MATHESON PFC LTD. v. SIMON JANSEN

1994, No.72
(Civil)

IN THE COURT OF APPEAL

(On Appeal from H.C. Action No.8703 of 1992)

________________

________________

J U D G M E N T

________________

Liu, J. :

1. This is an appeal from the judgment of Kaplan J. given in Chambers on 25th March 1994, in which the appellant's action against the respondent under a contract of employment dated 7th August 1991 was struck out. The appellant's claim was for the recovery of monies it advanced to the respondent during the course of the respondent's employment. The appellant's action was struck out on the ground that its claim was within the exclusive jurisdiction of the Labour Tribunal.

2. It is common ground (1) that the appellant's claim in the action struck out was "a claim for sum of money which (arose) from .... the breach of a term, whether express or implied, of a contract of employment", (2) that the said contract of employment had actually been performed up to its termination by the respondent employee in Indonesia and (3) that the said contract of employment was not one under an overseas contract within the meaning of the Contracts of Employment Outside Hong Kong Ordinance, Cap.78.

3. Clause 2(c) of the said contract of employment provided that the respondent would be employed initially in Indonesia subject to an absolute discretion on the part of the appellant to require him "at any time and from time to time to work in any other place or country in any part of the world". At no time before the termination of the said contract of employment had the appellant exercised its absolute discretion to require the respondent to work elsewhere. Thus, the said contract of employment had wholly been performed in Indonesia. In the circumstances, the said contract of employment was one, to all intents and purposes, to be performed in Indonesia and in the absence of any exercise of the appellant's discretion, it was a contract to be performed nowhere else during its subsistence.

4. The term "contract of employment" is defined in s.2 of the Labour Tribunal Ordinance under the rubric "Interpretation" as follows:

"2. Interpretation

In this Ordinance, unless the context otherwise requires -
"contract of employment" means -

(a) an agreement, whether express or implied by law, whereby one person agrees to employ another and that other agrees to serve its 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."

5. Section 7 prescribes the limit of jurisdiction of the Labour Tribunal. Under the rubric "Jurisdiction of Tribunal", s.7 reads as follows:

"7. Jurisdiction of Tribunal

(1) The Tribunal shall have jurisdiction to enquire 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."

The Schedule to the Labour Tribunal is set out below:

" SCHEDULE

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

(aa) 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);

(a) the breach of a term, whether express or implied, of a contract of apprenticeship; or

(b) the failure of a person to comply with the provisions of the Employment Ordinance (Cap.57) or the Apprenticeship Ordinance (Cap.47).

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.

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."

6. It is convenient to set out below also s.4 of the Contract For Employment Outside Hong Kong Ordinance:

"Contract to which the Ordinance applies

(1) Subject to subsection (2), this Ordinance applies to contract 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 who is not in Hong Kong and not carrying on business in Hong Kong where the contract is to be performed, whether wholly or partially, outside Hong Kong."

7. The judge construed 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)" in para. 1(a) of the Schedule not as one for the jurisdictional limit of the Labour Tribunal but one for illustrating the types of contract affected, alluding in particular to a contract of employment to be performed in Hong Kong and a Cap.78 overseas contract. On that interpretation, the judge felt obliged to allow himself to be guided by one of the meanings of "contract of employment" provided by s.2 of the Labour Tribunal Ordinance and concluded that Schedule 1(a) to the Labour Tribunal Ordinance comprised contracts to be performed not only in but also outside Hong Kong. It was thus unnecessary for the judge to proceed to consider whether or not the contract of employment between the appellant and the respondent was "a contract of employment ..... for performance in Hong Kong".

8. The judge reached his conclusion after having considered what might be described as the "practical absurdity" and "statutory internal irreconcilability". The judge could not accept as rational that whilst a Cap.78 overseas contract would permit a Hong Kong man employed by a non-Hong Kong man to work wholly or partially outside Hong Kong to sue in the Labour Tribunal, a Hong Kong man employed by another Hong Kong man to work outside Hong Kong could have no recourse to the relatively simple process of the same Tribunal. The judge was swayed by this so-called "practical absurdity". As for the "statutory internal irreconcilability", the judge took the view that an all-encompassing meaning of "contract of employment" as given in s.2 of the Labour Tribunal Ordinance, that is to say, an employment contract wherever performed, could not be struck down or limited by the words in para.1(a) of its Schedule. Shortly put: nothing in that all-encompassing meaning is to be "rendered superfluous by the wording used in (the) Schedule". The judge evidently felt constrained to suggest that the words "whether for performance in Hong Kong" in para.1(a) of the Schedule were a repetition, in part, of that meaning of "contract of employment" in the definition section. The judge attributed the difficulty to likely draftsman's oversight or error. He tested his approach by substituting the words "a contract of employment" in para.1(a) of the Schedule by the following words in the definition section, viz. "an agreement ..... wherever the services are to be rendered". So substituted, paragraph 1(a) would read:

"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 ...."

Placing the words "whether for performance in Hong Kong" after the all-encompassing words in that catch-all meaning in s.2, viz. "an agreement ..... wherever the services are to be rendered", the judge was able to show that this catch-all meaning of "contract of employment" was not to be whittled down by the phrase "whether for performance in Hong Kong" in para. 1 (a) of the Schedule.

9. An illustration involving a transposition of words from the definition section to the Schedule, each enacted to serve a purpose of its own, cannot be a fruitful exercise in quest of the parameters of the Labour Tribunal's jurisdiction. There would seem to be no real conflict between that meaning of "contract of employment" in the definition section and the meaning of the same term as used in para. 1(a) of the Schedule. Even if the words in the Schedule "whether for performance in Hong Kong" were to render some words in the definition section of "contract of employment" superfluous, it would hardly be problematic as the meanings of "contract of employment" in the definition section were merely intended for general application "unless the context otherwise require(d)". But there would seem to be no redundancy. Standing on its own, the term "contract of employment" in para. 1(a) of the Schedule clearly retains all of that catch-all meaning, but only in qualifying the sweeping term "contract of employment", the words "whether for performance in Hong Kong" in the Schedule set out to identify one of the two specified contracts of employment as falling within the jurisdiction of the Labour Tribunal. That all-encompassing meaning of "contract of employment" in the definition section refers to an employment contract "wherever the services are to be rendered", that is to say, to be performed in or outside Hong Kong. The words in para. 1(a) of the Schedule are "whether for performance in Hong Kong" (emphasis added) and they are not purposeless. They relate to one end of the spectrum of performance in that catch-all meaning (a) for "contract of employment" given in s.2 i.e. performance in as opposed to outside Hong Kong. Paragraph 1(a) isolates the contract for performance in (not, be it noted, outside) Hong Kong for inclusion. The words "whether for performance in Hong Kong" in para.1(a) of the Schedule cannot therefore be said to be a meaningless reproduction of part of that catch-all meaning of "contract of employment" in the definition section. These words seek to restrict, for the purposes of the Schedule, the all-encompassing meaning of "contract of employment" as given in s.2 to the two specified contractual relationships. These words are not useless surplus.

10. Turning to the "practical absurdity" complained of, Mr Cheung, counsel for the respondent offers a further example: statutory benefits and protection under the Employment Ordinance, even for a workman employed to work outside Hong Kong, may be claimed in the Labour Tribunal under para.1(b), para.4 and para.5 of the Schedule to the Labour Tribunal Ordinance. If an employment contract for performance outside Hong Kong were not to fall within the jurisdiction of the Labour Tribunal, it would, so counsel argues, produce the oddity that only claims for statutory benefits and protection in the Employment Ordinance under a contract of employment to be performed outside Hong Kong may be heard in the Labour Tribunal, but the pure contractual claims arising from the very same contract of employment for performance outside Hong Kong are barred from it.

11. It would seem that no absurdity in fact exists. Good sense requires a contract to be performed outside Hong Kong to be kept away from the Labour Tribunal unless the claims arising therefrom are well-defined and can be easily identified such as arrears of wages and statutory benefits and protection under the Employment Ordinance. A Cap.78 overseas contract is another example. The non-Hong Kong employer having no Hong Kong connection in these overseas contracts must furnish statutory particulars and follow a prescribed procedure, such as attestation before the employee's departure from Hong Kong and a prior medical examination. A ceiling is put on the duration of such an overseas employment. A bond or a guarantee may be required for the overseas employer's performance under these contracts. Non-compliance with the statutory requirements is made an offence. Where is the absurdity? In perfect unison with what I believe to be sound policy to keep Labour Tribunal proceedings simplistic, para.1(a) of the Schedule takes in these closely monitored overseas contracts. Without the statutory particulars and supervision, fortified perhaps by a bond or guarantee, a claim for money arising from an overseas contract may not always be easily resolved.

12. Stripped of "practical absurdity" and "statutory internal irreconcilability", it would be difficult to assume that the language in para.1(a) of the Schedule had stemmed from a draftsman's oversight or mistake.

13. Given a fair reading, para.1(a) of the Schedule is tolerably clear that the jurisdiction of the Labour Tribunal is limited to the two specified contracts of employment viz. a contract to be performed in Hong Kong and a Cap.78 overseas contract. Under s.8 of the Labour Tribunal Ordinance, the Schedule for jurisdiction may be swiftly amended by a resolution of the Legislative Council. The term "contract of employment" includes, by definition, also a contract of apprenticeship. If the meaning of "contract of employment" in para.1(a) of the Schedule had not been whittled down to the two said specified contractual relationships, there would have been no necessity to introduce in 1976 and thereafter maintain this separate item (aa) for a contract of apprenticeship. The need for an extra paragraph (aa) in the Schedule is indicative of the legislative intent to strike down the catch-all meaning (a) of "contract of employment" in para.1(a) of that Schedule. In my judgment, the Schedule excludes a contract of employment to be performed outside Hong Kong.

14. Finally I turn to consider whether the contract of employment in question was one to be performed in Indonesia. Performance of the contract was stipulated to be initially in Indonesia. The appellant as employer under that contract had not exercised its absolute discretion to transfer the respondent to Hong Kong. The contract of employment had been performed entirely in Indonesia up to its termination. In my view, the contract in question was one for performance outside Hong Kong. Although there was a possibility for performance in Hong Kong, that possibility had not been realised. We are not concerned with a contract subject to a possibility of performance in Hong Kong. The question for our consideration is whether it was one for performance in Hong Kong. Decidedly it was not. In any event, performance had initially to be in Indonesia and therefore the contract in question may at best be said to be a contract to be performed partly outside and (possibly) partly in Hong Kong. That would not come within the specified relationship of a contract of employment for performance in Hong Kong in para.1(a) of the Schedule.

15. The case of Re Pickup's Will, (1861)30 L.T.Ch.278 can offer no assistance. In that case, it was the intention of the testatrix to benefit "all and every the children of" her donee. The deceased's clear intention must be honoured by the court. It can be readily appreciated, therefore, why the words used in the same will of "whether by her present or any future husband" had to be rejected as surplusage.

16. The all-encompassing meaning (a) of the definition of "contract of employment" in s.2 of the Labour Tribunal Ordinance merely provides an aid to interpretation for general application so long as the context of the provision in which it finds itself does not otherwise require. The meaning is susceptible to restriction and is so restricted in para.1(a) of the Schedule to the Labour Tribunal Ordinance. Section 7 of the Labour Tribunal Ordinance coupled with para.1(a) of the Schedule sets the bounds for the Labour Tribunal's jurisdiction. For the reasons I have given, in para.1(a) of the Schedule "contract of employment" bears a more restricted meaning and is confined to the two named contractual relationships. The jurisdiction of the Labour Tribunal does not extend to an employment contract to be performed outside Hong Kong. The contract between the appellant and the respondent was such a contract over which the Labour Tribunal has no or no exclusive jurisdiction. I would allow the appeal and set aside the order of the judge. The amended order of the master is accordingly restored. I would make an order nisi for costs in favour of the appellant here and below.

Penlington, J.A.:

17. I agree with Liu J that this appeal should be allowed but as we are differing with the judge below on a difficult point of construction to which he has given very careful attention I will add a few words of my own.

18. In endeavouring to resolve the conflict between the wording of the definition section "wherever the services are to be rendered" and that in 1(a) of the Schedule Kaplan J was inclined to favour those in the section as against the Schedule because of those positions. I do not think that is a proper approach to interpretation. "A schedule in an act is a mere question of drafting, a mere question of words. The schedule is as much a part of the statute, and is as much an enactment, as any other part" A.G. v. Lamplough (1878) 3 Ex.D. 214 at 229 per Brett L.J.

19. Kaplan J properly transposed the words from the definition section into the schedule and having done so it does not read well. There is in my view a clear conflict between the words "wherever the services are to be rendered" and "whether for performance in Hong Kong or under an overseas contract ...".

20. Strong reliance was placed by Mr. Shum, counsel for the appellant employer, on the maxim expressio unius est exclusio alterius (to express one thing is impliedly to exclude another) as support for his contention that the words in para.1(a) of the schedule must mean that to come within the jurisdiction of the Labour Tribunal the contract of employment must either call for performance in Hong Kong or be one falling within the Contracts of Employment Outside Hong Kong Ordinance (Cap.78). By specifically including Cap.78 contracts the legislature must to be taken to have excluded all other contracts for performance outside Hong Kong. The inclusion of Cap.78 could not have been by way of example. If it was intended that breach of all contracts of employment, no matter where they were to be performed, were to come within the jurisdiction it would have been easy to say so. He referred us to the discussion of this proposition in Bennion on Statutory Interpretation 2nd Ed. p.873. The maxim was however not applied in Colquhoun v. Brooks (1887) 19 QBD 400 per Lopes L.J. at 404 "The exclusio is often the result of inadvertence or accident and the maxim ought not to be applied where its application, having regard to the subject matter to which it is to be applied, leads to inconsistency or injustice." I do not consider that to exclude contracts of employment which are to be performed outside Hong Kong from the jurisdiction of the Labour Tribunal is either inconsistent or unjust nor do I think the omission of a reference to other contracts calling for performance outside Hong Kong was due to inadvertence or accident.

21. That such is the case seems to me supported by the amendment made in 1976 by the Apprenticeship Ordinance which added subparagraph (aa) to paragraph 1. This specifically included contracts of apprenticeship in the jurisdiction of the Tribunal, despite the fact that such contracts are included in section 2. The only reason for doing so must have been that it was considered that apprenticeship contracts to be performed outside Hong Kong were not previously within the Tribunal's jurisdiction.

22. If there is ambiguity in a statute can the courts seek aid in resolving that ambiguity from "parliamentary material" i.e. Hansard or the explanatory memorandum accompanying a Bill? The answer to that before 1992 was "no" but in Pepper v. Hart [1992] 3 WLR, the House of Lords, by a majority, decided such a course was permissible if:

(a) There was an ambiguity.

(b) The statement came from a Minister or other promoter of the legislation.

(c) The statement relied on is clear.

23. The Lord Chancellor, Lord Mackay, dissented on the grounds that such a rule even though limited, would add to the material to be considered in deciding cases and would add to the cost of litigation. Lord Bridge at 49 said that the material should only be considered in "rare cases where the very issue of interpretation" was being considered. The other members of the House while clearly reluctant to open the flood-gates to consideration of parliamentary material did not seek to impose such a restrictive rule.

24. In the explanatory memorandum to the Apprenticeship Bill 1975 the then Attorney General, the Hon. J.W.D. Hobley Q.C. said that:

"Clause 49 contains consequential amendments to other ordinances. The amendment to the Labour Tribunal Ordinance extends the jurisdiction of the Labour Tribunal to certain claims arising from contracts of apprenticeship and under the Bill." (my emphasis)

25. This is, in my view, a clear statement from the equivalent of a Minister that clause 49 was intended to extend the jurisdiction of the Labour Tribunal and the only way it could do so was to thereby give jurisdiction to the Tribunal.

26. There is clear authority that in cases of ambiguity regard may be had to the way a statute has been subsequently amended. In Ormond Investment Ltd v. Betts [1928] AC 143 at 156 Lord Buckmaster cited with approval a statement of Lord Sterndale in Cafe Brandy Syndicate v. IRC [1921] 2 KB 403 at 414.

"'I think it is clearly established in Attorney-General v. Clarkson [1900] 1 Q.B. 156 that subsequent legislation on the same subject may be looked to in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation, if it proceed upon an erroneous construction of previous legislation, cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier.' This is, in my opinion, an accurate expression of the law, if by 'any ambiguity' is meant a phrase fairly and equally open to divers meanings,"

27. I realise that a finding that the Labour Tribunal does not have jurisdiction to consider all the terms of a contract of employment to be performed outside Hong Kong will have ramifications in connection with contracts, which are now common, between Hong Kong companies and employees where the company has a factory in China although there is jurisdiction in respect of statutory claims under the Employment Ordinance. However I cannot accept that such a consequence is absurd. The Labour Tribunal Ordinance was enacted to provide for the speedy resolution of contractual labour disputes, using inquisitorial means and without legal representation. There is a right of appeal only on an important point of law. There is no provision for discovery which, in the light of the defence filed in this action, will almost certainly be necessary. If any case involved difficult matters, especially of law, the Tribunal may decline jurisdiction and in all probability if this action had been originally brought in the Labour Tribunal it would have done so.

28. I would also allow this appeal and restore the claim.

Wong, J.:

29. For the reasons given by Liu J I agree that this appeal should be allowed.

Penlington, J.A.:

30. The appeal is allowed and the statement of claim is to be restored. We made an order nisi that the appellant is to have its costs before Kaplan J and of this appeal.