ZHU LI v. MAYER BROWN JSM (a firm)

DCCJ 977/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 977 OF 2012

----------------------------

--------------------

DECISION

--------------------

1.  This is an application by the defendant for (a) an order to strike out the Writ of Summons and the Amended Statement of Claim (hereinafter referred to as “the Writ and the Amended SOC”) under various grounds and (b) an order that the plaintiff’s action be dismissed. When the application was issued, the defendant sought to rely on Order 18 rule 19 and Order 12 rule 8 of the Rules of the District Court; and also sought a determination of a question of law under Order 14A.

2.  However, at the beginning of the hearing, Miss Lisa Wong, Senior Counsel for the defendant, withdrew the applications under Order 12 rule 18 and Order 14A.  As such, Miss Wong requested the court to only consider the defendant’s application for striking out and dismissal, under Order 18 rule 19 or alternatively, the inherent jurisdiction of the court.

3.  As such, I proceeded to consider the application on such basis.

The Plaintiff’s Claims

4.  The plaintiff appeared in person. In summary, as set out in the prayer of the Amended SOC, apart from claiming interest and costs, the plaintiff’s claims are for:

“(a) An apology;

(b) An investigation report;

(c) Damages for breach of contract (HK$593,578);

(d) Payment under Employment Ordinance (HK$350,835);

and

(e) Medical expenses for future medical treatment.”

(referred hereinafter collectively as “the plaintiff’s Claims”)

The Defendant’s Case

5.  In essence, the defendant’s case is that:-

(a)  the plaintiff’s claim(s) as pleaded in the Amended SOC are either (i) claims for remedies that are not known to our law to be available for the pleaded cause(s) of action or (ii) claims that fall within the exclusive jurisdiction of the Labour Tribunal, being  either claims for a sum of money for breach of a contract of employment or claims for non-compliance with the Employment Ordinance; or

(b) alternatively, if and to the extent that the plaintiff’s claims are not for breach of an employment contract and/or for non-compliance with the Employment Ordinance, the Amended SOC as it is now drafted is embarrassing and should be struck out.

The Labour Tribunal’s Jurisdiction

6.  The relevant parts of the Labour Tribunal Ordinance (Cap 25) state as follows:-

“Section 7:

(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.

        …...”

Schedule
(hereafter referred to as “the Schedule”)

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

(a) the breach of a term, …, 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; (Amended 8 of 1976 s. 49; 59 of 1999 s. 3)

……………

(b) the failure of a person to comply with the provisions of the Employment Ordinance ......

……………

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.” (emphasis added)

7.  Miss Wong submitted for the defendant that paragraph 1 of the Schedule covers claims for both liquidated and unliquidated damages and cited Citipost (Asia) Limited v Julian Robert Holliday CACV111/2004 (unreported, 8. 2.2005) in support. This submission was not challenged by the plaintiff . I agree with Miss Wong and Hon Roger VP’s views expressed in the above mentioned case, that, to interpret otherwise, it would be to read words into the statute that are not there.

8.  Miss Wong further referred me to Borchert v Drymo Ltd [2010] 1 HKC 168, in support of her submission that this court has no jurisdiction to entertain claims that are within the jurisdiction of the Labour Tribunal (unless such claims are transferred to this court by the Tribunal under section 10 of the Labour Tribunal Ordinance).

9.  There are provisions in the District Court Ordinance providing for transfer of certain types of cases from the District Court to the Labour Tribunal (section 73B to E of District Court Ordinance (Cap 336)), but I consider those to be inapplicable in this case. Hence, I agree with Miss Wong that transferring this action to the Labour Tribunal is not an option open to me and neither was it a course of action requested by the plaintiff. 

10.  I deal with the plaintiff’s Claims in turn below.

For An Apology

11.  The plaintiff has not provided any authority to support her assertion that this court has jurisdiction to order an apology for the causes of action pleaded in the Amended SOC (ie breach of contract and, allegedly, tort).

12.  I agree with Miss Wong that this court simply has no jurisdiction to order an apology unless provided for by statute (eg the anti-discrimination legislation or for defamation in England in the limited circumstances), and an apology is neither a remedy known for a claim for breach of contract nor a claim in tort.

For An Investigation Report

13.  Similarly, the plaintiff has not submitted any authority to support the court’s jurisdiction to make the requested order to order the defendant to conduct an investigation and prepare a report thereof. Miss Wong submitted that there is a fortiori no legal basis on which the court could order an investigation report, or indeed, order the defendant to conduct an investigation. I am not satisfied that this is a remedy that this court has the power to order.  I would add that I consider the proper forum for investigation of such matter should be the Law Society of Hong Kong.

For Damages For Breach of Contract

14.  It is undisputed that there is a contract between the plaintiff and the defendant, but the parties disagree as to whether the contract is a contract of employment.

15.  If the claim is for breach of a term(s) of an employment contract, it will fall within paragraph 1(a) of the Schedule, and hence, within the exclusive jurisdiction of the Labour Tribunal and this court has no jurisdiction to hear it. On the other hand, if the claim is for breach of a contract (other than an employment contract), the claim will be within the jurisdiction of this court.

16.  Miss Wong submitted that she was not asking me to determine as a matter of fact whether the contract between the parties is one of an employment nature. Miss Wong invited me to simply look at the pleadings as they currently stand to determine what the claim is.

17.  The plaintiff, on the other hand, submitted to me that I should look at all the evidence which had been adduced and then to determine if the contract is in fact a contract of employment.

18.  In this regard, I agree with Miss Wong. The plaintiff’s claims are those that have been pleaded in the pleadings but nothing else, unless and until amendments are sought to make to those pleadings to introduce new claims or amend the existing claims. No such application was made nor was there any indication that the plaintiff would be seeking leave to make further amendments. It is not for the court to speculate whether there are other claims (apart from those pleaded) or whether the pleaded claims are in fact of a nature different from those set out in the pleadings. My task is to determine whether the pleaded claim of the plaintiff falls within the Labour Tribunal’s jurisdiction, but not to investigate if the claim is in fact different from that which has been pleaded or if there are claims other than those pleaded.

19.  Miss Wong submitted that in the Amended SOC, the plaintiff characterizes the relationship between herself and the defendant as being found in contract and more particularly, an employment contract. Miss Wong has helpfully drawn my attention to various relevant parts of the Indorsement of Claim and the Amended SOC as follows:-

(a)  In the Indorsement of Claim, it was stated that “the defendant wrongfully terminated the employment contract and…..”

(b)  In the Amended SOC:-

i.  the plaintiff pleads the suspension of “the employment” without contractual or legal basis;

ii. the plaintiff complains of injury to her reputation and feeling caused by the defendant by suspending “the employment”, and the “suspension from employment” being a violation by the defendant of the Employment Ordinance (“EO”);

iii.  the plaintiff also complains of having been deprived of the “right, benefit and protection conferred upon an employee by the Employment Ordinance” ;  (emphasis added)

iv. the plaintiff refers communications and negotiations in the course of which she claimed, in addition to damages for breach of contract, the payments to which she is allegedly entitled under the Employment Ordinance and complains of the defendant’s failure to make such payments;

v. in the prayer, the plaintiff claims, inter alia, for an apology for illegal suspension of “the employment”; and also claims for payments under Employment Ordinance  in the sum of $350,835. (emphasis added)

20.  In response, the plaintiff submitted that the references to “the employment”, “the employment contract” in the Indorsement of Claim and the Amended SOC do not necessarily indicate that it is the plaintiff’s case that the contract between the parties is a contract of employment.

21.  The plaintiff further submitted that the fact that she is making a claim under the Employment Ordinance also does not necessarily mean that she is an employee of the defendant. It is her submission that benefits under the Employment Ordinance are not only for employees but for everyone that provides service in Hong Kong. No authority was cited for such bold assertion.

22.  With due respect, I find this argument of the plaintiff completely without merit.   The Employment Ordinance clearly applies only when there is an employment relationship. The application of such Ordinance is dealt with in Section4of the Employment Ordinance (Cap 57)which states that:-

“(1) Subject to subsection (2) and section 69, this Ordinance applies to every employee engaged under a contract of employment, to an employer of such employee and to a contract of employment between such employer and employee.

……” ;and

23.  “contract of employment” is defined in Section 2 as follows:-

“any agreement whether in writing or oral, express or implied, whereby one person agrees to employ another and that other agrees to serve his employer as an employee and also a contract of apprenticeship”.

24.  As such, I do not share the plaintiff’s views that she can on one hand say she is not an employee, but on the other hand, seek compensation under the Employment Ordinance. 

25.  After considering the pleadings and the submissions made, I find that the claim for breach of contract (HK$593,578) is a claim for breach of a term(s) of a contract of employment, and, hence falls within the exclusive jurisdiction of the Labour Tribunal.

26.   That said, while it is not for this court to speculate about the true nature of the plaintiff’s claims, other than as set out in the pleadings as they currently stand, I am mindful of the comment of  Hon Saw J, made while dealing with a different issue, in Glock (HK) Limited and….(HCA 2865/2004): “In the cases cited above both at First Instance and in the Court of Appeal, the approach taken was to look at the reality of the dispute stripped of the technicality employed in the pleadings.” In addition, it is also stated in the Hong Kong Civil Procedure 2012 as follows:-

“Affidavit evidence is equally inadmissible where the only ground on which the statement of claim can be said to disclose no reasonable cause of action is that the action is unlikely to succeed (Wenlock v. Moloney[1965] 1 W.L.R. 1238, CA). But in applications on any of the other grounds mentioned in the rule or where the inherent jurisdiction of the court is invoked, affidavit evidence may be and ordinarily is used by virtue of the general jurisdiction of the court (per Chitty J. in Republic of Peru v Peruvian Guano Co. (1887) 26 Ch.D. 489 at 498).” (emphasis added).

27.  As such, for prudent sake, I shall add that if I am wrong in solely looking at the pleadings to determine what the plaintiff’s claims are, the outcome would have been the same had I taken into account the affidavit evidence submitted as well. This is because in any event, I find that the contract in question is a contract of employment. Hence, the claim for breach of a term(s) of such contract is a claim that falls within Labour Tribunal’s exclusive jurisdiction.

28.  In coming to such view, I have considered all the relevant evidence before me, and in particular, the letter form contract between the parties dated 3 September 2010, which was exhibited to the affirmation for Noeleen Mary Farrell dated 8^th May 2012. There was no suggestion that the plaintiff is disputing the authenticity of this letter. It was countersigned by the plaintiff and is relied on by the plaintiff in her Amended SOC. There was also no evidence before this Court to show that the actual arrangement or practice departed from the terms as set out in this letter form contract.  Such letter form contract provides, inter alias, as follows:-

“This offer is subject to the approval for an employment visa under the Admission Scheme for Mainland Talents and Professionals, and the Firm’s standard terms of employment, a copy of which is attached……. Your salary will be CNY420,000 per annum……. You will be entitled to paid annual leave on the same level of annual leave as you are in Beijing office……. Leave should be taken at a time to be agreed with your Supervising Partner……. You will be entitled to our existing medical benefits in Hong Kong, details of which will be provided to you later……. The Firm’s normal office hours are from 9:00 am to 1:00 pm and 2:15 pm to 5:45pm Mondays to Fridays……. Whilst the Firm’s office hours do not include Saturday working hours, you may be required to come to the office on a Saturday to attend training occasionally or to fulfil your work commitments.”

29.  Accordingly, based on the pleadings and the evidence put before this court by way of affirmations/affidavits and putting the plaintiff’s case at its highest, by applying the test as set out inPoon Yau Nam v Yim Siu Cheun [2007] 1 HKLRD 951, I find that the plaintiff’s claim is for breach of an employment contract, regardless of whatever subjective belief the plaintiff may have regarding her role.

30.  The aforesaid test is set out by Ribeiro PJ in paragraph 18 of his Judgment given in the Court of Appeal and neatly summarized in Mak Ching Shan v Power Max Design Limited and others DCEC 301/2008 as follows: “The modern approach to the question whether a person was an employee was to examine all the features of their relationship against the background of the indicia of employment with a view to deciding whether, as a matter of overall impression, the relationship was one of employment.  This involved a nuanced and not a mechanical approach:  painting a picture from the accumulation of detail.  The indicia included the degree of control exercised by the “employer”; whether the person performing the services provided his own equipment; whether he hired his own helpers; what degree of financial risk he took; what degree of responsibility for investment and management he had; and whether and how far he had an opportunity of profiting from sound management in the performance of his task.”

31.  The evidence before me was that the terms agreed between the parties were for an employment relationship, nothing else.

Payment Under the Employment Ordinance (HK$350,835)

32.  The plaintiff’s claim under the Employment Ordinance (HK$350,835) is for payment in lieu of notice (S 8A); long service payment (S31R) or severance pay (S 31B); and annual leave payments (S 41AA). These are clearly claims for sums of money which arise from the defendant’s alleged failure to comply with the Employment Ordinance, and therefore fall within paragraph 1(b) of the Schedule to the Labour Tribunal Ordinance. This court has no jurisdiction to hear those claims.

Medical Expense For Medical Treatments

33.  At the hearing, the plaintiff submitted that the claim for medical expense for medical treatments is a claim in tort and, hence, as per paragraph 2 of the Schedule, cannot be heard by the Labour Tribunal.

34.  The only part in the plaintiff’s Amended SOC that deals with such claim for medical expense is paragraph 22 which states as follows:-

“Since the plaintiff reported the Misconducts, the defendant has been threatening by disgraceful means to harm the plaintiff’s career and reputation, as well as financially on various occasions. As a result, the plaintiff has suffered insomnia, palpitation and depression.”

35.  In response, Miss Wong submitted that this claim is still a claim for damages for breach of an employment contract. Such claim could only have arisen from the treatment of the plaintiff by the defendant alleged in the Amended SOC which, putting it at its highest, for the sake of argument, might constitute a breach of the implied term that the employer would not conduct itself in a manner likely to destroy or seriously destroy the relationship of trust and confidence between employer and employee. The existence of this implied term was indorsed by the House of Lords in Malik v Bank of Credit and Commerce International SA [1998] AC 20, and has been followed in Hong Kong in, e.g. Semana Bachicha v Poon Shiu Man [2000] 2 HKLRD 833, per Ribeiro JA at 844I-845I; Sun Zhongguo v BOC Group Ltd [2003] 2 HKC 239, per Recorder Edward Chan SC at SS17-18 and Ko Hon Yue v Liu Ching Leung [2011] 1 HKLRD 733, per Tang Ag CJHC at Ss111-113 (point not considered on appeal: FACV 8/2011, 23 February 2012). A claim for damages for breach of such implied term of a contract of employment also falls within S1(a) of the Schedule (see further Samulde Ma Violeta Cabaya v Kwan So Han [2004] HKLRD 658).

36.  After considering the submissions made by the plaintiff and Miss Wong and the authorities cited, I agree with Miss Wong and would add that there is nothing in the pleadings to suggest that this part of the claim is being advanced in tort as opposed to contract.

The Plaintiff’s Other Ground of Opposition

37.  Apart from responding to the grounds raised by the defendant, the plaintiff also submitted that as the defendant had requested for discovery of documents under Order 24, the defendant has already invoked the jurisdiction of this Court and in doing so waived its right to challenge jurisdiction of this Court subsequently. In response, Miss Wong submitted that “where a claim falls within the exclusive jurisdiction of the Labour Tribunal, no party can create jurisdiction in this, or any other, court by submission or waiver of objection, as illustrated in Borchert v Drymo Ltd:where Mustill J said:

“The next issue is whether a party can, by waiver, concede to the court the jurisdiction to entertain actions which by virtue of article 28 ought properly to have been instituted elsewhere. For this purpose, two situations must be distinguished. The first exists where an action is brought in respect of a matter which in the ordinary way the court would have no jurisdiction to entertain, but where it is not precluded from doing so if no objection is taken. Thus, for example, if a plaintiff obtains leave under R. S. O. Ord. 11, in a case where it should not have been granted, the action can properly proceed unless an application is made to set aside the writ and service. The objection is one which can be waived, and the entry of an unconditional appearance is an example of such a waiver. The second situation exists where the objection is not simply that the matter lies outside the jurisdiction of the court, as conferred by the common law or by statute, but is one in respect of which jurisdiction has been actively withdrawn from the court and conferred on another tribunal. The position in such a case is stated by Asquith L. J. in Wilkinson v Barking Corporation [1948] 1 KB 721, 724:

“it is undoubtedly good law that where a statute creates a right and, in plain language, give a specific remedy or appoints a specific tribunal for its enforcement, a party seeking to enforce the right must resort to that remedy or tribunal, and not to other”.

Asquith LJ further said Wilkinson v Barking Corporation at 725:

“The real answer to plaintiff’s contention under this head can be put in several ways: No act of the parties can create in the courts a jurisdiction which Parliament has said shall vest, not in the courts, but exclusively in some other body.  Nor again can a party submit to, so as to make effective, a jurisdiction which does not exist, which is perhaps another way of saying the same thing.”

38.  Section 7 of the Labour Tribunal Ordinance clearly confers jurisdiction on the Labour Tribunal for the subject matter of this dispute and no claim within the jurisdiction of the tribunal is actionable in any court in Hong Kong unless it has been transferred from the Labour Tribunal. I hence rule that this is not a case where a waiver can apply.

Order

39.  For the reasons given above, I give an order that the Amended SOC be struck out and the plaintiff’s action be dismissed.

Costs

Order Nisi

40.  There is no reason why costs should not follow the event. I make a costs order nisi that that the plaintiff pays the defendant’s costs of this action (including the costs of this application), to be taxed if not agreed. I also allow Counsel Certificate for this hearing as I consider the complexity and importance of this hearing warrants the engagement of Miss Wong. I also thank Miss Wong for her submissions which I find clear, succinct and most helpful.

41.  It is unclear if the defendant also seeks a certificate for two counsel, and if it does, whether this will be opposed. If such as application should become necessary, the parties are at liberty to lodge with court and serve their respective submissions within 21 days from the date of this judgment.