LEE MAN YEE NORMAN v. INTERNATIONAL CONTRACTORS SUPPLY LTD

HCA 916/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 916 OF 2014

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REASONS FOR DECISION

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The application

1.  In the present case, the plaintiff claims against the defendant for payment of commission in the sum of more than $1.8 million.  Although the plaintiff was and is an employee of the defendant, the plaintiff is not suing the defendant on the basis of the employment contract entered into between the parties.  Instead, the plaintiff relies on a separate commission agreement.

2.  It was argued by the defendant that, since the plaintiff was an employee of the defendant at all material times, only the Labour Tribunal has jurisdiction over the present dispute between the parties.  Hence, the defendant applies, among other things, to have this action stayed and “referred” to the Labour Tribunal.

The orders sought

3.  I should point out immediately that, even if I accept that the present case should be dealt with by the Labour Tribunal as contended by the defendant, I do not agree that the matter before this court should be stayed.  I also take the view that this court has no power to transfer the matter to the Labour Tribunal.  Having said that, as I will explain further below, in the event that I decide the substantive matter in favour of the defendant, the fact that the defendant has asked for inappropriate reliefs in its summons is not something which is irremediable.

4.  Pursuant to section 7(1) and paragraph 1(a) of the Schedule of the Labour Tribunal Ordinance, the Labour Tribunal has jurisdiction over a claim for a sum of money arising from the breach of a term of a contract of employment.

5.  Section 7(2) further states that unless the Labour Tribunal provides otherwise, such a claim shall not be actionable in any other court in Hong Kong.  In other words, the Labour Tribunal has exclusive jurisdiction over such a claim.

6.  Nevertheless, that does not mean that such a claim must be tried in the Labour Tribunal as the Ordinance has indeed “provided otherwise”.  Pursuant to section 10 of the Labour Tribunal Ordinance, the Labour Tribunal may decline jurisdiction over a claim and transfer the matter to the Court of First Instance, the District Court, or the Small Claims Tribunal.

7.  It can thus be seen that actions relating to employment disputes should be commenced in the Labour Tribunal first.  Other courts (for example, the Court of First Instance) would have no jurisdiction to deal with the case until the Labour Tribunal exercises its power to decline jurisdiction and make an order of transfer under the said section 10.

8.  In Panalpina (Hong Kong) Ltd v Ulrich Haldemann [1983] HKLR 275, the plaintiff had obtained judgment on its claim against the defendant.  However, the execution of such a judgment had been stayed pending the resolution of the defendant’s counterclaim.  Even though Hunter J took the view that the counterclaim should be tried in the then High Court because the case cried out for legal representation, his Lordship could not do anything but to hope that the Labour Tribunal would take the same view and transfer the case back to the High Court pursuant to the said section 10.

9.  Hunter J recognized that he had no jurisdiction over the matter before him.  However, since the pleadings in the High Court action have been closed, his Lordship considered it preferable to stay the counterclaim instead of striking it out.  His Lordship’s intention was to facilitate revival of the case in the event the matter would be transferred back to the High Court subsequently.  His approach is perfectly understandable.  If his Lordship ordered to have the counterclaim struck out altogether, in case the Labour Tribunal declined jurisdiction and transferred the case back to the High Court, the parties would have to file and serve pleadings on the counterclaim all over again, and much additional costs would have to be incurred.

10.  The defendant has referred this court to other authorities including Glock (HK) Ltd v Brauner Wilhelm (HCA 2865/2004, unreported, 31 May 2007) and Ralf Borchert v Drmyo Limited (HCA2234/2007, unreported, 28 October 2009).  In both these cases, upon finding that the Labour Tribunal should have exclusive jurisdiction over the matters in issue, the claims have been struck out altogether.

11.  By reference to all the authorities cited to me, it seems that once the court is satisfied that the case before it should be within the exclusive jurisdiction of the Labour Tribunal, the normal order to make is for the claim be struck out, and the plaintiff would have to commence a new action at the Labour Tribunal.  The Court of First Instance does not have any power, whether under the statutes or in its inherent jurisdiction, to transfer or refer the matter to the Labour Tribunal.

12.  However, as demonstrated by the case of Panalpina (Hong Kong) Ltd (see above), if the circumstances require it, the court may stay the action in the Court of First Instance.  Whether this is the appropriate course to take would depend on the facts of the case.

13.  In the present case, the defendant has not sought to strike out the plaintiff’s claim by its summons which, among other things, has only asked to stay the proceedings.  However, at the hearing, the defendant has not attempted to justify why a “stay” is preferable to “striking out” in the circumstances of this case.

14.  I have no doubt that the defendant’s summons is defective in that it has omitted to seek an order for striking out.  However, in my view, that does not matter, because this court may strike out the plaintiff’s claim of its own motion pursuant to Order 18 rule 19 of the Rule of the High Court if appropriate.  Whatever the form of the order should be, the crucial question remains whether the present dispute is within the Labour Tribunal’s exclusive jurisdiction.  If it is, I do not think the defects in the defendant’s application should prevent the defendant from achieving its ultimate purpose, namely, to stop the plaintiff from proceeding further in the Court of First Instance.

The applicable test

15.  As aforesaid, the proper order to seek herein is to strike out the plaintiff’s claim.  However, this application is different from other striking out cases in that in the event the plaintiff’s case is struck out, he may start again in the Labour Tribunal.  Be that as it may, the general principles under Order 18 rule 19 should still be applicable, with appropriate modifications.

16.  As far as the present case is concerned, they are as follows:

(1) The court should only strike out the plaintiff’s claim if it is plain and obvious that the claim is in the exclusive jurisdiction of the Labour Tribunal;

(2) Looking at it in another way, the assertion of the plaintiff that his claim is not made on the basis of his employment agreement must be obviously unsustainable or impossible (as opposed to improbable) to succeed before the court should strike his claim out;

(3) Disputed facts are to be taken in favour of the plaintiff and the facts pleaded in the Statement of Claim are presumed to be correct.

Application of the test

17.  No affirmation has been filed in support or opposition of this application.

18.  The only pleading which has been filed herein is the Statement of Claim.  On 8 August 2014, upon the request of the defendant, the plaintiff also provided certain further and better particulars on the said Statement of Claim.

19.  Given the above, this court has to decide whether it is arguable, on the basis of the plaintiff’s pleaded case, that the commission agreement between the plaintiff and the defendant has not become a term of the employment agreement but a separate agreement between the parties.

20.  In this regard, the most relevant parts of the plaintiff’s pleaded case are as follows:

(1) The plaintiff was employed by the defendant as a project coordinator.

(2) The plaintiff’s duties under the employment agreement with the defendant include:

(a) Supervising and maintaining site operation;

(b) Coordinating with all teams; and

(c) Responding to the user inquiries for technical support.

(3) In around August 2011, the plaintiff, out of his own initiatives, introduced a project which was to be tendered by MTR Corporation Limited to the two directors of the defendant.

(4) While the directors had reservation as to the defendant’s chance in successfully obtaining this project, they agreed with the plaintiff that if he could obtain this project for the defendant, he would be entitled to 5% of the contract price of the project as commission (this might have been varied subsequently, but this has no bearing on the present application).

(5) The plaintiff therefore worked on obtaining the said project from the MTR in his own spare time.  This includes the preparation of certain documents which is not within the plaintiff’s job duties stipulated under the employment agreement.

(6) The defendant was subsequently awarded by MTR with the project. However, the defendant failed to pay the plaintiff the agreed commission.

(7) The plaintiff therefore sues the defendant for breach of the commission agreement.

21.  Mr Millar for the defendant has tried very hard, by reference to a number of matters (including but not limited to the plaintiff’s plea that he had been promoted to be a project manager of the defendant) to argue that the employment agreement has been varied with the passage of time, that the plaintiff’s job duties under his employment with the defendant have been expanded and that the commission agreement has become part of the employment agreement.

22.  In effect, he is asking this court to make a finding of facts in this regard in his client’s favour.

23.  With respect, it is plainly inappropriate for the court to do so.  In my view, if the plaintiff’s assertions of facts are accepted, which should be presumed to be the case at this stage, it is arguable that the commission agreement was not part of the employment agreement and that the plaintiff was not acting in his capacity as the defendant’s employee when he worked on getting the project from the MTR.

24.  Applying the principles referred to in paragraph 16 above, this court cannot come to any conclusion at this stage that the dispute herein should be within the exclusive jurisdiction of the Labour Tribunal.  The defendant’s application should therefore be dismissed.

[Submission on costs]

25.  There is no reason why costs should not follow the event.  I therefore ordered that the defendant do pay costs of the plaintiff including the reserved costs for the hearing on 3 July 2014.

26.  However, in my view, this is a simple application.  Without disrespect to Mr Chen who has been instructed to appear for the plaintiff, I do not think it is appropriate to certify counsel’s attendance.

27.  The plaintiff has provided this court with a statement of costs for the purpose of summary assessment pursuant to Order 62 rule 9A(1)(a).  The total amount of costs sought, putting aside counsel’s fees which were not allowed, was $11,000.  The whole sum of $11,000 was allowed in full, and should be payable by the defendant within 14 days hereof.