Lai Foon Yung v. Tin Sum Valley Public Primary School

HCLA000007/1985

L.T. Appeal No. 7/85

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HEADNOTE

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On plaintiff's appeal against Presiding Officer of Labour Tribunal's award of damages equal to one month's salary, held, dismissing appeal:-

(1) On the true construction of the contract one month was the prescribed period of notice.

(2) Both at Common Law and under Section 7(1) of the Employment Ordinance one month's salary was the proper measure of damage.

(3) Observations upon the unfortunate effects of the new Section 6(3)(A) of the Employment Ordinance.

L.T. App, No. 7/85

IN THE SUPREME COURT OF HONG KONG

HIGH GOURT

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BETWEEN

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Coram: Hon Hunter, J.

Date of Hearing: 1 July 1985

Date of Delivery of Judgment: 1 July 1985

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JUDGMENT

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1. This is an appeal against a decision of the Presiding Officer in the Labour Tribunal given on 25th February of this year, whereby he awarded the claimant one month's salary by way of damages. He had before him a claim for damages for wrongful dismissal. There were two points in it. The first was that the defendant school were asserting that the contract between the claimant and the school was conditional not absolute. That defence failed on the facts. The second issue was damages. Relying upon section 7(1) of the Employment Ordinance (Cap. 57) the Presiding Officer awarded one month's salary by way of damages.

2. The principal matter taken before me on appeal is that the tribunal below went wrong on the issue of damages.  It is therefore necessary to have a closer look at the contract. This was a contract in writing made on 23rd September 1983. It provided for the employment of the plaintiff by the school, the period of employment being said to be "from 1st November 1983 to 31st August 1984": in other words for one school year. The conditions of service however contained the following. The very first condition talked of "probationary period two years w.e.f. 1st September 1983". I think that the date 1st September, was in fact a mistake which was also made and corrected in the letter of employment. I think that should probably be from 1st November. But there is no way that I can see which that phrase can convert a contract for one year into a contract for two years. The only way of reconciling those two provisions in my judgment, is to say this is a contract for one year the whole of which was to be probationary.

3. The next material clause is 9, which has the heading 'Termination of Agreement or Service and Period of Notice'. It goes on to provide that the teacher can terminate by giving one month's prior notice during the probationary period, and three months thereafter. So this was prima facie a contract for one year terminable on one month's notice at any time by the claimant teacher.

4. As far as the school management committee is concerned, the clause is much more cumbersome, and not, I regret to say, well drafted. It starts, it seems to me, by muddling unilateral termination with termination for cause. It says this: "where the school management committee considers the service of a teacher is unsatisfactory, even after due warnings both verbal and written have been given, normally one month's prior notice should be given to the teacher to terminate his service during the probationary period". So that seems to envisage three things: one, unsatisfactory service; two the giving of warnings both verbal and writing; and then ultimately one month's prior notice. Avery cumbersome procedure indeed. But then it goes on: "where it is considered necessary to terminate a teacher's appointment for reasons other than unsatisfactory notice, the foregoing periods of notice should apply". One wonders why all the fuss is made in the first sentence, when the 3rd sentence makes it perfectly plain, that the period of notice i.e. one month during probation and three months after probation applies for termination for any reason.

5. This is the clause in the contract which Mr. Siu has to attack, and has to get rid of in some way. It seems to me that he is faced with an impossible task. However ill-drafted, the clause is there. It is tolerably clear that it provides in fact for mutual termination of this contract by both parties on the same terms, if you read the two clauses together. I cannot give Clause 9 no meaning at all. He says that it requires reasons being given in the notice. I very much doubt that. He says that no notice was given here, and there is no decision by the school management committee, and no communication of that decision to this claimant. I agree with that. Nothing was in fact done, because the school thought that it had not made a binding contract.

6. The Common Law principle here is a deep rooted one. It is most conveniently described by Buckley L.J. in Gunton v. The London Borough of Richmond-upon-Thames 1980 3 All ER 577. This passage appears at page 589H; "The date when the contract would have come to an end however must be ascertained on the assumption, (my emphasis), that the employer would have exercised any power that he may have had to bring the contract to an end in the way most beneficial to himself. That is to say he would have terminated the contract at the earliest date at which he could properly do so". That principle was expressly accepted, as I read the decision, by the Privy Council in British Guiana Credit Corporation v. Da Silva 1965 1 WLR 248, at p259.  It is treated as good law by Chitty Specific Contracts 25th Edition paragraph 3522; and by McGregor on Damages 14th Edition particularly at paragraph 937. If you apply it here you can see straight away that this plaintiff is limited to one month's salary by way of damages, this being the period of notice under her contract.

7. The Presiding Officer arrived at the same conclusion by a statutory short cut, because section 7(1) of the Ordinance seems to me precisely to re-enact this Common Law principle. So it seems to me that there is no substance in the criticisms that have been directed to the decision on that account.

8. Fortunately it has not been necessary for me to consider a very new addition to section 6 of the Ordinance which is section 6(3)(A). This provides that even though (I am paraphrasing) the contract may provide for a period of notice, if the contract is probationary, then notwithstanding the length of notice provided for in the contract, either party at any time during the first month of such employment, may terminate that contract without notice. I read that Clause, when I first saw it this morning, with considerable distaste. If, as has been suggested, the reason behind it is administrative convenience in the Labour Department, I read it with disgust. I can see no conceivable reason, at the moment, why parties who have expressly gone to the trouble of providing for a period of notice in a probationary contract, should be entitled in the course of the first month to tear up that term. It seems to me a provision which is well calculated, if not bound, to lead to the gravest injustice,

9. It would have done so in this case. This contract was entered into on 23rd September. It is plain that it was not until 22nd and 23rd October that the lady was told that her services were not going to be required. Indeed if this provision is right she could have been told on 1st November, when she presented herself for work, go away. Although she had kept herself free to do that job for some considerable time, she would have gone away with nothing. I look at this with horror. I do not understand how this has gone through the legislature in this form. I sincerely hope someone will have second thoughts about it.

10. But as I have said it does not arise here. It is quite sufficient for me to say that, I think the judgment of the Presiding Officer below is totally correct, and that this appeal must be dismissed.

Representation:

Mr. S.C. Siu instructed by M/s W.I. Cheung & Co. for Appellant,

Mr. Louis Chan instructed by M/s Tong, Kan & Ho for Respondent.