LEUNG CHUNG LAN LORRAINE v. MERCER (HONG KONG) LTD

CACV 44/2018

[2018] HKCA 612

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CVIAL APPEAL NO. 44 OF 2018

(ON APPEAL FROM HCA No. 627 OF 2017)

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JUDGMENT

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Hon Chu JA giving the judgment of the Court:

1.  This is the plaintiff’s appeal against the judgment of B Chu J given on 2 February 2018 dismissing her appeal against the order of Master M Wong striking out the Statement of Claim and dismissing her action against the defendant with costs.

Background

2.  The plaintiff was a former employee of Merrill Lynch (Asia Pacific) Ltd (“Merrill Lynch”).

3.  The defendant was the administrator of the Merrill Lynch (Asia Pacific) Provident Fund (“the Scheme”), a retirement scheme set up under the Occupational Retirement Scheme Ordinance (“ORSO”) by Merrill Lynch for the benefit of its employees.  HSBC Trustee (Hong Kong) Limited (“the Trustee”) is the trustee of the Scheme.

4.  There is no contractual relationship between the defendant and the employees of Merrill Lynch who are entitled to benefits under the Scheme. 

5.  When being notified by Merrill Lynch of the termination of employment of an employee, the defendant’s role, as the administrator of the Scheme, was to (i) calculate the benefits payable to the employee under the Scheme, (ii) send the benefit statement and calculation to Merrill Lynch and the Trustee, and (iii) advise Merrill Lynch to issue the cheque for the relevant amount to the employee.

6.  The plaintiff left the employment of Merrill Lynch on 21 April 2005.  Under the Scheme, she was entitled to be paid US$24,281.62 equivalent to HK$189,225.80 (“the Sum”). 

7.  By way of a fax dated 18 May 2005, the defendant informed Merrill Lynch to issue a cheque for the Sum to the plaintiff.  By letter dated 19 May 2005, the defendant provided a copy of the plaintiff’s exit statement to the Trustee.

8.  The wealth management department of Merrill Lynch issued a cheque (“the Cheque”) numbered 570229 for the Sum, which was dated 19 May 2005 and made out to “Leung Chung Lan”, and mailed it to the plaintiff’s then residential address.  The issuance of the Cheque was recorded in Merrill Lynch’s May 2005 accounting statement of provident fund.  According to the record of stale cheques kept by the defendant, there is no record of the Cheque going stale.  Further, according to the Trustee, the Cheque was paid on 30 May 2005.

9.  In November 2011, the plaintiff first contacted the defendant to enquire about outstanding payment under the Scheme.  She was told the Cheque had been issued and posted to her.  The plaintiff, however, disputes this.  She denies having received the Cheque or being paid the amount.

DCCJ 5145/2013

10.  On 31 December 2013, the plaintiff commenced action in the District Court (DCCJ 5145/2013) against Merrill Lynch to recover the Sum as her benefits under the Scheme. 

11.  By the judgment of Deputy District Judge Lawrence Ng dated 13 February 2015, the claim was ordered to be struck out with costs to be paid by the plaintiff to Merrill Lynch.

12.  In his judgment, the Deputy Judge considered the plaintiff did not have a valid claim in trust against Merrill Lynch because under the terms of the Scheme, Merrill Lynch was not the trustee and was not responsible for making payment to the plaintiff.  The Deputy Judge also considered the plaintiff did not have a valid claim in contract against Merrill Lynch, and further held that even if such a claim existed, it would have been time-barred.  The Deputy Judge additionally observed that the plaintiff’s case that the Sum had not been paid to her was fraught with difficulties.

13.  Subsequently, the plaintiff entered into a settlement agreement dated 27 March 2015 (“Settlement Agreement”) with Merrill Lynch and the Trustee, whereby in consideration of Merrill Lynch agreeing not to enforce the costs order made by the Deputy Judge, the plaintiff agreed: (i) not to appeal against the Deputy Judge’s decision; (ii) not to commence proceedings against the Trustee in relation to the payment of retirement benefits under the Scheme; and (iii) not to pursue in the courts or by other means the matters raised by the plaintiff in DCCJ 5145/2013.

Labour Tribunal claims

14.  Then on 2 February 2016, the plaintiff brought a claim in the Labour Tribunal (LBTC 359/2016) against the defendant claiming for payment of the Sum.  On 1 March 2016, she was given leave to withdraw her claim.

15.  Later in 2017, the plaintiff brought a second claim against the defendant in the Labour Tribunal (LBTC 695/2017) for non-payment of ORSO benefits on the basis that the defendant was the trustee of a trust deed. 

16.  On 16 March 2017, the claim was dismissed by the Presiding Officer for want of jurisdiction having regard to the fact that there was no employment relationship between the plaintiff and the defendant and the claim was not based on any employment.  The plaintiff’s appeal to the Court of First Instance was dismissed by L Chan J on 10 May 2017 (HCLA 6/2017, judgment dated 10 May 2017).  The plaintiff’s application for leave to appeal to the Court of Appeal was dismissed by the Court of Appeal (Lam VP and Yuen JA) on 26 June 2017 (HCMP 1117/2017, judgment dated 26 June 2017).

HCA 627/2017

17.  On the day her second claim was dismissed in the Labour Tribunal, the plaintiff issued the writ in the Court of First Instance (HCA 627/2017). 

18.  According to the Statement of Claim indorsed on the writ, the plaintiff’s claim is for: “HK$189,225.80 which is the ORSO money and the cheque was issued on 19 May 2005.  However, the Defendant issued the cheque with the incorrect name LEUNG CHUNG LAN, my ID name should be LEUNG CHUNG LAN LORRAINE.”

19.  By summons issued on 2 June 2017, the defendant applied to strike out the Statement of Claim and to have the action dismissed pursuant to Order 18 rule 19 of the Rules of the High Court, Cap. 4A, on the ground that the Statement of Claim disclosed no reasonable cause of action, was frivolous or vexatious or was otherwise an abuse of process of the court.  Further or alternatively, the defendant sought a determination under Order 14A of the Rules of the High Court that the plaintiff’s cause of action was time-barred by reason of section 4(1) of the Limitation Ordinance, Cap. 347.

20.  On 11 October 2017, Master M Wong ordered that the plaintiff’s Statement of Claim be struck out and the action be dismissed, and ordered the plaintiff to pay the defendant the costs of the action.

21.  On 14 November 2017, the plaintiff appealed the Master’s decision out of time to the Court of First Instance.  The Judge heard the appeal.  By her judgment handed down on 2 February 2018, the Judge dismissed the appeal and ordered the plaintiff to pay to the defendant the costs of the appeal.  On 6 March 2018, the Judge summarily assessed the defendant’s costs of the appeal in the sum of HK$36,000.

22.  The Judge’s decision was based on several reasons.  First, the plaintiff had not set out in the Statement of Claim what cause of action she had against the defendant.   Second, insofar as the plaintiff purported to bring a claim in trust, her claim would have to be brought under the Scheme against the Trustee.  There was no contract, and no contractual relationship, between the plaintiff and the defendant.  Third, to the extent the plaintiff claimed that the defendant was negligent in issuing the Cheque with an incorrect payee’s name, the Cheque was not issued by the defendant.  Even assuming she in fact did not receive the Cheque, there was no causal link between the alleged mistake (i.e. the payee’s name was wrong) and the plaintiff’s claimed loss.  Fourth, in any event, any claim that the plaintiff might have in contract or in negligence would have been time-barred.

The plaintiff’s appeal

23.  In her notice of appeal dated 14 February 2018, the plaintiff raised two grounds of appeal:

(1)   The defendant’s solicitors had filed two summonses which were heard on 19 May 2017 and 9 June 2017 respectively, and had also filed the Acknowledgment of Service.

(2)   The Employer’s Return filed by Merrill Lynch for the period of 1 April 2005 to 21 April 2005 did not refer to the payment of the Sum.

24.  In her written submissions, the plaintiff further stated that during her employment with Merrill Lynch, the defendant maintained her ORSO account under the name of “Leung Chung Lan” instead of her ID name “Leung Chung Lan Lorraine”, and the Cheque was incorrectly issued in the name of “Leung Chung Lan”.  The plaintiff claimed that with the mistake in the payee’s name, she could not have cashed the Cheque as her bank account was held under the name of Leung Chung Lan Lorraine.   The plaintiff also said that until she left Merrill Lynch’s employment in 2005, she had never received annual ORSO statements from the defendant.

The plaintiff’s new evidence

25.  On the day before the appeal hearing, the plaintiff put in a second written submission enclosing two documents that were not adduced before the Master or the Judge. 

26.  The first document is a HSBC Credit Card Replacement Form dated 21 July 2017.  This related to a credit card issued by HSBC to the plaintiff in the name of “Leung Chung Lan” (without the name “Lorraine”), the validity period of which is from June 2016 to August 2019.  The plaintiff explained that this showed that someone could have deposited into this credit card account a cheque made out to “Leung Chung Lan”.

27.  The second document is a printout of closed account details.  The plaintiff said it showed all her accounts with HSBC as at 26 January 2016.  She claimed that four of the accounts (two of which with prefix “657” opened on 18 July 2013 and closed on 22 October 2013; and the remaining two accounts with prefix “720” opened on 17 October 2013 and closed on 28 July 2014) were not opened by her.  The plaintiff said this document went to show that there were accounts that were not opened by her and without her authority.

28.  The defendant objected to the admission of the two documents.

29.  The law on admission of new evidence at appeal is trite.  The applying party must satisfy all the three requirements laid down in Ladd v. Marshall [1954] 1 WLR 1489, [1954] EWCA Civ 1.  They are: (1) the new evidence could not have been obtained with reasonable diligence for use at the trial; (2) the new evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and (3) the new evidence must be such as is presumably to be believed, or, in other words, it must be apparently credible though it need not be incontrovertible.

30.  Both of the plaintiff’s new documents relate to accounts that only came into existence in 2013 or 2016 whereas the Cheque was issued and paid in May 2005.  As such they bear no relevance to the plaintiff’s claim and the dispute in question.  The second requirement of Ladd v. Marshall is therefore not met. 

31.  Further, there is no explanation on why the plaintiff, despite due diligence, could not have obtained the two documents and adduced them in evidence at the hearing of the striking out application before Master M Wong and/or at the appeal before the Judge. The first requirement of Ladd v. Marshall is also not met. 

32.  Accordingly, we will not permit the plaintiff to adduce and rely on the two documents in this appeal.

Our reasons for the decision on the appeal

33.  We turn to the plaintiff’s grounds of appeal.  On the first ground of appeal stated in the Notice of Appeal, the two hearings referred to (i.e. 19 May 2017 and 9 June 2017) were the direction hearings in connection with the striking out application taken out by the defendant.  There is further no dispute that the defendant had through its solicitors filed an Acknowledgement of Service.  It is simply unclear what argument was the plaintiff seeking to advance by this ground.

34.  On the second ground of appeal stated in the notice of appeal, while the Sum was not included in the Employer’s Return filed by Merrill Lynch for the period of 1 to 21 April 2005, this does not lead to the conclusion that the Sum was not paid to the plaintiff.  Still less does it support the plaintiff’s claim that the defendant is liable to pay the Sum to her.

35.  Firstly, Miss Liao, who appeared for the defendant, referred to section 8(2)(cc) and (4) of the Inland Revenue Ordinance, Cap. 112, under which any sum withdrawn from a recognized occupational retirement scheme on termination of service is not taxable except where the amount exceeds the prescribed statutory limit.  That the Sum was not included in the Employer’s Return is therefore not indicative of the Sum not having been paid to the plaintiff.

36.  Secondly, the Statement of Claim endorsed on the writ did not indicate what is the plaintiff’s cause of action against the defendant.   

37.  In her oral submission, the plaintiff asserted that the Cheque was issued by the defendant.  This, however, is not supported by the evidence before the Court.  On the contrary, the evidence shows that the Cheque was issued by the wealth management department of Merrill Lynch, and not by the defendant, and it was sent to the plaintiff by Merrill Lynch.  Such evidence includes two letters dated 5 December 2013 and 13 January 2013 from Merrill Lynch to the Mandatory Provident Fund Schemes Authority, Merrill Lynch’s May 2005 accounting statement of provident fund which recorded the issuance of the Cheque as well as an email dated 19 July 2013 from Eppie Chung of the defendant to Tiffanie Tan of APAC HR Service Centre.           

38.  The plaintiff argued that two letters dated 26 January 2016 and 20 May 2015 written by the Trustee to her show that the Cheque was issued by the defendant. 

39.  The Trustee’s letter dated 26 January 2016 was in response to the plaintiff’s complaint to the Hong Kong Monetary Authority.  It stated in the second paragraph that:

“according to the records of Mercer (Hong Kong) Limited (“Mercer”), the members administrator of the Scheme in 2005, Mercer arranged for the issuance of a cheque with cheque no. 570229 on 19 May 2005 for HK$189,225.80 made payable to “Leung Chung Lan” for the payment of your leaving service benefit under the Scheme. According to Mercer, your benefit cheque and termination benefit statement were sent to you by your former employer, Merrill Lynch, in May 2005. The benefit cheque was then paid on 30 May 2005.”

The letter concluded by reminding the plaintiff that the subject matter of her complaint had already been settled under the Settlement Agreement.      

40.  The other letter dated 20 May 2015 was written in response to the plaintiff’s enquiry made to the Mandatory Provident Fund Schemes Authority.  The material part stated that:

“it is common practice of administrators to issue benefit cheque in full member name without the first name or English name unless it is clearly stated in the payment instruction that the first name or English name has to be included.

We have checked with our bank, HSBC, that the benefit cheque (without first name or English name in the payee name) can be deposited to the bank account of the member even if the bank account name or the name on the Hong Kong identity card does include the first name or English name. The bank may require some additional information for the cheque deposit.

The benefit cheque sent to you by your former employer was drawn from a HSBC bank account 10 years ago.  HSBC is unable to produce the relevant record as HSBC only maintains records for up to seven years.  However, it is noted that according to the records of stale cheques (cheques which have been issued but remain uncashed) maintained by the administrator of the Scheme at that time, no stale cheque records could be found under your name in 2005.”

41.  Contrary to the plaintiff’s contention, the 26 January 2016 letter only stated that the defendant arranged for the Cheque to be issued; it did not indicate that the defendant issued the Cheque.  Further, the letter made it plain that it was Merrill Lynch who sent the Cheque to the plaintiff.  As for the earlier 20 May 2015 letter, it merely stated that it was common practice of administrator to issue cheques to members without including their first name or English name; it did not state that the defendant issued the Cheque.  We do not agree that either of these letters from the Trustee lends support to the plaintiff’s assertion that the Cheque was issued by the defendant.

42.  The plaintiff also submitted that because the Cheque was a crossed cheque and the payee’s name was incorrectly stated as “Leung Chung Lan” without the name “Lorraine”, it could not have been deposited into her bank account.  In light of what was said by the Trustee in the 20 May 2015 letter (see [40] above), this submission cannot stand. 

43.  On the evidence before the Court, there is no contractual relationship between the plaintiff and the defendant.  It is also not the plaintiff’s pleaded case, nor is it her submission, that the defendant is contractually bound to pay to her the benefits under the Scheme. 

44.  In the circumstances, the plaintiff has no valid claim against the defendant, whether in contract, or on the basis that the Cheque was made out to “Leung Chung Lan” instead of to “Leung Chung Lan Lorraine”.

45.  Thirdly, we agree with Judge that any claim that the plaintiff might have is already time-barred in that the action below was instituted more than six years from 2005 when the plaintiff left Merrill Lynch’s employment and the Cheque was issued (see section 4 of the Limitation Ordinance).

46.  The plaintiff argued in submission that her claim against the defendant was a trust claim and was not subject to any limitation period.  This is untenable.  The defendant was only the administrator of the Scheme, and not the trustee of the Scheme.  There is no basis for claiming against the defendant in breach of trust.

47.  In conclusion, for the reasons stated above, the Master was correct to strike out the Statement of Claim and dismiss the action, and the Judge was also correct to dismiss the appeal against the Master’s decision.  We would accordingly dismiss the plaintiff’s appeal against the Judge’s decision.

48.  Applying the normal rule of costs follow event, the plaintiff, having failed in her appeal, should pay the defendant the costs of the appeal.  We have considered the defendant’s statement of costs for summary assessment.  We would summarily assess the defendant’s costs of the appeal at HK$40,000.  The order for costs and summary assessment is in the nature of an order nisi, the effect of which is that if there is no application to vary the costs order and summary assessment within 14 days of the handing down of this judgment, it will be made absolute.

Disposition

49.  We make the following order:

(1)   The appeal is dismissed.

(2)   The plaintiff pays the defendant the costs of the appeal summarily assessed at HK$40,000.