TAN, SHAUN ZHI MING v. EUROMONEY INSTITUTIONAL INVESTOR (JERSEY) LTD

DCEO 4/2017

[2018] HKDC 185

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EQUAL OPPORTUNITIES ACTION NO 4 OF 2017

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DECISION

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1.  This is the respondent’s application to strike out the Notice of Claim and to dismiss the action, principally on the ground that the claim is frivolous.[1]

2.  The application is resisted by the claimant. 

Background

3.  The claimant was an employee of the respondent.  His employment was terminated by the respondent on 21 June 2017.

4.  It is the claimant’s case, as stated in his Notice of Claim, that he was “unlawfully dismissed … following a false, unsubstantiated and improbable sexual harassment allegation made against him by a colleague, without proper investigation or due process” and his dismissal was “the result of sex discrimination against him because of his gender and the gender of his accuser”.  He commenced this action against the respondent based on ss 5(1)(a) and 11(2)(c) of the Sex Discrimination Ordinance, Cap 480 (“SDO”).

5.  The respondent denies the claim.  According to its Notice of Response, the claimant’s employment was lawfully terminated by the respondent by payment in lieu of notice in accordance with the claimant’s employment agreement (“the Agreement”).

Discussion

6.  This application is said to be based on Order 18, rule 19 of the Rules of the District Court (“RDC”) and the inherent jurisdiction of the court.

7.  The provisions of the RDC apply to these proceedings by virtue of rule 4(2) of the District Court Equal Opportunities Rules.  One of the objects of Order 18, rule 19 is to stop cases which ought not to be launched, such as cases which are obviously frivolous or vexatious, or obviously unsustainable.  A proceeding is “frivolous” when it is not capable of reasoned argument, without foundation or where it cannot possibly succeed.  See para 18/19/7 of Hong Kong Civil Procedure 2018.

8.  This court also has power to strike out, stay or dismiss actions which it holds to be frivolous or vexatious under its inherent jurisdiction. This jurisdiction is separate to that which exists under the RDC and the two may be invoked cumulatively or alternatively.  See para 18/19/11 of Hong Kong Civil Procedure 2018.

9.  The applicable legal principles have been summarised by the Court of Appeal as follows:[2]

“The principles governing strike-out applications are well established. Actions should only be struck out in plain and obvious cases, where the claim is incontestably bad and obviously unsustainable. There should be no trial upon affidavit, and disputed facts are to be taken in favour of the party sought to be struck out. Nor should the court decide difficult points of law in such applications. If the Court is left in doubt the jurisdiction to strike out should not be exercised: Ha Francesca v Tsai Kut Kan [1982] HKC 382 per Silke JA at 392; Hong Kong Civil Procedure 2018, para 18/19/4.”

10.  The short point taken by Mr Hart for the respondent in this application is that the claimant’s employment was lawfully terminated in accordance with the Agreement and there is no evidence of any discrimination.

11.  The claimant disputes the respondent’s case that his employment was lawfully terminated, making references to (i) the recording he covertly recorded of his conversation with Ralph Cunningham (the de facto supervisor of the respondent’s Hong Kong office) and Catherine Wong (from the respondent’s human resources office) on 21 June 2017; and (ii) the respondent’s solicitors’ letter dated 13 July 2017.

12.  In my view, it is clear from the documentary evidence that the respondent invoked clause 14.3 of the Agreement to terminate the claimant’s employment:

(a)   Clause 14.3 provides that: “Following probation, this Agreement may be terminated by either party at any time by giving to the other party not less than one month’s notice or payment in lieu.”  By this clause, either party may, after probation, terminate the claimant’s employment by giving one month’s written notice or making payment in lieu of notice.

This should be contrasted with clause 14.4 whereby the respondent may dismiss the claimant for the reasons mentioned in sub-clauses 14.4.1 to 14.4.3 (eg misconduct of the employee) without notice of termination or payment in lieu of notice.  In other words, clauses 14.3 and 14.4 are mutually exclusive.

(b)   The salary computation accompanying the letter of termination evidenced the fact that a sum of $21,666.66 (equivalent to 1 month’s salary of the claimant) was paid to the claimant as “Payment in lieu of one month notice”.  The claimant confirms that he has received the payment.

13.  I do not agree with the claimant that the respondent has been inconsistent with the basis of his termination.

14.  The claimant has prepared a transcript of the covert recording. Although the respondent has not confirmed its accuracy, I shall consider the transcript on its face value for the purpose of this application. 

15.  The following part of the transcript is pertinent: [3]

“…

R: Shaun, as you know, we’ve been investigating the claim that Joey made in the last couple of weeks. Since she made it, we’ve looked at all the evidence, we’ve interviewed all the people who were there [false][4] including her witness, we’ve taken legal advice, and we’ve come to a–

S: What witness?

R: –come to a decision.

C: There are a number of them… [names omitted][5]

S: Mmhmm.

C: –and Joey herself.

S: Uhuh. But how could they [names of the witnesses omitted] possibly have seen anything? They weren’t even sitting nearby.

R: We’ve come to a decision, and I regret to say we have decided to terminate your employment with immediate effect. We will pay you in lieu of notice and we are happy to offer you the chance to resign – we will also pay you in lieu of notice – but whatever your decision is we need your access card back immediately, we want you to leave the building immediately. If you need to collect anything from your desk we can arrange that now. If you want to come back and collect your personal effects, you can arrange that with Catherine to do that at a later date.

S: I see. Well this is really ridiculous. This is so, so stupid. I cannot believe– What did they even say? Usually there is a chance to meet your accuser and hear what they have to say. How could anyone have seen anything?

R: I remind you that under your contract we can terminate your employment within the first two years without reason and give you a week’s notice. [sic]

S: Without reason?

R: Yes, under Hong Kong law we are allowed to do that…

…

C: … according to the terms of your employment contract, it’s not just by the company, but as well as yourself, either party could terminate the contract by either giving payment in lieu of one month’s notice or one month’s notice. One day, for instance, if you resign, within the first two years of your service, we cannot force you to give us a reason, as long as you give us one month’s notice or payment in lieu of one month’s notice.

S: You are required to give me a reason, are you not? Like a valid reason.

C: No, I’m afraid we don’t have to.

…

C: So, this is the letter outlining the termination, and the second page is the final payment. You can take a look at it.

[Pause whilst I read]

S: Ok.

C: So, do you want to sign to agree the final payment calculation?

S: No.

C: Ok, so you can take this home…

…”

16.  It is apparent from the above that although the sexual harassment allegation against the claimant and the respondent’s investigation were mentioned in the conversation, the claimant’s employment was terminated by payment in lieu of notice in accordance with clause 14.3 of the Agreement.

17.  The claimant also refers to the letter dated 13 July 2017 from the respondent’s solicitors.  This letter was a reply to the claimant’s email before action dated 7 July 2017.

18.  In the claimant’s email, he threatened that: “Having obtained legal advice, I’ve decided to sue [the respondent] in the District court under the Sex Discrimination Ordinance unless my terms are met…”.[6]

19.  In reply, the respondent’s solicitors stated that:

“Having taken instructions, we reply to your email as follows:–

(a) the decision to terminate your employment with our client was, contrary to your allegation, not as a result of any claim made against you by any staff member as a result of any alleged inappropriate conduct by you at the Crystal Jade Restaurant at the lunch on 2^nd June 2017;

(b) rather, that decision was made as a result of your conduct during and following the investigation of that claim, when it became clear that your continued employment with the company justified a termination within Section 32K(a) of the Employment Ordinance (Cap 57);

(c) a meeting was therefore held with you on 21^st June 2017, where you were given the opportunity to resign but as you were not willing to do so, your employment was terminated that day by payment of wages in lieu of notice within Clause 14.3 of your Employment Agreement dated 16^th November 2016”.

20.  It is puzzling as to why the respondents’ solicitors invoked s 32K(a) in Part VIA of the Employment Ordinance, Cap 57 (“EO”).

21.  The claimant is complaining about sex discrimination under the SDO.

(a)   According to s 32Q(a) of the EO, Part VIA (which contains s 32K(a)) does not apply to acts of sex discrimination within the meaning of the SDO.

(b)   In any event, the Court of Appeal has made it clear that Part VIA does not afford general protection to employees against unfair dismissal.[7] Remedies will only be granted under Part VIA in the three scenarios mentioned in s 32A(1). 

Insofar as an employee is alleging the first scenario (ie the dismissal was intended by the employer to extinguish or reduce any right, benefit or protection afforded by the EO) or the third scenario (ie the dismissal was in contravention of any of the statutory provisions enumerated in s 32A(1)(c)), the employer may justify the dismissal in terms of s 32K.  It does not appear from the claimant’s email that the claimant was alleging either scenario and s 32A(1)(c) is not engaged.

22.  It is unfortunate that the reference to s 32K(a) has led the claimant into thinking that there were some other reasons for his dismissal. 

23.  Even if the respondent had found the claimant’s conduct during and following the investigation objectionable, the respondent chose to terminate the claimant’s employment in accordance with clause 14.3 but not summarily under clause 14.4. 

24.  As Chu JA (sitting as an additional judge of the CFI) recently explained in Ko Hon Yue:[8]

“… the employer having knowledge of circumstances that would entitle him to effect a summary dismissal, chose to terminate the employment by giving notice or payment in lieu of notice, he would be regarded to have waived his right to dismiss summarily and would be prevented from relying on his right of summary dismissal to defend a claim of wrongful dismissal when it turned out that the termination was wrongful on the ground that there was no contractual right to terminate on notice or the notice was insufficient and so on.”

It is therefore futile for the respondent to subsequently assert that the claimant’s conduct had given cause for summary dismissal when it had clearly and unequivocally elected to invoke clause 14.3 by making payment in lieu of notice.

25.  It is apparent from the claimant’s witness statement that his real complaint in this case is that:

“34. Ralph and Catherine suddenly came to a decision without allowing me to defend myself.

35. I was not given any opportunity:

- To hear what was said by the two other colleagues

- To face my accusers

- To cross-examine the witnesses

- To produce many witnesses in my defense

36. This drastic decision took me by surprise, as I never expected that anyone would do anything so stupid and unfair. I didn’t receive the minimum standards of due process. This wasn’t an investigation at all, I thought, as the company showed no interest in uncovering the truth – this was just the company covering its own backside and taking what it thought to be the path of least resistance

37. Moreover, it was obvious the company would not have treated a female employee in this disgrace manner and fired her based on such a flimsy and unsubstantiated accusation.  Because I am a male and my accuser was female, the company was so scared of being accused of not doing enough that it was willing to discard truth and due process to get rid of the issue as fast as possible.”

26.  The claimant is acting in person.  It is understandable that he is unable to elaborate on the legal basis of his claim.

27.  According to his Notice of Claim, his claim is based on ss 5(1)(a) and 11(2)(c) of the SDO.  Section 5(1)(a) is concerned with “direct discrimination”:

“A person discriminates against a woman in any circumstances relevant for the purpose of any provision of this Ordinance if–

(a)   on the ground of her sex he treats her less favourably than he treats or would treat a man;”

28.  That section applies “in any circumstances relevant for the purpose of any provision of this Ordinance” and the claimant has invoked s 11(2)(c) in Part 3 of the SDO which is in these terms:

“It is unlawful for a person, in the case of a woman employed by him at an establishment in Hong Kong, to discriminate against her–

…

(c)   by dismissing her…;”

29.  The above provisions apply equally to men, as s 6(1) provides that:

“Section 5, and the provisions of Parts 3 and 4 relating to sex discrimination against women, shall be read as applying equally to the treatment of men, and for that purpose shall have effect with such modifications as are necessary.”

30.  Section 10 is also relevant.  It requires that:

“A comparison of the cases of persons–

(a) of different sex under section 5(1);

…

shall be such that the relevant circumstances in the one case are the same, or not materially different, in the other.”

31.  Thus, the claimant’s complaint (reformulated in the language of the SDO) is that he was dismissed by the respondent on the ground of his sex and that the respondent would not have dismissed a woman in the same or not materially different circumstances.

32.  The Court of Final Appeal has said in Secretary for Justice v Chan Wah that:[9]

“In determining whether a particular arrangement involves sex discrimination, the Court of Appeal correctly adopted the ‘but for’ test enunciated by Lord Goff considering the Sex Discrimination Act 1975 in R v Birmingham City Council Ex parte Equal Opportunities Commission [1989] 1 AC 1155 at 1194 A-C:

‘There is discrimination under the statute if there is less favourable treatment on the ground of sex, in other words if the relevant girl or girls would have received the same treatment as the boys but for their sex. The intention or motive of the defendant to discriminate, though it may be relevant so far as remedies are concerned .... is not a necessary condition of liability; it is perfectly possible to envisage cases where the defendant had no such motive, and yet did in fact discriminate on the ground of sex.’

This test was applied in James v Eastleigh Borough Council [1990] 2 AC 751 where Lord Bridge pointed out that the test is an objective one (at 765D).”

33.  The claimant has conceded that there is no direct evidence showing that he was dismissed on the ground of his sex or that the respondent would not have dismissed a female employee in similar circumstances.  In other words, there is no direct evidence to satisfy the “but for” test.  Rather, he is hoping that the court would “infer” discrimination from the totality of his evidence as in Ip Kai Sang v Federal Elite Ltd [2008] 2 HKLRD 563 and L v Burton [2010] 6 HKC 463.

34.  It is incorrect for him to think that the court in those cases cited by him made a finding of discrimination by means of inference.  There was direct evidence of discrimination in both cases: see paras 27 & 29 of the judgment in Ip Kai Sang; and para 21 of the judgmentin Burton.

35.  The crux of the claimant’s complaint in this case is that the respondent has taken an easy way out.  Instead of properly investigating the sexual harassment allegation and affording him an opportunity to confront his accuser and her witnesses and to call his witness(es), the respondent chose to dismiss him.

36.  If I accept (for the purpose of argument) that the claimant had been treated unreasonably or even unfairly in the investigation process, that does not mean that the respondent had committed any act of discrimination under the SDO.

37.  As the English House of Lords explained in Glasgow City Council v Zafar:[10]

“The [Race Relations] Act of 1976 requires it to be shown that the complainant has been treated by the person against whom the discrimination is alleged less favourably than that person treats or would have treated another. In deciding that issue, the conduct of a hypothetical reasonable employer is irrelevant. The alleged discriminator may or may not be a reasonable employer. If he is not a reasonable employer he might well have treated another employee in just the same unsatisfactory way as he treated the complainant in which case he would not have treated the complainant ‘less favourably’ for the purposes of the Act of 1976. The fact that, for the purposes of the law of unfair dismissal, an employer has acted unreasonably casts no light whatsoever on the question whether he has treated the employee ‘less favourably’ for the purposes of the Act of 1976.

I cannot improve on the reasoning of Lord Morison, delivering the opinion of the court, who expressed the position as follows, 1997 SLT 281, 284:

‘The requirement necessary to establish less favourable treatment which is laid down by section 1(1) of the Act of 1976 is not one of less favourable treatment than that which would have been accorded by a reasonable employer in the same circumstances, but of less favourable treatment than that which had been or would have been accorded by the same employer in the same circumstances.  It cannot be inferred, let alone presumed, only from the fact that an employer has acted unreasonably towards one employee, that he would have acted reasonably if he had been dealing with another in the same circumstances.’”

38.  The above was elaborated by Elias J in The Law Society v Bahl as follows:[11]

“The reason for this principle is easy to understand. Employers often act unreasonably, as the volume of unfair dismissal cases demonstrates. Indeed, it is the human condition that we all at times act foolishly, inconsiderately, unsympathetically and selfishly and in other ways which we regret with hindsight. It is, however, a wholly unacceptable leap to conclude that whenever the victim of such conduct is black or a woman then it is legitimate to infer that our unreasonable treatment was because the person was black or a woman. All unlawful discriminatory treatment is unreasonable, but not all unreasonable treatment is discriminatory, and it is not shown to be so merely because the victim is either a woman or of a minority race or colour. In order to establish unlawful discrimination, it is necessary to show that the particular employer’s reason for acting was one of the proscribed grounds. Simply to say that the conduct was unreasonable tells us nothing about the grounds for acting in that way. The fact that the victim is black or a woman does no more than raise the possibility that the employer could have been influenced by unlawful discriminatory considerations. Absent some independent evidence supporting the conclusion that this was indeed the reason, no finding of discrimination can possibly be made. The inference cannot be drawn from the fact that other employers sometimes discriminate in such circumstances; it cannot be inferred that A discriminates merely because B, C and D have been known to do so in similar circumstances. That is a plainly deficient basis for inferring discrimination. It would be wholly unjust to make a finding of such serious import on such a flawed basis. Nor does it help to say that it is a finding which is open to a tribunal but which it is not obliged to make. It is unjustifiable to make it in any circumstances.”

39.  In the present case, discovery is complete and the claimant has exhibited all relevant documentary evidence in his affirmation in opposition (such as those discussed above).  He has also put in his witness statement.  In other words, I have before me all the evidence of the claimant.  There is really nothing to show that but for his sex the respondent would not have dismissed him.  An inference of sex discrimination cannot be drawn simply from the fact that the claimant happens to be male (or his accuser is female) or that the respondent has acted unreasonably or unfairly in the investigation.

40.  The claimant has no intention of filing a claim in the Labour Tribunal and is not alleging any breach of the Agreement or the EO on the part of the respondent.[12] The only basis upon which the claimant claims against the respondent is one which, by the foregoing analysis, is obviously unsustainable and cannot possibly succeed.  In my view, it would be against the underlying objectives of the RDC to allow the claim to proceed any further. [13]

Conclusion

41.  For the above reasons, I strike out the Notice of Claim and dismiss the action on the ground that the claim is frivolous.

42.  The respondent has asked for costs in the event that I grant the application. 

43.  Mr Hart has very fairly reminded me of s 73B(3) of the District Court Ordinance, Cap 336 which provides that:

“Each party to any proceedings in the Court in the exercise of its jurisdiction under the Sex Discrimination Ordinance (Cap 480) shall bear its own costs unless the Court otherwise orders on the ground that–

(a) the proceedings were brought maliciously or frivolously; or

(b) there are special circumstances which warrant an award of costs.”

44.  Although I have come to the conclusion that the claimant’s claim is frivolous, I have decided not to order costs against him.  As said above, the claimant has been misled by the letter dated 13 July 2017 into thinking that there were more to his dismissal. 

45.  In the circumstances, I shall follow s 73B(3) and order each party to bear its own costs.