HADEN, FRANCIS WILLIAM v. LEIGHTON CONTRACTORS (ASIA) LTD

DCEO 16/2018

[2022] HKDC 823

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EQUAL OPPORTUNITIES ACTION NO. 16 OF 2018

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DECISION

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A.  THE APPLICATION

1.  By a Decision handed down on 11 May 2022 (“the Costs Decision”), this Court varied the costs order nisi dated 11 February 2022 made in the Judgment (“the Judgment”) and ordered the claimant to bear the respondent’s costs of the action (including all costs reserved), with certificate for counsel, to be taxed on party and party basis if not agreed.

2.  By summons filed on 24 May 2022 (“the Leave Summons”), the claimant applied for leave to appeal against the Costs Decision.

3.  I will adopt the same nomenclatures used in the Judgment.

B.  LEGAL PRINCIPLES

4.  The requirement for granting leave to appeal is set out in section 63A(2) of the District Court Ordinance (“DCO”) (Cap 336, Laws of Hong Kong). It is trite that leave to appeal shall not be granted unless the Court is satisfied that the intended appeal has a reasonable prospect of success or there is some other reason in the interest of justice why the appeal should be heard.

5.  It is also well established that a reasonable prospect of success means an appeal with prospects that are more than fanciful without having to be probable (SMSE v KL [2009] 4 HKLRD 129 at paragraph 17).

6.  In Chu Wai Leong v Leung Sum Kee et al Framework, Pipework and Demolish Engineering Limited (梁森記棚業水喉清拆工程有限公司) & Another [2020] 3 HKLRD 218, [2020] HKCA 392, Kwan VP explained the principles governing an appeal against a costs order as follows:

“30. It is acknowledged that costs are a matter of discretion of the primary judge and the appeal court should be circumspect in interfering with the exercise of this discretion, as it is institutionally disadvantaged from re-assessing a decision of this nature and the primary judge is the best person to exercise the discretion because he is most familiar with the conduct of the case presented before him and the impact of the success and failure on each issue canvassed before him. In the absence of palpable error in the exercise of the discretion, the mere fact that the appeal court might have exercised the discretion in a different way is not sufficient to warrant interference with the decision on costs.

31. Examples of palpable errors are where the judge has erred in principle, or did not exercise his discretion judicially having taken into account wholly extraneous and irrelevant matters, or the exercise of discretion was not based on facts or matters connected with or leading up to the litigation, or the decision was plainly wrong.”

C.  THE DRAFT GROUNDS OF APPEAL

7.  The claimant has raised the following draft grounds of appeal:

(1)  This Court erred in concluding that on an objective assessment of the claimant’s case, the proceedings brought by the claimant were frivolous (“the First Ground”);

(2)  This Court erred in determining that the refusal of the claimant to accept a “drop-hands” settlement offer made by the respondent amounted to special circumstances under section 73E(3)(b) of the DCO (“the Second Ground”).

D.  DISCUSSION

D1.  The First Ground

8.  When deciding whether these proceedings had been brought by the claimant frivolously (in the sense that, objectively considered, the claim was so manifestly misconceived that it could have no prospect of success), this Court had considered, among other things, 11 factual matters relied on by Ms Herbert, the claimant’s counsel, one by one[1].

9.  Ms Herbert has now singled-out five of those matters and argued that they were “either not taken into consideration or were not given the appropriate weight and as such the conclusion reached by the trial Judge on frivolity, is, with respect, plainly wrong”[2].

10.  I will consider these matters in turn below.

D1.1  The Audio Recording of the meeting held on 27 February 2017

11.  In paragraph 204 of the Judgment, this Court referred to a meeting between Mr Torka and the claimant held on 27 February 2017. Mr Torka’s initial plan was to inform the claimant at this meeting that the latter’s employment with the respondent would be terminated and to serve him with a termination letter.

12.  This meeting was audio-recorded, and the transcripts of the meeting show that they had the following conversations between them:

FH[3]:  Ok fine, but you know, eh…the Chinese have never been coming through with information to me.

JT:  Yes, I, I accept that. And that’s part of…

FH:  And that’s not my fault, because you know, there’s been enough calls of racism on this project enough as it is. Chris Leung, well you telling me yourself that Chris Leung came and said I don’t want non-Chinese Blasting Engineers. I didn’t even get a chance to choose the people I want in that department.

JT:  Yes, I look…look…I tried to manage it.

13.  In the Costs Decision, I expressed my view that this conversation only related to the claimant’s subjective belief but was irrelevant insofar as the objective test of frivolity is concerned.

14.  Ms Herbert submitted that this Court had erred in not taking into account Mr Torka’s acknowledgement of the issue of racism, which was in aid of the claimant’s claim of racial discrimination.

15.  With greatest respect, this argument has no merits.

16.  Viewed objectively, taking the claimant’s case to the highest, his complaint on “racism” (which was allegedly acknowledged by Mr Torka) only related to the Project but not the respondent company. Chris Leung, who allegedly said non-Chinese Blasting Engineers were not wanted, was not even a staff member of the respondent but the Deputy Project Director of the Joint Venture. I do not understand how it could be said that the claimant’s case would receive a more favourable objective assessment by reason of Mr Torka’s so-called “acknowledgment”.

17.  Indeed, it was Ms Herbert’s argument that:

“This response [of Mr Torka] when viewed objectively […] can lead to the objective view that Mr Torka was acknowledging the Claimant’s claim of racism on the Project. […]”[4] (emphasis added)

18.  There was simply nothing in such a response given by Mr Torka which could objectively make the claimant think that he had a stronger case against the respondent in his allegation that he had been dismissed by the respondent on the ground of his race.

D1.2  Racial hostility at work

19.  Ms Herbert argued that:

“Whilst ultimately the terms ‘gweilo’ and ‘foreigner’ were deemed by the court not to be discriminatory in this context this issue could easily have been decided in a different way as the appropriateness or otherwise of the use of such terms in a work setting had not been before the Hong Kong courts previously. Taking the same sentence ‘why so many gweilos are working on the Project’ and substituting other race-based terms e.g. ‘why so many niggers are working on the Project’ or ‘why so many chinks are working on the Project’, on an objective assessment, may be capable of being derogatory and there would be no way of knowing in advance what the court’s view would be due to a lack of cases on the terms arising in this case. Indeed the court may be aware that there was some press surrounding this issue and a significant amount of public interest and debate arose on both sides of the argument. Whilst the ultimate findings of the court must of course be respected it is submitted that the issue was not as clear cut from the commencement of proceedings stage to amount to frivolity.”[5]

20.  With greatest respect, such argument is totally misconceived. The question was not whether the use of the term “gweilo” may be capable of being derogatory. The issue in this action was whether the Court could draw an inference that the claimant was dismissed by the respondent on the ground of race. The scenarios which were relied on by the claimant must therefore be objectively assessed accordingly.

21.  In the Costs Decision, it was stated that:

“In the Judgment, it was found that the incidents relied on by the claimant were all totally unhelpful in advancing his case[6]. They were either totally not related to the respondent (but related to the Project only), or they were not about race but linguistic ability. They could not be relevant to the Question [of ‘whether the court can draw an inference that the claimant was dismissed by the respondent on the ground of race’]. In my view, if the claimant’s evidence was objectively assessed before this action was commenced, the same conclusion would have been reached. The fact that the word ‘gweilo’ can, in a different context, be discriminatory is totally beside the point, because we should only focus on the present case. In my view, objectively assessed, the claimant’s points on ‘gweilo’ could not assist his claim at all.”[7]

22.  It was not argued by Ms Herbert on behalf of the claimant that the above observation was plainly wrong.

D1.3  Other matters

23.  Ms Herbert has raised three other matters which she said this Court had not taken into account or not given the appropriate weight:

(1)  Preference for Chinese Blasting Engineers;

(2)  The claimant’s having been excluded from emails and his termination of employment took place very closely after his email complaints;

(3)  The claimant had, overall, received positive appraisals.

D1.3.1  Preference for Chinese Blasting Engineers:

24.  The matter had been considered in the Costs Decision, and it was held that:

“I am of the view that, objectively assessed (and without considering Mr Torka’s explanation given at the trial), such evidence was only very marginally relevant as far as the question of ‘whether the court can draw an inference that the claimant was dismissed by the respondent on the ground of race’ (‘the Question’) is concerned. Firstly, Mr Chris Leung was coming from China State. Secondly, the ‘Blasting Engineers’ were employed for the Joint Venture, but not the respondent. It is difficult to link this with the reason of the claimant’s dismissal.”[8]

25.  It is not open to the claimant to re-argue this point on appeal.

26.  To complete the picture, I would also deal with Ms Herbert’s argument that Mr Torka’s explanation that the preference had nothing to do with race was not available to the claimant initially.

27.  With respect, this argument must be rejected, because it was the evidence of Mr Torka that he had told the claimant that, apart from technical capability, the Joint Venture considered three criteria important in evaluating candidates, namely, bilingual or language ability, experience in Hong Kong and cost[9]. Mr Torka’s evidence had been accepted by this Court. Hence, the claimant must be taken to have known about Mr Torka’s explanation before the commencement of these proceedings.

D1.3.2  Exclusion from emails

28.  Ms Herbert submitted that the claimant had adduced evidence that he had been excluded from emails and that he had been dismissed very shortly after he had made various complaints to Mr Lai by email. Therefore, it was said that the proximity in time was a significant indicator of connection.

29.  In the Costs Decision, I had dealt with the claimant’s argument that “Mr Ngai had deliberately excluded the claimant in communications with no good reason” in the following way:

“Such evidence must be assessed objectively upon the following background which the claimant must be aware of at all material times:

(1) He had a very bad relationship with Mr Ngai[10];

(2) Mr Ngai was from China State rather than the respondent;

(3) Mr Ngai was a subordinate of the claimant.[11].”[12]

30.  Counsel for the claimant now tries to link the timing of the claimant’s complaint to Mr Lai and of his termination together, and alleged that this should be taken into account in the objective assessment of the merits of his claim.

31.  First of all, this point was not argued at all when the claimant opposed the respondent’s application for costs.

32.  Furthermore, it should be borne in mind that the Court was adopting an objective rather than subjective test. It was nothing but speculation on the part of the claimant to say that the two matters (complaints and termination of employment) were connected.

33.  In any event, given the claimant’s own knowledge about those three matters which were referred to in the Costs Decision (as quoted in paragraph 29 above), even if there was any reasonable ground for the claimant to believe that his termination was due to his complaint to Mr Lai, there was still no basis to say that his termination of employment by the respondent might be due to the ground of race.

D1.3.3  Positive appraisals

34.  It was submitted that the claimant had documentary evidence that all along he had received positive appraisals, and this could have supported a finding that the claimant was not terminated for performance issues.

35.  This point had been made before by the claimant when he opposed the respondent’s application for costs. At that time, he argued that:

“The Court accepted that Haden was a very able person as far as his technical ability was concerned. He was competent and good at his job [at §§68,73];”[13]

36.  It had been dealt with in the Costs Decision in the following way:

“While I agree that this is a matter which prima facie might support the claimant’s case, this fact must be considered in the light of the court’s finding that Mr Torka had talked to the claimant about the latter’s problems on 24, 25 and 26 January 2017 as well as 27 February 2017, and an improvement plan was agreed upon during the meeting on 27 February 2017. With the above in mind, viewed objectively, the fact that the claimant was a very able person must have become a much weaker point from the claimant’s perspective. For the present purpose, the claimant should be taken to have knowledge about Mr Torka’s view (as expressed in the meetings in January and February 2017) that he was not satisfied with the performance of the claimant.”[14]

37.  It is therefore clear that the matter had been taken into account. It is not open to the claimant to argue the same point again.

D1.4  Equal Opportunity Commission’s investigation

38.  Lastly, Ms Herbert relied on a letter of the Equal Opportunities Commission to the respondent’s solicitors dated 25 May 2018 (“EOC’s Letter”) which reads:

“During the investigation of this complaint, the Commission could not rule out the possibility that the race of the Complainant had been taken into consideration when your client reached the decision on terminating his employment…”

39.  It was submitted on the claimant’s behalf that:

“The EOC is, of course, experienced in investigating cases involving discrimination, well familiar with anti-discrimination laws and was aware of the allegations of the Claimant and the responses by the Respondent [see for example the Respondent’s response to the EOC at TB2/1203]. The fact that the EOC was unable to rule out race discrimination at the investigation stage should be an indicator that the claim was not objectively frivolous when commenced.”[15]

40.  This is a new argument which was not raised before.

41.  In any event, I do not think the EOC’s Letter could assist the claimant. The Court has to conduct the objective test on the basis of the evidence placed before the Court (subject to the reminders explained in paragraphs 6 and 7 of the Costs Decision). Such evidence might or might not have been made available to the EOC when it conducted its investigation. The Court has to exercise its discretion judicially and independently. The fact that the EOC “could not rule out the possibility of discrimination” is neither here nor there.

D1.5  Conclusion

42.  For reasons of the aforesaid, I hold the view that the First Ground has no reasonable prospect of success.

D2.  The Second Ground

43.  The rejection of the First Ground would render it unnecessary for the Court to deal with the Second Ground. However, for the sake of completeness, I would consider the claimant’s arguments hereunder anyway.

44.  On 23 April 2019, the respondent made an offer (“the Offer”), pursuant to which the claimant was invited to withdraw or discontinue his claim with no order as to costs. The Offer was not accepted by the claimant.

45.  As explained in the Costs Decision, I took the view that by the time when the Offer was made, the claimant had already had sight of the respondent’s Notice of Response and lists of documents. All requests for specific discovery had also been satisfied. If he had assessed his case objectively, he should have accepted the Offer, but he had rejected it unreasonably. I held that that would amount to “special circumstances” under section 73E(3)(b) of DCO because at the end of the day, he could not achieve anything more than the Offer after trial.

46.  Ms Herbert submitted that this Court erred in reaching that conclusion, because adopting such an approach would defeat the purpose of section 73E(3) of the DCO. It was further said that:

“It is submitted that it is all too easy for any respondent to make ‘drop-hands’ offer by letter to a claimant, after all such costs him nothing. If a ‘drop-hands’ has the effect of then making a claimant who rejects such an offer potentially liable for costs then the protection offered by the DCO is too easily thwarted.”[16]

47.  I have considered this aspect of the case in the Costs Decision. It was stated in paragraph 42 thereof that:

“I have borne in mind the rationale of the Statutory Provisions on Costs [i.e. section 73E of the DCO and similar statutory provisions applicable to other kinds of discrimination cases]. However, I do not think there is any conflict between such rationale and the spirit of the CJR in encouraging parties to settle. While individuals who may have legitimate grievance should not be discouraged to enforce their civil rights by bringing discrimination claims in court, they at the same time should also bear in mind the underlying objectives of the RDC. They should consider offers made by the other side seriously and realistically, bearing in mind the merits of their claims.”

48.  Ms Herbert stated that “it is all too easy for any respondent to make ‘drop-hands’ offer”. It may or may not be so, depending on the circumstances of the case including the stage at which the proceedings were at when the order was made. However, in the present case, it was not as “easy” as the claimant contended, because much costs must have been incurred by the time when the Offer was made.

49.  The claimant’s counsel then drew this Court’s attention to the case of X v Melvyn Kai Fan Lai & Another [2019] HKDC 122. In that case, the respondents offered $120,000 shortly after the commencement of the action to settle the claim but that was rejected by the claimant therein. The subsequent increment of the offer to $30,000 was also rejected. Upon the dismissal of the action, the 1^st respondent therein sought costs in relation to the whole action. In rejecting this application, His Honour Judge Ko:

(1)  held that Order 22 of the Rules of the District Court was applicable to those proceedings despite Ms Herbert’s argument[17] to the contrary;

(2)  did not agree that there were special circumstances in the case which warranted the award of costs to the 1^st respondent.

50.  Pausing here, it should be noted that if the Order 22 procedure can bring the stipulated costs consequence to a claimant in a discrimination case, there is no reason why the Court cannot take into account settlement offers made by respondents in these cases as a matter of principle.

51.  Coming back to the “drop-hands” offer, Ms Herbert reminded this Court that even the rejection of a “significant monetary offer” was not sufficient to thwart the DCO in the X v Melvyn Kai Fan Lai case. She therefore submitted that the Offer should not be adequate in changing the default costs position.

52.  The consideration of “special circumstances” must be very much dependent on the facts of the case before the Court. As counsel for the respondent pointed out, in the X v Melvyn Kai Fan Lai case, “extensive and detailed evidence [had been] provided by the claimant in support of her claim”[18]. That is certainly not the case here.

53.  Ms Herbert further submitted that it would be of value for future respondents to know whether drop-hands offers are capable of protecting costs liability in discrimination cases and that it is a question of importance and one which is to the public advantage.

54.  While she had not made it clear, it seems that she was relying on the “some other reason” limb under section 63A(2)(b) of the DCO in this regard.

55.  In my view, even if this is a question which is of importance, this is not an appropriate occasion for this question to be considered because of this Court’s ruling that the claimant’s case was so weak that he should not have commenced this action in the first place.

56.  For reasons of the aforesaid, I hold the view that the Second Ground has no reasonable prospect of success. Neither do I think there is some other reason in the interests of justice why the intended appeal should be heard.

E.  ORDER

57.  For reasons of the aforesaid, the Leave Summons is hereby dismissed.

F.  COSTS OF THE LEAVE SUMMONS

58.  Costs should follow the event. I therefore make a costs order nisi that the claimant should bear the respondent’s costs of the Leave Summons (including the costs reserved), to be taxed on party and party basis if not agreed. I grant certificate for counsel in relation to the engagement of Mr Lui.

59.  The above order nisi shall become absolute in the absence of application to vary within the first 14-day period mentioned above.