4M GOLDMEC JEWELRY LTD v. FUNG SHUN YIU, NANCY AND ANOTHER

DCCJ 5902/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5902 OF 2005

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DECISION

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1. The Plaintiff’s case is that the 1^st and 2^nd Defendants were employees of the Plaintiff.  The 1^st Defendant was the general manager and the 2^nd Defendant was the sales manager.  The Plaintiff has a safe to store gold and jewelry.  The safe has 3 separate keys and the safe could only be opened when all three keys were applied.

2. The 1^st Defendant in breach of her terms of employment without giving adequate notice left its employment on 21 May 2005 while the 2^nd Defendant also in breach of her terms employment without giving sufficient notice left on 30 June 2005.

3. During the stock taking of gold and jewelry kept in the safe from 28 to 30 May 2005 the Plaintiff discovered 2,667.92 gms of 999.9 fine gold were missing.

4. The Plaintiff now claims against the Defendants in that the Defendants have conspired to act in a manner to injure the Plaintiff and/or that the Defendants had been in breach of their duty of care and contractual duty.

Defendant’s Summons

5. The Defendants now apply for a declaration that the District Court has no jurisdiction as the Plaintiff’s claim arose out of employment dispute and that Labour Tribunal has exclusive jurisdiction.  Alternatively under O. 18 r.19 to strike out the claim as the claim disclosed no reasonable cause of action, it is scandalous frivolous or vexations or otherwise an abuse of the process of the Court.

6. I do not agree that the Plaintiff had not disclosed any reasonable cause of action even though the evidence is flimsy.  I am only concerned about whether the Labour Tribunal has exclusive jurisdiction.

7. Mr. Wong of counsel for the Defendants submitted that the Plaintiff’s claim is in effect a claim for liquidated damage in the sum of $365,421.02 arising from the breach of contract of employment and that only the Labour Tribunal has exclusive jurisdiction.

8. The Plaintiff’s counsel submitted that the Plaintiff’s causes of action are based on tort i.e. conspiracy and procuring a breach of contract which are outside the jurisdiction of the Labour Tribunal.  Para. 3 of the schedule to the Labour Tribunal Ord. states: “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.”

9. In Panalpina (HK) Ltd. v. Ulrich Haldemann [1983] HKLR 275 the Plaintiff issued a writ for a certain sum on “an account stated and acknowledged” and the Defendant counterclaimed, inter alia, for damages for wrongful dismissal.  Per Hunter J. at p. 278 “In my judgment the phrase “sum of money” must be construed in the light of the fact that practically every claim for “breach of a term …… of a contract” will be for damages unliquidated in law but quantified in practice.  It follows, I think that the phrase must cover such claims.”

10. Hunter J. went on to consider National Ebanch Ltd. v. Riski Kauman Bhatnagon [1981] HKLR 114 and said “A further complicating feature arose in National Ebanch because the claim there could be put both in contract and in tort.  This raised the further problem as to whether the claim was “founded” in tort: How that concept was to be tested when both claims were equally open: And whether divided jurisdiction was inevitable with the tribunal being compelled to hear one point and the High Court the other.”

11. Faced with that problem Hunter J. said “I am therefore constrained by the rigidity of the Ordinance to make orders quite contrary to the merits of the case”.  He stayed all proceedings on the counterclaim.

12. In Citipost (Asia) Ltd. v. Julian Robert Holliday CACV 111/2004 the Plaintiff referred to the employment contract and recited 4 categories of restrictive covenant and in addition the Defendant owed fiduciary duties.  Rogers VP decided that the claims made by the Plaintiff did fall within the exclusive jurisdiction of the Labour Tribunal and though the Plaintiff has not quantified its claim cannot take the matter out of the jurisdiction of the Labour Tribunal.

13. In Kao, Lee & Yip v. Lau Wing & Tsui Wai Yu HCA 1854/2005 Burrell J. ruled that a liquidated claim for breach of a contract of employment should be commenced in the Labour Tribunal and that a claim for declaration and an account were window dressing, in reality that was a breach of contract case and that taking of accounts is not materially different from an exercise in quantifying damages.  Even if there are potential issues which came solely within the jurisdiction of the Court of First Instance the claim should nevertheless have been commenced in the Labour Tribunal and, if appropriate, transferred to this Court by that tribunal. 

14. In the present case the Plaintiff’s claim against the 2 Defendants in effect is a claim against them for damages which had been quantified for their breach of their contract of employment.  Having considered the afore-mentioned cases I am of the view that the Labour Tribunal has exclusive jurisdiction to hear this case.  I agree with Hunter J. in Panalpina and order that the proceedings be stayed until determination either by the Labour Tribunal or in the event of referral back to this Court. 

15. Order nisi: Costs to the Defendant Certificate for Counsel.