Allidem Mae G v. Kwong Si Lin

Case No.HCLA 35/2002

Court

HCLA

Date09 Jun 2003

Judge—

Case Document

100%Judiciary

HCLA000035A/2002

HCLA 35/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 35 OF 2002

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO. 1513 OF 2002)

____________

BETWEEN
	ALLIDEM MAE G	Claimant

	AND

	KWONG SI LIN	Defendant

____________

Coram: Deputy High Court Judge A Cheung in Court

Date of Hearing: 7 April 2003

Date of Further Written Submission by the Claimant: 22 April 2003

Date of Further Written Submission by the Defendant (as re-submitted): 14 May 2003

Date of Judgment: 9 June 2003

_______________

J U D G M E N T

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1.This is an appeal by the Defendant from an award made by the Labour Tribunal on 26 April 2002.

2.The only live issue before the Labour Tribunal was the Claimant's entitlement to long service payment. There was no dispute that the Claimant had worked as the domestic maid of the Defendant for over 9 1/2 years. On 18 December 2001, the Defendant terminated her employment. The Defendant argued that this was a case of summary dismissal in accordance with s. 9 of the Employment Ordinance (Cap. 57) and therefore no long service payment was payable. The Claimant denied that there was any good cause for summary dismissal, but in any event maintained that the termination of her employment was not effected in accordance with s. 9 of the Ordinance, and therefore long service payment was due.

3.The Presiding Officer took as a preliminary point, which he decided eventually in favour of the Claimant, whether the termination of employment was effected in accordance with s. 9. Given that he answered this question in the negative, he held that the Claimant was entitled to long service payment, regardless of whether there was or were good ground(s) that could justify a summary dismissal in accordance with s. 9.

4.Long service payments are governed by Part VB of the Employment Ordinance. The general qualification provisions for long service payments are set out in s. 31R(1), which reads as follows:

"(1) Where an employee who has been employed under a continuous contract-

(a) for not less than 5 years of service at the relevant date-

(i) is dismissed and his employer is not liable to pay him a severance payment by reason thereof; or

(ii) subject to subsections (3) to (5), terminates his contract in the circumstances specified in section 10(aa); or

(b) terminates his contract and, at the relevant date, he is not less than 65 years of age and has been employed under that contract for not less than 5 years,

the employer shall, subject to this Part and Part VC, pay to the employee a long service payment calculated in accordance with section 31V(1)."

5.On the face of it, the Claimant's case fell within s. 31R(1)(a)(i). However, the above provisions have to be read together with s. 31S(1) and s. 31T(1)(a), which read respectively as follows:

"(1) An employee shall not be entitled to a long service payment by reason of dismissal where his employer, being so entitled by reason of the employee's conduct, terminates his contract of employment without notice or payment in lieu in accordance with section 9." (s. 31S(1))

"(1) For the purposes of and subject to this Part, an employee shall be taken to be dismissed by his employer if, but only if-

(a) the contract under which he is employed is terminated by the employer with or without notice or payment in lieu thereof other than in accordance with section 9." (s. 31T(1)(a))

6.Section 9 of the Ordinance reads as follows:

"(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."

7.Section 9 thus overrides s. 7 of the same Ordinance (see s. 8(b)) which reads as follows:

"(1) Subject to sections 15 and 33, either party to a contract of employment may at any time terminate the contract without notice by agreeing to pay to the other party a sum equal to the amount of wages which would have accrued to the employee during the period of notice required by section 6."

(Section 6 provides for termination of contract by notice.)

8.Given the way entitlement to long service payments is provided for in the relevant provisions in the Ordinance, it has been said by the late Deputy Judge Jerome Chan (as he then was) in Chak Chong Chi v Maxim's Caterers Ltd, Labour Tribunal Appeal No. 25/1992 (21 September 2002), that in order to deprive an employee of his long service payment entitlement, a dismissal must be effected "without notice or payment in lieu in accordance with section 9" (assuming, of course, that grounds exist to justify the summary dismissal under s. 9). Put another way, even if grounds existed to justify a summary dismissal under s. 9, if the actual dismissal was effected by the employer by notice (i.e. pursuant to the notice provisions, if any, in the contract of employment or s. 6 of the Ordinance) or payment in lieu of such notice (pursuant to either the provisions in the contract or s. 7 of the Ordinance), the dismissed employee would still be entitled to long service payment, because in that case the dismissal was not effected "without notice or payment in lieu in accordance with section 9".

9.In Chak Chong Chi, the employer conceded that the dismissal was not done in accordance with s. 9. Nonetheless, the learned judge made the following obiter observations (at pp. 4, 5, 7, 9 and 10):

" Pursuant to s. 31S(1) and s. 31T(1)(a), if an employment is terminated by the employer in accordance with s. 9, then the employee would have no right to any long service payment. I am unable to read into either of these 2 sections words to the effect that the section will apply notwithstanding that the termination was effected by the giving of a s. 6 notice or the making of a s. 7 payment, simply because the employer could have, but elected not to, exercise an existing right to terminate the employment in accordance with s. 9. It is obvious that both sections deal with the manner the contract of employment was in fact brought to an end, and not with what might or could have been the case but was not the case. In the face of the concluding wordings in s. 31S(1) that the termination is one "without notice or payment in lieu in accordance with section 9", any contention that the termination described therein also includes a termination with payment in lieu-in accordance with s. 7 defies both logic and common sense. Such a construction would also violate the clear wordings of s. 9. The opening words of s. 9 refer to a termination without notice or payment in lieu. How, then, could it be argued that a termination with payment in lieu is a termination "in accordance with section 9"?

Much emphasis has been placed by Mr Ho for the Respondent [employer] on the words "being so entitled by reason of the employee's conduct" in s. 31S(1). It is his submission that these words are suggestive of the sufficiency of a right to terminate under s. 9 to give rise to the exclusion. I do not accept, nor do I accept it is arguable, that the said words can give rise to a construction that would render a mere presence of an unexercised right under s. 9 to be sufficient to bring the exclusion into operation...

Our s. 9 restated the common law grounds for summary dismissal in sub-paragraph (a) and preserve other common law grounds in sub-paragraph (b). Other common law grounds covered by sub-paragraph (b), which have not been enacted as express statutory grounds, would include situations such as frustration, death or consent on the part of the employee. It would be most unreasonable if an employee whose employment was terminated by the employer on account of frustration or consent on his part without notice or payment in lieu thereof, should be deprived of his entitlement to long service payment (different considerations may apply to severance payments). Thus, it becomes necessary to distinguish terminations involving culpability under sub-paragraph (a), with those innocent situations under sub-paragraph (b) for the purposes of long service payments. Hence the reference to "being entitled by reason' of the employee's conduct" must be retained in the local legislation to qualify a termination in accordance with s. 9. The phrase, so heavily relied on by Mr Ho, is a clear reference to s. 9(a) to distinguish it from s. 9(b). The phrase in effect is the same as "being entitled by reason of subsection (a) thereof".

...

It is to be noted that though the archaic doctrine that "an employer, where he dismisses his employee, need not allege any specific act of misconduct on the employee's. Part as the ground for the dismissal; it is sufficient if such a ground still exist, whether or not the employer knew of it at the time of the dismissal" (see Chitty on Contracts, Vol II, 26th ed., para.3979) survives the local legislation when his English counterpart is obliged, at the pain of statutory penalty, to supply written reasons for dismissal to his employees upon request pursuant to s. 53 of the 1978 Act, it is still necessary for the employer to decide and inform the employee of the mode and ground for the termination i.e. whether it is a termination by notice, by payment in lieu of notice or summary dismissal pursuant to s. 9. If the termination is one pursuant to s. 9, the employer must expressly states thus in clear terms rather than kept quiet about the fact and gave notice or made payment as if the termination was one under s. 6 or 7, if he is to escape the consequence of payment of severance or long service payment. If the employer intends to be generous he should state in unequivocal terms that the termination is one under s. 9 and the notice is given, or the payment is made, only on an ex gratia basis."

10.In a nutshell, according to Chak Chong Chi, it is extremely dangerous if not fatal for an employer, who intended to summarily dismiss his employee, to give any advance notice of the dismissal or make any payment in favour of the employee. If he made any payment, unless he made it very clear that the payment had nothing to do with the basis of his dismissal and was only made as a gratuitous payment or the like, he would run the risk of being subsequently held to have executed a dismissal not in accordance with s. 9.

11.In a similar context (i.e. a dismissed employee's right to severance payment), Findlay J expressed doubts on the above views, although like Deputy Judge Jerome Chan, Findlay J expressed his doubts by way of obiter dicta. In Cheung Wan Shing v King Win Dyeing Works Ltd, Labour Tribunal Appeal No. 101/1994 (21 February 1995), the court was concerned with a dismissed employee's right to severance payment. Entitlement was governed by the provisions in Part VA of the Ordinance. Similarly, dismissal "without notice or payment in lieu in accordance with section 9" would take the employee's case outside Part VA of the Ordinance: see s. 31D(1)(a) (which is similar to s. 31T(1)(a)) and s. 31C(1) (which is similar to s. 31S(1)). It is not clear whether Chak Chong Chi was referred to the learned judge. In any event, Findlay J observed (at pp. 4-6) as follows:

" From section 31D(1), one would conclude that, if the contract is terminated in accordance with section 9, there is no dismissal for the purposes of this case.

Reading sections 31D(1) and 31B(2) together, if an employee has his contract terminated in accordance with section 9, the conclusion seems to be that he cannot be taken to be "an employee who is dismissed" by reason of redundancy.

It is to be noted that section 31C(1) refers to termination of a contract of employment without notice or payment in lieu in accordance with section 9. It is common ground that the respondent was paid seven days' wages in lieu of notice. It is difficult to understand why the words "without notice or payment in lieu" were included in this provision. One would have thought it sufficient to use words to the effect that the employee would not be entitled to a severance payment by reason of dismissal where his employer, being so entitled by reason of the employee's conduct, terminates his contract of employment in accordance with section 9.

One must say that an employee whose contract has been terminated in accordance with section 9 is not "an employee who has been dismissed" for the purposes of section 31Q. It would seem, on the face of it, that one must read section 31Q as saying that the presumption only arises where an employee has been dismissed by his employer without a cause provided for by section 9, or, where there is such a cause, without notice or payment in lieu.

Is one to conclude that where an employer is entitled to terminate a contract of employment without notice or payment in lieu under section 9, but terminates with payment in lieu of notice, he, by this act of generosity, exposes himself to liability for a severance payment? This would be very strange, and difficult to accept as the real intention of the legislature, but Mr Chow concedes that there is no dispute that the respondent was dismissed within the meaning of section 31D(1); in his skeleton submission, he put the matter this way: "... because on the evidence before the Tribunal, there is no doubt that [the respondent] was not dismissed 'without notice or payment in lieu' in accordance with section 9 ... [the respondent] was in fact paid seven days wages in lieu of notice pursuant to his contract of employment." I would be reluctant to come to the conclusion that where an employer is entitled to terminate a contract without notice or pay in lieu, but does not do so, and gratuitously pays wages in lieu or gives notice, he takes himself out of the protection of the legislation. Thankfully, I have concluded that the problem does not arise in this case."

12.For reasons that will become apparent below, I need not express any definite view on the matter. It seems to me that neither judge was against an employer making an ex gratia payment to an employee dismissed for cause. Deputy Judge Jerome Chan's concern was that if the employer should choose to do so, he must do it with the utmost care and on the clearest terms. In my opinion, one potential area of controversy here is where an employer tried to give "advance notice", as it were, of his intention to summarily dismiss the employee for cause. One could imagine situations where an employer who intended to dismiss an employee for cause, might nonetheless want the employee to stay behind for a period of time to facilitate, say, the handing over of his duty to his replacement. In that hypothetical example, the employer would need to tell the employee in advance that he was being dismissed. To say that in that situation, the employer could not do so, i.e. both dismissing the employee for cause and asking him to stay behind for a period of time, without obliging the employer to pay the employee a long service payment, would seem to go contrary to the intention of the Ordinance. But I need not express any definite view on this point, as it does not arise in this case.

13.Whilst as illustrated in my last example, conceivably the giving of notice may not be entirely in contradiction to a s. 9 dismissal (i.e. summary dismissal for cause), the same thing cannot be said if payment in lieu of notice was made at the time of dismissal. I emphasize the words "in lieu of notice" because if the payment was a gratuitous payment, then provided that that was made very clear, even according to Chak Chong Chi, this would not prevent the dismissal from being one done in accordance with s. 9. However, if the payment was, as a matter of fact, made in lieu of notice, then it would be difficult to see how the dismissal (which was accompanied by the payment) can have been done in accordance with s. 9. This is of some importance in the present appeal.

14.In the present appeal, according to the Defendant, the Claimant's performance had drastically deteriorated in the last year of her service, despite warnings. This was set out in fact in a letter which featured prominently in this appeal (referred to as exhibit "D3" in the proceedings below). D3 reads as follows:

"(1) Shortly after the renewal of your last contract in July 2000, your performance changed drastically from what it had been in the past eight years and your work attitude became insufferably awful. Even visitors complained to us that you were impolite. In January 2001, we were surprised to receive a letter from Lilia, your cousin advising us that as you were leaving us, she would like to have your job. We tried to clarify the situation with you and asked you to confirm your position. Although you refused to say much, you (1) admitted that your attitude had been poor and (2) confirmed that you would stay until the end of the contract. We repeatedly asked you why your attitude had become so poor but you never gave us an answer, admitting only that it had been your fault. We warned you that if your performance and attitude were not back to like those of the first eight years, we would have to terminate your service because we could not tolerate a domestic helper who could not respect her job.

(2) There were some improvements since then but your attitude remained unstable and at times awful. On Sunday evening 16DEC01, when you came back, you responded disrespectfully to Mr Lam's question of how your day had been with a haughty statement that "You Chinese are selfish". Then Mr Lam asked you why don't you go to places like the US where you think the people are good enough for you. Your reply was that it was exactly what you were doing.

(3) You left a note for us that night asking us to give you (a) a letter for you to renew your visa and (b) a reference and support letter for you to find a job.

(4) On 17DEC01 evening, we reviewed your performance in the past months and warned you again that your performance and attitude remained poor and not up to our expectation. You admitted (a) that by your poor attitude, you have been showing us your lack of interest I the work with us and (b) that if you had a domestic helper yourself, you would not accept the kind of attitude you have been showing us. You didn't apologize for the poor attitude you admitted and you didn't promise improvement.

By this letter, we advising you the immediate termination of your service by a month's salary in lieu. -Kwong Si-lin

This note and Hongkong Bank cheque No. 168183 for HKD3,900.00.

Received by Mae G Allidem / 18DEC01 06:15 - 09:15

Plane ticket and payment for 4 days will be ready in 2 days. Please call for collection." (italicised words added by hand at the time of the Claimant's departure)

15.According to the evidence, D3 was prepared by the Defendant and her husband in the small hours of the day of dismissal, i.e. 18 December 2001. On the morning of that day, the Defendant went to work, and it was the Defendant's husband (Mr Lam) who dealt with the dismissal. It is clear that the maid was told at around 6:15 a.m. that day that she had to go immediately. She was asked to pack her things which she did. At around 9:00 a.m. that morning, Mr Lam talked with the maid about her dismissal, gave her D3 and the cheque for $3,900. The learned Presiding Officer who heard the case wrote in paragraph 16 of his "Reasons for Decision" as follows:

"16. What then did the $3,900 given by Defendant through her husband on the date of dismissal stand for? I found that neither Claimant nor Mr Lam was able to recall exactly the conversation of the morning of 18.12.01. I did not believe Claimant's saying that Mr Lam had told her specifically that the $3,900 was wages in lieu of notice. Claimant appeared hesitant when she gave evidence in this regard. I accepted that Mr Lam told her to the effect that she was dismissed immediately and she had to leave later after packing. A few hours later, after Claimant had packed up, Mr Lam gave her 'D3' and a cheque of $3,900. He told her she would only get $3,900 plus 4 days' wages and a plane ticket to be collected later. He would not give long service payment and she had to go to court to sue for that if she so wanted."

16.Pausing here, it should be pointed out that in his written statement, which formed part of the evidence before the Tribunal, Mr Lam had said that at 6:15 a.m. he indeed told the Claimant that she was dismissed summarily for the reasons that he and his wife had previously mentioned (i.e. poor performance etc). Furthermore, Mr Lam also said in evidence that when the maid asked for payment of long service payment after D3 and the cheque were handed to her, he refused to pay it and said that this was a case of "summary dismissal for cause". Significantly, the Presiding Officer did not make any such findings (as per the specific evidence of Mr Lam). Rather he found that neither the Claimant nor Mr Lam was able to "recall exactly" the conversation on the morning of that fateful day.

17.Again pausing here, it should be apparent from the above account that the true meaning of the penultimate paragraph in D3 ("By this letter, we are advising you the immediate termination of your service by a month's salary in lieu") must be a matter of great importance. That indeed was in the proceedings below. But the learned Presiding Officer went further than simply construing this paragraph in D3, or construing D3 as a whole. He heard evidence from both the Defendant and Mr Lam (who together drafted D3), as to why they wrote D3 in the way they did and the purpose of the payment of $3,900. This is very clear from the transcript. Having received such evidence, the learned Presiding Officer went on to make findings against the couple. In his Reasons for Decision, he said:

"18. In this case, Defendant couple wanted to convince me that the $3,900 they gave Claimant on the date of dismissal was given out of generosity in lieu of everything else other than notice. I was not convinced by them.

...

20. I found that Defendant couple had specifically chosen the amount of one month's salary. It was not, as they said, a convenient sum...

...

24. I was sure Mr Lam and Defendant must have addressed their mind to the contract when they decided to dismiss Claimant. I was sure they were not only aware of the figure but also the 'notice clause' (clause 10 of 'C6'), which required one month's notice or wages in lieu thereof.

25. I did not accept that Defendant couple had intended the $3,900 to be an all-covering sum...

26. I had already ruled that the one month's salary was not a generous giving, so it must be for something. I had also found that there was nothing else in the mind of Defendant couple at that time. Thus the $3,900 must be for wages in lieu of notice, which I was sure Defendant couple thought they should give Claimant before she left. I found that Mr Lam did not put down the words 'of notice' because he and his wife did not think it was necessary. There was nothing else to be in lieu of (at least not in their mind at that time) except the one month's wages in lieu of notice as required by Clause 10. They felt there was no need to so specify. After all, Mr Lam put down in 'D3' clearly that it was "salary" and salary could only be in lieu of notice in that circumstance. The one month's salary given must be in lieu of one month's notice.

...

29. In this case, I rejected Defendant's saying and found as a matter of fact that she had given one month's salary to Claimant. It was not a gratuitous payment but merely wages in lieu of notice. Defendant couple would not admit so but what else could it be? At that time, it did not occur to Defendant couple that they owed Claimant anything else. They could not be generous in that circumstance and they were not at that time, I found."

18.In other words, it is abundantly clear from the findings of the learned Presiding Officer that he found as a fact that the couple wrote D3 in the way they did, and made payment in the way they did, because they wanted to make payment of a month's salary in lieu of notice of dismissal. He further found that the couple "felt obliged to pay one month's salary in lieu" in their mind (paragraph 22). He did not make any finding as to why they felt they were obliged to make such payment. According to his reasoning, that did not matter. What matter was that the couple did indeed choose to effect termination of the employment relationship by making payment of a month's salary in lieu of notice of termination of employment. He therefore concluded that termination was effected, not "without notice or payment in lieu in accordance with section 9", but rather pursuant to s. 7 of the Ordinance.

19.In this type of appeals, this court cannot lightly disturb a finding of fact, unless the finding amounts to or involves an error of law: see ss. 32(1)(a) and 35(2)(i) of the Labour Tribunal Ordinance (Cap. 25); Cheng Yuen v Royal Hong Kong Golf Club [1997] 2 HKC 426; Andayani v Chan Oi Ling [2000] 4 HKC 233. Nor can the court receive any further evidence on appeal: s. 35(2)(ii).

20.The learned Presiding Officer had evidence before him which could entitle him to come to his conclusion. I need not recite his reasoning here. I do not agree with the Defendant that his finding in this regard was such that no tribunal of fact could reasonably have, on the evidence before it, made. The fact that it was open to him on the evidence to reach a different conclusion is neither here nor there.

21.As I said, the Presiding Officer found, as a matter of fact, that when they drew up D3, the couple chose or set out to terminate the contract of employment by making payment of one month's salary in lieu of notice of termination of contract. Certainly, D3 itself could reasonably bear the meaning of a s. 7 dismissal, and no doubt the Presiding Officer adopted such a construction. From that factual finding and that construction of D3, it was indeed easy for the Presiding Officer to further conclude, as he must have, that the Defendant's intention was effectively carried out on the morning by her husband on her behalf. Certainly D3 was handed to the Claimant. Furthermore, the Presiding Officer made no finding which would suggest that the Defendant (through her husband) had said anything or done anything which would have the effect of defeating what they, ex hypothesi, set out to do (i.e. to terminate the contract by making payment of one month's salary in lieu of notice).

22.As I said, significantly, the Presiding Officer did not make findings as per Mr Lam's written statement and oral evidence before the Tribunal that he had mentioned summary dismissal at around 6:15 a.m. and at the time of departure of the Claimant when she raised the question of long service payment. Instead, he specifically found that neither side could recall exactly what was said. Again this is a matter of evidence and factual finding which this court would not lightly disturb in the absence of an error of law, and I cannot say, on the evidence before the Tribunal, that the learned Presiding Officer was not entitled to disbelieve what was alleged by Mr Lam in his witness statement and orally in the proceedings, and come to the conclusion that neither side could recall exactly what was said, when he evaluated the evidence before him based on the applicable burden and standard of proof.

23.I would therefore not express any definite view on the hypothetical situation of the Tribunal making findings of fact that at 6:15 a.m. and/or at the time of departure of the Claimant when she raised the question of long service payment, Mr Lam used the phrase "summary dismissal" in describing the termination of the contract of employment. If the learned Presiding Officer had made such findings, what was orally said by Mr Lam may or may not have been sufficient to defeat what he and his wife had, ex hypothesi, decided to do when they drafted D3 (i.e. to terminate the contract by making payment in lieu of notice) or the clear meaning of D3 (as decided by the Tribunal). In particular, I need not deal with the question of whether, on the assumption that Mr Lam had definitely and unequivocally told the Claimant at 6:15 a.m. when he terminated the employment of the Claimant there and then that she was summarily dismissed for cause, what happened 3 hours later at 9 a.m. when he gave the Claimant D3 (which provided, as explained above, for the termination of the employment by payment of wages in lieu of notice according to its true construction and intention as found by the Presiding Officer) would have become totally irrelevant.

24.On this last question, the Court of Final Appeal decision in Archer v The Hong Kong Channel Ltd, FACV No. 8 of 1998 (27 November 1998), would seem to suggest that if at the time of termination, the employer did not make clear the basis of termination, the court could look at what happened subsequently to find out the true basis of termination of contract. In that case, the Court of Final Appeal looked at the payment of a month's salary by the employer two weeks after the termination to conclude that the termination had been effected by means of payment in lieu of notice. In the hypothetical situation I raised in the preceding paragraph, the situation would be distinguishable. Assuming that Mr Lam did make it very clear to the maid at 6:15 a.m. that she was being summarily dismissed for cause, then it would seem to me to be at least arguable that what happened at 9:00 a.m. and what was said in D3 (which was only given to the maid at 9:00 a.m.) would be quite irrelevant, in the sense that they came too late to alter the true basis of termination. I say this subject to one further argument raised by counsel for the Claimant in this hypothetical situation, namely, the actual authority of Mr Lam to say something contrary to what his wife had entrusted him to do in terminating the contract, i.e. to terminate it by payment in lieu of notice.

25.But as I said, I need not reach any final conclusion on all these interesting matters, which were argued enthusiastically during the hearing. The learned Presiding Officer did not find that Mr Lam told the Claimant that she was being summarily dismissed for cause at 6:15 a.m. Nor did he make any finding that Mr Lam told the Claimant that she had been summarily dismissed for cause when she raised the question of long service payment with him as she was departing. Therefore as I said, nothing that happened on the morning of the day in question defeated or had the effect of defeating what, according to the finding of the learned Presiding Officer, the couple had set out to do the night before when they drafted D3, i.e. to terminate the contract of employment by making payment of one month's salary in lieu of notice.

26.Putting it bluntly, the Defendant's appeal is stuck with this finding by the learned Presiding Officer, as well as the two "non-findings", as it were, regarding Mr Lam's claim that he mentioned summary dismissal respectively at 6:15 a.m. and after 9:00 a.m. when the question of long service payment was raised by the Claimant.

27.Therefore subject to one important matter that I will immediately turn my attention to, this appeal must be dismissed.

28.The one matter that I must deal with is the allegation by the Defendant that the learned Presiding Officer has prejudged, or put at the lowest, appears to have prejudged, the dispute between the parties. When leave was first sought by the Defendant from this Court, this was not relied on specifically as a ground of appeal. But the allegation that the Defendant did not really receive a fair trial below was alluded to in the written submission made in support of the application for leave to appeal. After leave was granted, and in particular, after the full transcript was obtained, there can be no doubt that there are passages in the transcript which, even Mr Collins (appearing for the Claimant) would concede (and he did very fairly concede), make the complaint of the Defendant at least "arguable". On that basis, Mr Collins did not really oppose the application at the hearing of this appeal by the Claimant to amend the grounds of appeal. Accordingly I gave leave to the Claimant to do so: Order 55 rule 6(3), the Rules of the High Court (Cap. 4). I also gave leave to the parties to lodge written submissions on this new point with a view to avoiding the incurring of costs for having an adjourned oral hearing on this point, which the parties did.

29.The proceedings below involved an initial hearing on 13 March 2002 and a substantive hearing that took place on 26 April 2002 (because the case could not be heard on 13 March 2002). On the day of the substantive hearing, the hearing started at 2:53 p.m. and evidence and submission concluded at 4:56 p.m. At 5:36 p.m., the Tribunal gave judgment. The complaints of the Defendant centred on what was said by the Presiding Officer, who also heard and decided the claim, at the initial hearing on 13 March 2002. The transcript of what took place at the initial hearing runs to 25 pages. From p. 6 to p. 14 of the transcript, one could find comments made by the learned Presiding Officer on the strengths of the Claimant's case or, put another way, the weaknesses of the Defendant's defence, in respect of the long service payment claim. To put the matter in context, initially, the Claimant sought to argue that her wages were $4,500 (instead of $3,900), but it can be seen from the transcript that the Presiding Officer successfully persuaded the Claimant to reduce the figure to $3,900. The following passages in the transcript (particularly those words in bold type) are relied on by the Defendant:

"Court: Only you have the right of audience. Your husband can only speak when the time comes for him to give evidence as a witness. But, I have to try to explain to both parties some points of law later. Probably, there's not much argument in this case, you'll realise later. Please come forward.

...

Court: Madam, you can read English, certainly. I invite you to read this appeal case. It's no. 25/1992 [i.e. Chak Chong Chi]. If you can understand this case, then you probably realise that you have no defence to the defendant's claim of terminal payment, because you had given her one month's wages in lieu of notice, and that's exactly what you wrote in that document, D3.

...

Court: ... But now, it's very clear. It's very clear to be one month's wages in lieu of notice by that document. And I don't think there's any room for argument. If you insist on arguing, then I will ask you to go to a good lawyer to ask for advice. Don't waste your time, don't waste the court's time.

The only argument is whether her monthly wages were $3,900 or $4,500. According to your version, the $600 was incentive bonus. And certainly, you can say you have discretion to withhold it. And then, the claimant might have to base her claim of everything on the basic figure of $3,900. And that's the only argument I can see.

Madam, I stand the matter down. Look at that appeal case. It's decided by the High Court. Try to understand the law well before you come to the court.

Now, Madam Claimant, you heard what Madam Kwong has said about that extra $600, as incentive bonus. If you agree to amend your claim to $600 - to $3,900 as the basic figure as your monthly wages, then I don't see there is any argument for wages in lieu of notice, arrears of wages. She agreed to pay, but only based on the basic salary of $3,900 for calculation.

She had to pay you 10 - long service payment. I don't see any room for argument, according to that appeal case. So don't waste your time. If it's $3,900 as the basic figure, then we can calculate the figure. Of course, it will be something less. But it saves argument. And actually, there's no room for argument about long service payment.

...

So, as far as I can see, the only argument in this case are whether your monthly wages were $4,500 or $3,900. But, if that extra $600 was given as incentive bonus, certainly she had the discretion to withhold it. But, as the terminal pay - as to the long service payment, because she had given you one month's wages in lieu of notice, though now she want to change her version, but that's black and white, and I don't think any court would accept your latest saying that it's not wages in lieu of notice.

If you can read that appeal case, it's beyond dispute. I can assure you that you would not win your argument here, you would not win your argument in the appellate court. So, don't waste your time, don't waste the court's time. If you insist on arguing on that frivolous matter, then go to a good lawyer and ask for his advice. Probably, he would advise you the same.

...

Court: No. Madam Kwong, I have a lot of cases to deal with. There are more important cases. There are cases which, actually, have arguments between parties. But, in this case, I don't see any argument.

...

Court: Madam, if you read that appeal case, you will understand what I say. That's not my ruling. That's the High Court judge's ruling. You have to respect it. Even if you won't respect my words.

...

Court: Whatever your intention is, the wordings are important. You look at that appeal case, and you understand what the law is. And that's not the law made by me. That's the law decided by the High Court judge in 1992, and it's still good law. And it has been followed many times in court. So there's no room for argument.

Madam, I know you might have your grievance. You might be very dissatisfied with this employee's [performance]; so much so that you had to dismiss her after nine years, nine-odd years' relationship. But, now, when you come to a court of law, you have to respect the law. And I try to explain to you what the law is. I try to save your time.

You certainly can argue what you want. But the court looks at the evidence, the court looks at the law, and the law is very clear in this particular regard. So, try to understand the law first. You are educated people, so you can read the case yourself.

I stand the matter down for, say, half an hour. Or for so long as you would like to take to digest that case. And also, take this time to get a proper quotation from a travel agency or an airline to see what the current airfare...

...

Court: If you need further time to read and digest this judgment, I think that's a very good judgment, and it's very easy to understand. It's very detailed. The reasonings are clear. But if you need further time to read it and digest it, I'll stand the matter down further. But, if you understand it fully, then you probably will understand what I told you earlier.

That is, to this long service payment claim, you probably have no defence. The only argument is whether $3,900 should be adopted as the basic figure for calculation, or $4,500.

...

Court: I have seen all the documents, Madam. That's why I can point out to you from the outset that that document, D3, greatly prejudices your right to argue about the long-service payment.

...

Court: It's more than clear, it's in black and white, that you terminate the employee's service by a month's salary in lieu, and you deem it's $3,900, as one month's wages in lieu of notice."

30.The law on bias or apparent bias, particularly its development in the last 10 years in both the United Kingdom and the Commonwealth, may be conveniently found in a recent House of Lords decision, Porter v. Magill [2002] 2 AC 357, 493B-494H (paras. 99-103), where Lord Hope said as follows:

" 99. The test for apparent bias which the auditor sought to apply to himself, and was applied in its turn by the Divisional Court, was that which was described in R v Gough [1993] AC 646 by Lord Goff of Chieveley where he said, at p 670:

"I think it unnecessary, in formulating the appropriate test, to require that the court should look at the matter through the eyes of a reasonable man, because the court in cases such as these personifies the reasonable man; and in any event the court has first to ascertain the relevant circumstances from the available evidence, knowledge of which would not necessarily have been available to an observer in court at the relevant time. Finally, for the avoidance of doubt, I prefer to state the test in terms of real danger rather than real likelihood, to ensure that the court is thinking of possibility rather than probability of bias. Accordingly, having ascertained the relevant circumstances, the court should ask itself whether, having regard to those circumstances, there was a real danger of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly regard (or have unfairly regarded) with favour, or disfavour, the case of a party to the issue under consideration by him ..."

100. The "reasonable likelihood" and "real danger" tests which Lord Goff described in R v Gough have been criticised by the High Court of Australia on the ground that they tend to emphasise the court's view of the facts and to place inadequate emphasis on the public perception of the irregular incident: Webb v The Queen (1994) 181 CLR 41, 50, per Mason CJ and McHugh J. There is an uneasy tension between these tests and that which was adopted in Scotland by the High Court of Justiciary in Bradford v McLeod 1986 SLT 244. Following Eve J's reference in Law v Chartered Institute of Patent Agents [1919] 2 Ch 276 (which was not referred to in R v Gough), the High Court of Justiciary adopted a test which looked at the question whether there was suspicion of bias through the eyes of the reasonable man who was aware of the circumstances: see also Millar v Dickson 2001 SLT 988, 1002-1003. This approach, which has been described as "the reasonable apprehension of bias" test, is in line with that adopted in most common law jurisdictions. It is also in line with that which the Strasbourg court has adopted, which looks at the question whether there was a risk of bias objectively in the light of the circumstances which the court has identified: Piersack v Belgium (1982) 5 EHRR 169, 179-180, paras 30-31; De Cubber v Belgium (1984) 7 EHRR 236, 246, para 30; Pullar v United Kingdom (1996) 22 EHRR 391, 402-403, para 30. In Hauschildt v Denmark (1989) 12 EHRR 266, 279, para 48 the court also observed that, in considering whether there was a legitimate reason to fear that a judge lacks impartiality, the standpoint of the accused is important but not decisive: "What is decisive is whether this fear can be held objectively justified."

101. The English courts have been reluctant, for obvious reasons, to depart from the test which Lord Goff of Chieveley so carefully formulated in R v Gough. In R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 2) [2000] 1 AC 119, 136a-c Lord Browne-Wilkinson said that it was unnecessary in that case to determine whether it needed to be reviewed in the light of subsequent decisions in Canada, New Zealand and Australia. I said, at p 142f-g, that, although the tests in Scotland and England were described differently, their application was likely in practice to lead to results that were so similar as to be indistinguishable. The Court of Appeal, having examined the question whether the "real danger" test might lead to a different result from that which the informed observer would reach on the same facts, concluded in Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451, 477 that in the overwhelming majority of cases the application of the two tests would lead to the same outcome.

102. In my opinion however it is now possible to set this debate to rest. The Court of Appeal took the opportunity in In re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700 to reconsider the whole question. Lord Phillips of Worth Matravers MR, giving the judgment of the court, observed, at p 711a-b, that the precise test to be applied when determining whether a decision should be set aside on account of bias had given rise to difficulty, reflected in judicial decisions that had appeared in conflict, and that the attempt to resolve that conflict in R v Gough had not commanded universal approval. At p 711b-c he said that, as the alternative test had been thought to be more closely in line with Strasbourg jurisprudence which since 2 October 2000 the English courts were required to take into account, the occasion should now be taken to review R v Gough to see whether the test it lays down is, indeed, in conflict with Strasbourg jurisprudence. Having conducted that review he summarised the court's conclusions, at pp 726-727:

"85. When the Strasbourg jurisprudence is taken into account, we believe that a modest adjustment of the test in R v Gough is called for, which makes it plain that it is, in effect, no different from the test applied in most of the Commonwealth and in Scotland. The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the same, that the tribunal was biased."

103. I respectfully suggest that your Lordships should now approve the modest adjustment of the test in R v Gough set out in that paragraph. It expresses in clear and simple language a test which is in harmony with the objective test which the Strasbourg court applies when it is considering whether the circumstances give rise to a reasonable apprehension of bias. It removes any possible conflict with the test which is now applied in most Commonwealth countries and in Scotland. I would however delete from it the reference to "a real danger". Those words no longer serve a useful purpose here, and they are not used in the jurisprudence of the Strasbourg court. The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased."

31.The "reasonable likelihood" / "real danger" test propounded by Lord Goff in R v Gough represents what I may call the pure common law test in England. The "reasonable apprehension of bias" test represents the Commonwealth approach also based on common law as developed in the Commonwealth. The modified formulation set out in Porter, i.e. the so-called "real possibility" test represents the latest English common law approach as modified by the Strasbourg jurisprudence, which is of course not directly applicable to Hong Kong. In a recent judgment of the local Court of Appeal, Phoon Lee Piling Co. Ltd v The Hong Kong Housing Authority CACV 303/2002 (20 May 2003), the Court of Appeal referred to and apparently adopted the latest test propounded in Porter, notwithstanding its Strasbourg background (para. 20).

32.Incidentally, I should also point out that neither side has referred me to the Basic Law and its possible implications on the issue in question.

33.Ultimately, the question is a question of fact, applying the appropriate test. I do not think that actual bias is really in issue. What is in issue is apparent bias. I am reluctant to express any view on what is the appropriate test in Hong Kong, particularly bearing in mind that the Defendant is acting in person in the present case, and as I said, the possible implications of the Basic Law have not been referred to by either side. Given the conclusion that I reach below, I need not do so either.

34.I accept it is relevant to bear in mind that one is concerned with a hearing before the Labour Tribunal here. It is trite that in the Labour Tribunal, the proceedings are informal. No lawyers are allowed to represent the parties. The presiding officer is statutorily charged with an inquisitorial role. He will investigate the prospect of and actively try to promote a settlement between the parties. To do so, he is obliged to give the parties some realistic indication of the strengths and weaknesses of their respective cases based on an initial appraisal of the evidence and his knowledge of the applicable law. Even if no settlement can be reached, at least that exercise would have the benefit of identifying and narrowing down the issues between the parties.

35.In this regard, indeed even in an ordinary court of law, there is no impropriety in the court encouraging the settlement of the proceedings. In Harada Limited v. Turner [2002] EWCA Civ 599 Pill LJ said:

"It is often possible for a judge, having explored the difficulties on the facts or legal issues of the case with counsel, to give [the parties an opportunity to discuss settlement by standing down the case]. There is certainly nothing wrong with it in principle, and it is a course which often, helpfully, is taken."

36.In Hart v. Relentless Records [2002] EWHC 1984, Jacob J said that expressing views by a judge for the encouragement of a settlement did not indicate bias on the judge's part.

37.Furthermore, as has long been pointed out by Mr R A Ribeiro (as he then was) in The Law and Practice of the Labour Tribunal, Part III (1978) 8 HKLJ 308, 326, the whole legislative scheme of the Labour Tribunal Ordinance:

"clearly envisages speedy and somewhat approximate measures of procedural justice ... The price of this is a lesser degree of precision in procedural fairness, at least as understood by orthodox courts, for in such courts, carefully balanced procedures mean much expense."

38.On a more practical level, it must be remembered that the Labour Tribunal is one of the busiest courts and tribunals in Hong Kong, handling literally thousands and thousands of cases every year. The workload is extremely demanding and heavy. I would venture to suggest, with due respect, that with no exception known to me, all the presiding officers manning the Tribunal work extremely diligently and conscientiously.

39.All this, which I fully bear in mind, does not, however, mean that there is no line to be drawn. The law on apparent bias is equally applicable to the presiding officers of the Labour Tribunal, as it is applicable to all judges and judicial officers of all courts and other tribunals. But of course, in the application of the appropriate test, one must bear in mind the specific characteristics and actual circumstances of the Labour Tribunal.

40.The perceived difficulty of a presiding officer performing efficiently his functions and roles as described above in the busy life of the Tribunal on the one hand and observing the requirements against apparent bias on the other may be, in my judgment, to a large extent, removed by this simple device: if in the course of exploring the issues with the parties and seeking to persuade the parties to reach a sensible settlement at an initial stage of the proceedings or at a call-over hearing, a presiding officer finds himself to have expressed his views on the merits or on any particular issue between the parties too strongly, all that he needs to do is to ensure that he is not going to hear the substantive hearing in case no settlement can be reached. Thus in the present case, for instance, if the Presiding Officer had given a direction that the case be heard by another presiding officer, he having failed to persuade the Defendant to give up on the argument of a s. 9 dismissal, the present ground of appeal would not have arisen. Any benefit (in terms of the Presiding Officer having read the papers and familiarised himself with the issues in the case) to be gained by reserving the case to himself would be greatly outweighed by the consideration of possible (apparent) bias.

41.Mr Collins, in his written submission on apparent bias, has examined what was said by all parties concerned at the initial hearing in great detail. In particular, he put all the remarks and observations of the Presiding Officer that are under attack in their context. He sought to persuade the Court that examined in their context, none of these remarks and observations provides any or any sufficient ground for attacking the Presiding Officer on apparent bias.

42.I have borne in mind Mr Collins' arguments. The fact that I have only extracted the Presiding Officer's remarks and observations above, without reproducing at the same time what was said by others, does not mean that I have not considered those remarks in their proper context. I am reluctant to lengthen this judgment further by having a fuller quotation from the transcript.

43.Of the many cases cited to me, I find the facts in Peter Simper & Co. Ltd v. Cooke [1986] IRLR 19 bear some similarities to that in the present case (of course, there are differences). In that case, remarks hostile to the employer and suggestive of a concluded view were made by the chairman in the course of the cross-examination of the employee on the opening day and at other times during the first and second days of the hearing before the Industrial Tribunal, before the employer's case had been opened. Peter Gibson J (as he then was), giving the judgment of the Employment Appeal Tribunal, said (at p. 22, para. 17):

"On all the matters to which we have referred the chairman was making comments which would, in our opinion, reasonably be understood by the impartial onlooker as meaning that the chairman had already formed a concluded view hostile to the employers on matters which fell for decision at the conclusion of the case after hearing all the evidence and arguments. Of course, we accept that the chairman, experienced as he was, would not have made a final decision until the end of the case; but we feel bound to observe that his comments were injudicious and untimely. In so saying, we do not in any way underestimate the value, both in the formal English judicial system as well as in the more informal Tribunal hearings, of the dialogue that frequently takes place between the judge or Tribunal and a party or his representative. Nor do we wish to cast any doubt on the right of the Tribunal, as master of its own procedure, to seek to control prolixity and irrelevancies. But there is a time and a place for the expression of concluded views by the Tribunal. The middle of a cross-examination before the employers' case has been opened or the employers' arguments presented is, in our view, plainly not such a time for such strongly expressed views to be aired by the chairman."

44.Of course, the above was said by reference to the law on apparent bias as it was then understood in the United Kingdom. But in my judgment, regardless of whether one is applying the "reasonable likelihood"/"real danger" test, the "reasonable apprehension of bias" test or the latest "real possibility" test (and I do not believe that whatever implications that the Basic Law may have would require this Court to adopt some other test apart from these few choices), I am of the view that the Presiding Officer in the present case has expressed himself too absolutely or strongly, showing a closed mind on the issue in question when the hearing was only at its initial stage. His views on the possible outcome were, unfortunately, too early and too strong.

45.As I said, ultimately, what is involved here is a question of judgment. I have borne in mind the general circumstances applicable to Labour Tribunal proceedings; I have borne in mind the circumstances pertaining to the present claim and that pertaining to the initial hearing, as well as the length of adjournment between the initial hearing and the substantial hearing; I have also borne in mind the nature and context of the discussions in which the remarks were made, the actual contents of the remarks both individually and collectively (in their context), and the general circumstances of the present case, both from the perspective of the Court and in terms of public perception. Whilst some remarks were expressed in stronger and more absolute terms than others (and vice versa), what matters at the end of the day is the overall effect and appearance of these remarks. In my judgment, taking all the observations and remarks as a whole, the Presiding Officer, with respect, has stepped across the line.

46.In so concluding, I mean absolutely no disrespect to the Presiding Officer and intend no suggestion of impropriety on his part. As I said at the outset, in my judgment, actual bias is not in issue. But it is not what the Presiding Officer intended to do that matter, what matters is the outward appearance that what he said gave. As I emphasised above, the Presiding Officer had many functions and roles to play, and had a very fine balance to maintain - all this against the backdrop of a very heavy workload and lack of assistance from lawyers.

47.As I also mentioned above, a presiding officer who finds or suspects that he may have expressed himself too strongly on the matters in dispute can avoid any subsequent allegation of apparent bias by not presiding at the substantive hearing.

48.In conclusion, the Defendant is successful with this ground of appeal.

49.I therefore order that this appeal be allowed, that the judgment below be set aside, and that the case be remitted to the Labour Tribunal for a retrial before another presiding officer.

50.I find it desirable to give some guidance here for the retrial, as the issues involved are not as straightforward as may have been thought by the Presiding Officer. The issues involved are not only limited to the proper reading of D3, i.e. how D3 would have been reasonably understood, and what the Defendant and her husband set out to do by writing D3. They are of course relevant questions, but on analysis, there are other issues:

(1) On the question of the true intention of the Defendant and her husband when they decided to terminate the Claimant's employment, i.e. whether they intended to dismiss her for cause, or whether they intended to terminate the contract by giving her wages in lieu of notice, this is a question of fact depending on the evidence. In resolving this factual issue, one pertinent question to ask is whether the Defendant and her husband genuinely thought that they had good grounds to dismiss the Claimant for cause. If they did, it would not be difficult to further find (by direct evidence or inference) that they intended to exercise their right to so terminate the contract of employment. In my evaluation of the Presiding Officer's findings above, I noted that the Presiding Officer did not make any finding as to whether the Defendant and her husband genuinely thought that the Claimant could be dismissed for cause. In this type of appeal, the court's hands are tied. The finding made by the Presiding Officer cannot be lightly disturbed. However, in the retrial, the new presiding officer's hands would not be so tied. In fairness to all parties concerned, the matter should be looked at from all angles again. It would be a rather unusual (though not impossible) thing to find that on the one hand the Defendant and her husband genuinely believed that the performance of the Claimant was so bad that it justified summary dismissal, yet on the other they nonetheless decided to terminate the contract by offering wages in lieu of notice of termination.

(2) Finding out the subjective belief and intention of the Defendant and her husband is not directly relevant to the true interpretation of D3 (in terms of how it would be reasonably understood). This latter question does not depend on the subjective belief and intention of the Defendant and her husband. However, finding out their subjective intention and belief would be relevant to some other matters, i.e. whether the husband did mention summary dismissal at 6:15 a.m. or after 9:00 a.m. as he alleged. If the subjective intention and belief of the Defendant and her husband was to dismiss the Claimant for cause, this would be a relevant factor in deciding whether the husband did orally inform the Claimant on the following morning that she was being summarily dismissed. If, on the other hand, as the Presiding Officer has found, the couple's intention was simply to terminate the contract by giving one month's wages in lieu of notice, then the possibility of the husband mentioning summary dismissal on the following morning would be much lower. Of course, it is always open to the new presiding officer at the retrial to find, as the Presiding Officer did, that neither party could clearly remember what was said that morning - a finding that I did not find able or justified to disturb in this appeal.

(3) What was said by the husband on the morning is relevant because one must not assume that D3 is conclusive relating to the mode of termination. What is of importance is how the husband (as the Defendant's agent) executed the termination. If in executing a termination, both a written document was given and words were orally said, one must consider not only the written document but also the oral words in order to determine the mode of termination. Here, the parol evidence rule is totally irrelevant. In other words, as a matter of principle and logic, a written document has no precedence, as it were, over oral words. If apparently conflicting or inconsistent words were used orally and in writing, then the presiding officer must, after considering the whole circumstances, decide what exactly was the mode adopted to terminate the contract.

(4) A further issue here is the timing. I have already referred to the significance of timing in the above judgment. I will not repeat myself here. Did D3 come too late, if summary dismissal was actually mentioned at 6:15 a.m.? All this must be dealt with in accordance with the evidence and findings to be made.

(5) Finally, the question of the authority of the husband to depart from the agreed mode of termination mandated by the Defendant should be considered. If the Defendant had intended to terminate the contract by making payment in lieu of notice, was the husband entitled to execute the determination by summary dismissal (assuming that he orally mentioned summary dismissal on the morning)? Here, I would have thought that not only is the actual authority of the husband relevant, but so is his apparent authority. And of course, it is what was conveyed to and reasonably understood by the Claimant that really matters.

(6) The new presiding officer at the re-trial may indeed find it attractive to try the case at one go, instead of trying the preliminary point first: credibility of the parties (as witnesses) is one concern; secondly, if no ground for summary dismissal existed, all of the above would be wholly academic.

51.Finally, as regards costs, given the results, I am of the provisional view that the fairest order is that each party bear its own costs. I make an order nisi to that effect. Unless either party applies to vary the order within 14 days after this judgment is handed down, the same shall become absolute.