DAVID IRELAND AND OTHERS v. CANTON FITZGERALD (HK) LTD

IN THE SUPREME COURT OF HUNG KONG

HIGH COURT

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JUDGMENT

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1. I have before me four applications, two by the plaintiffs and two by the defendant.

2. They arise following the issue of writ by the plaintiffs on 21 March 1988, indorsed with a claim which reads as follows:

"The plaintiffs' claim is for damages arising out of breach of contract."

3. A few days before the issue of that writ, the plaintiffs applied for an ex parte injunction, and on 19 March 1988 Garcia J., upon the plaintiffs inter alia undertaking to issue and serve the said indorsed writ of summons and file and serve the affidavits and affirmations of the plaintiffs, ordered, inter alia, that the defendant be restrained until further order from removing any of its assets out of the jurisdiction of the Court or from disposing of, charging, transferring out, or otherwise in any way dealing with or dissipating all or any of such assets.

4. By one summons dated 22 march, 1988, the plaintiffs apply, inter alia, for the injunction granted to be continued, and by another for leave to join two additional plaintiffs.

5. By a further summons gated 22 March, the defendant applies for an order that the order made by Garcia J. be discharged with costs.

6. Finally, by summons dated 7 April, the defendant applies for an order that the plaintiffs' claims be struck out, on the ground that jurisdiction to hear it is exclusively vested in the Labour Tribunal and not in the high Court.

7. It is perhaps most convenient to deal with the last application first.

8. From the affidavits, it would appear as if the plaintiffs are all employees of the defendant, a company incorporated in Delaware. They all have employment contracts for 2 years, which would ordinarily have expired on 10 may, 1989. The defendant is registered under Part II of the Companies Ordinance, Chapter 32 of the Laws of Hong Kong, and part of the Cantor Fitzgerald Incorporated Group of Companies, a firm of brokers operating on various bond markets around the world. It closed its business in Hong Kong on 17 March, 1988. The contracts of the plaintiffs were terminated, and they were told that they would receive salary until the end of April, 1988. However, the employment contracts made no provision for early termination, and the defendant has not offered compensation or other employment.

9. It is submitted on behalf of the defendant that the claims fall within the ambit of section 7 of the Labour Tribunal Ordinance, Chapter 25, which reads as follows:

"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."

10. The relevant part of the Schedule referred to, is as follows:

11. Mr. Faulkner, for the defendant, submitted that the plaintiffs claims for damages arising out of breach of contract are claims for a sum of money under paragraph 1(a) of the Schedule, and that by virtue of section 7(2) of Cap. 25, are actionable only in the Labour Tribunal. since the claims have been brought in the High Court, they should be struck out.

12. He relies on Panalpina (Hong Kong) Ltd. and Ulrich Haldemann ⁽¹⁾, a decision of Hunter, J. (as he then was), who felt that "Practically every case involving a breach of service agreement gives rise to a claim for unliquidated damages (Yip Wan-chiu v. Magnificent Industrial Ltd. [1974] HKLR 183)". He went on, at page 278:

"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 that the phrase must cover such claims. I agree with Roberts, C.J. that the legislature anticipated a 'quantified' claim and a claim that was 'ascertained' or ascertainable. But I regret that I cannot agree that this makes the claim one for liquidated damages, or that it limits the tribunal's jurisdiction to such claims. This conclusion seems to me to be supported by paragraph 3 (of the Schedule). No claim 'founded in tort' can be for liquidated damages. It may contain a calculated or special damages element; but the bulk is likely to be for general damages. I am much comforted to know that the same conclusion was reached by O'Connor, J. on 18th December 1979 in Steward and Others v. The Hong Kong Philharmonic Society Limited (H.C. Civil Action No. 3031/79). Unfortunately as this decision was not reported, it was not cited to Roberts, C.J."

13. Having reasoned in this way, Hunter, J. at p. 278 felt "constrained by the rigidity of the ordinance to make orders quite contrary to the merits of the case."

14. In other words, Hunter, J. decided that a claim for a "sum of money" was not necessarily a claim for liquidated damages, but could include a claim for unliquidated damages. He was thus in diametric opposition to Roberts, C.J. in National Ebauch Ltd. and Rishi Kaumar Bhatnagar ⁽²⁾, who concluded "that a claim for a sum of money arising from a breach of contract, does not include a claim for unliquidated damages".

15. Hunter, J. derived support from the unreported decision of O'Connor, J. in The Hong Kong Philharmonic Society case. O'Connor, J. there pointed out that the phrase "sum of money" was clearly envisaged by paragraph 3 of the schedule to include a claim for unliquidated damages, for since all claims in tort are for unliquidated damages, the paragraph, in effect, concedes that a claim for a sum of money can arise in a cause of action founded in tort.

16. Mr. Smith, on behalf of the plaintiffs, submitted that Hunter, J. was clearly wrong. He submitted that the phrase "sum of money" carried a clear and unambiguous meaning. It did not have to be a liquidated sum, as such, in the sense that "liquidated damages" is an agreed pre-estimate of damage in the event of a breach. It merely had to be a claim for any sum of money. He pointed to section 12 of the Labour Tribunal Ordinance, Cap. 25, which requires a claim to contain, inter alia, the "sum of money claimed by each claimant or person represented", and also "such particulars of the claim as shall be reasonably sufficient to inform the defendant of the grounds for the claim and of the manner in which the amount claimed by each claimant or person represented has been calculated", as reinforcing his argument.

17. He submitted that the plaintiffs' claims were not for a specific "sum of money" in the ordinary meaning of that expression, although obviously they were asking for monetary damages. But the amount awarded, if the plaintiffs were successful, would depend on many imponderables, and was not quantifiable in advance. In other words, he was submitting that a claim for a sum of money does not include a claim for unlimited unliquidated damages. (Roberts, C.J. in National Ebauch had held that it does not include any unliquidated damages.)

18. Mr. Smith referred to Hung Sang Engineering Works Limited and Yu Wing Fat ⁽³⁾, a decision of the Full Court of Hong Kong. The respondent there brought a claim against the appellant in the Labour Tribunal, claiming wrongful dismissal from his position of apprentice and claiming $338, being one month's wages in lieu of notice. The President transferred the matter to the District Court on the ground that he considered it was a case where the respondent could claim unliquidated damages for the remaining period of his apprenticeship. Judgment was eventually given for $6,000 in favour of the respondent as general damage for wrongful dismissal.  The appellant appealed to the Full Court, the appeal was allowed, and a new trial in the District Court was ordered for the purpose of assessing damages arising out of the wrongful dismissal of the respondent. (Briggs, C.J. dissenting).

19. The issues argued at the appeal are of no relevance to the present case, but Huggins, J. (as he then was) said at p. 400:

"It is therefore the proceeding between the claimant and the defendant which may be transferred under S. 10 and we must construe the order of transfer accordingly. But what was the proceeding between the Respondent and the Appellants which was transferred" According to the Form of Claim as I have interpreted it, it was a proceeding for the recovery of unliquidated damages for breach of a contract of apprenticeship limited to $338. ...... In my view the presiding officer was right in thinking that there was no unlimited claim to unliquidated damages before him."

20. Unless I have misunderstood him, Mr. Smith submitted that this was an implicit recognition by Huggins, J. that while aclaim for aspecific sum of money could properly be described as unliquidated damages, and correctly brought in the Labour Tribunal, a claim for unlimited liquidated damages should be transferred to the District Court, or the High Court.

                (It would seem that the claim in Hung Sang Engineering would have been regarded by Roberts, C.J. as having been incorrectly brought in the Labour Tribunal, for his conclusion in National Ebauch was that “a claim for a sum of money arising from a breach of contract does not include a claim for unliquidated damages", and Huggins, J. described the claim as an unliquidated one for a limited sum.)

21. Mr. Faulkner submitted that following the decision in Colchester Estates v. Carlton Industries ⁽⁴⁾, I, as the third Judge, should follow the second Judge, namely Hunter, J., who, having fully considered the decision of Roberts, C.J., the first Judge, came to a very different conclusion.

22. Mr. Smith, whilst acknowledging the correctness of this principle, submitted nevertheless that this was that rare case where the second Judge has been clearly wrong in not following the first, and that I should therefore follow the first Judge, namely Roberts, C.J. he submitted that Hung Sang Engineering was not cited to either Judge, and that it was both a binding and persuasive authority.

23. In my view Hung Sang Engineering is quite clearly not a binding or persuasive authority for the proposition that a claim for damages arising from a breach or contract is not a claim for a sum of money within the Schedule to Cap. 25. It is perhaps, possible to infer that Huggins, J. considered that a limited claim for unliquidated damages had been correctly brought in the Labour Tribunal, and that there was nothing wrong, as such, for the transfer to the District Court of an unlimited claim for unliquidated damages. But I find it impossible to conclude that Huggins, J. decided that an unlimited claim for unliquidated damages had to be transferred out of the Labour Tribunal. The fact is that Huggins, J. was concerned with entirely different issues, and nothing that he said can be regarded as a binding or persuasive authority in relation to the issue upon which Roberts, C.J. and Hunter, J. specifically ruled.

24. In all the circumstances, I am satisfied that the decision of Hunter, J. was reached after full and careful consideration of the decision of Roberts, C.J., and I therefore propose to follow and apply it in this case.

25. It would be inappropriate for me to empress my own views of the matter in any detail, and it will no doubt be determined by the Court of Appeal. I only wish to say that it seems likely that the difficult and ambiguous phrase, "sum of money" may well have been used to highlight the distinction between any monetary claim whatsoever, arising from the breach of a contract of employment, be it a claim for liquidated damages, or unliquidated damages, limited or unlimited, on the one hand, and any non-monetary claim, on the other.

26. The plaintiffs claim is therefore struck out, as in their application to join two additional plaintiffs.

27. There remains the plaintiffs' application to continue the injunction, and the derendant's application to have it discharged.

28. Mr. Faulkner submitted that Siskina and Distos Compania Naviera B.A. ⁽⁵⁾ was authority for the proposition that if the Court was held to have no jurisdiction to hear a matter, it also had no jurisdiction to grant an injunction, or to continue an injunction already granted.

29. In my view, It is authority for nothing of the kind. In that case it was held that the injunction sought in the action had to be part of the substantive relief to which the plaintiffs' cause of action entitled them; and the thing that it was sought to restrain the foreign defendant from doing in England had to amount to an invasion of some legal or equitable right belonging to the plaintiffs in England and enforceable by a final judgment for an injunction; t hat in the Siskina the plaintiffs had no equitable right or interest in certain insurance moneys which had been paid to the defendant by insurers in England, in respect of the loss of a vessel; for all that they had was a claim to compensation arising from a cause of action against the defendant which could not be brought in England without the defendant's consent, which such consent had not been given, and that notice of the writ should be set aside as not falling within Order 11, Rule 1(1)(i)./

30. Order 29 l.(1) of the Rules of the Supreme Court permits the grant of an injunction to any party to a cause or matter, and Order 29 i.(3) prohibits such an application before the issue of the writ or originating summons by which the cause or matter is to be begun except where the case is one of urgency, and in that case the injunction applied for may be granted on terms providing for the issue of the writ or summons and such other terms, if any, as the Court thinks fit.

31. Since I have struck out the plaintiffs' action, I propose to treat their application for a continuation of the injunction as an application for an injunction made before the issue of a writ, in a case involving some urgency. I say that because it is obvious that if the restraint on dealing with its assets was to be lifted, the defendant could forthwith remove them from the jurisdiction.

32. It follows that I regard proceedings in the Labour Tribunal to be a "cause or matter".

33. There is no power in the Labour Tribunal, so far as 1 can ascertain, to grant an injunction.

34. It is inconceivable that parties to a dispute in the Labour Tribunal should not have the protection afforded by an injunction to restrain the removal of assets out of the jurisdiction.

35. I therefore order as follows:

(1)    (1983) HKLR, 275 at 277

(2)    (1981) HKLR 114, at 115

(3)    (1975) HKLR 394

(4)    (1984) 2 All E.R. 601

(5)    (1179) A.C. 210