Juno Revolving Restaurant Ltd v. Patty Kwok Hoi Chun

DCCJ002383/1970

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 2383 OF 1970

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Coram: N.B. Hooper, District Judge.

Date of Judgment: 13 August 1970

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JUDGMENT

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1. This is an action by an employer for damages for breach of contract, where an employee has left the employment without giving notice.

2. It is common ground in this case that the defendant was employed by the plaintiff company from the 4th of July 1968 until she left the employment of the plaintiff company without giving notice on the 17th of March, 1970. It is common ground also that at the time she left, the defendant was earning a salary of $250 per month and a half share in a fund which comprised of tips voluntarily given by customers of the restaurant together with sums collected by the restaurant as cover charges. It is also common ground that the defendant was entitled to free meals.

3. The plaintiffs claim that the average amount of a share of tips per month was $500 and that as the defendant was entitled to a half share of tips, the amount which she would normally recover would be $250. They also claim that the value of the free meals was $60 per month. These amounts are denied by the defendant, who does not however give any alternative figures. The plaintiffs further claim that these two sums are wages within the meaning of the Employment Ordinance, making the defendant's total monthly wage $560. This the defendant denies.

4. Originally the plaintiffs were claiming the sum of $560 representing one month's wages because the defendant had not given one month's notice according to an oral agreement made between her and the plaintiffs and in contravention to Sections 5 and 6 of the Employment Ordinance Cap. 57. During the course of the hearing the plaintiffs amended their claim to one of general damages.

5. The plaintiffs accept that it was a continuous contract of employment and that therefore the provisions of the Employment Ordinance apply. Although they had pleaded that there was an oral term in the contract for one month's notice, they have not succeeded in proving this. However, I am satisfied that by virtue of Section 5 of the Employment Ordinance, the period of notice required on termination of the contract, was one month. Section 6 of the Employment Ordinance provides an alternative to terminating the contract of employment by giving notice, and permits such termination without notice if a sum equal to the amount of wages which would have accrued to the employee during the period of notice is paid.

6. As the defendant in this case left the employment without giving one month's notice to the plaintiffs and without giving one month's wages in lieu of notice, she was in breach of her contract of employment, and the plaintiffs are entitled to general damages. I think I should mention here that the reason given by the defendant for leaving the employment, was because of personal differences between the manager of the plaintiffs and the defendant, concerning personal matters not connected with the employment. In my view this was irrelevant to the issues before the Court and I did not permit the defendant to lead any evidence on this part of her pleading.

7. There seems to be a prevalent view amongst the practitioners coming before this Court that where one party terminates a contract of employment without giving notice, the other party may sue for the recovery of one month's wages in lieu of notice, as enforcement of a right given to him under Section 6 of the Employment Ordinance. I do not subscribe to this view. Sections 5 and 6 provide a way for the one party to terminate the contract without committing any breach of contract. Where, however, a party terminates the contract without giving notice and without paying one month's wages in lieu of notice, that party commits a breach of contract and in my view the other party's only remedy is to sue for the damages suffered. I expressed this view in Action No. 1550 of 1969 in June 1969. A similar view has since been expressed by my brother Cons in Action No. 2049 of 1969 which is reported in the District court Law Reports for 1969 at page 21. It was in fact after the plaintiffs' attention was directed to the latter judgment, that they amended their Statement of Claim to one of general damages.

8. As there undoubtedly was a breach of contract in the present case committed by the defendant, the issue before me concerns the measure of damages. The common law rule is that a master is entitled to recover such sum as will place him in the same pecuniary position as if the servant had fulfilled his contract, though this is of course subject to the wellknown qualification laid down in the case of Hadley and Baxendale⁽¹⁾ that the amount of damages in actions for breach of contract must not exceed that which would have been reasonably contemplated by the parties at the time of the breach. In his book on the law of Master and Servant, Batt maintains that it must be assumed that where the servant has a right to terminate his engagement by notice, the master's damages must be limited to the losses he sustains through the absence of the defendant in the interim of his leaving and the time when, if notice had then been given, he would have been entitled to leave. He states that this may be a much larger or smaller sum than the amount of the servant's wages for that time, but refers to the absence of any direct authorities known to him dealing with these points specifically.

9. The point which has been exercising my mind, is whether it can be said that the defendant's breach of contract in not giving notice to her employer or not paying one month's wages in lieu of such notice, has caused the employer to suffer damages to the extent of one month's wages. In the judgment to which I have referred in Action No. 2049 of 1969 it was held that Section 6 grants no right to the person whose contract has been terminated. It merely incorporates into the contract for the benefit of both parties, a privilege which until then had been enjoyed by the employer alone, that is, the right to buy his way out of the contract at any stage for a predeterminable sum. Section 7 of the Emplovment Ordinance would appear to recognise that the other party has a right to notice or to payment in lieu of notice. (see Section 7(A)). It is argueable that since the defendant in the present case chose to terminate the contract without giving notice, the plaintiffs immediately had a right to payment of one month's wages in lieu of notice. Since the defendant did not pay one month's wages in lieu of notice, the pecuniary loss suffered by the plaintiffs was one month's wages. On the other hand it is argueable that the plaintiffs' position is similar to that of a servant under the common law who has had his contract terminated by the employer without having been given notice and without having been paid one month's wages in lieu of notice. Despite the fact that it was a well recognized right of the employer to terminate a servant's contract by paying one month's wages in lieu of notice, which gave rise to a corresponding right by the servant to either notice or wages in lieu, nevertheless the servant has never been able, on a breach of contract, by the employer, to recover one month's wages by enforcing a right as such. The servant's claim has always been recognized as one of damages for breach of contract, and it would appear to be quite clearly established that the servant in such circumstances had a duty to mitigate his damages (see Batt at page 264).

10. I have come to the conclusion that in the present case the plaintiffs had a duty to mitigate the damages suffered by them, and cannot therefore claim that they are entitled as of right to the amount of one month's wages in lieu of notice.

11. It is conceded by Mr. Ng the plaintiffs' Supervisor that a store bookkeeper was appointed to take the defendant's place on the 20th of March, that is, 3 days after the defendant left. However, he did not state how long this store bookkeeper remained in the service of the plaintiffs in precise terms; all he said was that this man had worked for a short time and left. Neither was there any evidence as to how much salary he received. It is to be appreciated that if he worked beyond the period which the plaintiffs could have expected the defendant to work on giving one month's notice, the plaintiffs could not look to the defendant for damages in respect of the departure of this store bookkeeper after that period. Since there is no evidence as to exactly how long this man worked at the plaintiffs I must assume, I think, that he continued to work there until the end of that period. That being so, it would appear that the plaintiffs were without a store bookkeeper only for the three days from the 17th of March to 20th of March. It has been stated that there was no proper bookkeeping for the store after the defendant left, and the accounts were not properly made out. No books of account have been produced in this Court and there is no way whereby the Court can assess the quality of otherwise of the bookkeeping. Clearly however the plaintiffs have suffered some inconvenience by reason of the defendant's departure.

12. In the absence of more detailed evidence as to damages, I think the damages suffered by the plaintiffs should be assessed on a basis whereby it bears some relation to the value which they themselves have placed upon her services. They paid her a salary of $250 per month. In addition to this they gave her free meals which I would take as being worth in terms of cash $60 per month as stated by the plaintiffs' Superintendent Mr. Ng Yiu-ming. In addition to this they gave her a half share in a fund comprising sums paid as gratuity by the customers and funds collected by the restaurant as part of the cover charge, which again was stated by Mr. Ng to be worth on an average $250 per month. Although those sums representing gratuities from customers could not be regarded as having been paid by the plaintiffs, nevertheless I think I should take into account for the purpose of assessing her value to her employers, the amount she normally received from the fund, because it would obviously have a bearing on the amount of salary the plaintiffs would pay her. I think it is well-known that in businesses where gratuities can be expected to be received by employees from customers, the salaries paid by the employers are correspondingly lower. It seems obvious that the defendant's services were worth more to the plaintiffs than the $250 they paid her per month and the $60 worth of board. I will take it that her value to her employers was approximately $560 per month, though her "wage" would be less and would not include for instance her free meals (see definition of "wages" and exception (a)) and would not include any part of the gratuities offered by customers. (exception (f) excludes bonuses of a gratuitous nature paid by employers - clearly gratuities paid by customers cannot be included).

13. The defendant's services would be worth to the plaintiffs approximately $18.60 per day making a total of $55.80 for 3 days. The plaintiffs' damages should in my view be assessed at this figure. I would therefore award damages at $55.80 and order the costs of this action to be paid by the defendant.

Representation:

Mr. Lee of Messrs. Woo & Kwan for the Plaintiff.

Defendant in person.

JUDGMENT READ IN OPEN COURT.

(1) 1854 9 Ex. 354