LO WAI KEUNG v. HANNOVER RÜCK SE

HCA 1687/2021

[2023] HKCFI 420

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1687 OF 2021

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DECISION

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Introduction

1.  This is the appeal by the plaintiff (“P”)  against the decision of Master KW Wong (“Master Wong”)  of 2 September 2022 striking out P’s Writ and amended Statement of Claim (“ASOC”), on the basis that P’s claim therein falls within the exclusive jurisdiction of the Labour Tribunal. 

2.  Mr Neal Clough appeared for P.  Ms Candice Lau appeared for D.  

Background facts

3.  P was a former employee of D.  The employment started in September 1997.  It continued until December 2020 when he was said to be unlawfully dismissed (the “Alleged Unlawful Dismissal”).

4.  On 5 November 2021, P took out the Writ herein with general indorsement (the “General Indorsement”).

5.  On 10 January 2022, P filed his Statement of Claim (“SOC”).  The SOC was amended on 8 February 2022 (“ASOC”).

6.  P’s claim relates to his alleged loss and damage arising from the Alleged Unlawful Dismissal and events leading thereto.  I will go to some details of P’s pleaded case later.

7.  On 12 April 2022, D filed its summons seeking an order that the Writ herein and the ASOC “be struck out on the grounds that they are an abuse of the process of the Court.”

8.  On 19 April 2022, and in reply to requests made by D on 9 February 2022, P filed his Answers to D’s Requests for Further and Better Particulars of the ASOC (the “F&BP”).  

9.  On 2 September 2022, Master Wong struck out P’s Writ and ASOC.

Parties’ stances

10.  D’s case is that P’s claim is in substance contractual in nature, so that it falls within the exclusive jurisdiction of the Labour Tribunal, and hence is liable to be struck out as an abuse of process of the Court. 

11.  P’s position, as summarized in Mr Clough’s written submissions[1], is that the ASOC and the F&BP contain a claim for (i) “[d]efamation of [P] that has led to damages due to loss of reputation”, and (ii)  the “tort of malfeasance”.  Mr Clough raises further[2] the question as to “whether [the ASOC] can be amended so that it properly pleads claims in tort.”  As elaborated upon by Mr Clough in the course of the hearing, P’s primary position is that the facts in support of those two tortious claims have been adequately pleaded in the ASOC, but that if deemed necessary, striking-out being the last resort, P should be afforded the chance to amend, which amendments can be effected readily.

The applicable law

12.  Striking out is only employed for plain and obvious cases.  Disputed facts are taken in favour of the party against whom the application is made. 

13.  Want of jurisdiction can be a basis for striking out – see Singh Baljit v Forward & Co Lawyers [2022] HKCFI 153, per Au-Yeung J at §5 if any authority is required.

14.  The following concern the jurisdiction of the Labour Tribunal.

15.  Those claims which the Labour Tribunal has jurisdiction to inquire into, hear and determine are specified in the Schedule to the Labour Tribunal Ordinance Cap 25 (the “Schedule”, and the “LTO”).

16.  Section 7(2)  of the LTO provides that no claim within the jurisdiction of the Labour Tribunal shall be actionable in any court in Hong Kong.  In other words, the Labour Tribunal has exclusive jurisdiction over those claims.

17.  Relevantly, the Schedule sets out the following matters:

“1. A claim for a sum of money, whether liquidated or unliquidated, which arises from—

(a)  the breach of a term, whether express or implied …, of a contract of employment, whether for performance in Hong Kong or under a contract to which the Contracts for Employment Outside Hong Kong Ordinance (Cap. 78)  applies;

…

(b)  the failure of a person to comply with the provisions of the Employment Ordinance (Cap. 57)  …,

other than a claim specified in the Schedule to the Minor Employment Claims Adjudication Board Ordinance (Cap. 453).

…

3. Notwithstanding paragraphs 1 and 2, the tribunal shall not have jurisdiction to hear and determine a claim for a sum of money (whether liquidated or unliquidated), or otherwise in respect of a cause of action, founded in tort whether arising from a breach of contract or a breach of a duty imposed by a rule of common law or by any enactment.

…

7.  A claim for remedies under Part VIA of the Employment Ordinance (Cap. 57).”

18.  The principles and approach to be adopted for dealing with a challenge to an action on the ground that the claims fall within the exclusive jurisdiction of the Labour Tribunal have been considered by Au-Yeung J in Singh Baljit, citing Her Ladyship’s own earlier decision in Woo Kwok Ping v The Incorporated Management Committee of Tsuen Wan Trade Association Primary School [2020] 1 HKLRD 717 §§17-23, that:

“17. The Labour Tribunal has exclusive jurisdiction over a claim for a sum of money, whether liquidated or unliquidated arising from, amongst others, (a)  the breach of a term of a contract of employment, and (b)  the failure to comply with the provisions of the Employment Ordinance.

18. Notwithstanding that, any claim in respect of a cause of action founded in tort, whether arising from a breach of contract or a breach of a duty imposed by a rule of common law or by any enactment falls outside the Labour Tribunal’s jurisdiction: [LTO] sections 7(1)-(2); §§1 and 3 to the Schedule.

19. In deciding the jurisdiction issue, the Court should look at both the pleaded causes of action and reliefs sought.

20. Mixed claims founded both in employment contracts and torts are excluded from the Labour Tribunal.

21. Similarly, a mixed claim for monetary and non-monetary reliefs, even though based on breach of contract or of the Employment Ordinance, fall outside the jurisdiction of the Labour Tribunal.

22. The proper approach of the Court is to look at the substance of the dispute and not the labels put on the pleadings. The Court should assess whether the other claims brought by the plaintiff are merely for “window dressing”, such that the real claim left is one that falls within the Labour Tribunal’s exclusive jurisdiction.

23.   A distinction should be drawn between jurisdiction and forum for trial. Whether a claim falls within the jurisdiction of the Labour Tribunal is determined at the time the claim is filed. On the other hand, the forum for trial is determined at the time the issues are crystallized or when there are changes in circumstances after filing of the writ.”

19.  Those paragraphs have been considered by the Court of Appeal in the appeal judgment of Singh Baljit, which were not in dispute and were applied[3].

20.  Further elaborations of certain aspects of the relevant legal considerations can also be found in the Hong Kong Civil Procedure 2023, vol.2 at §§S1/7/3 and S1/7/5, that (with authorities omitted):

“Unreasonable Dismissal – Paragraph 7 of the Schedule gives the Labour Tribunal exclusive jurisdiction in cases of ‘wrongful dismissal’ under Part VIA of the Employment Ordinance, Cap. 57, subject to the time restrictions set out in s.32J of the Employment Ordinance, Cap. 57 …

Tortious Claims – Claims founded on tort are excluded by virtue of paragraph 3 of the Schedule to the [LTO].  Such claims include: misrepresentation or conspiracy …; breach of confidence … , and breach of statutory duties …  Tortious claims must be brought separately …  This is subject to the Court being satisfied that the tortious claim is not mere ‘window-dressing’ …  Note that claims based on implied contractual duties or imposed on the employment relationship by equity rather than tort (e.g. breach of fiduciary duty)  remain within the exclusive jurisdiction of the Labour Tribunal …”

21.  If the claim is within the exclusive jurisdiction of the Labour Tribunal, the Court of First Instance does not have any power to transfer or refer the matter to the Labour Tribunal – Lee Man Yee Norman v International Contractors Supply Ltd (unrep., HCA 916/2014, per Master H Au-Yeung, 17 September 2014), §11, and Deutsche Bank AG (Hong Kong Branch)  v Daniel Mamadou-Blanco [2012] 3 HKC 176, per Lok J at §11.

22.  If the pleading does not disclose the cause of action relied on which takes the claim outside the jurisdiction of the Labour Tribunal into which of the Court of First Instance, an opportunity to amend may be given even though the formulation of the amendment is not before the court – Deutsche Bank AG, §31.  The power is clearly a discretionary one.  As explained in the Hong Kong Civil Procedure 2023, §18/19/4(2)  under the heading of “Striking out or amendment”:

“…unless there is reason to believe that the case can be improved by amendment, leave will not be given.”

23.  I apply the above.

Discussion

24.  As summarized above, Mr Clough’s submissions are that the facts in support of the 2 torts of defamation and malfeasance have been adequately pleaded in the ASOC.  Adopting §38 of his written submissions made before Master Wong, Mr Clough submits that “Reference to the ASOC makes it abundantly clear that P’s claim for loss of reputation and reputational damage is a claim funded [sic] in tort and the particulars to §59 SOC make that plain and obvious.”

25.  I need to consider first of all the nature of P’s claim in substance.

26.  About the ASOC:

(a)  It is useful to appreciate the overall structure and contents of the ASOC;

(b)  It comprises 61 paragraphs;

(c)  §§1 to 13 set out introductory or prefatory facts like:

(i)  P’s continuous employment with D between 1997 and the date of the Alleged Unlawful Dismissal;

(ii)  D’s business, and its lines of reporting and governance; and

(iii)  D’s Codes of Conduct[4] (the “Codes of Conduct”);

(d)  §§14 to 36:

(i)  They are under the heading of “The Plaintiff’s career with Hannover HK”;

(ii)  P’s employment, promotion and superiors for reporting (one being “Kroll” as from 2017)  over the years are pleaded;

(iii)  P’s “Employment Contract” with D is pleaded[5], which terms are pleaded to be evidenced by the Letters of Agreement issued to P every time P was promoted or his position changed;

(iv)  §32 pleads that Hong Kong laws were agreed to apply to the Employment Contract, that:

“[P] will rely on the fact that the termination of his Employment Contract on 10 December 2020 constituted unlawful dismissal and was in breach of provisions of the Employment Ordinance Cap 57 (‘EO’). As is hereinafter particularised [P] avers that the said termination was unlawful in that it was not for a valid reason within the meaning of the EO, s.32K”;

(v)  It is pleaded that the terms of Codes of Conduct in relation to the duties, responsibilities and/or commitment by D to its employees have become terms of the Employment Contract, which P relies upon, and which P avers D was in breach[6];

(e)  §§37 to 61:

(i)  They are under the heading of “Events leading to the Plaintiff’s unlawful dismissal”;

(ii)  P pleads in §§35 and 36 of the ASOC that he will pleads in the subsequent paragraphs facts that he relies on in relation to the events leading to his Alleged Unlawful Dismissal, and as particulars for D’s breach of its duties under the Codes of Conduct;

(iii)  Certain exchanges and meeting between P and Kroll (and others)  between September and December 2020 are then pleaded.  In particular, it is pleaded that P sent Kroll the Taiwan Business Summary, which Kroll asked him to redo and re-submit in a particular way, which P did, that Kroll on 22 October 2020 over video link offered P “an honourable exit”, that during another meeting on 10 December 2020 in which the head of D’s Human Resources Department (“Demel”)  was in attendance, P was given notice that “he would be terminated with effect from 1 January 2021”, and that on 22 December 2020, Kroll during a video meeting with all Hannover HK staff informed them that “[D] had issues with non-adherence to underwriting guidelines and stated that rendered [P’s] continued employment untenable”;

(iv)  P says that “[D] has never given valid reason for [P’s] dismissal that was unlawful within the meaning of the EO”[7];

(v)  P then pleads that:

“50. The laws of Hong Kong including the provisions of the EO, and the duties imposed on [D] pursuant to the Codes of Conduct, applied to the Employment Contract. Terms and conditions are also contained in the September 2010 Employment Contract.

51. The termination of the Employment Contract on 10 December 2020 was unlawful and contrary to the provisions of the EO [followed by Particulars which relates primarily to section 32K(a)  to (e)  of the EO];

52. [D] was in breach of its duties to [P] pursuant to the Codes of Conduct [followed by Particulars];

53. In consequence of [D’s] breach of the Employment Contract [P] has suffered loss and damage.

54. [P’s] net income as at the date of the 2019 IRD return was in the sum of HKD 5.54 million, including allowances, bonuses and the star reward of 2016.

(vi)  P pleads that he will update the particulars further [§56], that the Employment Contract was not limited in its duration [§57], and certain alleged requirements of the Codes of Conduct [§58];

(vii)  §§59 and 60 are important, the former in particular as it is heavily relied upon by Mr Clough, which I will reproduce in full, that:

“59. In consequence of his unlawful dismissal [P] has suffered damage to his reputation. He has mitigated his loss by obtaining other employment in spite of his besmirched reputation, but his career will not recover from the manner that the Defendant’s [sic] dismissed him.

PARTICULARS

a. The following serve as examples only of the damage that [P] has suffered damage to his reputation

b. [D] published the allegation that it had issues with [P’s] continued employment by his non-adherence to underwriting guidelines and that rendered [P’s] continued employment untenable to all Hannover HK staff at the video meeting on 22 December 2020 held by Kroll.

c. This said allegation was untrue and grossly damaging to [P].

d. At the 10 December Meeting [D] alleged through Kroll and tacitly by Demel that Hannover Head Office management no longer trusted [P].

e. [D] is aware that worldwide there is a small circle of senior executives of the rank of [P] and carrying out the duties he performed as GM and that within Asia and more particularly within Hong Kong all such senior personnel are well known to each other. [D] knew that [P’s] career has been exclusively in Hong Kong and that the impact of the damage to his reputation would be extreme.

60.  In the premises [P] claims damages for loss of reputation, loss of income and loss of benefits.”

(viii)  Though not in the orthodox form, Mr Clough has confirmed that §61 is the prayer for relief (“Prayer”), in the following terms:

“61. [P’s] claim for loss of income and loss of benefits will be further particularised when updated figures are available and is subject to discovery. [P’s] total remuneration package was worth something more than HKD6 m. per annum and [P] will claim a sum commensurate with his continued employment at this level until his normal retirement at 65

PARTICULARS

a. Damages for loss of reputation

b. Damages for loss of income

c. Damages for loss of benefits

d. Interest

e.  Costs”

27.  As can be seen from the above, P refers to and relies upon to the Employment Contract as evidenced by the Letters of Agreement.  The Codes of Conduct are also relied upon as having become terms of the Employment Contract.  Having pleaded the facts leading to the Alleged Unlawful Dismissal, and in particular what had happened during the meetings on 10 and 22 December 2020, P pleads §§50 to 52, which are contractual both in nature and substance.  Then at §53, he pleads, I repeat, that “In consequence of [D’s] breach of the Employment Contract [P] has suffered loss and damage”.  What follow in §§54 to 60 (including §59 which Mr Clough heavily relies upon)  relate to those “loss and damage” allegedly suffered “in consequence of [D’s] breach of the Employment Contract”. They are not pleaded as facts which may found any claim or cause of action independent of or separate from the contractual claim that has been pleaded, tortious or otherwise, but purely as loss and damage in consequence of the D’s alleged breach of the Employment Contract.

28.  Specifically in relation to §59 of the ASOC:

(a)  The first sentence thereof iterates that “In consequence of his unlawful dismissal [P] has suffered damage to his reputation.”;

(b)  Mr Clough[8] criticizes D for reading that sentence in isolation.  In my view, reading that sentence in the structural context in which §59 is in reinforces the understanding and conclusion that §59 relates only to loss and damage that P says flow from his contractual claim, and does not pleads any facts founding any separate claim or cause of action;

(c)  Damage to reputation has in fact been mentioned.  I have also considered the Particulars thereunder.  But as fairly accepted by Mr Clough, damage to reputation may be a head recoverable for breach of contract;

(d)  Throughout the ASOC, §§59, 60 and the Prayer included, the causes of action of “defamation”, “libel”, “slander” or “malfeasance” have never been mentioned.  This is not just a failure to give a label to P’s claim as Mr Clough submitted in the course of the hearing.  Such absence of reference to those tortious actions in my view, considered in the light of the overall structure and contents of the ASOC, clearly support the understanding and conclusion that P’s claim is in substance contractual in nature.

29.  I have not lost sight of the General Indorsement:

(a)  Therein P says that his claim is for damages;

(b)  He says further that the damages are “For all claims arising out of his employment by [D] and its termination evidenced by letter from [D] to [P] dated 10 December 2020…”[9];

(c)  The roles and duties of Kroll and P are pleaded;

(d)  D was said to be in breach of its statutory pursuant to EO and its contractual liabilities and duties both express and implied pursuant to P’s contract of employment[10];

(e)  I note that it is not Mr Clough that P’s claim comprises any tort arising from any breach of statutory duties.  The tortious claims relied out are defamation and malfeasance;

(f)  P seeks damages, including exemplary and/or aggravated damages and damages for loss of reputation, including but not limited to loss of earnings, loss of past share rewards and dividends, contractual benefits, future loss of share rewards and dividends, loss of benefits, damages for loss of reputation, and general damages;

(g)  The tort of defamation and malfeasance are not mentioned at all;

(h)  Reading the General Indorsement as a whole, its contents are consistent with and support the understanding and conclusion that P’s claim is in substance contractual in nature.

30.  In my view, the F&BP provided by P do not affect the validity of the above analysis:

(a)  P relies specifically on Answers 10(a)  to (q), 12(a)  to (h), and 18(f)  to (i);

(b)  I have considered the contents of the F&BP, and in particular those Answers.  Mr Clough relies on them, in particular Answers 18(d)  to (g)  as facts of publication, and facts suggesting that the published statement has lowered P in the eyes of his peers.  I have also considered Answers 18(h)  and (i)  where the labels “malfeasance” and “negligent malfeasance” have been used, and the pleading that D would be vicariously liable for such acts of Kroll;

(c)  However, such particulars remain provided as particulars to the paragraphs as contained and structured in the ASOC as analysed above.  Request 18 asks, in relation to §59 of the ASOC, “how [P’s] reputation in the industry has allegedly been damaged.”  Answers 18 are provided in that context, and are not pleaded as facts to found any tortious claim or cause of action, and it remains the case that none has been pleaded;

(d)  In the above regard, I also accept Ms Lau’s submissions on the strength of the Hong Kong Civil Procedure 2023 §18/12/1, that:

“It is not the function of particulars to take the place of necessary averments in the pleading, nor ‘to state the material facts omitted … in order by filling the gaps, to make good an inherently bad pleading’.”

31.  In my view, properly understood, it is plain and obvious that the substance of P’s claim is founded on alleged breach of the Employment Contract of unlawful dismissal, failure to comply with the provisions of the EO, or for remedies under Part VIA of the EO.  They are all within §§1(a), 1(b)  and 7 of the Schedule.  There is no claim for a sum of money, or otherwise in respect of a cause of action, that is founded in tort.

32.  I accept Ms Lau’s submission that P’s present stance of seeking to argue for the existence of any tortious claim is an afterthought, and is not borne out by the pleading (General Indorsement, ASOC and F&BP)  read as a whole. Such alleged tortious claims or defamation and malfeasance are nothing more than window-dressing.

33.  In my view, and having analysed the pleading as a whole as above, this a not even a case of any tortious claim having been included in a statement of claim for window-dressing purpose.  The present case is worse, as there is simply no such tortious claim.

Striking out or Amendment? 

34.  No proposed re-amended statement of claim in draft has been placed before this Court.

35.  What Mr Clough has done is this.  At §23 of his written submissions, he simply sets out how he proposes the facts which he submits support the elements of a defamation claim can be framed. Where those suggested facts are to be inserted in any re-amended statement of claim, whether there are to be other related and consequential amendments, and how they are going to sit with the existing structure and contents of the ASOC (as analysed above), have not been canvassed at all.

36.  Given the structure of the ASOC as analysed above, the suggested amendments with the above unknown are hardly sufficient.

37.  Whilst I note on the other hand that the absence of any formulation of the proposed amendment may not be conclusive as to whether the Court may allow P a chance to amend, I decline to adopt that course for the following reasons:

(a)  The application to strike out was first made in April 2022.  No fully articulated proposed re-amended statement of claim has been placed before this court;

(b)  I repeat the overall analysis and contents of the ASOC.  I repeat my view that no tortious claim has in fact been raised therein.  I add that any facts said and submitted to be relevant to any tortious claim are in fact extremely sketchy;

(c)  To allow P to amend would in effect be allowing P to add new tortious claims or causes of action which have hitherto not been pleaded;

(d)  Damages for loss of reputation as a head under breach of the Employment Contract has been pleaded.  No submission has been made to me as to, in substance, what the addition of a tortious claim of defamation basing on the same facts may add to P’s claim.  The same can also be said about the alleged claim based on malfeasance;

(e)  The addition of such tortious claims by amendment, even if allowed, would be in my view nothing but “window-dressing” so as to technically give the Court of First Instance the jurisdiction to hear the case, with no suggestion and indication as to what such additions might or could add in substance to the claim as it is;

(f)  Such “window-dressing”, even if had been included in the ASOC, may be ignored when deciding whether the claim is one that falls within the exclusive jurisdiction of the Labour Tribunal.  Not dissimilar to a fortiori scenario, leave should not be granted to any party on such facts to add any cause of action so as to window-dress.

Conclusion

38.  For the above reason, I dismiss the appeal.

Costs

39.  I make a costs order nisi that the cost of this appeal be to D, to be assessed summarily.  Any application for variation shall be made within 7 days from the date of this Decision by letter to this Court, upon receipt of which further directions will be given.  Unless the costs order nisi has been varied, and for the purpose of assessment, D is directed to file its Statement of Costs within 14 days from the date of this Decision, P to file his Statement of Objection 14 days upon receipt, and D to file its reply 7 days thereafter, with the view of the assessment being conducted on the papers.