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

____________________

___________________

_______________________

REASONS FOR DECISION

_______________________

1. This is an application for security for costs by the Defendant with the estimated costs of the whole action amounting to $3,445,951.

2. The background of this case has already been set out in my earlier Ruling and Reasons for Ruling dated 1 November 2002 ("my Earlier Ruling"). All the Plaintiffs were former female cabin attendants employed by the Defendant. It is the Plaintiffs' case that at the operative date of the Sex Discrimination Ordinance, Cap. 480 ("the SDO"), 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 options to extend to 45, whilst on the other hand, male cabin attendants could retire at the age of 55 with options of earlier retirement at 45. All the Plaintiffs in the present case retired at the age of 40 without exercising the options, and it is their case that they had to retire so early because of the discriminatory retirement scheme of the Defendant. By reason of the aforesaid, the Plaintiffs brought the present action under the SDO against the Defendant claiming for various relief including damages and declarations.

3. Earlier in the proceedings, the 1st Defendant applied to withdraw her claim. Apart from that, the parties also made various interlocutory applications before the court. The background of these applications and the circumstances leading to the withdrawal of the 1st Plaintiff's claim have been set out in some details in my Earlier Ruling, and I do not want to repeat the same here. For the purpose of the present application, I just mention that leave has been granted to the 1st Plaintiff to withdraw her claim with costs of the action be paid by the 1st Plaintiff to the Defendant.

4. Apparently encouraged by the said favourable ruling on costs, the Defendant made the present application for security for costs under O. 23 of the Rules of the District Court, Cap. 336, on the basis that the 2nd to the 6th Plaintiffs are all ordinarily residents out of the jurisdiction. In the hearing, I dismissed the application and I now give my reasons for such decision.

Approach of the court

5. It is common ground that the 2nd to the 6th Plaintiffs are ordinarily residents out of Hong Kong. In my reasons below, I would simply refer them as the Plaintiffs.

6. In an ordinary civil or commercial claim, although it is no longer an inflexible rule, it is trite law that other matters being equal, it is normally just to exercise the discretion by ordering security against a non-resident plaintiff (see: Porzelack K. G. v. Porzelack (UK) Ltd. [1987] 1 WLR 420 and Berkeley Administration Inc. v. McClelland [1990] 2 WLR 1021). The purpose of ordering security for costs is to ensure that a successful defendant will have a fund available within the jurisdiction against which it can enforce the judgment for costs. However, it has also been repeatedly emphasized that it is not an inflexible or rigid rule, and the court has to strike the balance between what would be too oppressive to the plaintiff and what would give the defendant a measure of security (see: Lauria v. Le Salon Orient (Hong Kong) Ltd. & Anr. [1996] 2 HKLR 37, Henrik Anderson and Michael Serring (suing as receiver of the Estate of Huang Kuang Yuan) v. Huang Kuang Yuan & Anr. [1997] HKLRD 1360, Re Greater Beijing Region Expressways Ltd. (No. 3) [2000] 3 HKC 608).

7. The Plaintiffs' claims in the present case are no ordinary civil claims. The claims are based on the SDO which is a piece of civil right legislation. As a result, the legislature was keen to see that no person should be discouraged from pursuing his or her claim simply because of costs concern. Indeed, section 73B(3) of the District Court Ordinance, Cap. 336 lists out the principles governing the award of costs in such kind of claims:

"(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."

8. Ms. Sharpston for the Plaintiffs argues that by reason of such provision, it is unlikely that the Defendant, even if it succeeds in its defence, is able to get its costs against the Plaintiffs, and so no security for costs should be ordered. At this stage, I am not prepared to go that far. As demonstrated by the 1st Plaintiff's case, in the event that the Defendant is able to prove in the trial that the Plaintiffs retired by reasons other than the alleged discriminatory retirement scheme, it is at least arguable, I do not put it higher than that, that the claims were brought maliciously and that the Defendant should then be able to get its costs against the Plaintiffs.

9. However, despite such an arguable case on costs, s. 73B(3) makes it clear that the court should not approach the question of costs in a sex discrimination case in precisely the same way as in an ordinary civil or commercial case. The unusual nature of this costs provision, which is different from the normal litigation rule that costs should follow the event, is clearly designed to permit persons who claim that they have suffered discrimination to pursue an action before the courts without the fear of a costs order being made against them, provided that they do not act frivolously or maliciously, or that there are not some "special circumstances" that would merit the displacement, in the interest of justice, of the basic rule that each party shall bear its own costs.

10. All the Plaintiffs retired at the age of 40 without exercising the options to work until 45, and so the Defendant does have a genuine defence that these Plaintiffs retired by reasons other than the alleged discriminatory retirement scheme. On the other hand, the Plaintiffs explain that they had to retire at earlier times because it would be more difficult for them to make mid-life career changes as they became older. As they had to retire at 45 in any event, it was more desirable for them to do so earlier. As I see it, the Plaintiffs also have a genuine explanation in this regard, and the unfavourable comment that I have made in respect of the 1st Plaintiff's case in my Earlier Ruling is irrelevant so far as the other Plaintiffs are concerned. Hence, for the purpose of this application, merits is very much a neutral factor.

11. In my judgment, the court should approach the question of security for costs in a sex discrimination claim in a very cautious manner. Whist the court should on the one hand recognize the difficulty of a defendant in enforcing a successful costs order, the court should not on the other increase the difficulty of a plaintiff in enforcing his or her bona fide civil right. In my judgment, to ignore the special rules in place by s. 73B(3) for sex discrimination cases and to approach O. 23 as entitling a defendant with strong financial backing to obtain security for costs against a plaintiff with limited means would serve, in a large measure, to defeat the very purpose for which s. 73B(3) was inserted into the District Court Ordinance by the SDO. In the balancing exercise, the court should therefore attach more weight to factors such as impecuniosity of the plaintiff, the relative positions of the parties and whether there is any risk that the order would stifle what is on the face a genuine claim. I will then deal with these considerations below.

The impecuniosity of the Plaintiffs

12. Even in an ordinary civil or commercial case, the court is very reluctant to order security against a plaintiff who cannot provide the same by reason of his or her limited means and the effect of the order will stifle what is otherwise a genuine claim. In the Porzelack case, Sir Nicolas Browne-Wilkinson V.-C. said the following (ibid., at p. 426):

"The next matter that I take into account is that, on the evidence before me, there is little doubt that if I order security on anything like the scale asked for, the plaintiff's action will in fact be stifled. It is simply does not have the means to put up the money. It is always a matter to be taken into account that any plaintiff should not be driven from the judgment seat unless the justice of the case makes it imperative. I am always reluctant to allow applications for security for costs to be used as a measure to stifle proceedings."

13. The Defendant accepts that all the Plaintiffs are persons with limited means (see paras. 5 to 12 of the Third Affidavit of Michael J. Downey filed on 13 December 2002). Most of them are now unemployed and it is unlikely that they can provide the amount of security as sought by the Defendant. Hence, without the assistance of the EOC, their claims will probably be stifled.

14. Mr. Wong for the Defendant argues that, as all the Plaintiffs are assisted by the Equal Opportunities Commission ("the EOC"), impecuniosity of the plaintiffs is not a relevant consideration here. I do not agree. Assuming that the Plaintiffs are not so assisted, the court, in taking into account the Plaintiffs' impecuniosity, is unlikely to order security against them. In such case, why should the fact that the Plaintiffs are assisted persons affect the equation? If the court were to order security, the Defendant would actually obtain an advantage which it would not otherwise obtain. In my view, this is not right.

15. In this regard, one should perhaps examine more closely the role of the EOC. In fact, there is a clear distinction between the position of the EOC and, say, that of the Director of Legal Aid, in legal proceedings. In respect of cases involving legally-aided persons, the Director of Legal Aid may be liable to pay for any costs ordered against the aided persons (s. 16C of the Legal Aid Ordinance, Cap. 91), or may have to provide security for costs if so ordered by the court (s. 18B), and public fund has been allocated for these purposes. However, there is no such corresponding provision in the legislation involving the EOC and sex discrimination claims, and so it follows that such kind of claims should be treated differently. If the court were to order security, the court is in effect imposing liability on the EOC to provide security and, if required, to pay for the Defendant's costs, which are not otherwise provided for in the legislation. In my judgment, the court should not do so in view of the different arrangements for costs under the said ordinances.

16. It is true that the court would on some occasions consider the assistance given to a plaintiff from "other backers or interested parties" in an application for security for costs (see: Wing Hing Provision, Wine & Spirits Trading Co. Ltd. [1998] 4 HKC 461 at 464). In particular, in an application for security against a plaintiff company under s. 357 of the Companies Ordinance, Cap. 32, the court would always take into account the means of the plaintiff's directors and shareholders, as they clearly have interests in the proceedings. However, the considerations here are different. The EOC is only discharging its public duties imposed by the legislation in assisting the Plaintiffs to enforce their civil rights, and there is no financial gain to the EOC by so doing. In such circumstances, why should the court impose such a liability on costs on the EOC?

17. Further, unlike the Director of Legal Aid, the EOC is not obliged to assist the Plaintiffs even if the latter have meritorious claims. Assuming that the EOC decides not to provide the security based on various policy considerations, the Plaintiffs' claims will probably be stifled. This is a real possibility that the court cannot ignore, and this would not be in the interest of justice. On the other hand, if the EOC is forced to provide the security, it is then be required to assume the liability for costs which is not otherwise provided for in the legislation. Neither is such position maintainable. Hence, even though the Plaintiffs are assisted by the EOC, their impecuniosity is still a relevant factor.

18. Based on the facts that all the Plaintiffs are persons with limited means and they have genuine claims to enforce their civil rights, I am of the view that it is not just in the circumstances to order security against them, in particular in the scale asked for by the Defendant.

Oral assurance given by the EOC

19. In fact, the Defendant's interest is not wholly unprotected. In the earlier Pre-trial Review Hearing, Ms. Newall for the Plaintiffs indicated to me that there were agreements between the EOC and each of the assisted Plaintiffs that the former would pay for all the costs of the latter in respect of the present action, including any costs which may be ordered against the Plaintiffs. In the light of such agreements, the Defendant asked the EOC to give an undertaking to that effect. The management of the EOC, after some consideration, declined the request. Based on the functions conferred upon it by the SDO and its status as a publicly-funded, quasi-government body, the EOC considers that it is inappropriate to give such an undertaking. According to Ms. Anna Wu Hung Yuk, its Chairperson, the EOC adopts a strategic approach to funding litigation, and it would grant legal assistance to those cases where important public interest principles are involved, or cases which raise important issues of law, in order that the case can set a precedent for future cases. Were it to be required to give an undertaking, that would hamper the discharge of the functions with which it has been entrusted by the SDO, as it would unnecessarily restrict the EOC's ongoing work promoting the abolition of discrimination, investigating cases of alleged discrimination and assisting other claimants in preparing and bringing actions to vindicate their rights. Hence, the EOC objects to the provision of security as a matter of principle, but nevertheless, the EOC is prepared to honour the agreements with the Plaintiffs and so it gives an oral assurance to the court that it will pay the Defendant for any costs which may be ordered against the Plaintiffs.

20. Obviously, the EOC is very concerned that the provision of security or any form of undertakings would set a bad precedent for the other cases, and so it maintains the stance that the court should not order security as a matter of principle. However, on the other hand, the EOC has every intention to honour the agreements made with the Plaintiffs, and so it provides the oral assurance as mentioned above.

21. In the submission of Mr. Wong, Ms. Wu's concern is very much exaggerated. As the EOC is going to cover the Plaintiffs' position on costs, the giving of the undertaking will not have further adverse effect on its budget. But to me, this is an administrative and policy decision on its part. Indeed, one must bear in mind that the EOC is not the party on trial here, and so the court should not, in my view, doubt the genuineness of such decision or put any pressure on the EOC to act one way or another.

22. Although Ms. Sharpston confirms that the oral assurance is not a legally enforceable one, taking into account the following factors, including: (i) the oral assurance was repeatedly given by the Chairperson of the EOC and its two counsel on a number of occasions; (ii) the EOC's refusal to give the requested undertaking is a genuine policy decision; and (iii) the EOC has demonstrated its willingness to pay for the costs ordered against the 1st Plaintiff by entering into discussion with the Defendant in relation to its bills of costs, it is, in my view, extremely unlikely that the EOC would not honour its obligations. In such circumstances, the Defendant's concern that it will not get paid in the light of a favourable costs order is more apparent than real, and hence the oral assurance is another factor weighting in favour of the Plaintiffs as to why security for costs should not be ordered in the present case.

23. Based on the aforesaid, although it is prima facie unfair to the Defendant for it to defend claims by the foreign Plaintiffs without security for costs, I, having regard to all the circumstances of the case, do not see it just to order such security. I therefore dismissed the Defendant's application in the hearing.

24. As this application does involve some principles of public importance, I decide, with the consent of the parties, to hand down this Reasons for Decision in open court.

25. Finally, I must express my gratitude to all counsel for their able submissions and the assistance that they have provided to this court.