HCA 1631/2021
[2023] HKCFI 3073
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 1631 OF 2021
(Transferred from Labour Tribunal Claim No. 1318/2020)
________________________
BETWEEN
| | HAVEAUX XAVIER MARIE-GHISLAIN | Plaintiff |
| | and | |
| | HONG KONG EXPRESS AIRWAYS LIMITED | Defendant |
________________________
| Before: | Hon Coleman J in Chambers (Open to Public) |
| Date of Hearing: | 28 November 2023 |
| Date of Decision: | 29 December 2023 |
_____________
D E C I S I O N
_____________
A. Introduction
1. The Defendant is an airline, operating in Hong Kong. The Plaintiff – who acts in person in these proceedings – was employed by the Defendant as a pilot on 13 June 2005, in the position of Captain. The Plaintiff also held other appointments within the Defendant.
2. The Plaintiff claims that the Defendant is in breach of duties owed to him, including in respect of his termination of employment by payment in lieu of notice on 5 September 2019. The claim was commenced in the Labour Tribunal, but transferred to the High Court.
3. The Plaintiff argues that there were material factual and technical flaws in the findings of the Quality, Safety and Security Department (“QSS”) of the Defendant, including the QSS safety investigation report regarding two incidents concerning the Plaintiff’s flights on 31 August 2018 (“First Incident”) and on 14 October 2018 (“Second Incident”) (collectively, “Incidents”). As part of his claim, the Plaintiff claims that the Defendant fabricated the data in support of the findings of the QSS provided to the Labour Tribunal in relation to the Incidents.
4. By summons dated 1 August 2023 (“Summons”), the Plaintiff seeks leave to file an expert report of Mr Danny Chow dated 30 July 2023 (“Expert Report”), relating to the usage and reading of flight data labelled QAR data.
5. The evidence that is sought to be adduced relates to “Annexures 1, 2 and 3 Screenshots”, which the Plaintiff claims evidence the fabrication by the Defendant in relation to the Defendant’s QSS findings. The Plaintiff says that the Expert Report is prepared so as to assist the Court on the technical aspects of the reading of the “Quick Access Recorder” (“QAR”) data, and the Plaintiff claims the evidence will demonstrate that the “Annexures 1, 2 and 3 Screenshots” provided by the Defendant were not raw flight data contemporaneously obtained from the flights regarding the Incidents, and rather have been tampered with.
6. The Defendant, represented by Mr Toby Brown of Counsel, argues that the expert evidence sought is irrelevant to the proceedings because there are no live issues in dispute between the parties regarding the underlying Incidents, and in any event the Plaintiff has no claim against the Defendant in relation to breach of any implied term of mutual trust and confidence in the context of termination of employment.
7. In order to decide the Summons, it will be necessary to consider the parties’ respective pleaded cases, and the relevant principles of law applicable when a party terminates the contract of employment in accordance with its terms and/or the statutory provisions in the Employment Ordinance Cap 57 (“EO”). However, as that legal point has already received some attention in the context of an earlier Order 14A application heard by a Master, it will also be necessary to consider what happened on that application, and the impact of the result of that application on the current Summons. That in turn seems to me likely to trigger various case management issues.
8. I say that in the context that the trial of this matter has at present been set down for 7 days between 9 and 17 September 2024.
9. At the end of the argument on the Summons, I reserved my decision. This is my Decision.
B. The Parties’ Pleaded Cases
B.1 The Claim
10. The Plaintiff’s Statement of Claim (“SOC”) is actually headed ‘Statement of the Plaintiff’, but nothing turns on that. It can also be noted that the Plaintiff’s SOC has been amended to reflect the result of certain aspects of the claim having been struck out on the Defendant’s application (see further below). Despite the red-line amendments arising from the strike out application, I shall continue to refer to the claim as the SOC.
11. By his SOC, the Plaintiff (as said, acting in person) claims that the Defendant was in breach of an implied duty of trust and confidence or wrongful dismissal under “Chapter 9 of the Labour Law”. His reference to “Chapter 9 of the Labour Law” appears to be a mistaken reference to section 9 of the EO. I shall proceed on that basis, but noting that section 9 of the EO relates to summary termination by an employer of a contract of employment without notice and without payment in lieu of notice.
12. In broad terms, the Plaintiff claims that the Defendant’s conduct towards him leading up to his termination amounted to a breach of the implied duty of trust and confidence.
13. In relation to the First Incident, the Plaintiff pleads as follows (§10 SOC). On 31 August 2018, the Plaintiff was on a scheduled flight from Hong Kong International Airport to Ishigaki Airport. The Plaintiff noticed that the flight path was below the “briefed one dot” and started to perform corrective action just before the Ground Proximity Warning System was triggered. On 3 September 2018, the Plaintiff self-reported by filing an Air Safety Report (“ASR1”) with the Defendant via the QSS.
14. In relation to the Second Incident, the Plaintiff pleads as follows (§11 SOC). On 14 October 2018, the Plaintiff was on a Line Flying Under Supervision training flight with Mr Gordon Lee, a First Officer Trainee. As the flight started to approach 50 feet, the Plaintiff felt a pitch forward movement changing the aircraft’s altitude. The Plaintiff therefore reduced the rate of descent by adjusting the controls to provide a pitch up response and return the aircraft to its normal landing altitude, removing the chance of touching down with nose wheel first. The manoeuvre resulted in a “dual input”. The Plaintiff self-reported by filing an Air Safety Report (“ASR2”) via the QSS.
15. The Incidents led to an investigation by the QSS of the Defendant. In November 2018, the QSS released its safety investigation reports in relation to both Incidents. In both cases, the QSS found that the Plaintiff had deliberately failed to comply with the applicable safety procedures (“QSS Findings”).
16. The Plaintiff challenged and still challenges the QSS Findings. The Plaintiff claims that the QSS investigation was in breach of compliance of the internal regulations/manuals. The Plaintiff also claims that there were material factual and technical flaws in the QSS Findings in relation to the Incidents.
17. Among his claims, the Plaintiff complains (§§37 to 45 SOC) that the “Annexures 1, 2 and 3 Screenshots” provided by the Defendant on 8 February 2021 in the Labour Tribunal proceedings (understood to be data of the Incidents) are fabricated.
18. The Plaintiff claims that the “Annexures 1, 2 and 3 Screenshots” do not evidence the actual flight circumstances of the Incidents. The Plaintiff relies on what he claims to be a comparison between “Annexure 1, 2 and 3 Screenshots” provided by the Defendant and the Plaintiff’s “Annex EGPWS ROIG” captured by the Plaintiff from the Defendant’s FOQA website.
19. As part of his claim for the Defendant’s breach of the implied duty of trust and confidence or wrongful dismissal, the Plaintiff claims that the investigation process carried out by the QSS in relation to the Incidents was flawed; and the Plaintiff identified the Defendant’s attempts of falsification as demonstrated by the Defendant’s “Annexures 1, 2 and 3 Screenshots” and the Plaintiff’s “Annex EGPWS ROIG” (§99 SOC).
20. Perhaps the core of the Plaintiff’s claim (§100 SOC) is that the Defendant abused its powers prior to terminating his employment, and its actions in terminating his employment in bad faith amounted to serious breach of its duties of trust and confidence, which the Plaintiff says have caused him to suffer substantial loss and damage including (but not limited to) loss of future earnings.
21. I will return later to those parts of the SOC which were struck out.
B.2 The Defence
22. By its Amended Defence (“AmDef”), the Defendant first pleads that it had the right to terminate the Plaintiff’s employment at any time by giving three months’ notice or making a payment in lieu of such notice. On one view, the Defendant might have stopped its pleading there, but it is understandable why the Defendant has been drawn into pleading at greater length in response to the SOC, not least in relation to some serious allegations made by the Plaintiff.
23. The Defendant denies that it was in breach of any of the regulations/manuals (§28 AmDef). The Defendant denies any evidence has been falsified (§§32, 33, 40 etc. AmDef). The Defendant claims that:
(1) The Incidents were sufficient to justify the termination of the Plaintiff’s employment. The Defendant was entitled to take into consideration the Plaintiff was involved in ASR1 and its temporal proximity to ASR2 for termination. Anyway, the Defendant was entitled to terminate the Plaintiff’s employment and did so within the terms of and in compliance with the Employment Agreement and in compliance with the Plaintiff’s statutory rights (§13f; 35 and 42 AmDef).
(2) The Plaintiff was not terminated for cause, but was terminated with payment in lieu of notice. The Defendant was entitled to terminate the Plaintiff’s employment at any time by giving notice or making a payment in lieu of notice (§42 AmDef).
24. In relation to the First Incident/ASR1 and the Second Incident/ASR2, the Defendant pleads:
(1) As to ASR1: The Defendant denies that the landing in relation to ASR1 was normal. Pilots are required to fly on glideslope and correct back to the glideslope when deviation occurs. The main issue is that “the [Plaintiff] elected to fly one dot below the Glideslope and remained below the Glideslope” (§11 AmDef). The Defendant denies that the Plaintiff’s deliberate failures giving rise to ASR1 were within the tolerance levels permitted by the Defendant (§13(d) AmDef).
(2) As to ASR2: The Plaintiff and Mr Lee were each flying the aircraft in breach of the one pilot flies principle. The Plaintiff was in breach of the designated procedure for Pilot Monitoring to take over control of the aircraft from the Pilot Flying (§12 AmDef). The Defendant denies that the events giving rise to ASR2 were not serious enough to justify termination (§13f AmDef).
(3) The Defendant denies that there were flaws in the QSS Findings. The Defendant denies there were material factual and/or technical errors in the Safety Investigation Report or that it is inaccurate or misleading. The Defendant denies that any evidence has been fabricated by the Defendant (§§15 to 16 AmDef).
25. As to the Annexures 1, 2 and 3 Screenshots, the Defendant pleads:
(1) The Plaintiff’s allegation that the information relied upon by the Defendant was tampered with by reference times is fundamentally flawed. The Plaintiff has mistakenly assumed that the time stamps shown in the Defendant’s data refers to actual time at the local airport for respective flights. This is incorrect. The error made by the Plaintiff fully accounts for the Plaintiff’s belief that the actual landing times do not match the landing times in the Defendant’s data, because the Defendant’s data does not refer to actual landing times (§18A AmDef).
(2) Certain data relied upon by the Plaintiff is, contrary to his claims, not associated with the flight that is the subject of ASR1 (on 31 August 2018) but rather a similar flight on 31 May 2017 (§18B AmDef).
26. The Defendant’s plea to the Plaintiff’s core claim (§100 SOC) is to repeat (§§42-43 AmDef) that the Defendant was entitled to terminate the Plaintiff’s employment and did so within the terms of and in compliance with the employment contract and in compliance with the Plaintiff’s statutory rights, by making a payment in lieu of notice. It is asserted that the only claim that would be available to the Plaintiff would be for any miscalculation of the payment in lieu of notice, but no such claim is asserted.
B.3 The Plaintiff’s Reply to Defence
27. Though the Plaintiff filed a Reply to Defence, I do not think I need to refer it for the purposes of the present application.
C. The Present Application
28. As stated, the Plaintiff seeks leave to adduce the Expert Report of Mr Danny Chow. The Plaintiff claims, by his affidavit in support, that the report was obtained with the purpose of assisting the Court on how QAR data was produced, and to assist the Court better to understand the Plaintiff’s case of fabrication of evidence of “Annexures 1, 2 and 3 Screenshots”.
29. The Defendant has provided evidence in response, in the form of 1st Affirmation of Ng Man Yui and the Affirmation of Chan Chun Hei, being evidence from the Defendant and from Ergoss, the third-party processor of the Defendant’s flight data, regarding the obtaining of the source codes in relation to the Incidents. The Defendant’s evidence is that the data from the relevant flights was received and processed by Ergoss without the possibility of human intervention and that no human intervention was in fact involved in the process.
30. The Plaintiff claims that the expert evidence will demonstrate that QAR data can be created by other means and were in fact fabricated in the present case. He claims that this is relevant to his case of fabrication of data regarding “Annexures 1, 2 and 3 Screenshots”.
31. The Defendant argues that the expert evidence ought not be allowed in as there is no live issue between the parties as to whether the Incidents occurred, and the relevant expert evidence sought is irrelevant to the proceedings because: (1) it is irrelevant to the Defendant’s case regarding the underlying Incidents leading up to the Plaintiff’s termination in relation to the two Incidents, and (2) in any event, the Plaintiff was not summarily terminated but terminated with full payment in lieu of notice. Thus the Plaintiff has in any event no claim against the Defendant under a claim of breach of implied term of trust and confidence.
32. In relation to the first point, the Defendant claims that the Plaintiff’s case is irrelevant to the main issues in dispute as this does not impact on the Defendant’s case. The Defendant’s case is that the Defendant takes issue with the deliberate intention of the Plaintiff to elect to fly below the glideslope in relation to the First Incident and was in breach of the one-pilot-flies principle in relation to the Second Incident.
33. In relation to the second point, the Defendant contends that, as the Plaintiff’s claim is fundamentally rooted in breach of an implied term of trust and confidence, the current state of law is that the Defendant had both statutory and contractual rights to terminate the Plaintiff’s employment for good, bad or no reason, provided that it made payment in lieu of notice. The Defendant relies on Malik v BCCI [1998] AC 20; Tadjudin Sunny v Bank of America, National Association (unreported, CACV 12 of 2015, 20 May 2016); Lam Siu Wai v Equal Opportunities Commission [2021] 5 HKLRD 30; and Cheung Chi Keung v Hospital Authority [2006] 2 HKLRD 46.
34. The Defendant claims that, in light of the express provisions of the employment contract, there cannot be an implied term that the Defendant cannot terminate the Plaintiff’s employment unless for some good cause and after giving him a reasonable opportunity to demonstrate that no such cause existed. Thus, even if everything the Plaintiff seeks to establish via the expert evidence regarding the investigation process was found to be correct, the Defendant could still terminate with payment in lieu of notice and do so even capriciously.
35. The Defendant points out that the above point of law was made in an Order 14A application taken out by the Defendant (this application being made at the same time the Defendant successfully struck out certain parts of the Plaintiff’s claim). However, the Master at the time declined to exercise his discretion to entertain such an application.
D. Principles regarding the admission of expert evidence
36. In an application for leave to adduce expert evidence under RHC Order 38 rule 36, the burden is on the applicant to show that the proposed expert evidence is relevant to the issues in dispute. The court has to examine the pleadings in determining the application. The court retains complete control over the use of expert evidence, the purpose of which is to limit expert evidence to what is reasonably necessary to resolve the issues for determination at the trial. The court has to be satisfied as to the relevance of the proposed expert evidence: Li Xiao Yun v China Gas Holdings Ltd (unreported, HCCL 18/2011, [2013] HKEC 350).
37. In Man King Chuen v Hong Lok Yuen International School Association Ltd [2018] 4 HKLRD 294 at §17, Recorder Yvonne Cheng SC (as Cheng J then was) gave a helpful summary of the principles on adducing expert evidence:
(1) In deciding whether proposed expert evidence should be received, there is a two-stage test (the Barings test).
(a) First, the evidence has to be admissible as ‘expert evidence’ for the purpose of section 58 of the Evidence Ordinance Cap 8. It will be so admissible in any case where the court accepts that there exists a recognized expertise governed by the standards and rules of conduct capable of influencing the court’s decision on any of the issues which it has to decide, and the witness to be called satisfies the court that he has a sufficient familiarity with, and knowledge of, the expertise in question, to render his opinion potentially of value in resolving any of those issues.
(b) Second, evidence meeting this test can still be excluded by the court if the court takes the view that calling it will not be helpful to the court in resolving any issue in the case justly. Such evidence will not be helpful where the issue to be decided is one of law or is otherwise one on which the court is able to come to a fully informed decision without hearing such evidence.
See Re Ocean Time Development Ltd [2008] 2 HKLRD 393 at §13, per Barma J (as he then was), citing Barings Plc v Coopers & Lybrand [2001] Lloyd’s Rep Bank 85. The Barings test was also applied in Wong Hoi Fung v American International Assurance Co (Bermuda) Ltd [2002] 3 HKLRD 507 at §12.
(2) It is for the party seeking to call expert evidence to satisfy the court that expert evidence is available which would have a bearing on the issues which the court has to decide and would be helpful to the court in coming to a conclusion on those issues: Phipson on Evidence 19th Ed §33-36.
(3) The court’s discretion as to whether to grant leave to a party to adduce expert evidence is to be exercised within the ambit of the court’s case management powers, exercised in the light of the underlying objectives of the CJR: Fung Chun Man v Hospital Authority (unreported, HCPI 1113/2006, [2011] HKEC 854, 24 June 2011) at §§9 and 11.
(4) Where the proposed expert evidence is plainly inadmissible or irrelevant, the court ought to exercise its discretion to refuse the admission of such evidence. But where the court cannot form a clear view of the relevance of the proposed expert evidence or where it considers that the proposed evidence is clearly relevant, then it should grant leave for the evidence to be adduced at trial: Wong Hoi Fung at §11.
38. The primary battleground on the Summons arises from the Defendant’s stance that the proposed expert evidence is inadmissible or irrelevant.
39. What is also appropriate is to keep in mind that the modern traditional approach has moved away from leaving all matters to be dealt with by the trial judge at the trial to an emphasis on effective pre-trial case management. Hence, the Court is prepared at an interlocutory stage to exercise its discretion to exclude expert evidence if it takes the view that it is not useful to the just resolution of the dispute. The obvious advantage of such an approach in reducing proliferation of evidence, costs and the length of the trial needs no elaboration: see LYAG v YSG (YX) (unreported, HCMP 802/2016, 14 November 2016, Court of Appeal) at §33.
E. The Strike-Out and Order 14A Application
40. By summons dated 21 June 2022, the Defendant applied to strike out various parts of the SOC reply to Defence, as well is to determine a question pursuant to RHC Order 14A. The application was heard on 14 October 2022, by Master Dick Ho.
41. Order 14A rule 1 headed ‘Determination of questions of law or construction’ provides as follows:
(1) The Court may upon the application of a party or of its own motion determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that-
(a) such question is suitable for determination without a full trial of the action; and
(b) such determination will finally determine (subject only to any possible appeal) the entire cause or matter or any claim or issue therein.
(2) Upon such determination the Court may dismiss the cause or matter or make such order or judgment as it thinks just.
(3) The Court shall not determine any question under this Order unless the parties have either-
(a) had an opportunity of being heard on the question; or
(b) consented to an order or judgment on such determination.
(4) The jurisdiction of the Court under this Order may be exercised by a Master.
(5) Nothing in this Order shall limit the powers of the Court under Order 18, rule 19 or any other provision of these rules.
42. The question which the Defendant asked the Court to determine pursuant to Order 14A was framed as follows:
Can the Plaintiff, as a matter of law, claim for the loss set out in paragraph 103(vii) and paragraph 103(viii) on the basis of a breach of the duty of mutual trust and confidence.
43. Those two paragraphs of claimed loss – which, as was said during the argument before the Master, comprise over 90% of the monetary amount of the Plaintiff’s claim in Hong Kong dollars – are as follows:
| (vii) | Loss of career as a captain in Hong Kong between the termination of his employment contract to end of his employment contract for 1.94 years (including but not limited to salary, contractual bonus and benefits coverage) | 5,516,678.00 |
| (viii) | Re-engagement - Additional compensation for lost of income the period of contract end 5 Sep 2019 to reemployment as Captain with additional appointment (currently assumed by 30 June 2022) | 8,004,870.53 |
44. To put this application in context, it helps to note that:
(1) The Employment Contract between the Plaintiff and the Defendant had an express term that the employment “is at-will and either party can terminate the relationship at any time with or without cause”.
(2) The manner in which the Employment Contract could be terminated was set out in the governing Conditions of Service (incorporated as part of the Employment Contract), which provided that the contract may be terminated at any time without cause by either the Defendant or Plaintiff by giving three months’ written notice or payment in lieu.
(3) The Employment Contract was governed by the provisions of the EO (see further, below).
(4) The Employment Contract was terminated by letter dated 5 September 2019, expressly referring to termination in accordance with the EO, and giving three months’ salary in lieu of notice in accordance with the Employment Contract.
45. The relevant provisions of the EO are sections 6, 7, 8, 8A and (on the Plaintiff’s case) section 9, which provide, in so far as is material for present purposes, as follows:
6. Termination of contract by notice
(1) Subject to subsections (2), (2A), (2B), (3) and (3A) and sections 15 and 33, either party to a contract of employment may at any time terminate the contract by giving to the other party notice, orally or in writing, of his intention to do so.
(2) The length of notice required to terminate a contract of employment shall be—
(a) in the case of a contract which is deemed by virtue of the provisions of section 5 to be a contract for 1 month renewable from month to month and which does not make provision for the length of notice required to terminate the contract, not less than 1 month;
(b) in the case of a contract which is deemed by virtue of the provisions of section 5 to be a contract for 1 month renewable from month to month and which makes provision for the length of notice required to terminate the contract, the agreed period, but not less than 7 days;
(c) in every other case, the agreed period, but not less than 7 days in the case of a continuous contract.
…
7. Termination of contract by payment in lieu of notice
…
(1A) 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) where the length of notice required to terminate the contract under section 6 is a period expressed in days or weeks, a sum calculated by multiplying the number of days in the period for which wages would normally be payable to the employee by the daily average of the wages earned by the employee during—
(i) the period of 12 months immediately before the date on which the party terminating the contract gives notice of the termination to the other party (date of notification); or
(ii) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the date of notification, the shorter period; or
(b) where the length of notice required to terminate the contract under section 6 is a period expressed in months, a sum calculated by multiplying the number of months required by the monthly average of the wages earned by the employee during—
(i) the period of 12 months immediately before the date of notification; or
(ii) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the date of notification, the shorter period.
…
8. Saving of rights
Nothing in section 6 or 7 shall be taken—
(a) to prevent either party to a contract of employment from waiving, at the time notice is required to be given for the purposes of section 6(2), (3) or (3A), his right to notice or to payment in lieu of notice;
(b) to affect the right of a party to a contract of employment to terminate the contract without notice or payment in lieu under section 9, 10 or 11(2).
8A. Damages for wrongful termination of contract
(1) Without prejudice to section 9, 10 or 11(2), where a contract of employment is terminated otherwise than in accordance with section 6 or 7, a sum equal to the amount of wages that would have been payable had the contract been terminated in accordance with section 7 shall be payable by the party terminating the contract to the other party.
(2) Without prejudice to section 9, 10 or 11(2), where a party to a contract of employment, having given proper notice in accordance with section 6 thereafter terminates the contract before the expiry of the period of notice otherwise than in accordance with section 7, such proportion of the sum referred to in subsection (1) as is proportionate to the period between the termination of the contract and the time when the notice given would have expired shall be payable by the party terminating the contract to the other party.
(3) For the purpose of calculating the sum referred to in subsection (1), where the party terminating the contract has not given notice of the termination to the other party, in calculating the daily average or monthly average of the wages earned by the employee in accordance with section 7, the reference in that section to the date on which the party terminating the contract gives notice of the termination to the other party or to the date of notification is to be construed as a reference to the date of termination of the contract.
9. Termination of contract without notice by employer
(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.
46. At the hearing, the Master struck out various paragraphs or parts of the SOC which appeared to raise claims in libel, defamation, dissemination of false information, reputational damage, damage to professional reputation, perjury and so forth. The actual strike-out need not be further considered for present purposes.
47. As to the application under Order 14A, the Defendant’s argument was essentially the same as that now put forward in the context of the current Summons. The Defendant – again through Mr Brown – argued that an implied obligation of mutual trust and confidence cannot be utilised to form the platform to allow an employee to recover damages for loss arising from the manner of his dismissal.
48. However, the Master declined the invitation to make any order under Order 14A. That is reflected in the order drawn up after the hearing, which makes no reference at all to paragraph 3 of the strike out summons which had sought determination of the question pursuant to Order 14A.
49. From my understanding of what transpired at the hearing, the Master’s approach and comments were as follows:
(1) Because the Plaintiff is a litigant in person, it may be hard for him to understand the niceties of Order 14A, and his inability to understand means that the Master was not assisted by full arguments on this area of law.
(2) The Court of Appeal (“CA”) case of Tadjudin Sunny (see below) may stand in the way.
(3) There is a very serious allegation of fabrication, and an allegation that the Defendant is targeting the Plaintiff.
(4) This might fall under the spirit of CA’s ruling in a still developing area of law, and there are other possibilities of the Court somehow coming to a finding in favour of a dismissed employee that would somehow be seen as impinging on the employer’s otherwise absolute right to terminate the employee’s service in accordance with contractual terms by giving notice or payment in lieu of notice.
(5) It may be appropriate to await the evidence on and determination of the fabrication point, before the court should safely rule against a litigant in person on a high money claim.
(6) Determination of the point would have a huge impact on the Plaintiff, and might necessarily invite an appeal which would cause extra costs or cause costs to be incurred up front as might need to be incurred eventually at trial.
(7) The claimed loss in 103(vii) and (viii) are the losses claimed arising at the point of termination of employment, but the claims at 103(i)-(vi) go to what the Plaintiff might otherwise have earned during or before the termination of service.
(8) Much of the trial proper might be spent on what happened during the currency of the employment, and whether what happened at that time would have any impact on the wrongful termination claim or impact a damages award, especially when there are allegations of targeting and fabrication of evidence to achieve the targeting purpose.
(9) It is unlikely that there would be hugely cost-effective exercise to conduct the Order 14A at that stage.
(10) The law does not seem to be as clear-cut as the Defendant argues.
(11) As a matter of discretion, where determination of part of the claim would not save much costs even if the law is clear, the invitation to make a determination on Order 14A should be declined.
50. The Defendant did not appeal from the Master as regards his stance on the Order 14A application.
51. I have set these matters out in some detail, as it seems to me to be appropriate to consider whether the stance taken by the Master, against which there was no appeal, somehow precludes me from addressing in essence the same argument in the context of the Summons. I do not think that it does.
52. First, the approach taken by the Master simply identifies that he did not think that the determination of the question posed would assist in disposing of the entire action, and that it might be premature prior to all of the evidence being obtained and considered at a trial, not least where this might be a question of law arising in a developing area of the law. Obviously, the Master has not determined the question of law one way or the other.
53. Second, I see no reason why the Defendant is not entitled to argue the same point in opposition to the Summons which seeks to deploy the Expert Report, when the Defendant’s primary point is that expert evidence is not relevant and/or useful to the just resolution of the dispute between the parties – because the Plaintiff’s employment was terminated by payment in lieu of notice, and the allegation that it was terminated in bad faith in breach of the implied duty of trust and confidence is irretrievably bad as a matter of law.
54. It also seems to me to be an appropriate matter of case management for me to address this question: see Order 1B rule 1 and the underlying objectives found in Order 1A rules 1, 2 and 4.
F. The Law on the Implied Duty
F.1 Introduction
55. The submissions made by the Defendant trigger and warrant a look into the current Hong Kong legal position on employment contracts regarding implied terms of mutual trust and confidence.
56. Such a term is that the parties to an employment contract shall not, without reasonable and proper cause, conduct themselves in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee (“Implied Duty”). It is an overarching obligation implied by law as an incident of the contract of employment. In Malik v BCCI [1998] AC 20, the United Kingdom (“UK”) case where this implied duty seems first to have been developed, it was held at 46D that the Implied Duty covers a broad range of situations wherever there is a balance between the employer’s interest in managing his business as he sees fit and the employee’s interest in not being unfairly and improperly exploited.
57. Mr Brown submitted that the Implied Duty could never be relevant in the case of a termination by payment in lieu of notice (i.e. a termination under the contract or section 7 of the EO). The submission is that the Implied Duty is or may be potentially relevant to a contract as it subsists or remains extant, but not to a contract when it is terminated or comes to an end on its own terms and/or under the EO.
F.2 The Tadjudin case
58. The position as to terms which might be implied into a contract of employment was considered by the CA in Tadjudin Sunny v Bank of America, National Association (unreported, CACV 12/2015, 20 May 2016). The CA affirmed the trial judge’s decision holding that the employer could not exercise an express contractual right to terminate a contract of employment by giving a payment in lieu of notice with the intention to avoid paying the employee a performance bonus.
59. I think it is important to look at the case in some more detail. The contract of employment in the case related to the employment of an analyst by a bank. The employment terms permitted termination by either the employee or the bank on one month’s notice or payment of one month’s salary in lieu of notice. The employee was also eligible to be considered for a bonus under the bank’s performance incentive programme, subject to her being employed by the bank at the time of payment of bonuses. In light of the history of payments during her employment, the trial judge described the employee’s basic salary as the “sauce” and the bonus as the “meat”.
60. The particular implied term put forward in that case – and given the definition “the implied anti-avoidance term” – was that the bank “shall not exercise its right to terminate the plaintiff’s employment by giving one month’s notice or by paying one month’s salary in lieu of notice in order to avoid her being eligible for the performance incentive programme”.
61. During her employment, the employee received a warning letter which stated that if she failed to make immediate improvement as specified in a performance improvement plan (“PIP”), the bank would take further disciplinary action against her including summary dismissal. Her supervisor considered that she did not meet the specific goals in the PIP, and he went through it with her, telling her that she failed to comply fully with the goals set out. The employee was given the option to resign or the bank would start the termination process. The employee refused to accept either option. The bank issued a termination letter terminating the employment by giving one month’s wages in lieu of notice.
62. The employee claimed she was dismissed in breach of the implied anti-avoidance term, that the termination had been orchestrated without any cause to invoke the PIP process, and that the specific goals under the PIP were designed in such a way to fail. Further, even though she had in fact achieved the specific goals, her employment was terminated on the pretext that she had failed the PIP. Had the employment not been terminated, she would have been eligible for the performance incentive programme and would have been awarded a bonus for 2007.
63. The trial judge took the view that the anti-avoidance term should be implied into the employee’s contract of employment. He thought it was not inconsistent with the express terms, or with the statutory right of the employer to terminate the employment by notice or payment in lieu under sections 6 and 7 of the EO, or with the protection given to employees under Part VIA of the EO. He thought the implied anti-avoidance term reasonable, equitable, necessary to give business efficacy to the employment agreement, and capable of clear expression.
64. In respect of the claim for breach of the implied anti-avoidance term, the issues were: (1), whether, having regard to the employee’s performance under the PIP, the reason given for termination was genuine; and if it was not, (2) whether it was to be inferred that the dismissal was made with the intention to avoid the employee being eligible under the performance incentive programme. The trial judge found that the PIP was just a pretext to terminate the employee’s employment and the PIP process was manifestly not conducted in good faith. He found the only reasonable inference was that one of the dominant intentions of the bank in terminating the employee was to avoid her being eligible for consideration under the performance incentive programme for the relevant year.
65. The CA (at §§37-45) considered the relevant legal principles relating to implication of contractual terms generally. It noted (at §37) the settled starting point that there are five conditions (which may overlap), which must be satisfied before a term can be implied into a contract, namely:
(1) it must be reasonable and equitable;
(2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(3) it must be so obvious that “it goes without saying”;
(4) it must be capable of clear expression; and
(5) it must not contradict any express term of the contract.
66. On the aspect that the term should be necessary to give business efficacy to the contract, the CA held (at §41) that, instead of asking whether the term sought to be implied is necessary in the sense that without it the contract would become unworkable in practice, the correct question is to ask whether it is necessary to give effect to the reasonable expectations of the parties. Similarly, the CA held (at §42) that, instead of asking whether the actual parties to the contract would have regarded the terms sought to be implied as being obvious although the contract does not expressly say so, the correct question to ask is whether the offered term is what a reasonable person would understand the contract to mean.
67. The CA also noted (at §44) the important distinction between two different kinds of implied terms, namely (1) those which are implied into a particular contract and (2) those which are implied into a class of contractual relationship. For the former, they are implied because, on the proper construction of the contract in question, the parties must have intended to include them. For the latter, the courts have implied them as a necessary incident of the relationship concerned, unless the parties have expressly excluded it. The CA specifically noted (at §45) that the particular case only concerned an implied term of the former kind.
68. The CA recognized (at §§58 to 60) that – at least by reference to the position in the UK, as set out in the case of Johnson v Unisys [2003] 1 AC 518 – the now established existence of an implied obligation of mutual trust and confidence between employer and employee cannot be utilised to form the platform to allow an employee to recover damages for loss arising from the manner of his dismissal. This is essentially for two reasons being: (1) the obligation of trust and confidence is concerned with preserving the continuing relationship which should subsist between employer and employee and thus is not appropriate for use in connection with the way the relationship is terminated; and (2) it would be an improper exercise of the judicial function to develop the common law to permit such claims to be made in the light of the evident intention of the legislature that they should be heard by a tribunal and the remedy should be limited in application and extent to that provided for in the statute.
69. The CA went on to deal with the implication of the implied anti-avoidance term put forward in the particular case and emphasised (at §63) what it regarded as the crucial contextual background. On the specific facts, the CA was satisfied (at §64) that the contract of employment between the Bank and the plaintiff meant that the Bank’s power of termination of the plaintiff’s employment must be subject to the implication of an anti-avoidance term, as being necessary in order to give effect to the common, reasonable, expectation of both the bank and the employee that the former could not exercise the power of termination in order to avoid the employee being eligible for the bank’s performance incentive programme. The CA agreed (at §65) with the trial judge that, without the anti-avoidance term, the employee’s contractual right to be eligible for consideration under the performance incentive programme would become illusory, and that conclusion would be wholly unreasonable and inequitable and could not possibly have been what the parties intended to be the effect of their employment contract. The CA also considered (at §66) that the implied anti-avoidance term is supported by the legal principle that an apparently unqualified contractual power, including the power of termination without cause by one month’s notice or payment of one month’s salary in lieu of notice, should be construed as being subject to the requirement that it can only be exercised in good faith, rationally and for a proper purpose, and not arbitrarily or capriciously or in a manner which is not bona fide or otherwise in good faith, rationally and for a proper purpose.
70. In affirming the possibility of the implication of a term of mutual trust and confidence into an employment contract, the CA considered (at §§73 to 76) that in Hong Kong the law on unfair dismissal fell outside the scope of Part VIA of the EO, and (at §77) that the Hong Kong position was different from the UK position as set out in Johnson v Unisys, because the UK Employment Rights Act 1996 provided a very comprehensive statutory regime of employment protection against unfair dismissal generally, whereas Part VIA of the EO is much more limited in scope and application.
71. The CA also considered (at §80) that there may not be any inconsistency between the implication of an anti-avoidance term and any express term that the employer could terminate an employment on notice without reason. However, it is important that the CA emphasised (at §83) that the implied anti-avoidance term was limited and specific to the facts, and it was not equivalent to a term that the employment could not be terminated without good reason. Further, the CA stated (at §84) that its conclusion that the anti-avoidance term ought to be implied into the employee’s contract of employment with the bank was reached on the particular facts and circumstances of the case, without having to rely specifically on the implied obligation of mutual trust and confidence.
F.3 Lam Siu Wai v EOC
72. In Lam Siu Wai v Equal Opportunities Commission [2021] 5 HKLRD 30, the Court was presented with the question whether the CA decision of Tadjudin Sunny should be read as authority for the proposition that there should generally be implied a common law duty of good faith in the termination of employment without cause. Anthony Chan J (at §§27-43) rejected such a contention. He did so broadly on the following basis:
(1) As the law stands, the Implied Duty cannot be applied to water down an employer’s right to terminate the employment of a worker without cause by invoking the notice provisions (contractual and/or statutory).
(2) The Implied Duty is about maintaining the relationship between employer and employee, and therefore inappropriate to be applied to the termination of that relationship.
(3) It is well-established that the contractual right to terminate an employment (on the part of either employer or employee) can be exercised unreasonably or capriciously, so long as the right is exercised in accordance with the contract, and the Court is not concerned with the rightness or wrongness of a dismissal.
(4) The CA in Tadjudin Sunny emphasised that the issue before it was “narrow and specific” based on the particular facts and circumstances of that case.
(5) Tadjudin Sunny is not authority for the general proposition that the right to terminate without cause is qualified by an implied duty to exercise such right in good faith. At the highest, it may be said that the door for further development in common law in this regard was left ajar by the CA.
(6) To imply a duty of good faith in the termination of employment without cause would have far-reaching effect on the law of employment, and the consequences – including additional litigation complexity and costs in matters ordinarily to be dealt with by the Labour Tribunal – would call for an exercise to be conducted by the legislature.
(7) There is also considerable force in the point that there is no room for judicial innovation because the right to termination without cause is provided for in sections 6 and 7 of the EO.
(8) An approach which suggests that the Implied Duty applies to the termination of employment is wrong in law.
(9) If the employer was entitled to terminate the employment without cause in accordance with the contract, it did not matter whether the exercise of the right was unreasonable or capricious. Therefore, stating any reason for dismissal had no bearing on the termination.
(10) In any event, an action for wrongful dismissal (in breach of contract) could yield no more than the salary which should have been paid during the contractual period of notice.
F.4 My View
73. I agree with the reasoning of Anthony Chan J in the Lam Siu Wai case, in its entirety. But I would add that any door left ajar for further development of the common law does not have any bearing on this case.
74. I also accept Mr Brown’s submission, made in this case, that the position as between employer and employee on termination is mutual. Hence, the circumstances in which an employer can terminate the employment are identical to those in which an employee can choose to leave. No one would seriously argue that an employee cannot resign from employment unless and until he or she has good or justified reasons for doing so, or could only do so in good faith. An employee can choose to resign for whatever reason he or she wants – including whether logical or illogical, or whether on a correct or mistaken belief of some wrong done to him or her by the employer – provided the employee serves out his or her notice or makes a payment in lieu of notice.
75. I would also emphasise the last point which I have noted above made by Anthony Chan J. This is that, in accordance with section 8A of the EO, where a contract of employment is terminated otherwise than in accordance with section 6 or 7, a sum equal to the amount of wages that would have been payable had the contract been terminated in accordance with section 7 shall be payable by the party terminating the contract to the other party. The Plaintiff’s reliance on section 9 of the EO is misplaced, because he was not terminated summarily or for cause, but without cause and on the express terms of the contract and the EO.
76. I have taken into account that at an earlier stage of the Tadjudin Sunny case – reported as Tadjudin v Bank of America National Association [2010] 3 HKLRD 417 – the CA allowed the employee’s interlocutory appeal against a strike out application which had been granted at first instance on the grounds that there was no justification in allowing an implied term which could have the effect of cutting down the clear statutory right of termination without cause as provided for by the EO. The CA held (at §§7 and 55-57) that that implied anti-avoidance terms was an area of the law in the process of developing, and that it was inappropriate where an “emergent” legal principle was at stake to have the matter decided favourably at an interlocutory stage without the benefit of full legal argument based on the facts established at trial. It is also noteworthy that the CA distinguished the case from Johnson v Unisys Ltd, on the basis that the particular anti-avoidance term sought to be implied only protected against tactics calculated to avoid the payment of the performance bonus, so that it was not inconsistent with and did not contradict the express contractual term as to termination by notice or payment in lieu of notice.
77. But when the substantive appeal after the trial was reached, the CA emphasised (see above) that the implied anti-avoidance term was applicable only to the relevant contract between the bank and employer (and not to any class of contracts generally), and only on the particular circumstances of that case. As already stated, in reaching that conclusion, the CA emphasised that the implied anti-avoidance term was not equivalent to a term that the employment could not be terminated without good reason. It is also obvious that any relevant bad faith, or lack of good faith, was in seeking to avoid a contractual bonus eligibility as would otherwise have accrued to the employee in that case.
78. The present case is fundamentally different, and the matter can also be tested in the following way. In this case, the Plaintiff’s claimed relief – in §§103(vii) and (viii) SOC, see above – as is said to arise from the circumstances of the termination of his employment are claims to future loss of earnings (up to the end of the then contractual period, and on an assumed re-engagement for a further contractual period). Those claims in effect presuppose that it would never have been open to the Defendant to have terminated, or even to have failed to re-engage, the Plaintiff – notwithstanding the terms of the contract and the provisions of the EO. With respect, that seems to me to be unsustainable.
79. It is also difficult to see how one might calculate damages for breach of the Implied Duty at the time and in the circumstances of termination in this case (unless it is to the amount that would have been payable on a lawful termination, i.e. a termination not in breach of that Implied Duty).
80. In other words, even on the Plaintiff’s case, this is nothing like the complaint in the Tadjudin Sunny case, and the only thing “avoided” in this case was continuing employment, and the ordinary payment which might have accrued upon continuing employment. Once it is understood that an employer (and, indeed, an employee) can terminate employment even capriciously and without cause, then even if the termination was somehow ‘unlawful’, the damages which would flow from that would merely be those which would be calculated by an entitlement on a ‘lawful’ termination, namely the payment which should have been made in lieu of notice. Subject to any argument about the correct calculation of the amount, the Plaintiff has been paid in lieu of the contractual period of notice.
81. Insofar as the Plaintiff’s claimed relief linked to the circumstances of the termination of his employment amounts in effect to an order that he must continue to be employed (and, on his further claimed relief, must even be re-engaged), that seems to me to fly in the face of ordinary basic principles relating to employment law and freedom to contract.
82. However badly it might be thought that the Defendant treated the Plaintiff during his employment (about which I obviously make no comment on this application), whatever facts and circumstances as might be proved could not logically lead to an award of damages higher than the payment in lieu of notice. In this context, it is relevant that the Plaintiff’s other claims relating, for example, to damage to reputation have been struck out. Nor is there any claim based upon Part VIA of the EO.
83. Therefore, I do not think it can be said that the law in this area is unclear and or that it allows for potential common law development.
G. Discussion
84. Of course, I note that, at present, as the pleadings now stand, the authenticity of the “Annexures 1, 2 and 3 Screenshots” is a live issue directly in dispute between the parties. I also note that the relevance of this issue does not only relate to the accuracy of the Defendant’s evidence presented to the Labour Tribunal but also impacts on the Plaintiff’s challenge to the propriety of the Defendant’s investigation of the Incidents in relation to the QSS Findings, which forms a significant part of the Plaintiff’s case against the Defendant.
85. Hence, whilst Mr Brown claims that the expert evidence is unnecessary on the basis that this is irrelevant to the Defendant’s case regarding the detail of the Incidents, the Defendant cannot dispute that this is relevant to the Plaintiff’s case as the pleadings currently stand. Therefore, looked at in isolation, it might be said that, given the technical nature of the Plaintiff’s case regarding the QAR data, the Court would be assisted with expert evidence in this area in respect of the Plaintiff’s case.
86. But the matter does not fall to be looked at in isolation. Nor does case management require the Court to shut its eyes to certain aspects of a case while focusing on other aspects. The Court does not exist to determine disputes between parties which would have no legal consequence, or which it is not necessary to resolve for the just resolution of the dispute. In my view, whatever the rights and wrongs about the Incidents and the subsequent investigations of them, and the presentation of materials in that regard, those matters are ultimately irrelevant to the legal consequences flowing from the termination of the Plaintiff’s employment contract with the Defendant which expressly on its contractual terms and by reference to the statutory provisions.
87. Ultimately, this is a case management decision, and I am directed by considerations of whether the evidence before me will be of help to the Court in resolving the issues in dispute justly. I consider that it would not be unjust for me to deny the Plaintiff his expert evidence at this interlocutory stage. In short, I do not think this aspect of the claim is ultimately fact-sensitive, so that there is no need for full (indeed any) ventilation at trial, nor is there any need to await the trial to rule on the point.
88. I also do not think the parties are entitled to significant Court time and resources to traverse matters which are ultimately unnecessary in the critical path of decision-making. It might also be thought only fair to the parties to avoid exposing them to either the incidence and/or potential liability for costs which are not necessary.
H. Conclusion
89. I therefore refuse leave to the Plaintiff to adduce the Expert Report of Mr Danny Chow dated 30 July 2023. I dismiss the Summons.
90. I invite the parties to fix a hearing date for the Court to consider and give consequential directions in light of my ruling, and in particular that part of it relating to the law – and as to the impact that may have on the future conduct and shape of the action and the trial. The parties should indicate (by letter to my clerk) their availabilities for a 60-minute hearing in the first quarter of 2024.
91. I reserve the question of the costs of the Summons, in the first instance to that hearing.
| (Russell Coleman) |
| Judge of the Court of First Instance
High Court |
The applicant, acting in person
Mr Toby Brown, instructed by Kennedys, for the defendant