No

HCSA 6/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS APPEAL NO. 6 OF 2001

(ON APPEAL FROM SMALL CLAIMS NO. 056794 OF 2000)

____________

____________

_______________

J U D G M E N T

_______________

1.  This is an appeal by the defendant from an award of Deputy Adjudicator Mr Fong Ho Yin made on 5 February 2001 in favour of the claimant in the sum of HK$9,633.00 with interest thereon and costs.  The defendant is an employment agency.  The claimant is an Indonesian domestic helper who had sought the assistance of the defendant to obtain a job for her in Hong Kong. 

2.  In this appeal, the defendant relied on two broad grounds.   Firstly, it was argued that there is no cause of action against the defendant on the findings made by the adjudicator.  Leave was given by Dep. J. To to the defendant to bring an appeal on this point of law on 30 March 2001 under section 28(1)(a) of the Small Claims Tribunal Ordinance, Cap.338 and he gave directions that the defendant should serve perfected grounds of appeal within 14 days of his order.  Secondly, it was argued that the claim of the claimant was outside the jurisdiction of the Small Claims Tribunal in that it was within the exclusive jurisdiction of the Labour Tribunal.  The defendant had not sought leave to bring an appeal on this ground, which would have come under section 28(1)(b) of Cap.338.  It was only raised by the defendant’s counsel, Miss Po, in her written submissions served the day before the hearing of the appeal.  I gave leave to the defendant to argue the point on jurisdiction notwithstanding it was raised very late in the day, as jurisdiction is an important matter.  I have also allowed the parties to make further written submissions on this point after the hearing was concluded in view of the insufficient time for counsel on both sides to research fully into the matter. 

The claimant’s claim

3.  In the prescribed form of claim for proceedings in the Small Claims Tribunal, a claimant is required to set out the grounds for the claim and how the amount of the claim is calculated.  The grounds for the claimant’s claim and how the amount claimed was calculated as stated in her claim form filed on 14 November 2000 may be summarised as follows. 

4.  In late 1999, the claimant approached the defendant to introduce a job to her as she was released by her previous employer in October 1999.  She was instructed by the defendant to return to Indonesia first and then come back to Hong Kong, which she did accordingly.  In January 2000, she was introduced by the defendant to work for an employer, one Madam Wong in Quarry Bay, and she did so on a full time basis from then onwards.  The defendant told her to pay an agency fee of HK$10,000.00 for introducing her to this job.  When the claimant received her salary of HK$3,000.00 each month from Madam Wong, she paid HK$2,500.00 to the defendant until she had paid the agency fee in full.  It was only after full payment was made that the defendant assisted her to report to the Immigration Department on 19 June 2000 to process her application.  She was charged with overstaying by the authorities and the case against her was later dropped.  She claimed that she did not know that the agency fee of HK$10,000.00 was illegal in that under the Employment Agency Regulations, Cap.57A (“the Regulations”), the prescribed amount of commission that the defendant could charge was an amount not exceeding a sum being 10% of the first month’s wages received by her from Madam Wong.  She claims the amount of HK$9,633.00 which is the difference between the amount she had paid (i.e. HK$10,000.00) and the amount that the defendant could charge legally (i.e. HK$367.00, being 10% of her first month’s salary of HK$3,670.00).

The possible causes of action

5.  It would be convenient if I consider first the ground of appeal raised by the defendant that there is no cause of action before I deal with the jurisdiction point although it would be logical to rule on the fundamental question of jurisdiction before I decide whether there are valid causes of action.  I do so because the possible causes of action are not entirely straightforward and it is important to see what possible causes of action there are before I turn to the question whether the claim falls within the exclusive jurisdiction of the Labour Tribunal.  Hence, whilst I canvass the possible causes of action, it may be convenient to rule on their validity. 

6.  In the judgment of the adjudicator, he did not identify the cause or causes of action of the claimant when he made her an award in the amount as claimed.  Miss Po made clear that she does not seek to argue that the possible causes of action would have to be stated in the judgment.  However, she contended that on the facts as found by the adjudicator, the claimant has failed to establish a valid cause of action.

7.  Mr Ling for the claimant has contended that there are three possible causes of action:

(1) a claim for restitution based on economic duress;

(2) a claim for restitution based on the fact that the parties were not in pari delicto; and

(3) a claim based on breach of statutory duty.

8.  For ease of reference, I set out the relevant statutory provisions that would have some bearing on the possible causes of action as follows:

Employment Ordinance, Cap.57

“57.  Prohibited acts in respect of employment agencies

A licensee shall not, directly or indirectly –

(a) receive from any person on account of having obtained, or in connection with obtaining or seeking to obtain, employment for that person –

(i) any reward of any kind; or

(ii) any payment or other advantage in respect of expenses or otherwise, except the prescribed commission; …”

“60.  Offences

…

(7)  Any licensee who contravenes any provision of section 57 shall be guilty of an offence and shall be liable on conviction to a fine at level 5.”

“62.  Power to make regulations

The Chief Executive in Council may make regulations for all or any of the following purposes –

…

(h)  prescribing the maximum fees and charges which may be charged and received by an employment agency;…”

Employment Agency Regulations, Cap.57A

“10.  Maximum fees and commission

…

(2)  The maximum commission which may be charged and received by a licensee in connection with the employment of any person shall be that set out in Part II of the Second Schedule.

(3)  A licensee shall cause Part II of the Second Schedule, written both in English and in Chinese characters, to be displayed at all times in a conspicuous position at the place of business of his employment agency.”

“Second Schedule, Part II: Maximum commission which may be received by an employment agency

The maximum commission which may be received by an employment agency shall be –

(a) from each person applying to the employment agency for employment, work or contract or hire of his services, an amount not exceeding a sum equal to ten per cent of the first month’s wages received by such person after he has been placed in employment by the employment agency.”

Economic duress

9.  The elements required to found a restitutionary claim based on economic duress are not in dispute.  It is necessary to establish pressure amounting to compulsion of the will of the victim or the absence of choice, that the pressure exerted was illegitimate, and that such pressure has constituted a significant cause inducing the victim so to act.  What Miss Po took issue with is that the adjudicator has made no finding on the evidence that there was threat or coercion by the defendant that had caused the claimant to pay the HK$10,000.00 charged by the defendant for introducing her to work.  It was submitted by Miss Po that I am not allowed to look at the transcript of proceedings to see if there is any evidence of threat or coercion if the adjudicator has not made any findings on it.  Under section 29(2)(a) of the Small Claims Tribunal Ordinance, on an appeal for which leave is granted under section 28, the Court of First Instance may “draw any inference of fact”.  It is further provided in section 29(2) that the Court of First Instance “may not – (i) reverse or vary any determination made by the tribunal on questions of fact; or (ii) receive further evidence.”  Hence, Miss Po submitted that I may only draw an inference of fact from primary facts, I am not permitted to infer from the evidence, which is not the subject of any finding of fact of the tribunal. 

10.  Where the evidence is conflicting and the tribunal has not made any primary finding of fact, the Court of First Instance is not permitted to look at the evidence and make a finding of its own.  Where the evidence is not controversial or where the tribunal has made a primary finding of fact, the Court of First Instance may draw an inference of fact from such material, if the inference is a proper one to draw in the circumstances. 

11.  In this instance, the adjudicator in his judgment first set out the evidence given by the claimant and her witnesses, then the evidence given by the defendant’s witnesses, then he gave his conclusion and stated that he was of the view the claimant and her witnesses are credible whereas the evidence given by the defendant’s witnesses is not credible.  Whilst the claimant had mentioned a few times in her evidence that she was threatened or coerced by the defendant into making payment, the adjudicator did not expressly say she was threatened or coerced when he recited the claimant’s evidence, which he accepted in the concluding part of his judgment.  I am thus left in doubt if the adjudicator had accepted the claimant’s evidence that the defendant had threatened her expressly.  As there is conflict between the claimant’s evidence and the defendant’s evidence whether she was expressly threatened into making payment, it would not be open to me to draw any inference on this from the claimant’s evidence, as her counsel Mr Ling has invited me to do.

12.  This, however, is not the end of the matter.  For there to be economic duress, the pressure applied does not have to be in the manner of an express threat or coercion.  Pressure for this purpose could take many forms.  If the victim is left with no practical choice but to submit because of the course of action of the other party, this would suffice.  Mr Ling submitted that the lack of practical choice could be inferred from the evidence accepted by the adjudicator.  Firstly, the demand for HK$10,000.00 was grossly excessive, considering that the monthly wages the claimant was to receive were only about HK$3,000.00.  Secondly, the adjudicator did accept the claimant’s evidence that she was told by the defendant that if she did not pay the agency fee, the defendant would not complete the necessary procedure for her to change to another employer.  Thirdly, the demand for payment was made in late 1999 or early 2000, the amount was paid by the claimant in four instalments from February to May 2000.  The adjudicator had accepted the claimant’s evidence that she had made repeated requests to the defendant to complete the necessary procedure after she was employed by Madam Wong, that she had already signed a contract with her employer one month after the commencement of employment, and that it was only after the claimant had made full payment that the defendant’s staff took her to the Immigration Department in June 2000 to make the necessary application. 

13.  In my judgment, in view of the above facts found by the adjudicator, it would be entirely proper to draw the inference that the claimant was presented with no practical choice but to pay the amount as demanded, that the pressure thus applied was illegitimate in that the amount had exceeded the commission prescribed in the Regulations, and that such pressure constituted a significant cause for the claimant to make payment.  On the basis of the above inference, I rule that there is a valid cause of action for restitution based on economic duress.

Not in pari delicto

14.  Where both parties have participated in an illegal transaction, one party may bring a restitutionary claim to recover what he has paid in the transaction if he is able to establish that the parties are not in pari delicto.  One of the categories of cases in which a plaintiff may be able to establish this is where there is oppression by the defendant, as illustrated in Smith v. Cuff (1817) 6 M & S 160.  Another category is where there is statute enacted for the protection of the plaintiff, as was first recognised by Lord Mansfield in Smith v. Bromley (1760) 2 Doug. 696n and applied more recently by the Privy Council in Kiriri Cotton Co. Ltd. v. Dewani [1960] AC 102.  These categories of cases are founded on the principle of exploitation, whether actual or potential, by the defendant of the plaintiff, see “The Principles of the Law of Restitution” by Graham Virgo, 1999 ed., at p.297-299; and “The Law of Restitution” by Goff and Jones, 5^th ed., at p.613, 615-616. 

15.  In this instance, I find there is sufficient evidence of inequality between the parties and the claimant’s conduct in making payment of the agency fee could not be regarded as voluntary for the reasons I have given above.  There was exploitation by the defendant of the claimant’s situation in that the defendant had declined to help her with her application to the authorities until she had paid the amount demanded in full.  There was oppression on the part of the defendant.  I consider the claimant would be able to establish that she is not in pari delicto with the defendant on this ground.

16.  As for the ground of statutory protection for the claimant, for restitution to be granted on this basis, it is necessary to determine whether the policy of the statutory provision is for the protection of protecting a particular group of people to which the claimant belongs.  An illustration is found in Kiriri in which it was held that a tenant could recover a premium paid to a landlord where this was prohibited by statute as the statute was enacted to protect tenants and the responsibility for ensuring compliance with the law rested primarily with the landlord rather than with the tenant so the parties were not in pari delicto.  It was stated by the Privy Council in Kiriri, supra. at 205 that “the omission of a statutory remedy does not, in cases of this kind, exclude the remedy by money had and received.”

17.  I shall not repeat the provisions of sections 57(a) and 60(7) of the Employment Ordinance, section 10(2), (3) and the Second Schedule of the Regulations which I have set out in full.  It is to be noted that the prohibition is imposed on the employment agency from receiving payment in excess of the prescribed commission, not on the person seeking to obtain employment.  Likewise, the criminal sanction is imposed only on the employment agency.  To adopt the words of Lord Denning in Kiriri, supra. at 205, the duty of observing the law is firmly placed by the Ordinance on the shoulders of the employment agency for the protection of the person seeking employment; and if the law is broken, the employment agency must take the primary responsibility.  I am satisfied that the claimant belongs to that class of persons which the statutory provision in section 57(a) and the regulations enacted in connection therewith were intended to protect.  As for Miss Po’s submission that there are other provisions in section 57, namely, sub-sections (b) and (c) that would appear to regulate employment agencies and the objective of which is not or not primarily for the protection of those seeking employment, I do not think this should detract from the clear primary objective of section 57(a), which is what we are concerned with.  I hold that the claimant is not in pari delicto with the defendant and is entitled to recover on this basis as well.

18.  I should point out that in Kiriri, it was sought to argue for the tenant that he could recover on the alternative claim for breach of statutory duty, which is the third cause of action relied on by the claimant here.  The Privy Council did not rule on this, having found for the tenant that he could recover as he was not in pari delicto with the landlord, hence “it is not necessary to find a remedy given by the Ordinance, either expressly or by implication” (at 205).

Breach of statutory duty

19.  The third and last cause of action relied on by Mr Ling is that as a matter of construction of the statute, section 57(a) impliedly confers a civil cause of action on those in the position of the claimant.  The statute does not expressly provide for a civil remedy, and only a criminal penalty is imposed in section 60(7) for the contravention of section 57(a).  Miss Po’s submission was that the claimant has failed to show there is clear legislative intent that a person in her position should have a private right of action where an employment agency is in breach of section 57(a).

20.  The general rule is that where a statute creates an obligation and enforces the obligation in a specified manner, that performance cannot be enforced in any other manner.  There are two well established exceptions to this general rule and one of them is where upon the true construction of the statute, it is apparent that the obligation or prohibition was imposed for the benefit or protection of a particular class of individuals, as in the case of industrial safety legislation, see Lonrho Ltd. v. Shell Petroleum Co. Ltd. (No. 2) [1982] AC 173 at 185C to D, per Lord Diplock.  A neat encapsulation of the law is found in the speech of Lord Browne-Wilkinson in X (Minors) v. Bedfordshire County Council [1995] 2 AC 633 at 731D to G:

“The principles applicable in determining whether such statutory cause of action exists are now well established, although the application of those principles in any particular case remains difficult.  The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action.  However a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and the Parliament intended to confer on members of that class a private right of action for breach of the duty.  There is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators.  If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer.  If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action: Cutler v. Wandsworth Stadium Ltd. [1949] AC 398; Lonrho Ltd. v. Shell Petroleum Co. Ltd. (No. 2) [1982] AC 173.  However, the mere existence of some other statutory remedy is not necessarily decisive.  It is still possible to show that on the true construction of the statute the protected class was intended by Parliament to have a private remedy.”

21.  I turn to examine the statutory provisions to see if there is any legislative intent to confer on a person in the position of the claimant a private right of action against an employment agency.  As I have stated above, I am of the view that section 57(a) of the Employment Ordinance was intended for the protection of those seeking employment through an employment agency.  My view is reinforced when I have regard to the preamble of the Ordinance, which stated that it is “to provide for the protection of the wages of employees, to regulate general conditions of employment and employment agencies, and for matters connected therewith.” (Emphasis supplied) Further, under section 10(3) of the Regulations, an employment agency is required to display in a conspicuous position at his place of business a notice containing the provisions in the Regulations regarding the amount of commission he is allowed to receive from a person seeking employment, no doubt to serve as notice and reminder to persons seeking employment that the agency is prohibited by law to demand from them any sum in excess of the statutory limit.  I do not think it matters that other provisions in Part XII of the Ordinance (in which section 57(a) is found) are more concerned with the regulation of employment agencies and Miss Po may well be correct in saying that the purpose of this part of the Ordinance is to maintain the integrity of the labour market.  The fact remains that section 57(a) and the related provisions, being sections 60(7) and 62(h) of the Ordinance and sections 10(2), (3) and the Second Schedule of the Regulations are clearly designed for the protection of those seeking employment through employment agencies.

22.  It is also pertinent to have regard to the fact that the obligation imposed on employment agencies not to receive from those seeking employment a commission in excess of the prescribed amount is a simple, specific and limited duty.  It does not involve the making of any difficult or delicate decision or the exercise of subjective judgment.  If the duty created were of this nature, in the words of Lord Browne-Wilkinson in X (Minors), supra. at 747D,

“… in such a context it would require exceptionally clear statutory language to show a parliamentary intention that those responsible for carrying out these difficult functions should be liable in damages if, on subsequent investigation with the benefit of hindsight, it was shown that they had reached an erroneous conclusion and therefore failed to discharge their statutory duties.”

23.  See also the application of the above dicta in Clunis v. Camden and Islington Health Authority [1998] QB 978 at 991F to 992C.

24.  I also bear in mind the fact that a particular provision was intended to protect certain individuals is not of itself sufficient to confer private law rights of action upon them, and that “something more is required to show that the legislature intended such conferment” (R. v. Deputy Governor of Parkhurst Prison, ex p. Hague [1992] 1 AC 58 at 170H to 171A, per Lord Jauncey).  In my view, there is such an indicator in favour of a private right of action in the present situation. 

25.  The criminal sanction imposed on an employment agency would not be a sufficient remedy to those who had paid a commission in excess of the prescribed amount.  This would give no financial protection to those who are most in need of such protection and it was mainly for the protection of this class of persons that section 57(a) and the related provisions were enacted.  It would be right to interpret the statute as conferring a right of action, despite the existence of a criminal sanction. 

26.  As for Miss Po’s submission that the claimant must establish that the alleged breach of statutory duty would give rise to the kind of damage generally remediable in tort, I think this has been satisfied here.  It would suffice if the breach of duty “would be likely to cause to a member of the class for whose benefit or protection it was imposed either personal injury, injury to property or economic loss” (Pickering v. Liverpool Daily Post and Echo Newspapers Ltd. [1991] 2 AC 370 at 420C, per Lord Bridge).  There is no rule against recovery of economic loss in an action for breach of statutory duty where the plaintiff can establish that the purpose of the statute was to protect his financial interest (Rickless v. United Artists Corporation [1988] 1 QB 40).

27.  For the above reasons, I rule that there is a valid cause of action for breach of statutory duty.  I turn to consider the ground of appeal that the claimant’s claim was outside the jurisdiction of the Small Claims Tribunal.

Relevant provisions on jurisdiction

28.  Again, for ease of reference, I set out the relevant provisions in the Small Claims Tribunal Ordinance and the Labour Tribunal Ordinance.

Small Claims Tribunal Ordinance, Cap.338

“5. Jurisdiction of the tribunal

 (1) The tribunal shall have jurisdiction to hear and determine the claims specified in the Schedule.

(2)  Save as provided in this Ordinance, no claim within the jurisdiction of the tribunal shall be actionable in any other court in Hong Kong.  …”

“Schedule: Jurisdiction of Tribunal 

1. Any monetary claim founded in contract, quasi-contract or tort where the amount claimed is not more than $50,000, whether on balance of account or otherwise: 

Provided that the tribunal shall not have jurisdiction to hear and determine –

…

(d) any action that lies within the jurisdiction of the Labour Tribunal established under the Labour Tribunal Ordinance (Cap. 25);

…

1A. Notwithstanding subparagraph (d) of the proviso to paragraph 1, the tribunal shall have jurisdiction to hear and determine a claim transferred to the tribunal under section 10(2) of the Labour Tribunal Ordinance (Cap. 25).”

Labour Tribunal Ordinance, Cap. 25

“7. Jurisdiction of the tribunal

(1) The tribunal shall have jurisdiction to inquire into, hear and determine the claims specified in the Schedule.

(2) Save as is provided in this Ordinance, no claim within the jurisdiction of the tribunal shall be actionable in any court in Hong Kong.”

“10. Declining jurisdiction 

(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.

(2) 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.  …”

“Schedule

1. A claim for a sum of money which arises from –

(a) the breach of a term, whether express or implied, of a contract of employment, whether for performance in Hong Kong or under a contract to which the Contracts for Employment Outside Hong Kong Ordinance (Cap. 78) applies;

(aa) the breach of a term, whether express or implied, of a contract of apprenticeship; or

(b) the failure of a person to comply with the provisions of the Employment Ordinance (Cap. 57) or the Apprenticeship Ordinance (Cap. 47), other than a claim specified in the Schedule to the Minor Employment Claims Adjudication Board Ordinance (Cap. 453).

2. A claim for contribution under section 26(2).

3. 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.  A curious feature of this case is that the claimant had at first attempted to file her claim in the Labour Tribunal but was told by the Registry that her claim against the defendant was not within the jurisdiction of the Labour Tribunal and she was advised to lodge her claim with the Small Claims Tribunal instead, which she did accordingly.  If she had lodged her claim in the Labour Tribunal and this tribunal had declined jurisdiction and transferred the claim to the Small Claims Tribunal under section 10(1) and (2) of Cap. 25, the Small Claims Tribunal would have jurisdiction to hear and determine the claim under paragraph 1A of the Schedule to Cap. 338. 

30.  What falls to be determined here is whether the claimant’s claim is within the jurisdiction of the Labour Tribunal.  If it is, the Small Claims Tribunal would have exceeded its jurisdiction in trying the claim.  The argument of counsel was centred on paragraphs 1(b) and 3 in the Schedule to Cap. 25.  It was submitted by Miss Po that insofar as the claimant’s claim is based on a claim for restitution founded on economic duress or on the fact that the parties were not in pari delicto, it is a claim for a sum of money which arises from the failure of the defendant to comply with the provisions of section 57(a) of the Employment Ordinance.  Therefore the claim falls within paragraph 1(b) of the Schedule to Cap. 25 and is within the jurisdiction of the Labour Tribunal.  Insofar as the claimant’s claim is founded on breach of statutory duty, Miss Po’s submission was that paragraph 3 of the Schedule is not applicable as this is not “a cause of action, founded in tort”.  On behalf of the claimant, Mr Ling submitted that her claim for restitution founded on economic duress or not in pari delicto is not caught by paragraph 1(b) of the Schedule.  As a fallback position, he submitted that the claim based on breach of statutory duty is clearly “a claim for a sum of money … in respect of a cause of action founded in tort … arising from … a breach of a duty imposed by … [an] enactment”, i.e. section 57(a) of the Employment Ordinance.  Hence, by virtue of paragraph 3 of the Schedule, the Labour Tribunal would have no jurisdiction to hear the claim. 

Is the claim within paragraph 1(b) of the Schedule?

31.  Mr Ling raised a number of arguments that the claim, insofar as it is based on economic duress or not in pari delicto, is not within paragraph 1(b) of the Schedule to Cap. 25.  Firstly, he submitted that all the various paragraphs of the Schedule refer to self-contained causes of action or remedies.  Hence, paragraph 1(b) should be construed in the same way as referring to a complete cause of action, as opposed to a factual event which merely forms part of the basis of a claim.  If paragraph 1(b) is construed in this light, this paragraph is not apt to cover a cause of action founded on economic duress because there are other elements required to establish such a cause of action, such as pressure and causation, not mentioned in this paragraph which only refers to the failure of a person to comply with the Employment Ordinance.  Likewise, for the cause of action based on not in pari delicto, the cause of action is not founded merely on the failure of the defendant to comply with section 57(a) of the Employment Ordinance, so the words in paragraph 1(a) are again not apposite to include such a cause of action.

32.  I do not accept this argument.  Section 7(1) of Cap. 25 provides that the Labour Tribunal shall have jurisdiction to hear “the claims” specified in the Schedule.  The Schedule makes provisions for various types of claims for this purpose.  A “claim” is not the same thing as a “cause of action”, the latter denotes the factual or legal basis out of which a claim arose.  Paragraph 1 provides for 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, and the failure of a person to comply with the Employment Ordinance or the Apprenticeship Ordinance.  I do not think the wording of paragraph 1 or of the other paragraphs in the Schedule would warrant a requirement that the entire legal or factual basis of a claim should be spelled out.  I say this for two reasons.  The various kinds of claims in the Schedule appear to be framed in fairly broad terms, see in particular paragraphs 4, 5 and 7.  If it were intended that the entire legal or factual basis must be set out, one would have expected more precise language to be used.  Further, the words used in paragraph 1 are “arises from”, which may leave room for debate as to the degree of causal connection required between the claim and the basis that gives rise to the claim, and this is another argument advanced by counsel which I will deal with.  If the entire legal or factual basis were required to be spelled out, one would have expected a more restrictive expression to be used. 

33.  Next, Mr Ling submitted that the words in paragraph 1(b) (i.e. “the failure of a person to comply with the provisions of the Employment Ordinance”) should connote an omission to perform a positive duty and they are not apt to cover the commission of a prohibited act.  He argued that as section 57(a) has not imposed any duty on an employment agency to charge a person seeking employment any commission at all, the making of an excessive demand for an agency fee or the receipt of an excessive fee was not a “failure to comply” with section 57(a).  I also reject this submission.  The Employment Ordinance makes provisions for the performance of obligations and the prohibition of acts by the parties concerned.  If a provision is contravened, whether this relates to a positive duty or a prohibited act, there is nonetheless a failure to comply with a provision of the Ordinance.  I see no justification to cut down the meaning and scope of paragraph 1(b). 

34.  Lastly, Mr Ling argued that the words “arises from” in paragraph 1(b) should be construed to require an immediate or proximate cause between the claim and the basis giving rise to the claim, in this instance, the failure to comply with section 57(a) of the Employment Ordinance.  I was referred by Mr Ling and Miss Po to a number of cases in which the courts have construed the words “arises from” in other contexts.  I shall not refer to them individually as they are ultimately of limited assistance.  I have studied them for the general approach in construing these words.  As submitted by Miss Po, the starting point is to consider the expression in its ordinary and natural meaning.  “Arise” followed by “from” or “out of” means “result”.  The expression signifies a causal connection between the subject and the predicate event.  In the construction of this expression by the courts, the degree of proximity in the causal connection varies according to the context in which the expression was found.  At the liberal end, the words have been given the wider meaning of “in connection with”.  At the restrictive end, the words have been construed to mean “caused by”, as signifying an immediate and direct causal relationship.  This is what Mr Ling has argued here. 

35.  Mr Ling submitted that the causal connection should not be a tenuous one bearing in mind that the Labour Tribunal is a specialist tribunal set up to facilitate the speedy and economic disposal of labour disputes and such an objective would be defeated if the tribunal is taken up with claims that have only a tenuous connection with areas of law within its staple work.  This may be a valid reason to require something more than a tenuous connection between the claim and the basis that gives rise to the claim, i.e. the failure to comply with section 57(a) of the Employment Ordinance in this instance.  However, I am not persuaded that the degree of connection required should be immediate, direct or proximate.  I do not think there is anything in the language used in paragraph 1 of the Schedule or in the context of the provision that would require such an interpretation. 

36.  In my judgment, the degree of causal connection required in this instance should be a reasonably close connection.  Giving the expression “arises from” its ordinary and natural meaning, I ask myself whether the claim based on economic duress or not in pari delicto arose from the defendant’s failure to comply with section 57(a) of the Employment Ordinance.  I am satisfied that this is the case.  I hold that the claimant’s claim, insofar as it is based on economic duress or not in pari delicto, falls within paragraph 1(b) of the Schedule and is within the jurisdiction of the Labour Tribunal.  I turn to consider the claimant’s fallback position on paragraph 3 of the Schedule.

Is the claim excluded by paragraph 3 of the Schedule?

37.  On the plain wording of paragraph 3, it would seem to me that the claim insofar as it is based on breach of statutory duty is excluded from the jurisdiction of the Labour Tribunal, as it is a cause of action founded in tort arising from a breach of duty imposed by section 57(a) of the Employment Ordinance.  An action for breach of statutory duty is an action in tort, this is the established view and it has been recognised in textbooks on the law of torts.  I am unable to accept Miss Po’s submission that the claim based on breach of statutory duty is not “a cause of action, founded in tort” because it is in essence a claim for refund for overpayment.  I do not propose to go over the legal basis of the claim founded on breach of statutory duty as I have analysed this when I rule that there is a valid cause of action on this ground. 

38.  Miss Po also submitted that the claim should not be excluded under paragraph 3 of the Schedule as this would give rise to tension between paragraphs 1(b) and 3 and might make it difficult to apply the provisions in the Schedule in practice.  I agree with Mr Ling that it is clear from the opening words of paragraph 3 (i.e. “notwithstanding paragraphs 1 and 2”), it was envisaged that there would be an element of overlap between the claims in paragraphs 1 and 2 and the claim in paragraph 3.  Take for instance a claim for a sum of money which arose from the breach of an express or implied term of a contract of employment to provide a safe system of work.  This would fall within paragraph 1(a) and yet one would have no difficulty in seeing that it would be excluded from the jurisdiction of the Labour Tribunal as this claim is in respect of a cause of action founded in tort whether arising from a breach of contract or a breach of duty imposed by the common law or by statute.  As for paragraph 1(b), Mr Ling has suggested that this is meant to cover simple claims in which there is an express provision in the Employment Ordinance or the Apprenticeship Ordinance governing the right of recovery in the event of failure to comply with the statutory provision.  He mentioned as an example section 40 of the Employment Ordinance which governs the payment of holiday pay.  Where there is failure of a person to comply with the Employment Ordinance and the means of enforcing the right which arose is provided in the Ordinance itself, there is no need to rely on a cause of action founded on breach of statutory duty.  I agree with his submission that where a claimant is driven to rely on a private right of action impliedly conferred by statute, as in this case, the claim is excluded from the jurisdiction of the Labour Tribunal by virtue of paragraph 3 in the Schedule. 

39.  For the above reason, I rule in favour of the claimant that she could advance a claim founded on breach of statutory duty and as the claim is not within the exclusive jurisdiction of the Labour Tribunal by virtue of paragraph 3, the Small Claims Tribunal has not exceeded its jurisdiction in trying the claim. 

Orders

40.  As I have ruled against the defendant both on the point of law and on the issue of jurisdiction, I dismiss the defendant’s appeal.  I make an order nisi that the claimant is to have the costs of the appeal and that the claimant’s own costs are to be taxed in accordance with the Legal Aid Regulations.

(S. Kwan)

Judge of the Court of First Instance

High Court