions as whether the Plaintiffs' damages should be regarded as liquidated or unliquidated are of no practical consequence in view of the particular facts of this case, but, as Mr. Fairbairn has gone to considerable trouble in presenting arguments to the Court on the nature of the award in this type of case, I consider it would be desirable for me to record my views on his submissions. 6. In the present case, following a Practice Direction of Judge Cons, which complemented his decision in Ma Mou Leung v. Dollar Motors Ltd, 1969 D.C.L.R. 21 to the effect that an employee's claim for wrongful dismissal without notice was one for unliquidated damages, the Deputy Registrar entered interlocutory judgment for the Plaintiffs in default of any defence, and ordered that damages should be assessed. It was for the purpose of assessing damages that the case came before me. 7. Mr. Fairbairn disputed the correctness of the Deputy Registrar's action in entering interlocutory judgment rather than final judgment for one month's salary in lieu of notice. Moreover, Mr. Fairbairn ventured to urge that the Court need not stop at awarding liquidated damages only, but could also award unliquidated damages as well. As he put it, the Ordinance creates a scheme of statutory compensation parallel and alternative to common law damages but not exclusive of common law damages. This so-called statutory compensation would in effect be the same thing as liquidated damages, the quantum being one month's wages. He would concede however that any amount awarded for liquidated damages would have to be deducted from the unliquidated damages. A situation analagous to what he appears to have in mind is that obtaining under the Workmen's Compensation Ordinance where any statutory compensation which the employer is required to pay under that Ordinance is off-set against any amount he has to pay for common law damages. 8. However, unless Mr. Fairbairn can get past first base, which entails demonstrating that the wrongfully dismissed employee is entitled to liquidated damages amounting to one month's salary, any consideration of the possible relationship between liquidated and unliquidated damages becomes otiose. 9. In my view, the argument that the Ordinance entitles the employee to claim liquidated damages received its quietus well and truly with the Dollar Motors decision (supra). Last year I arrived at a contrary conclusion in Lee Chi-fai v. Sunrise Knitting Factory Limited, Tsuen Wan Civil Action No. 198 of 1972, but that was per incuriam, and I now acknowledge that the part of my judgment to that effect was wrong. 10. Having myself fallen into the trap, I know how easy it is to assume that S.6(1) of the Ordinance creates a right for the party whose contract has been wrongfully terminated without notice to claim a fixed amount of damages or compensation. However, the Dollar Motors decision points out quite correctly that really the section creates no such right but merely incorporates into the contract for the benefit of both parties a privilege which until then had been enjoyed by the employer alone, namely the right to buy his way out of the contract at any stage for a pre-determinable sum. 11. Mr. Fairbairn questions whether S.7(a) of the Ordinance was taken into account in arriving at the Dollar Motors decision as there is no express reference to it in the judgment. As he says, S.7(a) refers to a party's bright to notice or to payment in lieu of notice." However, the apparent effect of those words taken in isolation is rather different from their effect when taken in the context of the whole of the words in the paragraph in which they appear. Section 7(a) reads as follows:-
12. It can readily be seen that S.7(a) by itself creates no new rights. It is a provision dealing solely with the waiver of rights, and to find out what are the rights which can be waived, one has to look outside the confines of S.7(a). It appears to be a provision inserted in the Ordinance ex abundante cautela to ensure that the concept of waiver was preserved, but it totally begs the question of what the rights are which can be waived. 13. At the most, one might argue that S.7(a) appears to presuppose that the Ordinance has created a right to payment in lieu of notice, but one searches the Ordinance in vain to find where this right has been created. The nearest one gets to a source for such a right is S.6(1), but the Dollar Motors decision shatters that illusion. 14. Even as the Ordinance stood at the time of the Dollar Motors decision, it could be clearly demonstrated that S.6(1) did not automatically give the wrongfully dismissed employee an entitlement to fixed compensation of one month's salary in lieu of notice. At that time S.6(1) read:-
15. So long as the word "paying" stood as it did in that subsection, one could at least mount an argument for interpreting it as meaning "being required to pay" but even that possibility has been removed since the amendment to the Ordinance in 1971, substituting the words "agreeing to pay" for "paying". 16. In a case like the present one, there is no scope for pretending that the employer "agreed to pay" the employees a month's wages each when they were wrongfully dismissed, but without such an agreement at the time of their dismissal section 6(1) can have no application to their claim. 17. Again, Mr. Fairbairn wondered whether the learned judge in the Dollar Motors decision had overlooked yet another provision of the Ordinance, this time S.16(2)(b). 18. S.15(2)(b) is to the effect that where an employee's contract is terminated, the amount his employer must pay him includes "the sum (if any) payable under section 6". Because of the words "(if any)" such a provision is obviously of assiatance to the employee only to the extent that section 6 confers some benefit on him. Unless the employer has agreed to pay the employee a month's wages at the time of termination, it is difficult to see how S.15(2)(b) will be of any avail to the employee. 19. Although the preamble to this Ordinance describes it as one, "To provide for the protection of the wages of employees ......", it started off by according even-handed treatment to employers and employees alike on the question of the damages payable by the party wrongfully terminating a contract of employment. The Dollar Motors decision established that the wrongfully dismissed employee could claim only for his actual loss, and then came the decision in Juno Revolving Restaurant Ltd. v. Patty Kwok Hoi-chun V.D.C. C.J. Action No. 2383 of 1970 which made it clear that what was sauce for the goose was also sauce for the gander when it held that where the employee was the one responsible for wrongfully terminating the contract then the wronged employer could claim only for his actual loss and not for fixed compensation of one month's wages. Section 6 and 7 of the Ordinance applied to employer and employee equally producing identical results for whoever happened to be the claimant. Those sections applied to, "Either party to a contract of employment ....." 20. Section 15, though, dealing as it does with payments to or deductions from an employee at the termination of his contract has always had, as a matter of drafting necessity, to make separate provision for the employer's and the employee's position. However, until it was amended in 1971, the section still exemplified the even-handed approach which characterised sections 6 and 7. On the one hand, if it was the employee who was wrongfully dismissed, the employer had to pay him under S.15(2)(b) "the sum (if any) payable under section 6", whereas, on the other hand, if it was the employee who had wrongfully terminated the contract, the employer by virtue of S.15(3) could deduct from any wages due, "such sum as the employee is liable to pay under section 6". Although the words "(if any)" which appear in S.15(3), I do not regard this as being of any significance as both provisions, by completely begging the question of what is due under S.6, throw the back to S.6 to ascertain what sum, if any, is due to the party claiming, and as I have already indicated S.6 confers equal entitlement on the employer and the employee. 21. However, after the JUNO Revolving Restaurant case, S.15(3) was altered in such a way that instead of at least even-handed treatment being meted out to employer and employee, the Ordinance has now become one where the balance has been tipped in favour of the employer. 22. If the employee walks out on him without giving notice, the employer can now automatically deduct the equivalent of a month's salary from any sums due to him from the employee, even though the employer might hire a substitute worker the some day and suffer no loss of profits whatsoever. By contrast the employee's position remains as it was, so that, if he gets another job on the day he is wrongfully dismissed, he gets nothing. 23. This state of affairs has come about by an amendment to S.15(3) which now provides as follows:-
24. Thus, it can be seen that now if the employee who should have given a month's notice wrongfully terminates without notice, an employer holding any sums for him is deemed entitled to deduct a month's wages in lieu of notice. 25. To restore reciprocity of treatment between employer and employee, it would now be necessary to amend S.15(2)(b) somewhat along the following lines:-
26. If, as an article at page 123 of 1973 H.K.L.J. states, the Hon. Commissioner of Labour in introducing the amendment to S.15(3) into the Legislative Council stated that it introduced no new principle, then I can only presume that his remark must have been founded on bad legal advice for the amendment appears to implement a startling change. 27. If anyone should seek to argue that the inclusion of the words " ...... subject to any order made by a court, ......" in S.15(3), as now amended, still might result in an employer ultimately retaining no more than unliquidated damages assessed according to ordinary Common Law principles, then all I can say is that it is singularly obscure, clumsy and haphazard means of achieving that object. Let the legal draftsman state his intention plainly instead of resorting to riddles. 28. The introduction of this Ordinance with its lofty preamble ...(illegible) of the wrongfully dismissed employee remains what it has always been, namely, to claim unliquidated damages only. As the Ordinance fails to confer on the employee any entitlement to liquidated damages, statutory compensation or any similar pre-determinable award, the argument that the employee now gets parallel benefits in the form of fixed compensation and common law unliquidated damages fails to get off the ground. 29. To return to the facts of the present case, each of the six Plaintiffs who gave evidence satisfied me that she was entitled to unliquidated damages equivalent to at least her previous month's earnings. I say "at least" advisedly, for there is authority at page 263 of Batt's The Law of Master and Servant (5th Edition) to the effect that the quantum of damages due to a wrongfully dismissed employee entitled to one month's notice is not limited to what he or she would have earned in a month, but is what he or she might have been expected to earn from the previous employer right up till the time of finding alternative employment, even though that might be far in excess of a month. 30. Thus in the present case, it is arguable that the Plaintiffs' quantum of damages is what they might have been expected to earn for the period 28th December 1972 to 9th February 1973. 31. On that line of reasoning, if employers wrongfully dismiss their employees without agreeing to pay wages in lieu of notice, the former might ultimately find themselves liable to pay unliquidated damages way in excess of the wages due merely for the appropriate period of notice. 32. However, in the present case the employees have limited their claims to the equivalent of one month's wages, so I will limit my award of damages to that amount. 33. On the basis described above, the damages I award to each of the Plaintiffs is as follows:
34. I award costs against the Defendant on Scale V.
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