ALESSANDRO GUARINO v. QUASAR ENGINEERING LTD

DCEO 6/2023

[2024] HKDC 2159

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EQUAL OPPORTUNITIES ACTION NO 6 OF 2023

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

BETWEEN

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

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

DECISION

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

Introduction and Background

1.  This is an application by Summons dated 3 May 2024 (“Summons”) by the Respondent (“R”) for striking out certain paragraphs of: (a) the Amended Notice of Claim (“ANOC”); and (b) the Claimant’s Witness Statement dated 15 February 2024 (“WS”).

2.  On 17 May 2024, the Claimant (“C”) obtained leave from the court to file the Re-Amended Notice of Claim (“RANOC”)[1]. It can be seen that a majority of the impugned paragraphs of ANOC were removed in the RANOC.

3.  Ms Lok SC leading Ms Kwok, counsel for R, confirmed what remains for determination by this court are paragraphs 1(4)[2], 1(6)[3] and 2[4] of the Summons with references to the ANOC to be read as references to the RANOC.

4.  C is a former employee of the Respondent (“R”). He commenced employment with R in April 2018. C started out as a Program Director and was promoted to Global Executive Vice President Commercial in November 2019.

5.  R issued to C a notice of termination on 9 December 2022 (“Notice of Termination”), whilst C was on paid sick leave. It is C’s case that the decision to terminate C’s employment was made on the basis of C’s disability. Essentially, it is C’s case that during his employment with R, he was required to work extensive hours, was not allowed to take his annual leave and he worked on statutory holidays without given a day in lieu. He was asked to travel excessively even during Covid which caused additional stress to him. These all had a detrimental effect on his physical and mental health. On 7 December 2022, C submitted to R a medical certificate dated 6 December 2022 stating the diagnosis of “General Anxiety Disorder” (“GAD”). Pursuant to the certificate, C was granted sick leave of 14 days from 6 December 2022.

6.  C claims the decision to terminate his employment was due to him suffering from GAD and was an act of discrimination on grounds of his disability in breach of ss 6(a) and 11 of the Disability Discrimination Ordinance Cap 487 (“DDO”). He seeks inter alia a declaration that R has engaged in conduct, or committed an act, that is unlawful under DDO, damages for his loss of earnings, damages for injury to feelings, punitive/exemplary damages, orders that R pay C’s entitlement to his Phantom Equity Stock Option (“PESO”) which he would have received. During the hearing before me, Ms Lau, counsel for C, conceded that the relief for an order for specific performance that R reinstate C’s entitlement to PESO and damages in lieu of specific performance should be struck out[5].

7.  On the other hand, R’s case is that there was a decision taken in mid-November 2022 to terminate C’s employment due to his underperformance (and not due to C’s allegedly suffering from GAD) which was verbally communicated to C on 22 November 2022. Furthermore, R did not terminate C’s employment during any period C was on sick leave as the Notice of Termination stated that C’s employment would terminate on 9 March 2023. Rather, it was C who gave notice immediately terminating his employment on 1 February 2023 by asserting R had constructively dismissed C. C was considered a “Bad Leaver” and C’s vested PESO was therefore forfeited.

Applicable Principles

8.  The applicable principles for striking out are trite:

(1) It is only in plain and obvious cases that the court should exercise its summary power to strike out;

(2) Disputed facts are taken in favour of the party sought to be struck out;

(3) The burden is on the applicant for striking out to establish it is plain and obvious the claim is bound to fail;

(4) Plain is not the same as simple and obvious is not the same as short. If on a careful reading of the Statement of Claim however complicated, it can be seen that there is no cause of action, a court can, and probably will, order it to be struck out;

(5) Where the court comes to the conclusion after full argument that the case is plainly and obviously one for striking out it should not decline to do so on the ground that the issues are difficult or complicated;

(6) The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable for the claim to succeed before the court will strike it out; and

(7) A reasonable cause of action means a cause of action with some chance of success when only the allegation in the pleadings are considered. The mere fact the case is weak, and not likely to succeed, is not ground for strike out.

See Hong Kong Civil Procedure 2025, Vol 1, §§18/19/4 and 18/19/5.

9.  As for striking out or expunging witness statements, there is also no dispute that the court has jurisdiction to do so where it contains any matter which is scandalous, irrelevant or otherwise oppressive. Evidence that bears no relevance to the pleaded issues in dispute is scandalous and inadmissible, and is liable to be struck out. Evidence which is inconsistent with the party’s own pleadings should be struck out. Evidence which is beyond the ambit of the pleaded issues is scandalous and should be struck out. Merely putting material in a witness statement cannot render something admissible if it were otherwise inadmissible. Before trial, the court should only strike out those parts of a witness statement that are plainly objectionable, in any case of doubt, the matter should be left for determination by the trial judge. See Hong Kong Civil Procedure 2025, Vol 1, §38/2A/15; Talent Weaving Dyeing & Printing Ltd v Able Billion Textiles Ltd [2013] 2 HKLRD 479, §5 and China Shanshui Cement Group Ltd v Zhang Caikui [2019] HKCFI 3033, §20.

10.  Counsel for both parties confirmed that there is no dispute on the above applicable principles.

11.  It is noted that C’s claims herein are made pursuant to the District Court Equal Opportunities Rules, Cap 336G. Those rules were made with the objectives of providing more flexibility for parties to equal opportunities proceedings and expediting the adjudication of equal opportunities claims by replacing formal pleadings with more informal notices of claim and notices of response. Unless the court has ordered that the Rules of the District Court shall apply, the strict rules of pleadings should not be applicable. That said, despite greater flexibility is given to pleaders in equal opportunities proceedings, as a matter of fairness, the complainant in equal opportunities claims is still required to state adequately what his case is about so the other side would be able to prepare the defence properly and not be taken by surprise. See Haden v Leighton Contractors (Asia) Ltd [2022] 1 HKLRD 995 at §§49-51.

12.  Therefore while the strict rules of pleadings should not apply to the RANOC, which should be considered a less formal claims document, the trite principles on pleadings and striking out (which have not been disputed) are still applicable.

Discussion

Application to strike-out various paragraphs of the RANOC

13.  Firstly, Ms Lok has submitted that the claim for constructive dismissal although based on discriminatory conduct is a pure employment claim which falls within the exclusive jurisdiction of the Labour Tribunal. For this reason, she submitted paragraph 1(11) of RANOC should be struck out.

14.  Paragraph 1(11) of RANOC reads: “The Claimant considered that the Respondent’s act of giving notice to him whilst he was receiving paid sick leave to be an act amounting to a repudiatory breach of the Employment Contract and that he was therefore entitled to treat himself as having been constructively dismissed. The Claimant notified the Respondent of this claim of constructive dismissal on 1 February 2023.”

15.  It is correct that pure claims of breach of employment contract (such as in the case of Borchert v DRMYO Ltd & Anor [2010] 1 HKC 168 cited by Ms Lok) are within the exclusive jurisdiction of the Labour Tribunal. However, it is clear to me that in the present case C’s claim goes further than a simple claim based on breach of employment contract. C has made a claim based on disability discrimination. See:

(1) Paragraph 1(4) of RANOC states inter alia “As will be further elaborated below, the Respondent’s decision to give notice to terminate the Claimant’s employment was made after the Claimant had submitted a medical certificate to the Respondent that he was unfit to work and suffering from a disability which constitutes a breach of the Disability Discrimination Ordinance.”;

(2) Paragraph 1(12) of RANOC similarly states “The Respondent’s decision to terminate the Claimant’s employment on 9 December 2023, was made on the basis of the Claimant’s disability.”;

(3) Paragraph 1(13) of RANOC goes on to state “Section 6(a) of the Disability Discrimination Ordinance (‘DDO’) stipulates that a person discriminates against another if on the ground of that other person’s disability he treats him less favourably than he treats or would treat a person without a disability. The Claimant was a victim of direct disability discrimination in his employment as he received a notice of termination just two days after he informed the Respondent that he was suffering from an illness. The Respondent did not provide any reasons for the dismissal and the inescapable conclusion is that the Respondent [sic] was dismissed because of his illness. The Respondent would not have been dismissed the Claimant but for his diagnosis as stated on the medical certificate. The Respondent’s discriminatory acts amounts to a breach of Section 6(a) of the DDO.”; and

(4) Paragraph 1(14) of RANOC also goes on to state inter alia that the decision to dismiss the Claimant due to him suffering from GAD is also a breach of s11 of DDO.

16.  Reading the RANOC as a whole and properly understood, in essence, C claims that the decision to terminate his employment after he was suffering from a disability amounted to constructive dismissal and a discriminatory act contrary to DDO. A claim based on disability discrimination is a claim in tort: see s 72(1) of DDO and Siu Kai Yuen v Maria College [2005] 2 HKLRD 775, §5.

17.  Claims founded on tort are excluded by virtue of paragraph 3 of the Schedule to the Labour Tribunal Ordinance, Cap 25. See Hong Kong Civil Procedure 2025, Vol 2, §S1/7/5 citing Woo Kwok Ping v Incorporated Management Committee of Tsuen Wan Trade Association Primary School (No 2) [2020] 1 HKLRD 717, §§17-23.

18.  Furthermore, s 72(3) of DDO requires proceedings for a claim that another person has committed an act of discrimination against the claimant which is unlawful by virtue of Part 3 or Part 4 (s 11 of DDO falls within Part 3) to be brought in the District Court. Plainly, the disability discrimination claim cannot be brought in the Labour Tribunal.

19.  As mentioned, C seeks a declaration that R has engaged in conduct, or committed an act that is unlawful under DDO. That relief is plainly one which the District Court but not the Labour Tribunal can make: see s 72(4)(a) of DDO.

20.  I agree with Ms Lau that Dean Alexander Aslett v Lane Crawford (Hong Kong) Ltd (unrep) DCEO 3/2013, 26 November 2013, does not support Ms Lok’s proposition that even if a claim of constructive dismissal is based on discriminatory conduct, it will not render it any more than a pure employment claim. In that case, the plaintiff claimed that he was constructively dismissed as a result of racial discrimination. The defendant applied to strike out both the plaintiff’s discrimination claim and the constructive dismissal claim. The court found that the plaintiff can under no circumstances show a causal link between the alleged unfavourable treatment and his race and therefore struck out the discrimination claim on the grounds that no reasonable cause or action has been pleaded and the claim was not bona fide and was vexatious (see §§37-37). It was in that context that the Chief District Judge S T Poon (as he then was) said that the only claim left is a pure employment claim which can be more appropriately be dealt with by the Labour Tribunal (§45).

21.  As for the case of Chang Ying Kwan (HK) Limited v Wyeth (HK) Limited [2001] 2 HKC 129 also relied upon by Ms Lok, that was a DCEO action where the court made a finding that the plaintiff was entitled to treat herself as being constructively dismissed by reason of the employer’s ill treatment including pregnancy discrimination (see 159H). I do not agree that case is distinguishable because constructive dismissal was not a cause of action. At the very least, it illustrates how constructive dismissal can form the basis of a discrimination claim and the District Court has jurisdiction to hear such claim.

22.  Besides, as held by Queeny Au-Yeung J in Woo Kwok Ping at §22, the proper approach of the court is to look at the substance of the dispute and not the labels put on the pleadings. In the present case, it is clear to me that C claims that he was constructively dismissed and the reason for the dismissal was disability discrimination.

23.  For this reason also, I therefore do not agree with Ms Lok’s further submissions made orally that given the claim of constructive dismissal is based on a claim of repudiatory breach of contract it has no place or no relevance to the disability discrimination claim.

24.  Secondly, Ms Lok submits that the PESO claim is contractual and not an equal opportunities claim. She further submitted that it is not disputed that R is not a party to the Peso Award Agreement which was between C and QE Holdings, the grandparent company of R and the claim is bound to fail.

25.  I do not agree that C has attempted to “disguise” the PESO claim, which is a contractual claim, as part of the loss and damage caused by the alleged discrimination. If C succeeds in his claim under DDO, the court may award R to pay to C “damages by way of compensation for any loss or damage suffered as a result of the respondent’s conduct or act”: see s 72(4)(e) of DDO.

26.  It is for R to demonstrate it is plain and obvious the claim for damages is bound to fail. Ms Lok submitted that if C was correct that he was constructively dismissed he would not be a “Bad Leaver” as defined in the PESO Plan and thus would not have suffered any loss and damage in the form of PESO awards. However, that is only part of C’s claim. If C succeeds in his claim based on disability discrimination in that the termination of his employment was contrary to s.11 of DDO, it is at least arguable that C’s employment with R would have continued and he would have been entitled to his PESO entitlement. As Ms Lok herself pointed out, C’s entitlement to PESO is conditional on C’s employment with R.

27.  As to what loss and damages should be recoverable goes to question of causation and remoteness which is a matter for trial and not for striking out when Ms Lok has not satisfied me the relief is bound to fail. Any difficulties with the quantification of that claim or weakness of that claim is not a ground for striking out.

28.  For all the above reasons, I would not exercise my discretion to strike out paragraphs 1(11) and 1(16)(ii)(g) of RANOC. For the avoidance of doubt, this is the case even without considering the draft Re-Re-Amended Notice of Claim submitted by Ms Lau to demonstrate that the RANOC is capable of being amended to cure any technical defect and should not be struck out. That said, as Ms Lau fairly admitted, although not unarguably bad, the RANOC is far from perfect and could certainly be much improved.

Application to expunge various paragraphs in WS

29.  Ms Lok submitted that paragraphs 25 (final 3 sentences), 26-27 and 29 of WS concern the leadership style of Alexander Wallstein (“AW”), the CEO of R, and the cause of C’s disability which are not relevant. With respect, I do not agree.

30.  In paragraph 1(6) of RANOC, it has been pleaded that AW had failed to provide C with additional resources and headcount which led to him being overworked and his health suffered from not able to take leave or take sufficient rest. Further, it has been pleaded in paragraph 1(8) that AW’s action over the years amounts to workplace bullying which was the main reasons that caused C’s health issues. Particulars are given in subparagraphs (i) to (v) including targeting C, putting him under undue stress and creating a hostile and abusive work environment for C.

31.  In the Amended Notice of Response (“ANOR”), R has raised in response that C’s dismissal was due to underperformance. In particular, it is mentioned that targets were missed including revenue diversification (see para 3a of ANOR).

32.  In reply, C has stated inter alia that he had advised R of the need to invest in technology so as to diversify business but this was not supported by R (see paragraph 8 of C’s Reply to ANOR (“Reply”)).

33.  Furthermore, in paragraph 3b of ANOR, another performance issue raised by R was that C was not able to win over peers and lead by influence, and the relationship with PMO team did not improve.

34.  I therefore take the view that the paragraphs in WS concerning: (a) AW’s leadership style (which is stated at paragraph 10(i) of Reply as having disrupted C’s communication with PMO team and paragraph 10(v) of Reply stated that AW’s micro-managing was disrupting C’s communication with the PMO team and with the major client of R, Biosense Webster of Johnson and Johnson (“J&J”)); and (b) AW’s not believing in the need for investment in technology or not supporting C’s advice in this aspect such as removing the non-complete clause with J&J; are clearly relevant to the issues raised in the ANOR and the Reply. I therefore will not strike out paragraphs 25 (last 3 sentences), 26-27 and 29 of WS.

35.  I do not accept Ms Lok’s submissions that as the witness statement of AW only expressed dissatisfaction concerning the excessive delegation of C that C should not be allowed to “digress” to matters of about management style by AW. It is trite that the issues are defined by the pleadings and not by the witness statements.

36.  As for paragraphs 48-52 of WS, insofar as they mentioned difference in views in terms of R’s business goals and development plans leading to the refusal to invest in technology and C’s disagreement with AW’s way of winning new businesses for the reasons explained therein, I am similarly of the view that they are relevant to the issues in dispute. Ms Lok submitted that those paragraphs have gone too far in “bad-mouthing” AW and borders on abuse. Given the issues raised on AW’s management style which are matters for trial and I am not satisfied based on the email written by C on 10 April 2024 that bad faith on part of C is clearly established, I would leave the matter to the trial judge.

37.  Insofar as paragraph 50 of WS contains two clauses of an agreement between J&J and R, whilst Ms Lok maintains that reference to those clauses is in a breach of C’s confidentiality obligations under clause 12 of his employment contract (as alleged by AW in his witness statement), she confirmed that she would not go further than that. Ms Lok had not submitted that the clauses were confidential and that it was a bar to disclosure.

38.  As for paragraphs 77-79 and 90 of WS, given that I do not accept Ms Lok’s submissions made on the constructive dismissal claim and claim to PESO entitlement, I would not strike them out on the ground that they are irrelevant. They are background to C’s claim for constructive dismissal and why he was not a “Bad Leaver” which AW in his own witness statement had devoted individual sections to address.

39.  As for paragraph 80 of WS, this relates to C’s untaken annual leave and his claim that the failure to ensure that he took his statutory annual leave entitlement each year was in breach of s 41AA of the Employment Ordinance (“EO”). Although the specific provision of EO was not pleaded in RANOC, the fact that C was not given the opportunity to take annual leave in accordance with EO is stated in paragraph 1(4) of RANOC. It is relevant to the constructive dismissal claim and his claim that his health suffered as a result.

40.  As for paragraphs 81-82 of WS, I accept as submitted by Ms Lau that these substantiate C’s claim that he had been suffering from a disability and he had been exhibiting symptoms for more than 12 months prior to December 2022 due to working under stress.

41.  As for the objection of C speculating the reason to terminate his employment on the basis of disability in paragraphs 83-84 of WS, given that the real reason for terminating C’s employment is clearly an issue and C is simply setting out the basis for his case, I do not agree that it is irrelevant or inadmissible. As mentioned already, workplace bullying is a matter mentioned in the RANOC and is relevant to the disability discrimination claim.

42.  Whilst I agree with Ms Lok parts of paragraphs 85-87 of WS contain legal submissions that R was in breach of s 33(4B) of EO, which should not be contained in the WS, given that at paragraph 2b of ANOR it is stated that it is relevant that C had filed a complaint with the Labour Department alleging breaches of EO and that C argues, which R denies, the Notice of Termination was in breach of s 33(4B) of EO, I do not find them objectionable.

43.  For the above reasons, I do not take the view that prior to trial, the impugned paragraphs of WS should be struck out. It is not plain and obvious to me that they are objectionable.

Disposition

44.  Accordingly, I would dismiss the Summons.

45.  In accordance with s 73C(3) of the District Court Ordinance, Cap 336, I would order parties to bear their own costs of the Summons as it does not seem to me that there is any basis to find that this application was brought maliciously or frivolously, or there are special circumstances which warrant an award of costs.

46.  I am grateful for counsel’s assistance in this matter.