Chan Yiu-yam v. Peter Woo
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CACV000149/1980 Contract of employment - instant dismissal - servant alleged to have carried on business in competition with employer- servant not deliberately intending to compete or in fact taking work from employer - nothing done which would reasonably sap confidence of employer in servant - motive of employer in dismissing servant immaterial -insolvency of employer does not destroy contract of employment and servant's duty of good faith and fidelity continues so long as contract subsists - no ground for instant dismissal.
----------------- Coram: Sir Alan Huggins, V.-P. Leonared and Cons, JJ.A. Date of Judgment: 24th February 1981. ----------------- JUDGMENT ----------------- Sir Alan Huggins, V.-P.: 1. The respondent Plaintiff brought an action for damages for wrongful dismissal against his employer (the 1st Defendant) and upon a contract of guarantee against the 2nd Defendant, the Appellant. Judgment was awarded in his favour against both Defendants, but only the 2nd Defendant appeals. The substantial ground of appeal is an allegation that there was good cause for the Plaintiff's instant dismissal, a defence which the trial judge expressly rejected. 2. The Plaintiff was a naval architect and marine engineer of great experience. He was employed by Goldwyn Shipping Co. Ltd. when he was approached by the 2nd Defendant, who was then managing director of the 1st Defendant, and the Plaintiff was invited to work for the 1st Defendant. Eventually an agreement was reached and the parties signed a letter of appointment in these terms:
Clause 3(b) was inserted so that the Plaintiff could finish some work he was doing for Goldwyns. 3. There was a dispute whether there was also an express oral term of the employment that the Plaintiff should be permitted to act as a consultant in addition to his work for the 1st Defendant, a dispute which the trial judge resolved in favour of the Plaintiff. That decision has been attacked upon the appeal, but in our view it is not necessary for us to reach a conclusion on this aspect of the case for two reasons: (1) that the alleged justification for the dismissal is that the Plaintiff not only worked as a consultant but engaged in other employment also which was incompatible with his duty of good faith and fidelity to the 1st Defendant, and (2) that on the judge's findings the Plaintiff did not in any event act professionally as a consultant for anyone else during the term of his employment with the 1st Defendant otherwise than as permitted by Clause 3(b). 4. This finding that the Plaintiff did not act professionally as a consultant for anyone else during the term of his employment with the 1st Defendant is attacked as being against the weight of the evidence: see Ground (i). In particular it is contended that the Plaintiff worked for Goldwyn Shipping Co. Ltd. and for Cosmo Enterprises Ltd. We have been taken through much of the evidence and it is sufficient to say that we saw no reason to differ from the trial judge in relation to these particular allegations. At p.61a of the record the learned judge said:
As we understand this passage, the judge found that the only consultancy work done for Goldwyns was either within Clause 3(b) or of a purely voluntary nature in his capacity as a sort of "elder statesman" - such as he had done for the 2nd Defendant when he was still employed by Goldwyns - and he was not relying upon the alleged oral term permitting consultancy work generally. It was admitted that the Plaintiff did some work for Goldwyns while employed by the 1st Defendant but nothing of a kind which did not fall squarely within Clause 3(b): see p.94a of the record. 5. It is common ground that with effect from 1st November 1976 the Plaintiff entered into partnership with a Captain Ho under the firm name "Woo & Ho", the Plaintiff having a 51% interest. As the judge said, the gravamen of the case against the Plaintiff was that by setting up this firm. or alternatively by setting up this firm and by the firm's carrying on the business it did, he destroyed the foundation of confidence which was essential to his contract of employment. 6. The judge found as a fact "that the Plaintiff did not deliberately attempt to compete with the 1st Defendants, nor did he deliberately attempt to take work from them". He further found that no work was in fact taken from them. These findings are also attacked as being against the weight of the evidence. There can be no doubt that the findings were supported by the evidence of the Plaintiff, whom the judge found to be a most reliable witness. The attack upon them is based upon some documentary evidence and upon a short passage in the evidence of Captain Ho. The firm used a chop which incorporated the words "ship management service and agency" and "marine surveyors and consultants". The application for a business registration certificate described the business in similar terms. Then Captain Ho said:
Finally, it was admitted that in June 1977 Captain Ho, through a personal introduction, agreed to the firm's appointment as general agents in Hong Kong for the Union Gulf Lines, a company engaged in carrying cargo between Hong Kong and Caribbean ports. The Plaintiff's evidence was however, that the appointment was made without his knowledge and that he played no part in this business. He was believed by the judge and we were not persuaded that the judge must have been wrong to do so. 7. The fact that the motive of the 1st Defendant in dismissing the Plaintiff was found by the judge to be to reduce its liabilities when it was in grave financial trouble is, of course, irrelevant if he was in breach of his duty. We were referred to several cases where the duty of good faith and fidelity had been discussed, but none of them laid down any principle which was decisive of the present case. The extent of that duty and whether there had been a breach of it were matters to be decided on the particular facts of each case. The Plaintiff himself was not qualified to do agency work, Captain Ho was Primarily interested in survey work and the staff of the firm was never large enough to undertake agency work on any but the most limited scale. The only agency work in fact proved was that for Union Gulf Lines, and Miss Chan Soo-fan (managing director of the 1st Defendant) herself indicated that the 1st Defendant was not concerned in agency for vessels carrying cargo to and from the Caribbean. 8. What one is concerned to enquire is whether the employee has done something which saps the confidence of the employer in him and thus strikes at the very root of the relationship between them. Usually conduct which is held to be a breach of the duty will (as in Robb v Green 1895 2 Q.B. 1) be such as the employee will admit to be unfair and dishonourable, but we do not rule out the possibility that a case might occur where, upon an objective approach, a breach of duty might be found although the employee did not in fact think he was doing wrong, for one must have regard to the feelings of the employer. It was conceded on behalf of the Plaintiff that if there had been deliberate entry by him into competition with the 1st Defendant his dismissal would not have been wrongful. It may well be that if he had started a business which was likely to find itself in competition with the 1st Defendant, that too would have justified his dismissal: see the example of a solicitor's clerk given by Lord Greene, M.R. in Hivac Ltd. v Park Royal Scientific Instruments Ltd. 1946 1 Ch. 169 at p.174. However, the evidence did not establish any such likelihood. The judge accepted the Plaintiff's assertion that the business was initially intended to be a surveying business and that the other fields were originally included in case Captain Ho wished to expand his activities later on. The Plaintiff said that he himself knew nothing of the ship agency and, indeed, his participation appears to have been limited to advising Captain Ho and correcting the English in his survey reports. In our view the possibility that Captain Ho would pick up some chance agency business through a personal connexion was too remote to establish likelihood. 9. On behalf of the Plaintiff it was argued that it was a material consideration that the employer was near insolvency at the time that the agency of Union Gulf was accepted by the firm. We could not agree to that: the duty continues so long as the contract of employment subsists. An employee who has not been paid his salary may be able to treat his contract as repudiated, but if he does not do so he is not entitled, as it were, to stab his employer in the back. 10. The judge found that there was no breach of the duty of good faith and fidelity and we were not persuaded that he was wrong. We accordingly dismissed the appeal. 24th February 1981. Representation: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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