WONG CHI CHING v. BOCOM INTERNATIONAL HOLDINGS CO LTD

HCA 362/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 362 OF 2014

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JUDGMENT
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Introduction

1. The present application was taken out by the defendant (“D”) to strike out the claim of the plaintiff (“P”) set out in her statement of claim and to dismiss the present action.

2. P was D’s employee from 19 April 2004 to 4 December 2008.  In the present action, she was claiming among other things that D had in breach of implied terms of the contract of employment and/or its duty of care owed to P, employed two individuals, namely a Mr Wan (“Wan”) as Managing Director, and a Ms Au (“Au”) as a Principal engaged in sponsorship, which resulted in P losing the bonus that she would have earned from various projects but for D’s breaches.

Background

3. P and D had entered into two employment contracts.

4. The first employment contract was made on about 23 March 2004 (“1^st Contract”) and terminated by agreement with effect from 1 March 2006, under which P was employed as the Deputy Manager of the Equity Capital Markets Department (“ECM Department”) with a basic salary of HK$33,000 per month and other benefits, including a bonus for the relevant year calculated in accordance with the formula set out in Annex 1 to that contract. 

5. It was not disputed that pursuant to the 1^st Contract, D had paid P the following bonuses:

(i) A sum of HK$21,000 for the year ending 2004;

(ii) A sum of HK$500,000 for the year ending 2005.

6. The second employment contract was made on about 25 May 2006 with effect from 1 March 2006 (“2^nd Contract”).

7. It was D’s case that in early 2006, in order to strengthen its competitiveness in the corporate finance industry, it decided to combine its ECM Department with its Corporate Finance Department into a new department known as the Investment Banking Department (“IB Department”) and consequently, the parties entered into the 2^nd Employment Contract.  Under the 2^nd Contract, P was stated to be employed as a Deputy Manager of ECM Department with a basic salary of HK$45,000 per month.

8. Clause 5 of the 2^nd Contract provided for the distribution of bonuses which would depend on the departmental performance after the end of a year, and if the employee resigned before the distribution of the bonus or dismissed immediately, the employee would not be paid any bonus.

9. Pursuant to the 2^nd Contract, D had paid to P following bonuses:

(i) A sum of HK$405,000, said to be discretionary bonus for the year ending 2006;

(ii) A sum of HK$1,100,000, said to be discretionary bonus for the year ending 2007.

10. According to D, as a result of substantial loss suffered by the IB Department in the year 2008, after taking into account all the relevant factors, D exercised its discretion not to pay any bonus to P for that year. Further, D terminated P’s 2^nd Employment Contract by a letter dated 4 December 2008[1], with effect from 5 December 2008, by reason of redundancy (“Termination Letter”).

11. Further, D had issued a letter dated 10 December 2008 to P stating the final payments payable to P arising from the termination of her employment (“Settlement Letter”)[2], which had been countersigned by P.

HCA 1494/2012(“1^st HCA”)

12. Notwithstanding signing the Settlement Letter, on 30 December 2010, P filed a claim in the Labour Tribunal against D for alleged outstanding balance of bonus payments under the 1^st and 2^nd Contracts for the years ending 2004, 2005, 2006, and 2008, in the total sum of about HK$3,964,146.03 (“LT Claim”).  D later filed its defence to P’s LT Claim (“LT Defence”). 

13. On 18 January 2011, D applied for the transfer of the LT Claim to the High Court under section 10 of the Labour Tribunal Ordinance Cap 25 (“LTO”) based on grounds including that the action involved complicated legal issues and expert evidence[3]. P had filed written submissions for opposition on 20 January 2011[4], which was followed by D’s response filed on 13 May 2011[5].  Subsequently, on 30 May 2012, the Presiding Officer of the Labour Tribunal made an order of transfer and the LT Claim became the 1^st HCA on 21 August 2012. 

14. Directions were then given for the filing of proper pleadings. P claimed, among other things, in her amended statement of claim filed on 2 January 2013 in the 1^st HCA (“1^st ASOC”), a total of about HK$4,002,708.77 being the alleged outstanding balance of bonus payments for the years ending 2004, 2005, 2006 and 2008 under the 1^st and the 2^nd Contracts.

15. After P filed her 1^st ASOC, D filed its defence (“1^st Defence”) on 8 February 2013, and on the same day a notice of sanctioned payment was filed.

16. P’s claim in the 1^st HCA was settled on 7 March 2013 by P accepting the sanctioned payment of HK$1,800,000.

HCA 362/2014 (“2^nd HCA”)

17. About 6 months later, on 16 November 2013, P’s solicitors wrote to D seeking damages for the loss of bonus which she claimed she would have earned under the 1^st and 2^nd Contracts had it not been D’s employment of Wan and Au.  The amount of damages claimed in this letter was HK$5,381,818[6].

18. D denied the claims.  P eventually issued the writ in the 2^nd HCA action on 4 March 2014, and her statement of claim was filed on 7 May 2014 (“2^nd SOC”).  D issued the present summons on 23 July 2014 under Order 18 rule 19(1) (b) and (d) of the Rules of the High Court and the court’s inherent jurisdiction (“O18 Summons”).

General principles on striking out

19. Order 18 rule 19 of RHC states as follows:

“(1) The Court may, either of its own motion or on application, at any stage of the proceedings order to be struck out or amended any pleading or the indorsement of any writ in the action, or anything in any pleading or in the indorsement, on the ground that-

(a) it discloses no reasonable cause of action or defence, as the case may be; or

(b) it is scandalous, frivolous or vexatious; or

(c) it may prejudice, embarrass of delay the fair trial of the action; or

(d) it is otherwise an abuse of the process of the court;

and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.”

20. D’s Counsel Mr Anthony Chan had summarized the general principles on striking out as follows:

(1) The burden is on the party seeking to strike out the pleading to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail[7];

(2) A proceeding is frivolous when it is not capable of reasoned argument, without foundation or where it cannot possibly succeed. A proceeding is vexatious when it is oppressive or lacks bona fides.  The expression “frivolous or vexatious” includes proceedings which are an abuse of the process[8]. 

(3) An “abuse of the process of the Court” connotes that the process of the Court must be used bona fide and properly and must not be abused.  The Court will prevent the improper use of its machinery, and will, in a proper case (eg where an action is absolutely groundless, where the claim is time-barred) summarily prevent its machinery from being used as a means of vexation and oppression in the process of litigation[9].

(4) The court has inherent jurisdiction to stay all proceedings before it which are obviously frivolous or vexatious.  The inherent jurisdiction is preserved by section 16(3) of the High Court Ordinance (Cap 4) and is separate to that which exists under Order 18 rule 19 – the two may be invoked cumulatively or alternatively.  In pursuance of its inherent jurisdiction, the court may strike out part of an indorsement of a writ, or will stay, or dismiss before the hearing, actions which it holds to be frivolous or vexatious or strike out a statement of claim and remove from its files any matter improperly placed thereon[10].

(5) Where the court comes to the conclusion after full argument that the case is plainly and obviously unsustainable, the court should not decline to strike it out just because the issues are difficult or complicated, see: Byjoy Ltd v Thorogood Estates Ltd [1985] 2 HKC 746[11].  There is a public interest element in seeing an otherwise lengthy and costly trial which will take up substantial judicial resources simplified, if not resolved, even if difficult questions of law may be involved, provided it is proper to do so, see: Guang Xin Enterprises Ltd v Kwan Wong Tan & Fong [2002] 2 HKLRD 319[12].

21. There was no dispute by P’s Counsel Mr Paul Leung on the above general principles.

D’s Grounds

22. There were 4 grounds put forward on behalf of D, namely:

(i) P’s present claim in the 2^nd HCA fell within the jurisdiction of the Labour Tribunal and this court had no jurisdiction in relation to P’s claim (Ground I);

(ii) P’s present claim constituted an abuse of process as the purported claim could and should have been raised by P in earlier proceedings (Ground II);

(iii) P was in any event not entitled to pursue the present action by virtue of her prior agreement to waive and release D from all her claims except her medical claim during the notice period (Ground III);

(iv) P’s claim was also liable to be struck out on the basis that it was out of time (Ground IV).

Ground I – Jurisdiction

23. The relevant provisions of the LTO are sections 7(1) and (2), sections 10(1) and (2) and the Schedule thereof.

24. Section 7(1) states that the tribunal shall have jurisdiction to inquire into, hear and determine the claims specified in the Schedule. 

25. Section 7(2) then provides that save as is provided in the LTO, no claim within the jurisdiction of the tribunal shall be actionable in any court in Hong Kong.

26. Further, under section 10(1), the tribunal may, at any stage of proceedings, if it is of the opinion that for any reason the claim should not be heard and determined by it, decline jurisdiction.  Then section 10(2) states that the tribunal may, when it declines jurisdiction under subsection (1), transfer the claim to the Court of First Instance, the District Court or the Small Claims Tribunal, in such manner as may be prescribed.

27. The Schedule of the LTO sets out the claims which the tribunal shall have jurisdiction to inquire into, hear and determine, and under paragraph 1, such includes a claim for a sum of money which arises from the breach of a term of a contract of employment, the breach of a term of a contract of apprenticeship or the failure of a person to comply with the provisions of the Employment Ordinance, the Minimum Wage Ordinance or the Apprenticeship Ordinance, and under paragraph 2, a claim for contribution under section 26(2) of LTO.

28. Then paragraph 3 of the Schedule provides that:

“Notwithstanding paragraphs 1 and 2, the tribunal shall not have jurisdiction to hear and determine a claim for a sum of money, 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.”

29. P’s Counsel, Mr Paul HM Leung, submitted that the 2^nd HCA was founded in tort. 

30. Both Counsel had referred this court to Endozo Maylin Palomar and Lee Chi Ming [2014] 4HKLRD 470. This was a case where the plaintiff, a domestic helper, had lodged a claim against her employer the defendant in the Labour Tribunal for arrears of wages, wages in lieu of notice, travel expenses and damages for breach of trust and confidence by the defendant for making false accusations against her.  The parties then reached a compromise of the plaintiff’s claims.

31. The plaintiff later issued a High Court action against the defendants based on the tort of malicious prosecution and breach of contract, and the defendant applied to strike out the plaintiff’s claim under Order 18 rule 19.  The application was dismissed by the Master, and the defendant appealed.  On appeal, Deputy High Court Judge Mayo, as he then was, ordered that the plaintiff’s claim be struck out. 

32. On appeal by the plaintiff, the Court of Appeal reversed the decision of DHCJ Mayo, and held that, among other things, (1) the case was not a plain and obvious case for striking out the claim, in that the defendant had not been vexed by the plaintiff’s claim in tort for malicious prosecution which had not been raised before; (2) further, unlike in a tort claim based on malicious prosecution, for a breach of contract of employment, non-pecuniary damages were not recoverable for mental distress arising from injury to reputation or feelings resulting from being prosecuted and/or loss of liberty, even where there was breach of the implied term of trust and confidence; (3) the compromise could only be properly construed as a compromise of the Labour Tribunal contractual claim, even if not specified as such, and it could not be an abuse for the plaintiff to raise her tort claim in the subsequent action[13]. 

33. As Cheung JA had said that it was true that the tort claim and the earlier contractual claim were based on the same factual background but to rely on this to mount a case of abuse would be a mechanistic approach without considering, at the same time, the different causes of action and relief and the restricted jurisdiction of the Labour Tribunal where the compromise was reached[14].

34. Mr Leung had also referred to the judgment of Deputy District Judge Kent Yee, as he then was in Pathak Ravidutt and Sanjeev Maheshwari, unrep, DCCJ 3031/2009, 04.05.10.  In that case, the plaintiff filed a claim with the Labour Tribunal against the defendant arising out of his employment contract with defendant as a domestic helper.  He had set out all his complaints whilst expressly reserving all his rights to claim damages and other relief against the defendant in future.  The parties settled the claim but with express reservation of the plaintiff’s right to make claims against the defendant in the future.  The plaintiff later made a 2^nd claim in the Labour Tribunal which was subsequently transferred to the District Court. The issue was whether the 2^nd claim was an abuse of process.

35. The plaintiff’s 2^nd claim was based on the defendant’s false representations, and that there was an oral employment contract between the parties in addition to the written employment contract as a domestic helper upon which the plaintiff based on in his 1^st claim.  It was held that the defendant failed to discharge the onus to show a clear and plain case that the 2^nd claim was an abuse of process and his application under Order 18 rule 19 was dismissed.

36. Another case which Mr Leung had referred this court to was Spring and Guardian Assurance Plc and Others [1995] 2 AC 296.  The plaintiff in this case was an appointed company representative of the 1^st defendants for the purpose of selling their investment products was dismissed.  The plaintiff then sought to sell the products of another company which requested from the 1^st defendants a reference for the plaintiff.  In consequence of the unfavourable reference, the other company refused to appoint the plaintiff, who then sued the defendants.  It was held by the judge at first instance that the defendants had been under a duty of care to the plaintiff and that the reference given had constituted a negligent misstatement and that the defendants were accordingly liable to the plaintiff in negligence, but he dismissed the plaintiff’s claims based on malicious falsehood and breach of contract.

37. The Court of Appeal allowed an appeal by the defendants and dismissed a cross-appeal by the plaintiff.  The plaintiff then appealed to the then House of Lords on issues of negligence and breach of contract, and the appeal was allowed by 4 out of the 5 Lord Justices.

38. The central issue in the appeal in Spring was whether a person who provided a reference in respect of another who was formerly engaged by him as a member of his staff could be liable in damages to that other in respect of economic loss suffered by him by reason of negligence in the preparation of the reference[15]. 

39. Lord Goff of Chiveley in giving his judgment in Spring had quoted passages of Lord Morris of Borth-y-Gest and Lord Devlin from Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465[16].  Lord Goff then went on to say as follows:

“Where the relationship between the parties is that of employer and employee, the duty of care could be expressed as arising from an implied term of the contract of employment. … But in the present case this adds nothing to the duty of care which arises under the Hedley Byrne principle, and so may be applicable as a tortious duty, either where there is no contract between the parties, or concurrently with a contractual duty to the same effect[17].”

40. Lord Woolf had in the Spring case had also indicated that it was possible to approach the appeal as being primarily one involving a contractual issue[18]. 

41. The facts in Spring were different from the present case and concerned a letter of reference.  As I understand from what was said above, the duty of care in connection with the letter of reference in that case arose under the Hedley Byrne principle but could also have been expressed as arising from an implied term of the contract of employment, and could be approached as a contractual issue.

42. Mr Chan had referred to Glock (HK) Ltd v Brauner [2007] 2 HKLRD 852, Citipost (Asia) Ltd v Julian Robert Holliday, unrep, CACV 111/2004, 03.02.05, and Kao, Lee & Yip v Lau Wing, unrep, HCA 1854/2005, 07.03.06, and submitted that the approach to be adopted when considering whether a claim would fall within the jurisdiction of Labour Tribunal would be to look at the reality of the dispute stripped of the technicalities employed in the pleadings, and that the reality of P’s claim in the 2^nd HCA was for bonus which she asserted she would be contractually entitled to under the 1^st and 2^nd Contracts.

43. That the court should look at the reality of the claim was not disputed by Mr Leung, but he submitted that there had not been any “window dressing” on the part of P as alleged by Mr Chan.

44. In P’s 2^nd SOC, she referred to and relied on certain provisions in the “Management, Supervision and Internal Control Guidelines” published by the Securities and Futures Commission (SFC) under section 169 of the Securities and Futures Ordinance (SFO) in April 2003, the “Fit and Proper Guidelines” published by the Commission under section 399 of the SFO, and the “Sponsor Guidelines” published by the Commission under section 399 of the SFO in September 2006 (collectively “Guidelines”) which she had set out in detail in 9 paragraphs[19].

45. P then pleaded that it was an implied term of the 1^st Contract and the 2^nd Contract that D would not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between P and D[20] (“Contractual Trust and Confidence Claim”).  P further went on to plead that at all material times, D owed a duty to P to exercise due care and skill to employ fit and proper persons, and that in discharging its duty of care towards P, D had to act in compliance with, among other things, the Guidelines[21] (“Breach of Duty Claim”).

46. P had set out the particulars of D’s breach of the implied terms and/or its duty of care.

47. As had been pointed out by Cheung JA in the above Endozocase, a claim for damages for breach of trust and confidence, which although unliquidated, was, nonetheless, a claim based on an employment contract[22].  Further, as said by Rogers VP in the Citipost case, it would be wrong to interpolate into the Schedule of the LTO that the claim must be for a liquidated amount[23].  There was no real dispute by Mr Leung that   P’s Contractual Trust and Confidence Claim was a claim based on contract.  In my view, this part of P’s claim in her 2^nd SOC fell within the exclusive jurisdiction of the Labour Tribunal.

48. Mr Leung had submitted that the 2^nd HCA was in essence a Breach of Duty Claim, and that such as in personal injury cases, when an accident happened by the employer failing to provide a safe system of work, an injured employee would have a claim against the employer for negligence.  Further, although P had pleaded breach of implied terms, her claim was founded in tort, and was a very different claim from the 1^st HCA. 

49. However, in the present case, P’s allegation of the Breach of Duty Claim was based on the same set of facts used to ground her Contractual Trust and Confidence Claim, namely D had appointed Wan as a Managing Director and Au as a principal, and in doing so, had failed to ensure that D would only employ persons who were fit and proper to perform the duties for which they were employed, had failed to ensure D would only employ person who were duly registered with SFC, and had failed to ensure that D would only employ persons who had the ability to carry on the regulated activity competently, honestly and fairly.  The nature and amount of damages, namely the calculation of bonuses, claimed under the two claims were also identical.

50. The Breach of Duty Claim was pleaded as an alternative to the breach of implied terms for the Contractual Trust and Confidence Claim.

51. In my view, any duty of care as alleged by P in reality arose out of implied terms of P’s contract of employment. 

52. In any event, having considered the pleadings in the 2^nd SOC, I am of the view that there was in reality no practical difference between the two claims and any judgment given in favour of P in respect of the Contractual Trust and Confidence Claim would fully satisfy her Breach of Duty Claim, and I accept Mr Chan’s submission that P’s latter claim was no more than “window dressing”.

53. In the above circumstances, the Breach of Duty Claim, being in reality a contractual claim, should also fall within section 1(a) of the Schedule to LTO and the exclusive jurisdiction of the Labour Tribunal, and accordingly, P’s 2^nd HCA or the present action, which was wrongly issued in the High Court, should be struck out .

54. In the event that I am wrong in relation to the Breach of Duty Claim being in fact contractual and only “dressed up” as tortious, I will also consider the other grounds put forward by D.

Ground II –Abuse of Process

General Legal Principles

55. Mr Chan had referred to res judicata in the wider sense (or the Henderson v Henderson abuse).  He had also referred to what was said by Auld LJ in Bradford & Bingley Building Society v Seddon [1999] 1 WLR 1482[24], what was said by Lord Bingham[25] and Lord Millet[26] in Johnson v Gore Wood & Co [2002] 2 Ac 1, and also what was said by Ma CJHC as he then was[27] in Chiang Lily v Secretary for Justice [2009] 6 HKC 234.

56. As seen from the above cases, the correct approach is for the court to make a broad, merit-based judgment which takes account of all the facts of the case and focusing on the crucial question of whether, in all the circumstances, a party is abusing the process of the court and causing unjust harassment to the other party by seeking to raise issues which could have been raised before.

57. As Ma CJ had said in Ko Hong Yue v Chiu Pik Yuk (2012) 15 HKCFAR 72, the essence of the doctrine is that “a party ought generally not be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings”[28].

58. There was no dispute about the above general legal principles.

Whether P’s claim/s could have brought have been brought in earlier proceedings

59. It was Mr Chan’s submission that first of all P could have included both the Contractual Trust and Confidence Claim and the Breach of Duty Claim in her LT Claim, as the factual matrix upon which those claims were grounded was exactly the same that relied on to ground her claim for outstanding bonus made in her LT Claim, but she did not do so nor did she explain why she had failed to do so.

60. Mr Leung submitted that ‘common factual matrix’ would not be a material factor, nor did P had knowledge of all the relevant facts giving rise to the 2^nd HCA at the time when she took out the LT Claim. Further, D was not being vexed twice to re-litigate the dispute concerning its alleged breach in failing to pay P the bonuses under her 2 employment contracts, in that her claim in 2^nd HCA was clearly different, and was about the loss of a chance of earning more bonuses caused by breach of duty of care by D in hiring Wan and Au at the material time.

61. It was not quite clear as to what “relevant facts giving rise to the 2^nd HCA” Mr Leung was referring to in his submission of which P had no knowledge.  P had filed only one affirmation to oppose D’s O18 Summons, and it mainly set out the background leading to the compromise in the 1^st HCA, and stating merely that she was advised by her legal advisers that the causes of action in the 2^nd HCA were different from those in the 1^st HCA. 

62. According to P, Wan was appointed D’s Managing Director in April 2007, and Au was appointed a Principal in or about 2007.  It seemed that both these appointments took place long before 4 December 2008, the date of the Termination Letter.  Further, it was not disputed that a sum of HK$1,100,000 was paid to P as discretionary bonus for the year ending 2007 and there was no complaint by P in relation to the 2007 bonus.

63. It was not clear as to when P found out about the allegations she made concerning Wan, and in any event the alleged improper release of confidential information by Wan to the press was in late 2007 or early 2008, which was again some time before the Termination Letter.  There was no explanation from P as to why she could not have brought the Contractual Trust and Confidence Claim in her 1^st LT Claim, or in the 1^st HCA.

64. Even if the Breach of Duty Claim was separate and distinct from the Contractual Trust and Confidence Claim, and that it was a claim founded in tort, Mr Chan submitted that P could have taken the following steps:

(i) brought the Breach of Duty Claim in earlier proceedings, namely by commencing a fresh High Court action based on such claim and applied for that action to be consolidated or heard together with the 1^st HCA ;

(ii) raised the Breach of Duty Claim in the 1^st HCA by including such claim in her LT Claim, notwithstanding such claim fell outside the jurisdiction of earlier proceedings, as the Labour Tribunal could exercise its discretion under sections 10(1) and (2) of the LTO to decline jurisdiction and transfer the LT Claim to the High Court ;

(iii) raised the Breach of Duty Claim in the 1^st HCA, after the LT Claim had been transferred up by applying for directions to include the Breach of Duty Claim in her 1^st SOC.

65. Mr Leung, however, referred this court to Yu Hoi Po v Act International Ltd [1996] 4 HKC 377 where in proceedings in the Labour Tribunal, the plaintiff claimed arrears of salary, salary in lieu, payment for annual leave and other unpaid benefits.  The claim was subsequently transferred to the High Court under section 10(2) of the LTO.  Although no specific reasons appeared for the decision to decline jurisdiction, it could may well have been because of the nature and amount of the claims against the employer and because some mention was made about other claims involving the parties.

66. After the transfer, the plaintiff applied to add 4 defendants and her application was dismissed.  The plaintiff appealed against this decision on the basis that the court had power to join parties to an action transferred from the Labour Tribunal.

67. There were a number of causes of action set out in the amended statement of claim included a claim for damages against the 1^st defendant for ‘stress and worry’, and other somewhat convoluted and complex claims against other defendants, as well as a claim in partnership for a share of profits, some of them pleaded in the alternative.

68. Seagroatt J had said that it could well be that after transfer to the High Court it was revealed that some other party was in fact the employer, eg a holding company, or a subsidiary company, or a partnership rather than a corporation, or there was a lack of certainty which could be resolved only by adding a party, but what the plaintiff had sought to do in that case was to use the Labour Tribunal application on which to litigate a multiplicity of claims against a variety of entities.

69. The appeal by the plaintiff was dismissed by Seagroatt J who held that when section 10 of the LTO was invoked to transfer a claim to the High Court, it was a transfer of jurisdiction, and the claim itself remained confined to that which the tribunal had jurisdiction to entertain in the first place, and that Order 15 rule 4 (joinder of parties) covered the position in which the plaintiff sought to join one or more defendants where there was some common question of law of fact, such as where there was uncertainty as to who was the actual employer, and that it did not in his view exist to enable a claimant to widen his action into something over which the Labour Tribunal could not have jurisdiction originally, and the plaintiff’s remedy was to commence an action or actions in the High Court which was the proper venue for such claims.

70. Mr Chan referred this court to Dataprep (HK) Limited and Kuo Chi yung Peter [1996] 4HKC 378 CACV 16 of 1974, the presiding officer exercised his power under section 10 of the LTO and transferred the claim of the claimant Kuo to the then Supreme Court when Dataprep indicated it wished to file a counterclaim.  In ordering the transfer, the presiding officer also took into consideration that the claim was for a large sum of money and that the summary of facts tended to show that part of the claim arose more than six months before the claim was filed.  In such claims the tribunal had no jurisdiction save in special circumstances.  (This limitation on the jurisdiction of the Tribunal was contained in section 9(1) of the LTO which had since been repealed).

71. The appeal before the then Full Court, consisting of Briggs CJ, Huggins and Pickering JJ, concerned the transfer order.

72. Mr Chan had quoted a passage from what was said by Huggins J, as he then was, in his dissenting judgment, that he did not agree that before a tribunal could ‘decline’ jurisdiction, it must have the jurisdiction which it declined, and he had further said that he saw no reason why a claim brought bona fide in the tribunal but which after enquiry the tribunal thought it had no jurisdiction to hear and determine should not be transferred under s 10[29].

73. Even though what was said above by the then Huggins J was said by way of dicta,Briggs CJ had agreed with the other two members and had said in his view any tribunal or court would have an inherent power to decide whether or not it had jurisdiction.  It was held by the majority of the Full Court a court or tribunal had an inherent power to decide whether or not it had jurisdiction, and it was not a prerequisite of an order of transfer that the tribunal must have jurisdiction to hear and determine the case transferred[30].

74. In light of the above, Mr Chan submitted that Yu Hoi Po  was wrongly decided and should not be followed, and further submitted that it would be contrary to the current emphasis on efficiency, economy and proportionality on conduct of litigation in the CJR era to mandatorily require a plaintiff, who had his claim transferred from the Labour Tribunal to the High Court but wished to litigate other related claims not falling within the jurisdiction of the tribunal, to commence a fresh action and then apply for that action to be consolidated or heard together with his transferred claim.

75. Mr Leung, however, pointed out that a number of authorities had been referred to Seagroatt J in the Yu Hoi Po case, including the Dataprep case, who had said it was common ground that that those authorities did not bear on the real issue[31].

76. Yu Hoi Po was an appeal in relation to joinder of other entities/parties.  It was not quite clear from the judgment as to the relationship between plaintiff and those defendants which the plaintiff wished to join but it did not appear that those defendants which the plaintiff wished to join were all plaintiff’s employer/s, or that some of the claims against them could be said to be employment related so as they could even be lodged in the Labour Tribunal in the first place, such as the claim in partnership for a share of profits.

77. In my view, what was said and held by Seagroatt J in Yu Hoi Po was in the context of that case.  What Huggins J had said, and agreed by Briggs CJ, in Dataprep was in relation to a claim brought bona fide in the tribunal but which after enquiry the tribunal thought it had no jurisdiction to hear and determine and there was no reason why the claim should then not be transferred under section10. 

78. Anyway, whether a contractual claim or not, there was no explanation from P as to why she could not have taken any of those three steps put forward by Mr Chan.

79. Mr Leung had submitted that the 1^st HCA was short-lived, and that there was in fact not much time for P to even consider issuing a new claim for breach of duty, let alone applying for such a new claim to be consolidated or tried together with the 1^st HCA. 

80. The LT Claim was lodged at the end of December 2010, and it was not until about mid 2012 that it was transferred to the High Court. P’s 1^st ASOC was not filed until the last day of December 2012.  P’s claim in her 1^st ASOC was in relation to shortfalls in bonuses for 2004, 2005, 2006 and 2008.  In particular, she had claimed that in breach of the 2^nd Contract and/or collateral contract, D did not pay her any bonus for the year ending 2008.

81. As mentioned earlier, Wan’s appointment as Managing Director was in April 2007, and Au’s appointment as a Principal was in or about 2007, and thus any alleged damages arising out of the Breach of Duty Claim could only have been after their appointment.  As there was no complaint, nor any claim by P over the bonus she received for 2007[32], any damages allegedly suffered by P would seem to be after end of 2007.

82. According to P’s own case at that time, the ECM Department participated in 26 projects generating income of some HK$10.3m for 2006, and 28 projects generating income of some HK$8m for 2007.  Then, she said the ECM Department made a “huge profit” in 2008[33].  According to her, at the date of the Termination Date, D had not yet received all the income for the projects completed in 2008 but she listed 6 projects with income of a total of HK$6.1m.  Further, according to her own case, that when she was explained on the day she was given the Termination Letter, that D had foreseen the primary market would be inactive in 2009 and that D had decided to close the ECM Department, she herself suggested  substantial salary cut or even a transfer to a sales department[34].

83. She then said after she left D’s employment, she noticed that D kept participating in the equity capital markets actively and acted as a sub-underwriter in the rights issue of HSBC in early 2009, and also acted as underwriters in some initial public offers[35].  She further referred to the Internal Control Guidelines issued by the SFC, pointing out that D must appoint individual staff to take up the ECM job[36].

84. The evidence thus showed at the time of the LT Claim, P’s case seemed quite contrary to her present one, in that the failure for D to pay her a bonus for 2008 was “so perverse that no reasonable employer would have acted that way”, by reason of the “huge profits” in 2008, and the active participation in the equity capital markets and IPOs in early 2009.  

85. Further, the evidence also showed that P certainly had knowledge of the Guidelines at the time of her LT Claim.

86. There was no evidence as from P to why the Breach of Duty Claim could not have raised by P in the LT Claim in December 2010 or raised it in the 1^st HCA by applying for directions when such were given for the filing of pleadings in 2012, or brought it in separate proceedings in the High Court at any time prior to D making a sanctioned payment on 8 February 2013.

87. In my view, both P’s Contractual Trust and Confidence Claim and Breach of Duty Claim could and should have been raised in earlier proceedings by taking one of those steps put forward by Mr Chan, and that D ought not be vexed twice in relation to the bonuses by the 2^nd HCA.

Ground III – P’s prior agreement to waive and release D

88. Ds’ case was that under the Settlement Letter, P had confirmed and agreed that she had no remaining claims other than her medical claim in the notice period against D and agreed to waive and release D from any claims.

89. The Settlement Letter set out the details of P’s “final payments”, namely salary for December 2008, payment in lieu of untaken annual leave, payment in lieu of short notice, severance payment and contributions to MPF.  It was stated in the last paragraph of the Settlement Letter as follows:

“Please signify your confirmation and acceptance by signing and returning the duplicate copy of this letter. You should note that the compensation package outlined above is that to which you are contractually and statutorily entitled. You should confirm that you have no remaining claims against the Company and agree to waive and release the Company from any claims.”[37]

(“Waiver/Release”)

90. P had hand written and inserted the words “other than my medical claim in the notice period” after the words “no remaining claims” in the above paragraph, before she signed indicating agreement and acceptance. 

91. D’s case was that P was not entitled to bring the 2^nd HCA against D due to the compromise and the Waver/Release.

92. Mr Leung, however, submitted that D’s conduct in dealing with the LT Claim and the 1^st HCA spoke volume of the credibility of P’s evidence, and that if the alleged representations had not been made, it would take a “highly uncommercial and unrealistic employer” to entertain P’s claim for outstanding bonuses, let alone to actually make a sanctioned payment.

93. I accept that in the LT Claim, the issue of the compromise in the Settlement Letter was not raised in D’s LT Defence signed by its then Human Resources Director Ms Stephanie Yu (“Yu”).  Neither P nor D’s former General Manager Liu Qiang (“Liu”) mentioned about the Settlement Letter in their respective witness statements. 

94. The compromise and the Waiver/Release seemed to have been only raised in the 1^st Defence in the 1^st HCA, but the 1^st HCA was settled shortly thereafter.

95. P had said in her affirmation by saying that (a) before signing the Settlement Letter, she was told by Yu that the Settlement Letter was not intended to cover P’s claim concerning outstanding bonus and (b) relying on what Yu had told her, she had amended the letter as she did before signing it.

96. Mr Leung submitted that the approach on an application for striking out would be to take disputed facts in favour of P, and that there was no evidence from D expressly disputing the representations alleged by P to have been made by Yu, and Yu had not made any affirmation in reply to P’s affirmation.

97. However, as pointed out by Mr Chan, even in a strike out application, the court had to consider the affidavit evidence against contemporaneous documents, inherent implausibility and other compelling evidence.

98. P had in her affirmation referred to two emails she had sent to Yu on 22 and 30 December 2008 demanding her outstanding bonuses[38]. She, however, did not produce these emails.

99. P went on to say that on 31 December 2008, Yu called her and told her the final payments had been paid into her account and requested her to go to D’s office to sign the acknowledgment of receipt[39].  P then stated that the Settlement Letter was in fact presented to her by Yu on 2 January 2009, and was back-dated to 10 December 2008[40], and that P’s account was credited with HK$140,141.26.  She said she had enquired about the outstanding bonus, and Yu told her that the outstanding bonuses would be discussed separately[41].

100. Thus, from her own evidence, P clearly knew the amount credited into her bank account was only the amount stated in the Settlement Letter, and did not include her medical claim, nor any alleged outstanding bonuses.  It would appear that she had read the Settlement Letter in detail, since there were other hand written insertions by her under the heading “Company Property”. 

101. Yet, she only inserted in the exception regarding her medical claim, and there was no mention of the bonuses.

102. P had given her personal background in her LT Claim.  She was highly educated, having graduated from University of San Francisco in the United States with a Master Degree in Financial Economics.  What she now said about oral pre-signing representations and/or discussions and/or negotiations would not seem credible and sustainable or inherently plausible.

103. Mr Chan had also submitted that the court should disregard P’s extrinsic evidence as such was inadmissible, in that it contravened the parole evidence rule, or it concerned pre-contractual negotiations.  I accept Mr Chan’s submissions in this regard.

104. In any event, having considered the terms of the Settlement Letter, I am of the view that the objective and plain meaning of the words is clear and that apart from her medical claim in the notice period, she had agreed to waive and release any D “from any claims”.

Ground IV – whether P’s claim time barred

105. D’s case was that as P’s claim was in reality a contractual claim for bonus, which she said she was entitled to under the 1^st and 2^nd Contracts, and that for contractual claims, the right of action accrued and the limitation period began to run as soon as there was a breach of contract.

106. As D’s appointment of Wan as Managing Director and Au as a Principal was respectively in April 2007 and in or about 2007, by 4 March 2014 when P issued the 2^nd HCA, more than 6 years had elapsed.  P’s claim was thus time barred under section 4(1) (a) of the Limitation Ordinance.

107. Mr Leung submitted that as P’s claim was founded in tort and that time only began to run against a claimant when damage was suffered and not when Wan or Au were hired, and that it was far from clear from the pleadings as to when loss was suffered by P, and that P’s claims would be time-barred.  It was thus not a clear and obvious case that P’s claim should be struck out.

108. Mr Leung’s submissions were in relation to the Breach of Duty Claim.   

109. As I have come to the view that the Breach of Duty Claim was in reality a contractual claim, the alleged breach of D was clearly over 6 years ago by the time P issued the 2^nd HCA.  In my view, P’s claims were time-barred.

Conclusion

110. In light of what I have said above, I have come to the conclusion that D has discharged its burden in demonstrating a plain and obvious case in which P’s claim is bound to fail and that P’s claim against D as set out in the statement of claim filed on 7 May 2014 should be struck out and that the present action be dismissed.

111. I order that costs of the action and the O 18 Summons be to D, to be taxed if not agreed, with certificate for Counsel.  This is an order nisi, to be made final after 21 days.

112. Lastly, I thank both Counsel for their submissions and assistance to the court.