TEMPRA VIRGINIA PIDO v. COMPASS TECHNOLOGY CO LTD AND ANOTHER

CACV 210, 211, 212, 213, 214, 215, 216 & 217/2009
CACV 210/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 210 OF 2009

(ON APPEAL FROM DCCJ NO. 3498 OF 2008)

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REASONS FOR JUDGMENT

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Hon Ma CJHC :

1.  The appeals before us emanated from 8 actions in the District Court, all brought against the same Defendants.  Following the issue of the Writs, the 1st Defendant (then the only Defendant in the proceedings) applied to strike out the Statements of Claim endorsed on the Writs and for an order that the actions be dismissed.  The 2nd Defendant was added as a party by way of amendment but has so far taken no part in the proceedings (we understand that there has been an order for substituted service on this Defendant).  H H Judge Simon Leung dismissed the 1st Defendant’s application, but gave leave to appeal.  The issue before us was whether the Statements of Claim (as amended) should be struck out and if so, whether the actions should also be dismissed.

2.  After hearing submissions from counsel, we allowed the appeals, and ordered the Amended Statements of Claim in the actions to be struck out and the actions dismissed.  We also made consequential orders as to costs.  We indicated that the Reasons for Judgment would be handed down in due course.

3.  The pleaded cause of action against the Defendants was the same in all the actions, namely, the economic tort of conspiracy to injure.  Was this a sustainable cause of action?

The factual allegations

4.  Until counsel for the Plaintiffs finally revealed to us the true nature of their case (see paragraph 23 below), it appeared to me from the Plaintiffs’ own evidence and their pleadings that the following represented the factual allegations asserted by them.

5.  The Plaintiffs are from The Philippines.  They were all ex-employees of the 1st Defendant.  As pleaded, in the course of 2004 and 2005, they were recruited by the 1st Defendant to work as process engineers in Hong Kong.  Each of them signed two contracts of employment with the 1st Defendant.  The difference between the two contracts was the salary : in the first contract (“the 1st Contract”), the salary was substantially higher than in the second contract (“the 2nd Contract”).  The range of salaries stated in the 1st Contract signed by the Plaintiffs was between $18,000 and $21,000 a month, compared with the salary of $10,000 a month under the 2nd Contract.

6.  The person who hired the Plaintiffs was the 2nd Defendant, who was the Director of Quality Assurance of the 1st Defendant.

7.  The purpose of the 1st Contract coming into existence was to facilitate the obtaining of employment visas from the Immigration Department for the Plaintiffs.  Presumably, it was hoped that by stating a higher salary, the Immigration Department would be more willing to issue an employment visa.  Such visas were in fact issued.  When extensions to the visas were sought, letters were issued by the 1st Defendant to the Immigration Department repeating the fact of the higher salaries under the 1st Contract.

8.  On the other hand, the 2nd Contract reflected the actual salary to be paid to the Plaintiffs by the 1st Defendant and, when the Plaintiffs did come to Hong Kong to work, they were in fact paid the lower salaries.

9.  In 2007, the fraud committed on the Immigration Department came to light.  The 2nd Defendant was prosecuted for conspiring with the Plaintiffs to defraud the Immigration Department by the dishonest representation on salaries in order to secure employment visas for them.  The 1st Defendant was also originally charged but this was later dropped.  At trial, all the Plaintiffs (except, apparently, the Plaintiff in DCCJ 3501/2008) gave evidence for the prosecution (they were presumably given some form of immunity).  The 2nd Defendant was convicted at Shatin Magistrates’ Court and sentenced to 6 months’ imprisonment.

10.  It is to be noted that in the interviews carried out by the Immigration Department in the course of the investigations by the authorities into the fraud, each of the Plaintiffs effectively said that the 1st Contract signed by them was not a genuine contract and was only used to facilitate the obtaining of employment visas.  The true agreement, according to them, was contained in the 2nd Contract.

The claims made by the Plaintiffs against the 1st Defendant

11.  In March 2008, some of the Plaintiffs (in fact 7 of them) commenced proceedings in the Labour Tribunal against the 1st Defendant on the basis of underpayment of wages.  It was alleged that the agreed salary was that under the 1st Contract.  These claims were eventually struck out for want of prosecution.

12.  The present actions were commenced in September 2008.  The pleaded cause of action was conspiracy to injure.  It is now necessary to examine this cause of action in detail.

Conspiracy to injury : the law

13.  The law need only be briefly dealt with.  As stated above, the tort of conspiracy to injure is an economic tort.  Essentially, the tort consists of a conspiracy to injure the Plaintiffs resulting in (usually, if not invariably) pecuniary damage.

14.  There are two types of conspiracy to injure : -

(1)    First, there is the conspiracy to injure the Plaintiff using lawful means.  Here, a requisite element of the tort is the predominant motive to injure : see Lonrho Plc v Fayed and Others [1992] 1 AC 448, at 464B-C, 465C, 465H-466A.

(2)    The second type of conspiracy is the conspiracy to injure by the use of unlawful means.  Here, the mental element is not the predominant motive to injure the Plaintiff, merely an intention to do so : see Lonrho Plc v Fayed and Others at 465C, 465H-466A.  This is a lower requirement of intention, but it is still “needed” to found the cause of action : see Revenue and Customs Commissioners v Total Network SL [2008] AC 1174, at 1249A-C (paragraph 82).

15.  Mr S T Jat, SC and Ms Lau (for the 1st Defendant) pointed out in their Skeleton Arguments that intention is not synonymous with  foresight : OBG Ltd and another v Allan and others [2008] AC 1, at 35E-G (paragraph 62).  Quite simply, what one foresees as a consequence of one’s actions may not necessarily be the intention, although I daresay it is sometimes evidence of it.

16.  Damage to the Plaintiff is an essential ingredient of the tort of conspiracy : see Clerk & Lindsell on Torts  (19th edition) at paragraph 25-137; McGregor on Damages (18th edition) at paragraph 40-023.  The tortious basis of damages has, of course, as its starting point, the principle that the innocent party should be put, in monetary terms, in the same position as he would have been if the wrong had not been committed : see McGregor on Damages at paragraphs 1-022 and 19-003.  This is of course just a starting point in that, in any given case, the court will have to examine other aspects such as causation in order to reach a conclusion as to whether or not the damages claimed can be awarded.

17.  As a matter of pleading, a case based on conspiracy, must contain the following elements : -

(1)    The agreement between two or more persons.  The means of carrying out the agreement, whether lawful or unlawful, must be set out.

(2)    The intention to injure the Plaintiff, whether predominant (in the case of a lawful means conspiracy) or merely an intention to injure (in the case of an unlawful means conspiracy).

(3)    The acts that were carried out pursuant to the agreement and the stated intention.

(4)    The damage caused to the Plaintiff.

See : Bullen & Leake & Jacob’s Precedents of Pleadings (16th edition) Vol.2 at paragraph 51-02.

18.  With these principles in mind, I now examine the Plaintiffs’ claim, both as pleaded and in substance.  The latter exercise is necessary in that even if a pleading is bad, as long as it can be saved by amendment, the court may necessarily not be prepared to dismiss the whole action (or, in the case of a defence, give judgment in the action).

Are the Plaintiffs’ claims sustainable?

19.  The Statements of Claim in all 8 actions are virtually identical.  The conspiracy relied on is a conspiracy by unlawful means.  There is pleaded the 1st Contract, but it is said that the Plaintiffs were “induced” to sign this contract.  From the pleading, it is clear that this contract was not relied on as constituting the true agreement, because it is said that when extensions for the employment visas were sought from the Immigration Department, a letter was supplied to the Plaintiffs by the 1st Defendant “falsely” stating the salary to be that under the 1st Contract.  The 2nd Contract is pleaded as one in which the Plaintiffs had no choice but to sign by reason of their circumstances.  However, it is pleaded that the Plaintiffs did “accept” this contract.

20.  The pleading is obscure as to just what the conspiracy entailed.  The unlawful means to further the conspiracy can be assumed to be the fraud committed on the Immigration Department by the use of the 1st Contract (although no particulars are provided as to the exact nature of this fraud), but the Statement of Claim does not provide any clue as to whether it is alleged that the intention of the conspiracy was to injure the Plaintiffs and if so, how this was to occur.

21.  If, as seems to be the case pleaded in the Statement of Claim, the true contract was the 2nd Contract, then it is impossible to see how any conspiracy was intended to or could injure the Plaintiffs.  In any event, it is also impossible to rationalize how the pleaded loss (the difference in the salaries between the 1st Contract and the 2nd Contract) could arise : the Plaintiffs received exactly the salary under the very contract asserted in their pleading to have been the true contract.  Thus, on the basis of those principles referred to in paragraph 16 above, without the conspiracy, their financial position was precisely the same.

22.  In my view, the failure to plead properly material aspects of the conspiracy (even particulars aside) – that is, in respect of the intention to injure and the loss caused by the alleged conspiracy - renders the Amended Statements of Claim (on their face) demurrable.  It should therefore be struck out on this ground alone.

23.  Faced with this possibility, Mr S H Kwok( for the Plaintiffs) then expanded on the true nature of the conspiracy intended to be alleged by the Plaintiffs.  As I understand his formulation (or more accurately, reformulation) of the cause of action, it is this : -

(1)    It was not the Plaintiffs’ case that a true agreement was reached on the terms of either the 1st Contract or the 2nd Contract.

(2)    There was in fact never any agreement as to the precise salary to be received by the Plaintiffs.  The agreement or arrangement was only that the Plaintiffs would work for a salary that was consistent or commensurate with the terms of the Migration for Employment Convention 1949, as revised (it was said that this Convention applied in Hong Kong; without deciding this, we assume this to be the case).

(3)    In Mr Kwok’s skeleton arguments, he sets out the relevant parts of Article 6(1) of the Convention as follows : -

“Each Member ……… undertakes to apply ……… treatment no less favourable than that which it applies to its own nationals in respect of ……… remuneration, including family allowance where these form part of remuneration, hours of work, overtime arrangements, holidays with pay, restrictions on home work, minimum age for employment, apprenticeship and training, women’s work and the work of young persons; ……… accommodation ……… legal proceedings relating to the matters referred to in this Convention.”

(4)    Accordingly, when the Plaintiffs came to Hong Kong to work for the 1st Defendant, they did so on the expectation or hope that they would be paid a salary that was consistent or commensurate with the Convention.  They were instead paid $10,000 a month.

(5)    The conspiracy consisted of an agreement on the 1st Defendant’s part with the 2nd Defendant to injure the Plaintiffs by paying them only $10,000 when the salary ought to have been higher; and the unlawful means to be employed consisted of defrauding the Immigraton Department by representing that the salary was that under the 1st Contract, when in reality, the 1st Defendant only intended to pay $10,000 a month.

(6)    The damage suffered by the Plaintiffs was the difference between $10,000 (the salary actually received) and $21,000 (or in some cases, $18,000), being the salaries that they ought to have received.

24.  If what has been set out in the previous paragraph represented the Plaintiffs’ true cause of action, it was nowhere pleaded in the Amended Statements of Claim.  This version was also nowhere to be found in the various affidavits filed on behalf of the Plaintiffs by their solicitors, these affidavits purporting to set out the Plaintiffs’ version of events.  Mr Kwok submitted that this version of the Plaintiffs’ case could be inferred from both the existing pleadings and the affidavits.  With respect to him, this was simply not possible.

25.  In any event, the formulation of a party’s cause of action should clearly and cogently be made in the pleadings.  It should not be left to an exercise of drawing inferences.

26.  Three further points should be made: -

(1)    First, the Plaintiffs’ latest version of their cause of action was totally at odds with the evidence before us.  I have in mind in particular the content of the Plaintiffs’ interviews with the Immigration Department : see paragraph 10 above.  No explanation was provided as to this inconsistency.

(2)    Secondly, this version was also inconsistent with seven of the Plaintiffs’ cases in the Labour Tribunal (see paragraph 11 above).  Again, Mr Kwok was unable to provide any clarification.

(3)    Thirdly, the latest version of the Plaintiffs’ case, whereby workers commenced employment without any agreement as to a fixed salary but instead relying on the reference to a Convention, also defies logic and commonsense.  In the circumstances, it is impossible to accept.

27.  For these reasons, the Amended Statement of Claim was struck out and there being no realistic possibility of the Statement of Claim being amended again to cure the defects, the action was dismissed as well.

Hon Kwan JA :

28.  I agree with the reasons for judgment of the Chief Judge.

Hon Andrew Cheung J :

29.  I also agree.