RAJ KUMAR MAHAJAN v. HCL TECHNOLOGIES (HONG KONG) LTD AND OTHERS

HCA954/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 954 OF 2005

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D E C I S I O N

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1. The plaintiff is suing for monies said to be due to him upon the termination of his employment in 2004.  The issue which is at the heart of this interlocutory proceeding is the identity of his employer.  The 1^st defendant (“D1”) is a Hong Kong wholly owned subsidiary of an international company incorporated in India, the 2^nd defendant (“D2”), of which the 3^rd defendant (“D3”) is the chairman and chief executive.  The amount claimed is substantial, in excess of US$1 million.

2. D1 was duly served in Hong Kong.  After much difficulty D2 and D3 were duly served in India.

3. The claim is in the form of a “Form 2” issued by the plaintiff in the Labour Tribunal.  That Form 2 claim has been transferred to this court.  By a decision of Master de Souza dated 13 June 2007 the claim against D2 was set aside on the grounds that (a) it did not fall within RHC Order 11 rule 1(1)(c) and/or (b) that there was no serious issue to be tried against D2.

4. The issue concerning Order 11 rule 1(1)(c) is simply whether or not D2 is a “necessary or proper” party to the proceedings.

5. Before me the plaintiff now appeals the Master’s decision.  The plaintiff submits that D2 is a proper or necessary party and there is a serious issue to be tried.

6. At the same time D3 has applied to this court for an order discharging four other Masters’ Orders (which, taken together, granted leave to serve D3 out of the jurisdiction) on the same grounds, namely, that D3 is not a “proper or necessary” party and that there is no serious issue to be tried.

7. Two other matters should be noted.  Firstly, the Form 2 claim is pleaded in the alternative.  In it the plaintiff claims that the contract of employment was made between himself and D3 acting on behalf of D1.  Alternatively, that the plaintiff was employed by D2 and/or D3.  In other words the claim is that D1 or D2 and/or D3 was the employer.  In the Labour Tribunal proceedings, D1 made an early formal admission that it was the plaintiff’s employer.  Secondly, on 10 October 2007 the plaintiff served an Amended Statement of Claim on the defendants’ solicitors (all three defendants are represented by the same firm).  One effect of the amendment was that the claim is now being made against all three defendants, not in the alternative.  The employer is thus claimed to be D1 and/or D2 and/or D3 in the amended claim.

8. At this hearing (both the plaintiff’s appeal and D3’s application) the plaintiff invites the court for a ruling in its favour based on the original pleading, as in Form 2.  Should the plaintiff be unsuccessful on the basis of the Form 2 it invites the court to re-grant leave to serve the Amended Statement of Claim on D2 and D3 by way of substituted service on their Hong Kong solicitors.

9. Mr Paul Carolan’s (counsel for D2 and D3) first submission is that D1’s admission that it was the employer deals a fatal blow to the plaintiff’s alternative pleas against D2 and D3 and therefore they cannot be proper or necessary parties to be included in this litigation by virtue of Order 11 rule 1(1)(c).  If, he submits, the plaintiff says, “A is my employer but if A is not my employer then B is my employer” and A says, “I admit that I am your employer”, the plaintiff cannot continue to claim that his employer may be B.

10. Mr John Scott, SC leading Mr William Wong for the plaintiff submits that D1’s admission of employment is an irrelevance in this appeal.

11. I agree.  The first issue is a narrow one, namely does the plaintiff’s case against D2 and/or D3 come within Order 11 rule 1(1)(c).  I am satisfied that even on the original Form 2 alternative plea, it does.  I do not think that the plaintiff is bound by D1’s admission to the extent that he is thereafter barred from continuing the action against D2 and/or D3.  The notes to Order 11 rule 1 state :

“	… a person may be a ‘proper’ party when the liability of several persons whether cumulative or alternative or both, depends on one investigation.”

12. I accept that the threshold that the plaintiff must meet to persuade the court that D2 and D3 are “proper or necessary” parties is not a low one.  It must demonstrate a good arguable case.  In my judgment this threshold has been reached.  As a result of considerable legal research an abundance of authority has been included in the plaintiff’s written arguments.  Mr Carolan has ably endeavoured to distinguish and counter-argue.  I do not propose, on this interlocutory application, to rehearse the submissions and analyses of each and every authority.

13. Having considered the arguments I am content that the position is as advanced by Mr Scott.  Where a plaintiff has alternative claims against different defendants he can sue both in the same proceedings and has a right to postpone election until judgment.  This may affect the ultimate costs order but that is a matter for the plaintiff.  By the same token, Order 15 rule 6(2)(b) permits the adding of a new defendant as an alternative employer to the original defendant provided it was “necessary for the complete and effectual determination of the matters in dispute”.  In the present case a dispute remains as to the true identity of the plaintiff’s employer regardless of D1’s admission.  Whilst that dispute remains nothing turns on whether the plea is in the alternative or joint.

14. A key flaw in the defendants’ argument is the premise that an alternative plea can only be considered after the failure of the primary plea.  Thus, it is submitted that if the primary plea cannot fail (because of D1’s admission) the “secondary” or “alternative” plea will never surface.  I do not agree.  Alternative pleas may be advanced in parallel.  The alternative is not necessarily “secondary”.  It need not always be a fall back position.  In my judgment this must be right because D1’s admission does not bind the plaintiff.  If it were otherwise strong defendants would encourage a weak defendant to be sacrificed at trial so as to enable the remaining defendants to escape liability.

15. In a sense all of the above may be academic.  Should I be in error and should the original Form 2 “alternative” plea, taken together with D1’s admission, mean that D2 and D3 fall outside Order 11 rule 1(1)(c) I can see no objection to exercising my discretion to accede to the plaintiff’s fall back request to re-grant leave to serve the Amended Statement of Claim by way of substituted service to the defendants’ solicitor.  Should it be necessary I would grant such leave.

A serious question to be tried?

16. Under this test the plaintiff must demonstrate that it has a reasonable prospect of success.  The court should avoid a “prolonged debate” about the merits of the plaintiff’s case when resolving this issue.

17. Not surprisingly, in respect of both D2 and D3 there are arguments to be made on both sides.  For example, against the plaintiff it will be strongly prayed in aid that D1 was the plaintiff’s paymaster at all times.  However, at this stage it is sufficient to note the indicia pointing for or against employment rather than to evaluate them.  Factors which may point to a contract of employment would include : the degree of control exercised over the plaintiff, the power of dismissal, the involvement in the appointment process and the plaintiff’s own belief. 

18. In relation to D2 the plaintiff points to no fewer than twelve factors in support.  None are frivolous.  I shall record merely three of them :

(i)	The plaintiff has written notes of the meeting in Amsterdam when he was appointed in 1999 plus evidence that the notes were circulated to the defendants. They support a significant involvement of D2 and D3 in the appointment process.
(ii)	There is evidence to show that the plaintiff was responsible for the whole North Asia and New Zealand region and was merely “posted” to Hong Kong for geographical convenience.  One of the several subsidiaries within that region was D1 and as a matter of convenience it was D1 who paid him.
(iii)	There is evidence that the plaintiff’s contract of employment was terminated by D2.

19. Taken together, the above and other factors relied on by the plaintiff point clearly to a serious question to be tried.

20. With regard to D3 there is a considerable overlap of the evidence.  D3 was the major party at the 1999 Amsterdam meeting.  He was also the person to whom the plaintiff’s performance reports were sent.  D3 exercised control over the plaintiff, particularly with regard to directing him, from time to time, where to go within the region for which he was responsible.

21. D3 also authorised a number of financial transactions directly involving the plaintiff, including personal loans and bonuses. 

22. Once the court is satisfied that sufficient indicia are present for there to be a serious question to be tried, further analysis is inappropriate.

23. The issues concerning (a) the plaintiff’s appeal and (b) D3’s application are substantially the same.  I have dealt with them together.

24. The authorities considered on the issue of whether D2 and/or 3^rd defendant are “proper or necessary” parties included Inchape JDH Ltd v. Baltrans Exhibition & Removal [1997] HKLRD at page 1283 et seq., Lief Christense v. Regent Ken International Limited, HCA6011/1996, Wong Kam Lee v. Shimizu [1997] 1 HKC at page 71, Peter v. Moloney (1957) 84 C.L.R. at page 102, Tang v. Capacious Investments [1996] 1 HKC at page 407, and Agip (Africa) Ltd v. Jackson [1990] Ch. 265 at page 284.

25. On the “serious question to be tried” issue, assistance was gleaned from      Seaconsar Far East Limited v. Bank Markazi Jomhouri Islami Iran [1994] AC 438 and      Cheung Yuen v. The Royal Hong Kong Golf Club, CACV146/1996.

26. I allow the plaintiff’s appeal with a costs order nisi here and below to the plaintiff.  D3’s summons is dismissed with costs.