CANO-SHEARER, ANNE AND OTHERS v. CATHAY PACIFIC AIRWAYS LTD.

DCEO 1/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EQUAL OPPORTUNITIES ACTION NO. 1 OF 2001

____________________

___________________

_____________________________________

RULING AND REASONS FOR RULING

_____________________________________

1. All the Plaintiffs were former cabin attendants employed by the Defendant. It is the Plaintiffs' case that at the operative date of the Sex Discrimination Ordinance, Cap. 480 ("the Ordinance"), the Defendant had adopted a discriminatory practice, under which female cabin attendants employed prior to 1993 had to retire at the age of 40 with an option to extend to 45, whilst on the other hand, male cabin attendants could retire at the age of 55 with an option of early retirement at 45. All the Plaintiffs in the present case retired at the age of 40 without exercising the option, and it is their case that they had to retire so early by reason of the discriminatory retirement scheme of the Defendant. By reason of the aforesaid, the Plaintiffs brought the present action against the Defendant claiming for, inter alia, a declaration that the Defendant had engaged in unlawful conduct under the provisions of the Ordinance, and damages, including loss of income, aggravated damages, damages for injury to feelings and exemplary damages. In the adjourned hearing for the pre-trial review on 23 September 2002, Mrs. Newall for the Plaintiffs indicated to the court that the Plaintiffs would abandon the claim for exemplary damages.

2. In the said pre-trial review hearing, the parties asked this court to determine the following applications:

(i) the 1st Plaintiff's application for leave to withdraw the claim against the Defendant with no order as to costs;

(ii) the Plaintiffs' application for split trial relating to liability and quantum;

(iii) the Defendant's application for further and better particulars of the Statement of Claim; and

(iv) the Defendant's application to amend the Defence.

3. After hearing the submission of counsel, I refused the application for split trial and allowed the Defendant's application for further and better particulars and amendment of the Defence. I now give my reasons for such ruling. Further, I have reserved my ruling on the 1st Plaintiff's application for discontinuance of the proceedings and on the issues of costs relating to all the applications. I will also give my ruling on theses issues below.

Amendment of the Defence

4. I deal with the more straightforward application first. According to the draft Amended Defence attached to the summons, the Defendant's proposed amendments mainly relate to some new points of law purportedly to be relied upon by the Defendant at the trial. Mrs. Newall for the Plaintiffs accepts that her clients would not suffer any prejudice arising from such amendments which cannot be compensated by an appropriate award of costs, and the only ground of objection is one of lateness. Although lateness is one of the considerations whether to allow the amendments, the guiding principle is always whether the opposite party would suffer any prejudice which cannot be compensated by an appropriate award of costs. As there is no such prejudice in the present case, I allowed the Defendant's application to amend its Defence.

Leave to the 1st Plaintiff to withdraw the claim

5. There is also no serious argument between the parties that the 1st Plaintiff should be allowed to withdraw her claim on the condition that she cannot bring a fresh action against the Defendant relating to the subject matter of the present proceedings. In such circumstances, I allow the application with the said condition. The main dispute between the parties relates to the costs of the action between the 1st Plaintiff and the Defendant, and I propose to deal with it at the later part of this ruling together with the issue of costs of the other applications.

Split trial

6. This is one of the main contested applications in the hearing. With a view to save costs and time, the Plaintiffs ask this court to make an order for split trial on liability and quantum. According to the Plaintiffs, the question to be decided at the trial of liability, which is whether the retirement scheme adopted by the Defendant was discriminatory under the provisions of the Ordinance, is relatively straightforward. On the other hand, the determination of the question of quantum is more complicated. The claims will be large, and the court will have to determine issues such as; (i) multiplier to be applied to each of the Plaintiffs' claim; (ii) likely increments in their salaries had they continued to work as cabin crews; and (iii) the assessment of earnings made by the Plaintiffs after their retirement and whether they should be deducted from damages. If the Plaintiffs cannot succeed on the question of liability, considerable costs can be saved as the preparation work for the trial on quantum is no longer necessary.

7. The parties do not dispute on the principles to be applied in determining whether to order a split trial:

(i) generally, all issues are to be tried together at the same time unless it is "just and convenient" to do otherwise (Coenen v. Payne & Anr. [1974] 1 WLR 984, Wincheer Investments Ltd. & Ors. v. Lobley Co. Ltd. & Anr. HCA No. 8145 of 1992, unreported, decision of Findlay J. on 23 February 1995), and the burden is on the party seeking such departure to show it is just and convenient (Telford Development Ltd. v. Shui On Construction Co. Ltd. [1990] 2 HKC 110);

(ii) "just" means fair to both sides, without one side or the other gaining an undue advantage by a separation, and "convenient" means convenient to both sides and advantageous from the point of view of costs (Wincheer Investments v. Lobley Co. Ltd., ibid.); and

(iii) separate trials of liability and quantum should only be ordered in exceptional circumstances where there is a clear line of demarcation between those issues (Polskie Towarzystwo etc. v. Electric Furnace Co. Ltd. [1956] 1 WLR 562, Edward Martin Williams v. The Hong Kong Land Property Company Limited and Anor. , HCPI No. 522/2001, unreported, decision of Deputy High Court Judge Muttrie on 12 April 2002).

8. According to Mr. Wong for the Defendant, a key part of the Defendant's defence is that each of the Plaintiffs chose to retire at the age of 40 as opposed to 45 voluntarily, and so the retirement scheme in practice by that time did not cause the early retirement of the Plaintiffs. As the causal link was missing, the Plaintiffs should not be allowed to obtain any damages, even nominal damages, against the Defendant. If the claim for damages fails, and the Defendant has changed the retirement scheme after the enactment of the Ordinance, there is even no point for the court to grant declaratory relief in the present case. In such circumstances, the Defendant should not be liable for anything at all.

9. In view of the said defence, Mr. Wong submits that the Defendant would have to investigate, even in the trial of liability, the post-retirement activities and events of each of the Plaintiffs, including whether they sought alternative employment, and if so, what kind of employment was it, what remuneration they received, and whether they engaged in full-time or part-time employment. Such matters are essential to the Defendant for the purpose of destroying the Plaintiffs' case that they were forced to retire by reason of the Defendant's discriminatory policy. In other words, the post-retirement activities and events are relevant to both the trial on liability and that of quantum, and there is no clear line of demarcation between the issues relevant in both trials. Instead of saving costs, the witnesses will have to deal with all these issues in both trials and additional costs will be incurred as a result.

10. At this stage, all that is required from the Defendant is to establish an arguable case as outlined above. If the Defendant succeeds in doing so, which I think it has, there is certainly no clear demarcation between the issues relating to liability and quantum, and it is therefore not appropriate for the court to order split trial in the present case.

11. It seems that what the Plaintiffs' legal advisers have in mind is that the court should conduct a trial on preliminary issue of law as to whether the retirement scheme adopted by the Defendant at the operative date of the Ordinance was unlawful. If that is the case, the trial may be a simple one. However, it is very different from a split trial of liability and quantum. There is nothing as liability per se, and liability must be considered in relation to the relief that is to be granted by the court. If it is the Defendant's case that it is not liable for any of the relief claimed by the Plaintiffs as the retirement scheme by that time did not cause their early retirement, the line of demarcation between the issues is then by no means clear. The evidence from witnesses is likely to cross frequently the dividing line between liability and damages, and an order of split trial is therefore not appropriate.

12. Further, I have also great reservation as to whether substantial costs can be saved by an order of split trial. In answering the Defendant's request for further and better particulars of the Statement of Claim exhibited as "MJD-7" to the Affidavit of Michael J. Downey, the Plaintiffs' legal advisers have already obtained some instructions relating to the post-retirement employment and income of each of the Plaintiffs, and so the only remaining task is to quantify the claim of each of the Plaintiffs. I am given to understand that the Plaintiffs will rely on the same witnesses both on the issues of liability and quantum, and there would not be any additional witnesses, not to mention expert witnesses, on the issue of quantum. In such case, although a full trial will last longer than a simple trial on liability, it would actually be more convenient, and indeed costs saving, to deal with all the issues in one trial.

13. It is interesting to note that most of the authorities in this area of the law relate to personal injuries actions. Obviously, there are usually clear demarcations between issues of liability and quantum in this sort of cases. Further, considerable costs may have to be spent in proving damages in personal injuries claims, for example the engagement of experts from various medical fields, and as a result substantial costs may be saved if there are split trials on liability and quantum. These factors do not appear in the present case, and so I refused the Plaintiffs' application in this regard.

Request for further and better particulars

14. The Defendant has requested the Plaintiffs to provide particulars on the following matters:

(i) full numerical particulars of the special damages claimed under each of the headings pleaded in the Particulars of Special Damages; and

(ii) full numerical particulars of the future loss of income claimed.

15. The Plaintiffs do not object to such request. However, in the event of a split trial, they should be allowed to defer the provision of the particulars until after the trial on liability. In view of my ruling of the split trial issue, the Plaintiffs' argument is no longer a valid one and I therefore allowed the Defendant's request for the said particulars.

16. Further, even in the case of a split trial, I see no reason to delay the provision of the particulars. As I see it, there are a lot of legitimate reasons why the Defendant would like to know the actual quantum of the Plaintiffs' claims as soon as possible. Indeed, the actual quantum of the claims may affect the Defendant's future conduct of the proceedings, for example, the Defendant may choose to settle the claims after considering the particulars. In a personal injuries action, a plaintiff is required to provide such particulars at the commencement of the action, and there is no reason why the same should not be done in the present case. In addition, as I have mentioned above, the Plaintiffs' legal advisers have already obtained some instructions from their clients relating to the post-retirement working history of the Plaintiffs, and so they should be in a position to quantify the Plaintiffs' claims without much difficulty. Hence, I do not agree that the order of split trial is a justification to delay the provision of the particulars in the present case.

Costs

17. In dealing with the issue of costs of the various applications, the parties always refer me to section 73B(3) of the District Court Ordinance, Cap. 336, which reads as follows:

"(3) Each Party to any proceedings in the Court in the exercise of its jurisdiction under the Sex Discrimination Ordinance (Cap. 480) shall bear its own costs unless the Court otherwise orders on the ground that:

(a) the proceedings were brought maliciously or frivolously; or

(b) there are special circumstances which warrant an award of costs."

18. The rationale for such rule is clear. If the court always makes an order of costs against an unsuccessful plaintiff, it may discourage individuals who may have legitimate grievance in enforcing their civil rights. On the other hand, I agree with Mr. Wong that such indulgence should not go unchecked, otherwise parties who are sued as defendants may have to face with all sorts of unmeritorious claims, and the said statutory provision would be doing more harm than good. In particular, if the court cannot make any costs order in respect of procedural matters, the court will lose the power to control and regulate the progress of the proceedings. Hence, apart from the case that the proceedings were brought maliciously or frivolously, the court is given wide discretion to make an order of costs if there are "special circumstances" which warrant so. Obviously, it would be very difficult for the court to list out all the special circumstances in which an order of costs should be made. However, the court should always bear in mind the aforesaid considerations in deciding on the issue of costs in sex discrimination cases.

(i) Costs of the withdrawal summons and costs of the action between the 1st Plaintiff and the Defendant

19. In the first hearing before me on 11 July 2002, the 1st Plaintiff had applied to the court to withdraw the claim without a supporting affidavit. Obviously, this was very undesirable as the court could not determine whether the proceedings were brought maliciously or frivolously. The application was therefore adjourned to enable the 1st Plaintiff to file a supporting affidavit.

20. Two supporting affidavits were filed subsequently, and the reasons for the 1st Plaintiff in withdrawing the claim can briefly be summarized as follows. Prior to the commencement of the present action, the 1st Plaintiff had, in June 1999, commenced proceedings in the National Labour Relations Commission in the Philippines against the Defendant claiming for compensation ("the Philippine Action"). According to the 1st Plaintiff's case in the Philippine Action, she was unable to continue to work for the Defendant on medical ground, and so it was wrong for the Defendant not to pay benefits to her based on medical retirement. Obviously, the position of the 1st Plaintiff in the Philippine Action is very different from the position that she has adopted in the present case, in which she claims that she would have continued to work for the Defendant but for the discriminatory retirement scheme in practice by that time.

21. According to the Notice in Response for Pre-Trial Review filed by the Defendant on 18 April 2002, the Defendant indicated that it would apply for specific discovery of the documents relating to the Philippine Action and the appeal proceedings. The Equal Opportunities Commission ("the EOC"), who acted for the 1st Plaintiff, then obtained instructions from her and learnt, for the first time, about the Philippine Action. After knowing about the inconsistent positions, the EOC sought legal advice from counsel, with the result that the EOC decided not to provide any more legal assistance to the 1st Plaintiff. After the 1st Plaintiff had been advised by the EOC to obtain independent legal advice, she decided to withdraw her claim.

22. According to the explanation given by the 1st Plaintiff, she did not appreciate that the position that she had adopted in the Philippine Action would prejudice her claim in the present case. She did not consider both reasons for her retirement as contradictory, and so she had not revealed the details of the Philippine Action to the EOC when she approached it for assistance in October 1999.

23. As a chief purser formerly employed by the Defendant, the 1st Plaintiff is definitely not an uneducated person. In such circumstances, it is very difficult to understand why she did not appreciate that the statements she had made in the two proceedings were in fact contradictory. In paragraph 24 of her witness statement filed in the present case, the 1st Plaintiff actually said the following:

"My decision to retire at the age of 40 years was not made because I did not want to continue working as a cabin attendant. Nor was it made because I could not carry on with my work as a result of the back pain I was suffering. My decision was based on the fact the only alternative option was to retire at age 45 years."

In the light of the position that she has adopted in the Philippine Action, the said statements given by the 1st Plaintiff cannot possibly be correct.

24. A case is obviously frivolous when the claimant subjectively knows that it is unmeritorious. A case may also be frivolous when objectively considered it is plainly without foundation and is bound to fail. In E.T. Maler Ltd. v. Robertson [1974] 1 ICR 72, the English National Industrial Relations Court was asked to consider, inter alia, the issue of costs relating to an appeal from the Industrial Tribunal. Under the relevant statutory provision, the Tribunal should not normally award costs unless it considers that a party has acted frivolously or vexatiously. Sir Hugh Griffiths said the following in p. 76:

"If the employee knows that there is no substance in his claim and that it is bound to fail, or if the claim is on the face of it so manifestly misconceived that it can have no prospect of success, it may be deemed frivolous and an abuse of the procedure of the tribunal to pursue it."

In Wilson v. Phoenix Contracting Services (1998) EOC 92-936, the Victorian Anti-Discrimination Tribunal in Australia was asked to consider a similar provision relating to costs. The Tribunal said the following in page 78234 of the report:

"The costs referred to in the section are party/party costs (including disbursements) and, notwithstanding sub-section (2), the discretion of the Tribunal to award costs is very wide.

There is no general rule adopted by this Tribunal that the successful party is entitled to costs (see Murphy v. Colorific Lithographics ADT of Vic, 22 January 1997). In exercising its discretion the Tribunal must have regard to the nature of the jurisdiction. If orders for costs are made too readily, people might be deterred from coming to the Tribunal and, to that extent, the policy of the legislation would be frustrated.

In Delmonaco V. NRU Worklife Pty Ltd. (ADT of Vic, 3 April 1997), ......... the Tribunal said:

'We therefore find that the Respondent has been put to needless expense in defending a claim that should not have been brought against her. It is not simply a case of a complaint having failed. It is a case where a Complainant has made a complaint without having any reasonable grounds for expecting that it might succeed. In such circumstances, we think that it is appropriate to order costs in favour of the Respondent."

.........

The Tribunal should not lightly find that a claim should not have been brought. It is the intention of the legislation that a person with a bona fide claim will bring it to the Commission and, if it is not resolved, have the matter determined by the Tribunal. On the other hand it must be recognized that an accusation of unlawful discrimination can have serious consequences for the person accused (see Gray v. Ritossa Supreme Court of Victoria 21 October 1993 per Nathan J) and should not be made without due cause."

In Hong Kong, by virtue of the second limb of s. 73B(3), the court has a much wider discretion in approaching the issue of costs in sex discrimination claims.

25. Mrs. Newall for the 1st Plaintiff tries to argue that the 1st Plaintiff's case is not bound to fail. Even if she cannot succeed on the claim for monetary compensation, it is still quite possible that she may obtain declaratory relief against the Defendant for adopting the discriminatory retirement scheme. However, if that is the case, why did the EOC decide to withdraw all the legal assistance given to the 1st Plaintiff? Indeed, the EOC acknowledges that the revelation of the materials in the Philippine Action is the main reason for the withdrawal of legal assistance, and such withdraw clearly shows that even the EOC is not optimistic about the merits of the 1st Plaintiff's claim.

26. Further, it is clear that the 1st Plaintiff was fighting this case for monetary compensation, and not with a view to correct any discriminatory practice on the part of the Defendant. As the latter has already changed its cabin attendants' retirement scheme after the enactment of the Ordinance, the 1st Plaintiff's claim would serve no purpose other than a claim for monetary compensation. As I see it, the 1st Plaintiff is an opportunist who tries to obtain "compensation" from the Defendant by whatever means. She could always shift her positions, or even her evidence, to suit the different purposes of her claims. After she learnt that some of her former colleagues had filed sex discrimination complaints against the Defendant, she, despite her position in the earlier Philippine Action, also joined in the litigation with a view to obtain some "compensation". Once she knew that her claim for damages was bound to fail, she decided to withdraw the claim.

27. Further, if her real intention is to obtain a declaratory relief and she has a meritorious claim in this regard, why does she not pursue the claim after the withdrawal of the legal assistance by the EOC? Even in the absence of legal assistance, the 1st Plaintiff can pursue her claim without much difficulty. Hence, in my judgment, the 1st Plaintiff has all along been interested only in monetary compensation. So far as this part is concerned, her claim is unmeritorious. To me, the object of the Ordinance would not be frustrated even if she is to be asked to pay for the costs of the action.

28. Based on the aforesaid, the court is justified in concluding that the action was brought by the 1st Plaintiff frivolously. Undoubtedly, she had withheld some important facts about the case from the EOC. If the EOC had known about such information at the outset, the 1st Plaintiff's claim probably would not have been commenced in the first place. Hence, even if I am wrong in concluding that the action was brought by the 1st Plaintiff frivolously, the present case falls within the "special circumstances" as set out in s. 73B(3)(b), and as a result, in withdrawing her claim, she should pay for costs of the Defendant. I therefore so order.

29. As an alternative argument, Mrs. Newall has asked this court to reserve the decision on costs between the 1st Plaintiff and the Defendant until after trial. By that time, Mrs. Newall submits, the court would be in a better position to assess whether the 1st Plaintiff does have legitimate grievance in respect of her claim against the Defendant. However, based on the reasons above, there is already sufficient ground for the court to make an award of costs against her, and it is not necessary for me to reserve the decision even if the court may, after trial, make a declaratory relief in favour of the other plaintiffs remaining in the action. Indeed, there should be a "clean-break" after granting leave to the 1st Plaintiff to withdraw the claim, and it is not appropriate to keep her as a party to the proceedings until after trial just for the purpose of arguing on the issue of costs. At this stage, the court should base on the existing circumstances and proceed to make any appropriate order on costs.

(ii) Costs of the application for split trial

30. I have no reason to doubt that the Plaintiffs' legal advisers intend to save costs by way of a split trial. I also do not accept that they intend to gain an unfair advantage over the Defendant by way of such application. Although after taking into account the Defendant's argument, in particular the way as to how the Defendant approaches the case, the court does not see fit to order a split trial in the present case. In such circumstances, the Plaintiffs should not be penalized on the issue of costs. As this is an interlocutory application, I am of the view that a costs-in-the-cause order would be more appropriate. In any event, the trial judge would have to revisit s. 73B(3) of the District Court Ordinance in deciding the costs of the whole action after the trial. I therefore so order.

31. According to the correspondence between the parties, the Plaintiffs agreed to answer the request for further and better particulars of the Statement of Claim after the Defendant supplied the documents relating to the income of its cabin attendants. However, after the Defendant had supplied those documents, the Plaintiffs applied to the court for an order of split trial and sought to defer the supply of some of the answers until after the trial on liability. In such case, Mr. Wong says, the Plaintiffs was relying on the split trial application to defer the supply of the particulars. However, the Plaintiffs' legal advisers have all along agreed to supply the particulars, and the issue is only one of timing. They genuinely believe, which I have no reason to doubt, that an order of split trial can save costs, and so I am not satisfied that there was an ulterior motive behind the application for split trial.

(iii) Costs of the application for further and better particulars

32. Although I do not doubt the genuineness of the application for split trial, I am of the view that the costs of the application for further and better particulars deserve separation consideration. As I have mentioned above, the Plaintiffs' legal advisers agreed to provide the particulars after the supply of certain requested documents by the Defendant. However, after the Defendant had done so, the Plaintiffs did not honour their promise. Although the intention to defer the supply of the particulars may be a genuine one, I do not find that such kind of conduct is reasonable. In such circumstances, the Plaintiffs have to pay for the costs of such application.

(iv) Costs of amending the defence

33. In my judgment, even in sex discrimination cases, costs should normally be awarded against the party who is amending the pleading. If not, parties to the litigations would have no incentive to formulate their cases properly at the early stage of the proceedings. As I see it, an order of costs is the main if not the sole weapon for the court to regulate the progress of the proceedings, and awarding costs in such kind of interlocutory application would not defeat the object of the Ordinance.

34. In the present case, Mr. Wong fairly concedes that the proposed amendments do not arise out of some new evidence or documents disclosed in the proceedings, and in such circumstances, I see no reason not to make an order of costs against the Defendant. I therefore so order.

35. These are the reasons for the ruling I have made in the hearing on 23 September 2002. For the reserved decisions, I make an order nisi in the following terms:

(i) the costs of the Plaintiffs' application for split trial be costs in the cause;

(ii) the Defendant's application for the answers to request numbers 8 and 9 of the request for better particulars of the Statement of Claim referred to in exhibit "MDJ-3" of the Affidavit of Michael J. Downey be paid by Plaintiffs to the Defendant;

(iii) costs of the Defendant's summons dated 20 September 2002 and the costs of and occasioned by the amendments be paid by the Defendant to the Plaintiffs;

(iv) leave to the 1st Plaintiff to withdraw the claim herein on the condition that the 1st Plaintiff is barred from bringing a subsequent action based on the same subject matter against the Defendant; and

(v) the 1st Plaintiff do pay to the Defendant the costs of the action, including the costs of the summons dated 5 July 2002.

I make a nisi order so that the parties can still address me on the final wording of the order if that is required. The order is to be made absolute 14 days after the date of the handing down of this ruling.

36. Finally, I must express my gratitude to both counsel for their able submission and the assistance that they have provided to this court.