Fong Chi Yung t/a Long Fai Bus Co v. Cheung Hoi Ying
Read the full judgment text of DCCJ 1586/2003 on BabelCite. This District Court judgment.
1. This case concerns with the termination of the employment relationship between the Plaintiff (“P”) as the employer and the Defendant (“D”) as the employee in September 2002.
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DCCJ 1586/2003 & 2569/2003 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NOS. 1409 OF 2003 AND 2569 OF 2003 -------------------- BETWEEN
-------------------- Coram : Deputy District Judge J. Ko in Court Dates of Hearing : 25th – 29th July 2005 & 10th – 11th August 2005 Date of submission of Plaintiff’s written reply : 22nd August 2005 Date of Handing Down Judgment : 22nd November 2005 J U D G M E N T 1.This case concerns with the termination of the employment relationship between the Plaintiff (“P”) as the employer and the Defendant (“D”) as the employee in September 2002. 2.Prior to the first day of trial, it was P’s pleaded case that the employment relationship between of P and D had been terminated on 3rd July 2002 by mutual agreement and that D had, since 4th July 2002, been working for P as an independent contractor. This has always been disputed by D (see Statement of Claim para.2 at Agreed Bundle p.1; Defence and Counterclaim para.5(4) at Agreed Bundle p.12; and Reply and Defence to Counterclaim para.4(6) at Agreed Bundle p.54). 3.On the first day of trial, Ms. Wong (counsel for P) informed the court that P would no longer take issue with the fact that the employment relationship between P and D had not been terminated in July 2002. Leave was granted to P to amend her pleadings accordingly. 4.As a result of the above concession made by P, it is now common ground that D had been employed by P as a coach driver up to its termination in September 2002 (see Amended Statement of Claim para.2 at Agreed Bundle p.604). How their employment relationship ended, however, is a matter in great dispute. Overview of the respective case of the parties 5.It is P’s case that D’s employment was terminated on 14th September 2002 by mutual agreement. However, D failed and refused to inform P the whereabouts of the coach then assigned to him bearing the registration no. KJ 4376 (“the Coach”) despite requests and demands after the date of termination (see Amended Statement of Claim para.7(1) at Agreed Bundle p.606). In addition, D has also failed and refused to return to P the wireless transceiver installed on board the Coach (“the Transceiver”), the cover of the coolant reservoir, the cover of the lubricant chamber and the small engine cover of the Coach (“the 3 Covers”), as well as boarding tickets/coupons that D had collected from passengers (see Amended Statement of Claim para.7(3)-(4) at Agreed Bundle p.606). 6.By reason of the aforesaid, says P, D has breached the employment contract and committed the tort of conversion and P has suffered loss and damage as a result (see Amended Statement of Claim para.8-9 at Agreed Bundle pp.607-608). Initially, P prayed for both an order for delivery up of the Transceiver and damages. However, it has now become clear that the damages claimed by P includes the cost of replacement of the Transceiver. In the end, P only asks for damages in the total sum of $124,570. 7.D denies that his employment was terminated on 14th September 2002 as alleged by P. Instead, D says he was constructively dismissed on 16th September 2002 when P withdrew the Coach and demanded the return of the keys to the Coach from him (see Defence and Counterclaim para.5(5) and 12 at Agreed Bundle pp.12-13 and 19-31). D is counterclaiming against P in the total sum of $23,677.70 being wages in lieu of notice, annual leave pay and end of year payment. 8.D denies that he has breached the employment contract or committed conversion. It is D’s case that all along P knew where the Coach was parked. He denies having taken the Transceiver. He maintains that he had removed the 3 Covers from the Coach as a security measure to prevent the Coach from being stolen, which were handed to the police for P on 16th September 2002. Background 9.Despite the vast difference between the parties, there is much common ground in the evidence. Mr. Iu (solicitor for D) has helpfully summarized those facts which are not in dispute in his written closing submission. They have been subjected to remarks made by Ms. Wong in her written reply. 10.For the purpose of this judgment, I have accepted the following facts to be common ground between the parties. These facts provide the backbone for the ensuring discussion and their relevance will become apparent when one turns to the specific issues in dispute. 11.P is the sole-proprietress of Long Fai Bus Company (“Long Fai”) and holds the title of deputy general manager of the company. Mr. Man Tat Shing (“MAN”) is the general manager of Long Fai whereas Mr. Li Kwok Wing (“LI”) is Long Fai’s supervisor of coaches. 12.Long Fai Bus Limited (“LF Limited”) was incorporated on 10th June 2002. MAN holds 99.99 % of the shareholding in LF Limited and P holds the remaining 0.01 % shareholding. MAN and P are the only directors of LF Limited. 13.Avonwin Holdings Tour Limited (“Avonwin”) was incorporated on 26th June 2002. MAN holds 98 % of the shareholding in Avonwin and P holds the remaining 2 % shareholding. There are 4 directors of Avonwin including MAN and P. 14.Long Fai, LF Limited and Avonwin share the same address as their offices. 15.D’s employment contract was negotiated and agreed upon by MAN (for and on behalf of P or Long Fai) and D in November 2001. P commenced working for Long Fai as a coach driver on 3rd December 2001. 16.In early January 2002, P purchased the Coach, which was then brand new, at $300,000 to $400,000. The Coach has a seating capacity of 30 (including driver). The Transceiver was installed on board the Coach for use by the driver for communication purposes. The Transceiver had a detachable front panel cover (“the Panel”). No anti-theft security measure was installed on the Coach. 17.Soon after its purchase, the Coach was assigned to be driven exclusively by D. D was given one set of keys to the Coach and a spare set was kept by Long Fai. 18.Generally, Long Fai’s coaches are parked at its designated car park in Hang Mei (坑尾) in Tin Shui Wai. Shortly after the Coach was assigned to D, D obtained permission from P through MAN to park the Coach in the vicinity of D’s residence in Sung Ching San Tsuen (崇正新村) in Yuen Long. At all material times, P (and MAN) knew where D resided. 19.What happened between 6th and 16th September 2002 is hotly contested. Be that as it may, the following facts are not in dispute:
20.On 4th November 2002, D filed a claim against P in the Labour Tribunal under LBTC 10532/2002 claiming for $12,000 being wages in lieu of notice, $5,600 being arrears of wages, $2,209.30 being annual leave pay, $9,468.40 being end of year pay and $220 being order fee, totaling $29,497.70 (see Form of Claim at Agreed Bundle pp.144-145). 21.D, P and MAN gave evidence at the Labour Tribunal on 28th November 2002. 22.On 9th January 2003, the Labour Tribunal made an Award in favour of D on P’s admission for $5,600 being arrears of wages and $220 being order fee, totaling $5,720.00, and adjourned D’s remaining claim for further consideration (see Award at Agreed Bundle p.186). 23.On 20th March 2003, P issued the Writ in this action against D. 24.On 23rd April 2003, the Labour Tribunal ordered D’s remaining claim in LBTC 10532/2002 to be transferred to the District Court (see Order at Agreed Bundle p.190). By an Order dated 23rd May 2003, D’s remaining claim in LBTC 10532/2002 has been consolidated with P’s claim in this action and becomes the counterclaim herein. Main issues in dispute 25.The main issues in dispute can be summarized as follows:
Witnesses and evidence at trial 26.P testified at trial. She also called MAN and LI as her witnesses. 27.D testified at trial. He also called YUEN as a witness. 28.In addition, parties have adduced 2 agreed bundles of documentary evidence (“Agreed Bundle”). What were the terms of the employment contract between P and D? 29.The natural starting point for the discussion is on the terms of the employment contract between P and D. 30.The terms of the employment contract will be particularly relevant to the following issues discussed below, namely, whether D was in breach of the employment contract (as alleged by P), whether D was constructively dismissed by P (as alleged by D) and whether D is entitled to any end of year payment (as alleged by D). 31.On pleadings, both parties agree the following terms were terms of the employment contract (see Defence and Counterclaim para.5(3)(a)-(d) at Agreed Bundle pp.10-11; Re-Amended Reply and Defence to Counterclaim para.4(2) at Agreed Bundle p.612):
32.In addition to the agreed terms, P has pleaded that D was required under the employment contract (see Amended Statement of Claim para.3 at Agreed Bundle pp.604-605):
33.P is also relying on an implied term that D should not intentionally cause damage to the coach he was assigned to drive and/or to remove any part therefrom without the express authorization or consent from P (see Amended Statement of Claim para.4 at Agreed Bundle p.605). 34.D has either denied or not admitted the above terms pleaded by P (see Defence and Counterclaim para.7 at Agreed Bundle p.13 and para.9 at Agreed Bundle p.19). In addition to the abovementioned agreed terms, D pleads that he was entitled to end of year payment equivalent to 1 month’s basic salary under his employment contract (see Defence and Counterclaim para.5(3)(e) at Agreed Bundle p.11). 35.I observe from the evidence at trial that the parties are in fact on common ground that D was required under the employment contract:
36.Insofar as the parking of the coach assigned by P to D is concerned, the evidence at trial (which are again not disputed) is that soon after the Coach had been assigned to D, he obtained permission from P through MAN to park the Coach in the vicinity of D’s residence in Yuen Long instead of in Long Fai’s designated car park in Tin Shui Wai. 37.Insofar as the implied term alleged by P is concerned, it must be looked at in 2 parts:
38.Whilst D denies the first limb of the alleged implied term on pleading, Mr. Iu submits in his written closing submission that there was a bailment of the Coach by P to D. Relying on Gilchrist Watt & Sanderson Pty Ltd v. York Products Pty Ltd [1970] 3 All ER 825, he submits that D (as bailee) was under an obligation to take due care of the Coach. Curiously, Ms. Wong submits in her written reply that there was no bailment and that Gilchrist Watt & Sanderson Pty Ltd v. York Products Pty Ltd is not applicable but without giving any reason. 39.If, according to Mr. Iu, D was obligated to take due care of the Coach, D must be taken to be under an obligation not to intentionally cause damage to the Coach. It therefore seems to me that both parties are in fact in agreement that at least D was under an obligation not to intentionally cause damage to the Coach. Whether such obligation flows from the employment contract (as alleged by P) or from the law of bailment (as alleged by D) is perhaps academic in the circumstances of this case. 40.As to the second limb of the alleged implied term, it is clear from MAN’s testimony that Long Fai had not given instructions to its drivers that they had first to obtain Long Fai’s authorization or consent before they could remove anything from the coaches assigned to them. In any event, P has adduced no evidence as to why this limb should be implied into the employment contract. 41.In the premises, I only find that it was an implied term of the employment contract that D was under an obligation not to intentionally cause damage to the Coach. 42.As to whether D should be entitled to end of year payment under the employment contract, the matter is much more complicated and will be discussed later in this judgment when I consider D’s counterclaim. 43.Lastly, it must be noted that parties are also in disagreement on pleading as to the term of the employment contract entitling D to any “order fee” for additional work not covered by his basic salary (see paragraphs 5(3)(f)-(g) of Defence and Counterclaim at Agreed Bundle 11-12; and paragraph 4(4)-(5) of the Re-Amended Reply and Defence to Counterclaim at Agreed Bundle pp.612-613). 44.Since D’s claim for “order fee” has apparently been dealt with by the Labour Tribunal in the Award dated 9th January 2003 and D is not claiming for any “order fee” in his counterclaim herein, it is not necessary for me to resolve this dispute and I shall say no more. How was the employment contract terminated? 45.The main dispute in this case is how the employment relationship between P and D ended. 46.To recap, it is P’s case that D’s employment contract was terminated by mutual agreement on 14th September 2002. On the other hand, it is D’s case that D was constructively dismissed by P on 16th September 2002. 47.In order for P to succeed, P must establish that she has given oral notice to D on 6th September to terminate D’s employment on 14th September. The relevant conversation was between P and D in person. MAN was not present at the meetings. Although LI was present at both meetings and YUEN had attended the afternoon one, the discussion between P and each employee was apparently held individually at a separate table and so they do not know what was said between P and D. 48.According to P:
49.Having considered all the evidence before me, I am not satisfied that oral notice has been given on 6th September. 50.To start with, P’s testimony in court is contradicted by MAN’s testimony at the Labour Tribunal. On 28th November 2002, MAN has told the Labour Tribunal that after he had learnt from P that D had refused on 6th September to change his working status, he instructed P on 7th September 2002 to tell D that D’s employment would be terminated on 15th September and D needed not report to work on 16th September (see transcript at 26H-I, T-V and 27O-175G at Agreed Bundle pp.173-174). 51.In my view, P’s testimony is inconsistent with MAN’s testimony at the Tribunal in 2 material aspects. First, Man said he only gave instructions to P to terminate D’s employment on 7th September. So, P could not have given oral notice to D on 6th September. Secondly, Man’s understanding of the effect of the notice is to terminate D’s employment with effect from 16th September. This, again, is different from P’s case that D’s employment was terminated on 14th September. When Man is cross-examined on the above inconsistencies, he simply says that P might not have followed his instructions and that he does not know what P has in fact told D on 6th September. Given MAN’s role in Long Fai as general manager and P’s admission that she relied on MAN for Long Fai’s administrative matters, the above inconsistencies are remarkable and Man’s excuses unsatisfactory. Furthermore, if P had already given notice of termination to D, it would not be necessary for MAN to instruct P to do that again! 52.Secondly, according to P’s pleaded case either party might terminate D’s employment by giving 1-month advance notice. So, if P had given notice to terminate D’s employment on 6th September, such termination should take effect on 5th October – i.e. 1 month from 6th September! However, it is P’s testimony that the termination would take effect on 14th September. How could this possible? 53.P tries very hard to explain away in cross-examination by alleging that prior to 6th September the parties had reached another agreement to amend the notice period from 1 month to 7 days. When she was pressed hard on the timing of this alleged prior agreement, she first said that the agreement was made in early September 2002. Later on, she alleged that it was made in the month of July 2002. In any event, the alleged prior agreement, whether in early September or in July, has never been pleaded. 54.Thirdly, if P is correct that D’s employment ended on 14th September and that she had asked D to return to calculate the outstanding wages, one would expect P to be prepared to calculate D’s outstanding wages on 14th September. It is noted that, in the past, D had received his basic salary of $12,000 by cheques or cash (see Agreed Bundle at pp.263-273). However, it is clear from P’s testimony that she was not in a position to do so on that day. She was admittedly not ready to calculate D’s outstanding wages and did not bring any cash or cheques for payment to D. This leads one to doubt if P had really meant to terminate D’s employment and calculate D’s outstanding wages on 14th September. 55.Other than the above obvious discrepancies, I have also causes to doubt the genuineness of P’s case. 56.On pleadings, P has always denied that there was a second meeting on 6th September (see Re-Amended Reply and Defence to Counterclaim para.7(5) at Agreed Bundle p.616; and Defence and Counterclaim para.12(5)-(6) at Agreed Bundle p.21). The implication, insofar as P’s pleaded case is concerned, must be that the oral notice to terminate D’s employment was given in the morning meeting (see Re-Amended Reply and Defence to Counterclaim para.7(1) at Agreed Bundle p.615; Defence and Counterclaim para.12(1) at Agreed Bundle p.19). Yet, P admits during cross-examination that there was a second meeting on 6th September and further alleges in re-examination that the alleged oral notice was given in the afternoon meeting. So, P’s testimony in court is not consistent with her pleadings. 57.Again on pleadings, P has always alleged that she had only showed D one document on 6th September (see Re-Amended Reply and Defence to Counterclaim para.7(3) at Agreed Bundle p.616; Defence and Counterclaim para.12(3) at Agreed Bundle p.20). P’s former solicitors have even supplied a copy of this alleged single document to D’s solicitors upon the latter’s request (see Agreed Bundle pp.281-283). However, it is quite apparent from P’s testimony that the document supplied by P’s former solicitors is none of the 2 documents mentioned in her testimony. The document supplied by P’s former solicitors is concerned with the period between 4th July 2002 and 3rd July 2003 (see Agreed Bundle p.283). However, according to P’s testimony in court, the 2 documents put to D should relate to the periods of 3rd December 2001 to 2nd December 2002 and 3rd December 2002 and 2nd December 2003 respectively. 58.P’s case that D had demanded for $29,000 on 14th September is also suspicious. The amount allegedly demanded by D (i.e. $29,000) matches the amount of D’s claim in the Labour Tribunal (i.e. $29,497.70, see Agreed Bundle p.144) closely. According to D, he was only advised by the Labour Department on 16th October 2002 that his claim against P would be in the region of $29,000 odd and so he could not have made such demand on 14th September. Curiously, when D was interviewed by the police under caution on 16th September 2002, no question was put to him about this alleged demand of $29,000 (see Agreed Bundle pp.289-292)! This subject was only brought up during the interview on 1st November 2002 (see question and answer no. 8 in D’s cautioned statement at Agreed Bundle p.322). If D had really demanded for $29,000 on 14th September, would MAN have failed to mention it to the police when he reported the matter? D’s solicitors have consistently requested for a copy of MAN’s statement to the police to confirm what had been said by MAN to the police but to no avail (see D’s solicitors’ letters at Agreed Bundle pp.542, 545, 548, 550, 555 and 558). P has never disclosed MAN’s statement to the police to D or at trial. When MAN is cross-examined, he initially said he did not recall whether he had mentioned D’s demand of $29,000 when he made his initial report to the police. Upon further cross-examination by Mr. Iu, MAN then admits that he probably have only told the police well after 16th September 2002 about the demand when he was requested by the police to give a further statement. In my view, MAN’s testimony not only casts doubt on P’s testimony but supports D’s testimony that no demand for $29,000 was made on 14th September. 59.Turning to D’s case that there had not been any notice to terminate his employment, his case tends to be supported by the following evidence:
60.According to D, there was another meeting between MAN and D in the evening of 6th September 2002. At the conclusion of the meeting, D told MAN that P should follow the employment law if P wished to fire him. MAN asked D to continue with his work. Ms. Wong criticizes D in her written closing submission for not mentioning this meeting in D’s witness statement filed herein. However, D has apparently mentioned such a meeting when he testified on 28th November 2002 at the Labour Tribunal (see transcript at 4A-E at Agreed Bundle p.151). 61.Ms. Wong, in her written closing submission, submits that the fact that P had indicated to D on 6th September 2002 that the employment relationship would terminate on 14th September 2002 and they would do the calculation on that day is reflected in D’s witness statement to the Labour Tribunal at Agreed Bundle p.523. However, I cannot discern such an indication in D’s said witness statement. 62.In her written closing submission, Ms. Wong on the one hand criticizes D for going to the Labour Department (as opposed to the police or contacting P) on 16th September 2002 when he found the Coach missing. On the other hand, D was also criticized for going to P after his enquiry with the Labour Department. I find these criticisms unjustified. According to D, he immediately called MAN to enquire if MAN had repossessed the Coach when he discovered the Coach missing. MAN did not give him a direct answer (“支吾以對”), which gave him the impression that P wanted to fire him. That, together with the fact that he had been asked to sign the 2 documents on 6th September, prompted him to seek advise from the Labour Department. I find D’s action in seeking advise from the Labour Department as opposed to contacting P or the police reasonable. It is also D’s evidence that he called P at about 4 pm after he had consulted the Labour Department to enquire if she had taken the Coach. I find nothing remarkable in D calling P at that stage. D had earlier called MAN and could not get a definite answer as to the whereabouts of the Coach. He then went to the Labour Department and was advised to send letters to P to preserve his rights and to wait for 7 days. I find it reasonable for him then to enquire with P to clarify his position in relation to the Coach. 63.Ms. Wong also submits that D’s and YUEN’s testimony are in complete contradiction insofar as the telephone conversation between them on 16th September 2002 is concerned. This is not supported by the evidence. On the contrary, I find their evidence generally consistent with each other. What is clear from their evidence is that D had learnt from YUEN that MAN had made accusation against him to the police. And this has, according to D, prompted him to go to the police on 16th September. 64.All in all, I find D’s case more believable. I find that P has not given oral notice to D on 6th September 2002 to terminate D’s employment on 14th September 2002. 65.The next question is whether D was constructively dismissed by P in the circumstances of this case. 66.The starting point is the principle laid down in Western Excavating (ECC) Ltd v. Sharp [1978] I.C.R. 221 at 227 that:
67.In my view, the following facts are pertinent to the question of whether D was constructively dismissed:
68.When stripped of the purported context of having given due notice of termination, P’s action of withdrawing the keys and the Coach from D without assigning a replacement coach to him was without legal basis. The very work D was employed to do according to the employment contract was to provide service as a coach driver of such coach assigned by P. D was prevented from performing his duties as a coach driver without the Coach. The withdrawal of the Coach without assigning a replacement coach must go to the root of the employment contract. When one further takes into account the fact that P had unilaterally tried to alter the nature of D’s engagement earlier and P’s complaint to the police against D, P’s conduct on the whole, viewed objectively, show an intention no longer to be bound by the employment contract. 69.On the evidence, therefore, I find D was constructively dismissed by P on 16th September 2002. Whether D was in breach of the employment contract and/or committed the tort of conversion as alleged by P? If so, whether P is entitled to the damages claimed? 70.P is claiming against D for the following loss and damage (see Amended Statement of Claim para.9 at Agreed Bundle pp.607-608):
71.Item (1) relates to the Transceiver. The remaining items concern with the Coach and/or the 3 Covers. I shall now examine each item of P’s claim more closely. (a) The Transceiver 72.It is common ground that the Transceiver installed on board the Coach has a detachable front panel cover (“the Panel”). 73.It is P’s pleaded case that D has failed and refused to return the Transceiver to P after D’s employment was terminated. MAN describes in his witness statement filed herein how he discovered on 15th September 2002 the Transceiver to be missing (at Agreed Bundle p.107):
Thus it is clear that what P has been alleging to be missing is the Transceiver, as opposed to the Panel. 74.However, when P and MAN testify in court they both say that it was the Panel but not the Transceiver that was found missing. This seems to be inconsistent with what has been pleaded and what is described in MAN’s statement. 75.Further, MAN has apparently omitted to mention the loss of either the Transceiver or the Panel to the police and when he testified before the Labour Tribunal. He agrees during cross-examination that he did not mention the loss of the Transceiver or the Panel when he gave his statement to the police. He has similarly omitted to mention it when he testified before the Labour Tribunal on 28th November 2002 (see transcript at 29S at Agreed Bundle p.176). 76.Curiously, P has also made the same omission repeatedly. She mentioned only the loss of the 3 Covers but failed to mention the loss of either the Transceiver or the Panel:
77.During cross-examination, P explains that she did not regard the Panel as lost because she had seen it inside the plastic bag D was carring on 14th September and she thought D would return it to her. Hence, she did not state in her statement filed with the Labour Tribunal that the Panel was also lost. However, it is noted that she has also stated in the same statement that she had demanded D for the return of the 3 Covers on 15th September. If she had then considered the 3 Covers (which she knew were kept by D) lost, why did she not consider the Panel as lost? P’s explanation is clearly untenable. 78.It has always been D’s case that he has not taken the Transceiver or the Panel away. He consistently maintains that he has put the Panel inside the drawer in the driver’s compartment of the Coach after detaching it from the Transceiver when he last got off work. 79.In view of the glaring omission on the part of P and MAN highlighted above and my doubt on the invoice produced (see below), I consider D’s version more believable. I therefore find that the Panel has not been lost. 80.Given my above finding, there can be no question of breach of the employment contract or conversion in relation to the Panel. (b) Item (1): $4,000 being the cost of replacement of the Transceiver 81.In any event, I have grave doubt about P’s claim of $4,000 to replace the Transceiver. 82.It is true that P has produced an invoice (at Agreed Bundle p.591) to support her claim for $4,000. However, I find P’s case in this respect far from satisfactory. 83.It is P’s case that without the Panel, the whole Transceiver would have to be replaced. P’s testimony is that she asked MAN and LI to purchase a replacement transceiver for the Coach. After the purchase, the new transceiver was installed in the Coach and she was given the said invoice. However, when it is pointed out to her during cross-examination that the said invoice is apparently dated 10th December 2001 (i.e. long before 15th September 2002 when MAN allegedly discovered the Panel missing), she replies that the said invoice is only produced for reference purpose. 84.MAN’s initial testimony in court is already quite different from that of P. He says that the invoice at Agreed Bundle p.591 was the invoice for the Transceiver (i.e. the one that was lost). He further alleged that the Transceiver was installed on the Coach about 1-2 days after purchase. However, when he is confronted with the fact that the said invoice (dated 10th December 2001) pre-dated the purchase of the Coach (i.e. January 2002, see the certificate of particulars of the Coach at Agreed Bundle p.192), he simply agrees without offering any explanation! 85.If P has indeed purchased a replacement transceiver, one would expect some documentary evidence such as invoice or receipt to evidence the purchase. This is all the more so as P should be very astute in retaining relevant evidence given the events that P said had happened in September 2002. I consider it most unsatisfactory that P is unable to produce any documentary evidence. Worse still, neither P nor MAN can offer any consistent and satisfactory account on the absence of an invoice/receipt. 86.All in all, I find P has not discharged her burden of proving Item (1) of her claim. (c) The Coach 87.It is P’s case that D has unlawfully failed and/or refused to inform P the whereabouts of the Coach despite repeated requests and demands after the date of termination of the employment contract. 88.To succeed in this regard, P must establish that neither she nor MAN knew where the Coach was at the material time. If they had all along known where the Coach was parked, there could be no question of D failing or refusing to inform them. 89.It is common ground that Long Fai’s coaches are generally parked at its designated car park in Tin Shui Wai. According to P, Long Fai’s coaches may not be parked anywhere else without first obtaining permission. MAN is principally responsible to know the whereabouts of Long Fai’s coaches and she does not need to know and it is enough to obtain MAN’s permission to park somewhere else. At the material time, although she knew the Coach was not parked at Long Fai’s designated car park, she did not know where D had parked the Coach. 90.MAN confirms that he had given permission to D to park the Coach in the vicinity of D’s residence. He, however, denies he had been informed where exactly D was parking the Coach. On 14th September 2002, he spent half an hour driving around the vicinity of D’s residence but failed to locate the Coach. On the next day, he managed to find the Coach inside YYCP after another half-hour search. He confirms that YYCP is within walking distance from where D resided. 91.It is D’s testimony that he had obtained permission from MAN to park the Coach nearer his residence in order to save traveling time. He rented a car parking space at YYCP, which is within walking distance from his residence, and had been parking the Coach there. He has produced the receipts from YYCP evidencing the fact that he had been parking there (see Agreed Bundle at pp.275-276). He has informed MAN that he was parking the Coach at YYCP and MAN had even been to YYCP to inspect the location. 92.Both P and MAN deny knowledge that the Coach was parked at YYCP. They both testify that they were in fact not concerned where the Coach was parked. I find their laxity most surprising. First, it is inconsistent with the strict policy of Long Fai to have all coaches parked at the designated car park. Secondly, it is common ground that Long Fai kept a set of spare keys to the Coach in case the Coach was urgently required. What was the point in keeping the spare keys if no one in Long Fai (other than D) knew where the Coach was? 93.On the other hand, the fact that the Coach was eventually “found” inside YYCP is consistent with D’s case that he did not fail or refuse to inform P of the whereabouts of the Coach. First, D had been permitted to park the Coach in the vicinity of his residence and it is common ground that YYCP is within walking distance from D’s residence. Secondly, if he had wanted to keep P from knowing the whereabouts of the Coach, would he have parked it at YYCP – something that he had been permitted to do? Thirdly, D’s witness, YUEN, also says that MAN had made it his business to know the whereabouts of YUEN’s coach, which had also been permitted to park away from the designated car park. This tends to confirm D’s case that MAN should know the whereabouts of the Coach. 94.In her written closing submission, Ms. Wong criticizes D for referring to YYCP in 3 different ways. In fact, D might only have referred to YYCP by 2 names at most, namely, “榕苑停車場” (see answer no.8 of D’s cautioned statement at Agreed Bundle p.291) and “容記停車場” (see transcript at 12R at Agreed Bundle p.453). The remaining description, namely, “元朗大棠路榕苑士多對面停車場” was in fact used by a police officer (see Agreed Bundle p.321). In any event, I find the 2 names used by D reasonably close to each other. 95.In the premises, I do not accept that P did not know that the Coach was parked at YYCP at all material times. 96.Based on the above finding of fact, there can be no question of D breaching the employment contract. D had been permitted to park the Coach in the vicinity of his residence and that was exactly what he did. 97.There cannot be a claim on conversion in those circumstances either. According to Clerk & Lindsell on Torts, 18th Edition (2000) at para.14-09:
98.There is simply no evidence of any deliberate dealing with the Coach inconsistent with P’s right. 99.Given my above finding that the Plaintiff has not given any notice of termination on 6th September 2002, any alleged requests and demands (whether by P personally or through LI) for the return of the Coach must be viewed with suspicion. In any event, LI’s testimony is that he demanded D on 14th September 2002 to return the Coach by 2 pm on the same day. There is no evidence of P demandingfor the return of the Coach after the date of termination of the employment contract (i.e. after 14th September 2002) as pleaded. (d) The 3 Covers 100.To recap, it is common ground that the 3 Covers were found missing from the Coach when MAN “found” the Coach on 15th September 2002. It is P’s case that by removing the 3 Covers, D has breached the employment contract and/or committed the tort of conversion. D admits to have removed the 3 Covers. 101.According to P, it is quite rare for the type of coach same as the Coach to be stolen. It would suffice if drivers simply lock up after work and Long Fai would not hold its drivers responsible for theft from or of the coaches assigned to them. 102.MAN also gives similar evidence. At one stage, he claimed that Long Fai was not concerned that its coaches might be stolen because it had bought comprehensive insurance for all its coaches. However, upon further cross-examination, he retracted from this and alleges that it is only common sense that no one would be interested to steal a coach manufactured by Mitsubishi or Isuzu! It is noted that the make of the Coach is Mitsubishi. However, it is also his testimony that he felt it necessary to file a report with the police before actually recovering the Coach on 15th September because he was afraid that he might be mistaken as a thief and got beaten up! If it were indeed common sense that no thief would be interested in the Coach, why did MAN hesitate in recovering the Coach on 15th September before going to the police? After all, he did have the spare keys to the Coach, did he not? 103.Whilst D admits that he removed the 3 Covers, he maintains that they were removed as a security measure to prevent the Coach from being stolen. In any event, he has returned the 3 Covers to P through the police since 16th September 2002. 104.The question here is whether D’s assertion of removing the 3 Covers as a security measure can be accepted. 105.Ms. Wong has attempted to demonstrate in her examination of witnesses that the Coach without the 3 Covers might still be driven for a short while or distance and that was good enough for a thief. In my view, that is quite beside the point. 106.Although P, MAN and LI all insist that they have not heard of removing the 3 Covers as a security measure before, it is clear from MAN’s evidence that he was unable to drive away the Coach in the evening of 15th September and had to await someone to tow it away on the following day. 107.It is MAN’s evidence that he noticed a strange noise the moment he ignited the engine on 15th September. He then noticed that the big cover inside the driver’s compartment which covered the engine had been displaced. When he opened the big cover, he noticed the 3 Covers missing. During re-examination, he explains that if he had tried to drive the Coach away without the 3 Covers, hot coolant and lubricant would burst out from the uncovered tanks and might cause injury to him at the driver seat. In addition, the engine would eventually overheat and burn without sufficient coolant and lubricant. 108.In my view, the effectiveness of D’s alleged means of securing the Coach has been confirmed by the testimony of MAN. 109.D’s act must also be viewed in its proper context. It is common ground that the Coach was brand new when it was assigned to D and no anti-theft security measure was installed. Although it has been suggested that the more usual anti-theft measures adopted by other coach drivers would be by means of steering wheel lock or brake lock, none had been supplied to D. 110.Ms. Wong has criticized D in her written closing submission for only employing such security measure over the weekends but not on weekdays. D has explained that he would normally stayed across the border if he knew he had no order over the weekend. So he would remove the 3 Covers to secure the Coach over such longer period. I find D’s explanation reasonable. 111.In the circumstances, I accept D’s explanation and find that he had removed the 3 Covers as a security measure to prevent the Coach from being stolen. 112.D’s act in securing the Coach is consistent with his obligation under the employment contract. All employees are deemed to have a discretion to act for the protection of the employer’s property (see Clerk and Lindsell on Torts, 18th Edition (2000), para.5-34). This is all the more so as it is remembered that P had not instructed her employees to seek permission before removing parts from their coaches. As such, there cannot be any breach of the employment contract. 113.There cannot be any conversion either as I have found what D did to be consistent with the right of P as owner of the Coach. (e) Item (8): $3,000 being additional wages paid to staff 114.P has adduced 2 receipts to support P’s claim in this regard (at Agreed Bundle pp.596-597). However, the sum total of these 2 receipts, which is $3,755, does not support her claim of $3,000. P has apparently noted this inconsistency in court and volunteers to limit her claim to $3,000 only. 115.Be that as it may, I am still not satisfied with the genuineness of these receipts. These 2 receipts have been purportedly issued to evidence payments to MAN and LI for their extra work on 15th and 16th September. Both MAN and LI say they have already received payment and it is handwritten on each receipt the date of 30th September 2002. If P has already paid them as early as 30th September 2002 and such payments have all along been evidenced by these receipts, I find it strange that P would claim for $3,000 (but not $3,755) in her Statement of Claim dated 16th June 2003. (f) Item (2): $470 being towing charges 116.Given my above finding that D was constructively dismissed by P, there is no basis for D to be responsible for any towing charges. In any event, the receipt produced by P (at Agreed Bundle p.593), which shows an amount of $400, does not tally with P’s claim of $470! (g) Item (3): $1,000 being change of lubricant with service fee 117.P has not satisfied me that this item is anything other than for general maintenance of the Coach to which P as owner should be responsible. (h) Item (5): $1,100 being replacement for car parts with service fee 118.P has failed to produce any documentary evidence to support this item of claim. 119.P has not satisfied me as to the circumstances of incurring this $1,100. According to both P and MAN on the one hand, this sum of $1,100 is for the parts to replace the 3 Covers and was paid to the same garage which had changed the lubricant oil and serviced the Coach (i.e. 建新車房). P even claims that she has received a receipt from the garage but has since misplaced it. However, it is LI’s evidence on the other hand that he himself bought the 3 Covers from Mitsubishi service centre and paid for them. He passed the invoice to Long Fai and has been reimbursed. 120.In any event, MAN agrees that he has always knownthat the 3 Covers are being kept by the police and he could have obtained them from the police. I am not satisfied that it was necessary to get replacement for the 3 Covers. (i) Item (4): $6,000 being loss of hiring contracts 121.The basis of P’s claim here is that the Coach was under repair for 5 days. But for the repair, P would have received hiring charges in the sum of $6,000 from Avonwin (i.e. at $1,200 per day). P’s claim therefore is premised upon the fact that it has taken 5 days to repair the Coach. 122.According to MAN, it required 5 days to repair the Coach because there was no available parts to replace the 3 Covers. This is contradicted by LI who says that he managed to purchase the lubricant cover and the water-coolant cover from Mitsubishi service centre for the Coach (although he cannot quite remember exactly when he did that). However, the small engine cover was out of stock and had to be ordered in from Japan which would take 6 weeks. In the meantime, the garage had used a wooden plank to act as a makeshift cover for the small engine cover and the Coach was useable. 123.Curious enough, LI’s evidence is consistent with MAN’s witness statement filed herein (see paragraph 29 of MAN’s witness statement at Agreed Bundle p.109) which stated that:
124.All in all, I am not satisfied with this item of claim. (j) Item (6): $9,000 being loss of hiring contracts 125.It is P’s case that the Coach was hired to Avonwin at the material time. As the Coach was repaired for 5 days, Avonwin hired a replacement coach at $1,800 per day for 5 days. Hence, Long Fai paid $9,000 to Avonwin for this additional cost. 126.To start with, this item is also premised upon the taking of 5 days to repair the Coach and I have already found against P in this regard. Secondly, no invoice or receipt is produced to evidence this payment of $9,000 to Avonwin and the payment is not reflected in the accounting records of Avonwin either (see Agreed Bundle pp.561-567). Thirdly, given P’s case that Avonwin is paying P $1,200 a day for the hiring of the Coach, the extra cost incurred by Avonwin (if any) in hiring the replacement coach for 5 days could only have been $3,000 (i.e. ($1,800 – $1,200) x 5). MAN has failed to provide any explanation on this discrepancy under cross-examination. Instead, he merely insists on the claim for $9,000. (j) Item (7): $100,000 being damages paid to customers in respect of disruption of contracts 127.This is perhaps the single most important item in P’s claim by reason of the amount claimed. 128.According to P and MAN, the non-availability of the Coach to run Avonwin’s orders has caused business loss to Avonwin. Eventually, P and Avonwin have agreed that P should pay $100,000 to Avonwin as compensation. This agreement, according to P’s case, has been reduced in writing (see Agreed Bundle p.595). 129.To start with, I find this alleged agreement highly suspicious in view of the intricate relationship between Long Fai and Avonwin. P says that she instructed MAN to negotiate with Avonwin and MAN says he negotiated with the other directors of Avonwin. However, MAN himself holds 98 % of the shareholding in Avonwin and the remainder is held by P. The other directors of Avonwin (i.e. other than P and MAN) do not have any beneficial interest in Avonwin! Secondly, the written agreement produced at trial is apparently unsigned! 130.Most suspicious of all, it is P’s case that the basis of the agreement on the amount of compensation of $100,000 is 10 % of the turnover of Avonwin for the months of July, August and September 2002 totaling $1,000,000. P has even adduced the accounting records of Avonwin (at Agreed Bundle pp.561-567) purportedly to show that:
P and MAN both testify that it took about 3 months for Avonwin’s loss due to the non-availability of the Coach in September 2002 to be reflected in the accounts. 131.Mr. Iu has been most meticulous in scrutinizing Avonwin’s accounting records. The result, which has been admitted by MAN in cross-examination, is that Avonwin has in fact made more profit in the month of December 2002 (at $4,400) than the months of July, August and September 2002 (averaging at about $4,000 per month)! So, what P is really claiming under this item is in fact about 25 times of the average monthly profit of Avonwin! 132.As the accounting record of Avonwin does not support P’s allegation that Avonwin has suffered a loss in business in December due to the non-availability of the Coach back in September, there is simply no basis to claim for any compensation! (k) Conclusion on P’s claim 133.By reason of the above, I am not satisfied that D has breached the employment contract or committed the tort of conversion. Even if I am wrong, I am not satisfied that P has discharged her burden in proving any of the items of loss and damages claimed. Whether D is entitled to his counterclaim in the sum of $23,677.70? 134.I now turn to the counterclaim. D is counterclaiming against P for the following items (at Agreed Bundle p.35):
135.I have already noted above that:
(a) Item (1): $12,000 being wages in lieu of notice 136.Given my above finding that D has been constructively dismissed by P on 16th September 2002, P should be entitled to wages in lieu of notice. This should be calculated on the basis of 1 month’s basic salary at $12,000. (b) Item (2): $2,209.30 being annual leave pay 137.There is no evidence that D has taken any annual leave between 3rd December 2001 (i.e. when he commenced working for P) and 16th September 2002 (when D was constructively dismissed). It is common ground that D was entitled to 7 days’ annual leave with pay every year under the employment contract. 138.D should therefore be entitled to $2,209.30 (i.e. $12,000 ¸ 30 x 7 x 288/365). (c) Item (3): $9,468.40 being end of year pay 139.Despite the concession made by P at the beginning of the trial that D was still an employee of Long Fai up to September 2002, the parties are still in dispute as to whether D was entitled to any end of year payment under his employment agreement. 140.It is common ground that the employment contract was concluded between MAN and D during the interview conducted in November 2001. 141.According to MAN, he did not offer any end of year payment as part of the employment package to D. He says that D could do nothing if Long Fai was unwilling to offer such benefit and D eventually accepted the situation (i.e. without entitlement to end of year payment) by reporting to work. It is also MAN’s evidence that Long Fai has only offered end of year payment to one employee, namely, LI because LI is a supervisor. 142.To start with, MAN’s testimony that Long Fai has only offered end of year payment to LI is contradicted by his own evidence in the Labour Tribunal. On 28th November 2002, MAN has apparently told the Tribunal that many employees of Long Fai have received such benefit before (see the transcript at 24K at Agreed Bundle p.171). 143.More significantly, MAN’s evidence that he did not offer end of year payment to D is contradicted by his own statement filed with the Labour Tribunal. In his statement to the Tribunal signed on 16th December 2002 (at Agreed Bundle pp.534-535), it is stated that D would be entitled to double pay upon completion of 12 months’ work. When he is confronted with his own statement during cross-examination, he agrees that he did tell D that D would be entitled to end of year payment. 144.MAN tries to salvage the situation by then insisting that D’s entitlement to end of year payment should be conditional upon D completing a year’s service and that such payment should be calculated on the basis of basic salary of $4,500 per month. This last twist in MAN’s testimony is particularly amazing. First, that has never been P’s pleaded case. Secondly, P has clearly admitted on pleading that D’s monthly basic salary should be $12,000. MAN has failed to elaborate why D’s end of year payment should be calculated on the basis of $4,500 per month but not the monthly salary of $12,000. 145.Although P was not present during the interview when the employment contract was concluded, her testimony may shred some light on this issue. After all, she is the sole-proprietress of Long Fai. According to P, all drivers of Long Fai employed on monthly basis should be entitled to end of year payment. She, however, maintains that D is not entitled to such payment because D was employed on “daily basis”! P has never alleged in her pleadings that P was employed on “daily basis”! That much is admitted by Ms. Wong. 146.Insofar as D is concerned, he has consistently maintained that one of the terms of his employment agreement was that he was entitled to end of year payment. He, however, agrees during cross-examination that he would be paid oncompletion a year’s work. 147.Given the different versions advanced by MAN at different times and the inconsistency between his testimony and that of P, I find D’s case more believable. 148.It has been noted above that it is also D’s evidence that he is entitled to such payment upon completion of a year’s work. Would this affect his entitlement to end of year payment? 149.“End of year payment” is governed by Part IIA of the Employment Ordinance, Cap.57 (“the Ordinance”). Section 11B(1) of the Ordinance provides that:
150.“End of year payment” is defined in s.11A of the Ordinance as:
151.There is no evidence in this case that the “end of year payment” to which D is entitled under his employment contract is of a gratuitous nature or which is payable only at the discretion of P. In any event, s.11AA(1) of the Ordinance presumed that an end of year payment is not of a gratuitous nature and is not payable only at the discretion of the employer unless there is a written term or condition in the contract of employment to the contrary. It is noted that D’s employment contract is entirely oral and there can be no question of any written term or condition to that effect. 152.Given P’s present pleadings, it is clear that D was employed under a continuous contract. So the conditions set out in s.11B(1) is satisfied and Part IIA of the Ordinance applies to D. 153.But what about D’s evidence that he would be paid his end of year payment upon completion of a year’s work? 154.To start with, although the parties might have agreed that D would be paid end of year payment upon completion of a year’s work, there is no term disentitling D from payment of a proportion of his end of year payment if he does not complete a year’s work. 155.In any event, s.11B(2) provides that:
156.Section 11F(1) in Part IIA of the Ordinance prescribes proportioning of end of year payment. It provides as follows:
157.Section 11F(2) of the Ordinance then provides the following calculation:
158.It is clear that D’s employment contract does not provide for payment of a proportion of the end of year payment. Section 11F(2)(b) is therefore applicable and D should be entitled to end of payment proportioned in accordance with s.11F(2). 159.Under Section 11F(2)(b), the end of payment to which D is entitled would be $9,468.40 (i.e. $12,000 x 288/365). (d) Conclusion on D’s counterclaim 160.For the above reasons, I am satisfied that D has proved his counterclaim in the sum of $23,677.70. Whether D’s employment contract is unenforceable by reason of illegality? 161.As a last ditch attempt to refute D’s counterclaim, P has alleged that D’s employment contract is contrary to public policy and unenforceable (see Re-Amended Reply and Defence to Counterclaim para.14 at Agreed Bundle p.621). P’s allegation is said to be based on D’s own pleading that as far as D knew the routes operated by Long Fai designated to D were illegal (see Defence and Counterclaim para.8(11) at Agreed Bundle pp.17). 162.To start with, there is a presumption of legality. According to Chitty on Contracts, 29th Edition (2004), para.16-193:
163.There is nothing illegal on the face of what I found to be the terms of the employment contract. So the burden is on P (as the party alleging illegality) to prove that fact. However, P has denied on pleadings that the routes are illegal (see Re-Amended Reply and Defence to Counterclaim para.6(9) at Agreed Bundle p.614). So the running of this most desperate allegation on the part of P is inconsistent with her pleaded case! 164.Be that as it may, the evidence at trial in this regard is that:
165.Given MAN’s role in Avonwin, he would be in a position to know whether the routes ran by Avonwin and designated to D were illegal. However, MAN’s testimony at trial is contradicted by his evidence at the Labour Tribunal. On 28th November 2002, he has apparently told the Tribunal that those routes were legal (see transcript at 16F-K at Agreed Bundle p.367). I therefore find MAN’s testimony in court to be suspicious. 166.That leaves D’s testimony. However, D’s understanding was apparently based on what he learnt from the police. D was last interviewed by the police on 1st November 2002 (see Agreed Bundle p.321) and he has apparently complained to the Transport Department in November/December 2002 (see Agreed Bundle p.201). So the timing of D’s complaint supports D’s case that only learnt of such information from the police! 167.In the end, it is not at all clear whet the alleged illegality is. Which route(s) is/are alleged to be illegal? How is the running of such route illegal? What is/are the relevant legislative provision(s)? What is/are the contravention(s) alleged? All these are neither covered by evidence nor dealt with in P’s submission. 168.All in all, I am not satisfied with the evidence before me that the routes assigned to D by P were illegal. 169.What P has tried very hard to say in this case is that the employment contract may be invalidated on the grounds of public policy so much so that D may not found his counterclaim on his employment contract. In this regard, Le Pichon JA in Yip Alice v. Wong Shun (No.2) [2003] 2 HKC 528 at 537 has observed that:
170.In the present case, the only person who stands to reap a windfall from the allegation of illegality would be P. She would then be able to profit from running such “illegal” routes for Avonwin but, at the same time, avoid paying D under D’s employment contract. It is difficult to see how the general public may benefit from depriving D of his contractual rights against P under the employment contract! Conclusion and Judgment 171.By reason of the above, I dismiss P’s claim and enter judgment in favour of D on the counterclaim. P is adjudged to pay D the sum of $23,677.70 with interest thereon at judgment rate from 4th November 2002 (i.e. the date when D filed his claim with the Labour Tribunal) until payment. 172.Lastly, I make an order nisi that P do pay D’s costs of defence and counterclaim including all reserved costs, to be taxed if not agreed. D’s own costs to be taxed in accordance with Legal Aid Regulations. Unless an application has been made to vary such order, such order shall become absolute 14 days after this written decision is handed down.
Miss Catherine K. K. Wong instructed by Messrs. Yeung & Tsang for Plaintiff. Mr. Iu Ting Pong, Wallace of Messrs. A. M. Mui & Kwan, assigned by D.L.A., for Defendant. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under DCCJ 1586/2003