XCHRX MATHESON PFC LIMITED v. SIMON JANSEN

1992, No. A8703

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

___________

________________

J U D G M E N T

________________

1. I have before me an appeal against a decision of Master Jones dated 19th November 1993 which raises a short, but interesting, point of construction on the Labour Tribunal Ordinance Cap. 25.

2. The matter arises in the following manner. By a written contract of employment dated 7th August 1991, the Plaintiff agreed to employ the Defendant and the Defendant agreed to serve the Plaintiff for an initial period of 2 years, subject to earlier determination as therein provided, as Manager of Matheson PFC Indonesia. Clause 20(c) of the contract provided :

"You will be employed initially in Indonesia as Manager of Matheson PFC Indonesia, but the Company shall have an absolute discretion to require you at any time and from time to time to work in any other place or country in any part of the world, to vary the nature of your duties and to require you to carry out duties with any subsidiary of Associated Company."

3. Although no evidence was adduced on this point, it seems that the contract was made in Hong Kong and it certainly contains a Hong Kong choice of law clause. The contract contained a package of benefits usual in this sort of contract. In due course, the contract was determined and by writ dated 9th December 1992, the Plaintiff claims against the Defendant $358,544.00 allegedly due and owing by the Defendant to the Plaintiff under the terms of this contract of employment.

4. By summons dated 19th May 1992, the Defendant took out a summons seeking to set aside a default judgment which had been entered against him. In due course, the Master set aside the judgment. In seeking the setting aside of the judgment, the Defendant also sought an order that the Statement of Claim be struck out and the action be dismissed or stayed "on the ground that the Plaintiff's claim is within the exclusive jurisdiction of the Labour Tribunal". The Master refused to strike out dismiss or stay the action and the Defendant now appeals from that decision.

5. The jurisdiction of the Labour Tribunal can be found in Section 7 of the Labour Tribunal Ordinance which provides :

" (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."

6. Schedule 1 provided as follows :

"

SCHEDULE

[s.7]

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 an overseas contract as defined in the Contracts for Employment Outside Hong Kong Ordinance (Cap. 78);

(aa) the breach of a term, whether express or implied, of a contract of apprenticeship, or (Added 8 of 1976 s.49)

(b) the failure of a person to comply with the provisions of the Employment Ordinance (Cap. 57) or the Apprenticeship Ordinance (Cap. 47). (Amended 39 of 1973 s.9; 8 of 1976 s.49)

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.

4. Any question as to -

(a) the right of an employee to a severance payment under Part VA of the Employment Ordinance (Cap. 57); or

(b) the amount of such payment. (Added L.N. 178 of 1974)

5. Any question as to -

(a) the right of an employee to payment of wages by a person other than his employer under Part IXA of the Employment Ordinance (Cap. 57); and

(b) the amount of such payment. (Added 54 of 1977 s.3)"

7. The phrase "contract of employment" is stated by section 2 of the Ordinance to mean -

"(a) an agreement, whether express or implied by law, whereby one person agrees to employ another and that other agrees to serve his employer as an employee whether payment is to be on a price, task or time basis and wherever the services are to be rendered;
and

(b) a contract of apprenticeship;" [emphasis added]

8. I must now make some reference to the Contracts for Employment Outside Hong Kong Ordinance Cap. 78 which was passed in November 1965. Section 4 is headed "contracts to which the Ordinance applies" and states as follows, so far as is relevant :-

"(1) Subject to subsection (2), this Ordinance applies to contracts of employment entered into in Hong Kong after the commencement of this Ordinance, by which a person in Hong Kong enters or agrees to enter into the service of another person who is not in Hong Kong and not carrying on a business in Hong Kong where the contract is to be performed, whether wholly or partially, outside Hong Kong."

9. It is clear from this Ordinance that it is only intended to cover Hong Kong manual workers who are employed by non Hong Kong entities and has no application whatsoever to the facts of this case. Put simply, the Ordinance provides that the contracts of such workers should be in writing and should contain certain particulars set out in the Ordinance. There is a provision for attestation before the departure of the employee from Hong Kong and certain penalties are provided if the contract is not in writing or is not attested as provided in the Ordinance.

10. Both counsel have agreed the following facts.

(1) The Plaintiff's claim is "a claim for a sum of money which arises from ... the breach of a term, whether express or implied, of a contract of employment";

(2) The contract of employment in question was actually performed (up to the time it was terminated) by the Defendant in Indonesia;

(3) The contract of employment in question was not one under an overseas contract as defined in the Contracts for Employment Outside Hong Kong Ordinance (Cap. 78).

11. Mr. Cheung has, as usual, set out in his very helpful skeleton that the disagreement between the parties boils down to :

(1) Whether the phrase "whether for performance in Hong Kong or under an overseas contract as defined in the Contracts for Employment Outside Hong Kong Ordinance (Cap. 78)" is part of the jurisdictional requirement of the Labour Tribunal. In other words, if the contract of employment was not for performance in Hong Kong and was not one within Cap. 78, does the Labour Tribunal have the jurisdiction to hear the claim?

(2) If the answer is no, whether the present contract of employment was "for performance in Hong Kong".

12. It has to be said that this is an unfortunate piece of drafting. The definition of "contract of employment" includes the words "wherever the services are to be rendered". This cannot relate to whether the services are to be performed in one part of Hong Kong or another. It can only relate to whether they are to be performed within or without Hong Kong. It seems to me that one has to give considerable weight to the words used in the definition section.

13. Do the words used in the schedule require me, as it were, to strike down or limit the words used in the definition section. After having given this matter long and careful consideration, I think not. I believe that the wording in Section 1(a) was used in order to make perfectly plain that service carried out under Cap. 78 was covered by the Ordinance. I think it most likely that the draughtsman had forgotten about the words "wherever the services are to be rendered" in the definition of "contract of employment", and he was anxious to spell out the fact that such a claim came within the jurisdiction of the tribunal wherever the services under the contract would be performed. The reference in Schedule I(a) to Cap. 78 could well have been a mistaken assumption by the draughtsman that reference to a contract to which Cap. 78 applied was equivalent to performance outside Hong Kong.

14. I do not believe that the words in the second line of (a) in para. 1 of the Schedule commencing with the word "whether" were intended to be words of limitation because surely they have to be read with the rest of the Ordinance which includes the definition section. One way of testing this is to substitute in para. 1(a) of the Schedule for the words "contract of employment" the words "an agreement ... wherever the services are to be rendered". If that is done, para. 1(a) of the Schedule then reads as follows :-

"A claim for a sum of money which arises from -

(a) the breach of a term, whether express or implied, of an agreement ... wherever the services are to be rendered, whether for performance in Hong Kong or under an overseas contract ..."

15. Paraphrasing the Schedule thus one can see, in my judgment, that the phrase commencing with the word "whether" is not there to cut down the preceding phrase. Further, if the phrase beginning with the word "whether" did provide a geographical limitation, then the phrase "wherever the services are to be rendered" in the definition section would indeed be rendered superfluous. I would be most reluctant, unless forced to do so, to find the words in the definition section of an Ordinance rendered superfluous by the wording used in a Schedule, albeit, I accept, a Schedule which is intended to set out the claims in respect of which the tribunal will have jurisdiction.

16. If the Ordinance does not apply to cases where employees carry out work outside of Hong Kong certain absurdities arise. For instance, an employee could sue in the Labour Tribunal a foreign employer and vice versa, but he could not sue a local employer. I doubt that it was ever the intention to make available this inexpensive and expedient means of dispute resolution to cases involving a foreign employer hiring someone to work overseas but not to cases involving a local employer hiring someone to work overseas.

17. I have read the explanatory notes to the Bill which became the Labour Tribunal Ordinance and I have read the debates on the Bill in Hansard. I have also read three articles by Robert Ribeiro in (1978) HKLJ. However, none of these materials assist me in divining the intention of the legislature.

18. As I said, this is not an easy point of construction, but I have come to the conclusion that the claim made in this action by the Plaintiff against the Defendant is one within the exclusive jurisdiction of the Labour Tribunal and I propose to declare accordingly.

19. It was agreed the costs will follow the event and therefore I propose to make a costs order nisi in favour of the Defendant.

20. This case was extremely ably argued by both counsel and I have found Mr. Cheung's thoughtful written submissions of great assistance.