DEAN ALEXANDER ASLETT v. LANE CRAWFORD (HONG KONG) LTD

DCEO 3/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EQUAL OPPORTUNITIES ACTION NO 3 OF 2013

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DECISION

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Introduction

1. The Plaintiff is a European gentleman previously employed by the Defendant as a “Personal Shopper” in its high-end fashion retail business in Hong Kong. 

2. He was first recruited by the chairman of the Defendant, Miss Jennifer Woo, when he was in London in October 2009, and was appointed as a “Styling Consultant” of the Defendant from 1 February 2010 under a “service contract”[1] for a fixed term of 3 months.  The specific task of the Plaintiff was to conduct a review of the Defendant’s personal styling services as Miss Woo was not satisfied with how it was running at that time.

3. Upon completion of the “service contract”, the Plaintiff was offered a contract of employment with the Defendant for the post of Personal Shopper.  After some negotiations on the terms of the employment, the Plaintiff signed the offering letter on 7 June 2010 and started working again with the Defendant from 2 August 2010.

4. The Plaintiff tendered his resignation on 30 November 2010 and left the Defendant on 4 December 2010.  It was the Plaintiff’s case that he was constructively dismissed by the Defendant as a result of the Defendant’s ill-treatment on him, including race discrimination against him. 

5. The Plaintiff initially brought his claim, on 31 October 2012, at the Labour Tribunal for damages arising from the Defendant’s constructive dismissal of him.  As the Plaintiff’s allegations involved race discrimination, the Presiding Officer of the Labour Tribunal ordered a transfer of proceedings to the District Court[2], upon the Defendant’s dispute on the Tribunal’s jurisdiction.

6. Pursuant to the order of Master Dick Ho, the Plaintiff was directed to issue a fresh writ at the District Court.  There are at present two different ways to deal with cases transferred from the Labour Tribunal to the District Court: one is to direct that the Claim Form filed at the Labour Tribunal be deemed the Writ of Summons; and the other is to direct that a fresh writ be issued.  In this case, Master Ho adopted the latter and a fresh writ was accordingly issued on 15 March 2013 by the Plaintiff, attached thereto a Statement of Claims drafted by the Plaintiff himself.

7. Regarding race discrimination, the Plaintiff’s allegation is that his remuneration package is less favourable than that of his Chinese counterparts while he was given more onerous work-tasks to perform. He pleaded that this is a breach of section 10(2)(b) of the Race Discrimination Ordinance, Cap 602 (“RDO”). 

8. The matter before me is the Defendant’s application to strike out the Plaintiff’s Statement of Claims under O.18, r.19 of the Rules of the District Court (“RDC”).  Regarding the claims under the RDO, the main ground relied on by the Defendant is that they were time barred under section 80(1) of the RDO. On constructive dismissal, the Defendant says that the Plaintiff’s claims are frivolous and vexatious in that it has no chance of success on the merits; and he has suffered no loss or damage.

9. Under Paragraph 1 of the Defendant’s summons, the Defendant also relies on the ground that the Statement of Claim discloses no reasonable cause of action.

Relevant provisions under the RDO

10. Section 10(2) of the RDO provides that:

   (2)  It is unlawful for an employer, in the case of a person employed by that employer at an establishment in Hong Kong, to discriminate against that employee –

(a)  in the terms of employment which the employer affords that employee;

(b)  in the way the employer affords the employer access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford the employee access to them; or

(c)  by dismissing the employee, or subjecting him or her to any other detriment.

11. Under section 70, a claim by a person for discrimination acts under the RDO, including those under section 10, can be made the subject of civil proceedings in the like manner as any other claim in tort.

12. Nonetheless, section 80(1) of the RDO provides, inter alia, that the District Court shall not consider a claim under section 70 unless proceedings in respect of which are instituted before the end of the period of 24 months beginning when the act complained of was done.

13. On the other hand, section 80(4) gives the Court a discretion to consider any claim or application which is out of time if, in all the circumstances of the case, it considers that it is just and equitable to do so.

Limitation

14. In her written submission, Ms Elizabeth Herbert, counsel for the Defendant, highlighted the correspondences between the parties’ solicitors and submitted that the Plaintiff has no excuse for his delay in filing his claim.  She submitted that the Plaintiff’s claim on RDO was time-barred and hence it is an abuse of the court’s process.

15. However, Ms Herbert did not identify in her written submission the time when the act complained of was done and the time when the present proceedings were instituted.  She has proceeded as if the Plaintiff’s claim on the RDO is as a matter of fact out of time.  Obviously, Ms Herbert has regarded the date of the issuance of the fresh writ, that is, 15 March 2013 as the date of institution of the proceedings and hence, as the acts complained of by the Plaintiff should all have happened before his last day of work, they must be outside the 24 months’ limitation.

16. In my view, however, the issue as to whether the Plaintiff’s claim was time-barred is not that straight forward.  Although the fresh writ was issued on 15 March 2013, the Plaintiff has instituted the proceedings at the Labour Tribunal as early as on 31 October 2012.  The Plaintiff’s last day of work was on 4 December 2010 and if the act complained of was done at any time between 1 November 2010 and 4 December 2010; and if the time of institution of the proceedings is taken to be on 31 October 2012, the Plaintiff’s claim under the RDO shall not be time-barred.

17. We are, therefore, obliged to ascertain the time when the acts complained of were done and the actual time of institution of the proceedings.

18. It is not clear in the Statement of Claims what particular acts of the Defendant allegedly constituted race discrimination. The Plaintiff pleaded as follows:

“I resigned due to racial discrimination caused by intolerable working conditions that led to ill health and a sexual allegation that inept management failed to deal with, which I believe are grounds for my constructive dismissal.

My complaint is I resigned due to racial discrimination, a sexual allegation and subsequent ill health whilst working at Lane Crawford.

To summarise my complaint, I was treated differently to all my Chinese counterparts being that I am a white European. I can see no justification for this blatant breach of Section 10(2)(b) of the Race Discrimination [Ordinance].

I was given extra onerous work tasks to perform and comparatively less remuneration than my Chinese colleagues. The consequence of this was damaging to my self-esteem and health. Whilst carrying out the extra work tasks, I collapsed at work through exhaustion.

My contract of employment differed significantly from my Chinese counterparts. To summarise these differences taking into account the unique limitations imposed in my contract meant that I had to sell three times as much to achieve the remuneration as my Chinese counterparts.

Finally, I could not cope anymore with the discrimination and the effects on my health resulting in my resignation in December 2010.

I think it significant that I should summarise my treatment by my co-workers at Lane Crawford. Management ignored my ill health issues. I was vilified by my Chinese co-workers including a sexual allegation against me that resulted in further vilification and a retraction of the allegation that was not made known to me at the time.

One of my initial employment tasks was to conduct a review of my direct manager’s department and report directly to him (Mr Franz Kraatz).  My appointment was conducted by the chairperson, Miss Jennifer Woo.  My report highlighted many deficiencies with my manager’s work practice, which resulted in vilification and victimisation from the outset of my appointment and continued throughout, which resulted in me being constructively dismissed.”

19. As it appears, the Plaintiff’s claim on race discrimination rests on the alleged difference of treatment to him by his employer, the Defendant, in respect of his workload and remunerations, as compared to the Chinese employees at his level. 

20. Although vilification is mentioned in the Statement of Claim, apparently it is unrelated to the Plaintiff’s race.  As pleaded by the Plaintiff, it was about a sexual allegation against him which has later been retracted by the Defendant without notifying him.  In his affidavit[3], as opposed to what was mentioned in the Statement of Claim, the Plaintiff said that he was “subject to substantial vilification as his manager[4] set less favourable contract terms for him, as a result of being his junior co-worker and critiquing his work practice in his report, which he was tasked to do”.  Still, it has nothing to do with his racial origin.  

21. This paragraph in the affidavit, in my view, is a true reflection of the actual cause of the grievances of the Plaintiff against the company, as he thought he was being put into a position where he was doomed to be treated unfairly by his superior, due to the fact that he was once duty bound to criticize him in the course of reviewing his work.  This also coincides with what he has pleaded in the last paragraph of the above extract in his Statement of Claim.  This view is also supported by another paragraph[5] of the Plaintiff’s affidavit where he says:

“Clearly, there was no justification for treating me differently with respect to the opportunity to earn commission income. The essence of commission is that it is different from a wage/salary and is a merit-based payment that is designed to encourage both hard work and higher volume of sales. This discriminatory practice enabled my Chinese colleagues the opportunity to earn more by selling more. This discrimination caused me stress from the outset of my re-employment. I was disadvantaged at having to work so much harder than my Chinese colleagues for less remuneration. I believe Mr Kraatz victimised myself (no other stylists’ commission had been affected) as a result of my findings in the review I produced. (My emphasis)”

22. The above observations relate to the issue of whether the alleged differences in treatment are the result of race discrimination and will be revisited later.  Regarding the discriminatory acts complained of, namely the lower remunerations and heavier workload, they should be considered as happened throughout “the second employment”, i.e. from 2 August 2010 to 4 December 2010.  Therefore, if the date of commencement of this action is to be considered as on 31 October 2012, the 2 years limitation under RDO has not expired.

23. Order 79 of the Rules of the District Court (“RDC”) provides that:

“Save as is otherwise provided by Ordinance or rules of Court when a matter is transferred or removed from a tribunal to the Court, it shall be set down before a master who shall make such directions as he sees fit for the further conduct of the proceedings.”

24. In this case, as mentioned above, the learned Master ordered that a fresh writ be issued by the Plaintiff in respect of this matter.

25. For cases transferred from the Court of First Instance to the District Court, Order 78, rule 3 of the RDC provides that after the transfer, the action or proceeding shall proceed in the District Court as if, before transfer, it had been commenced and had proceeded there.  There is however no similar provision for cases transferred from the Labour Tribunal.

26. In my judgment, it would be unfair to a claimant of a case instituted at the Labour Tribunal, or equally the Small Claims Tribunal, to have to face the issue of limitation by virtue only because of the decision of the District Court Master sees it fit to order the issuance of a fresh writ.  In the present case, should the learned Master take the view that deeming the claim form as the writ is sufficient, or simply give other directions as are necessary to continue the proceeding at the District Court, for instance, order the exchange of pleadings right away, there will be no issue of limitation.

27. Although it is within the learned Master’s power to order the issuance of a fresh writ, and I understand that it is a convenient way to cater for the issue of service of the originating document in some cases, I do not think it is the appropriate direction to give at least for similar cases where there is no issue of service and limitation might be of relevance.

28. For the purpose of section 70, I find that, for proceedings instituted at the Labour Tribunal and transferred to the District Court, the date of institution of the proceedings at the Labour Tribunal shall be taken as the date of institution of the proceedings notwithstanding any subsequent directions being given by the District Court for issuance of a fresh writ. 

29. I find, therefore, the Plaintiff’s claims under the RDO in this case are not time-barred under section 70.

30. Having said that, however, it does not mean that the Plaintiff’s claims are not liable to be struck out.

Other grounds for striking out

31. It is only in plain and obvious cases that the court should exercise its summary powers to strike out any claim of pleading. 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[6]. 

32. In so far as the Plaintiff’s claim under the RDO is concerned, it is not sufficient to prove only that he has been treated unfavourably but also that he has been so treated because of his race.  Usually, for similar cases, there will not be any direct evidence as to the cause of the claimant’s mistreatment and the causation has to be inferred from circumstantial evidence.

33. In the present case, as depicted under the Plaintiff’s Statement of Claim, the alleged unfavourable treatment of his employer was, in the Plaintiff’s own case, a result of his criticism of his superior’s performance made when he was tasked to evaluate his superior’s work.  Apart from the fact that all the other colleagues of his rank, who happened to be of Chinese origin, are allegedly receiving a better remuneration, there is no mention of any basis upon which to infer that any such differences, if proved, was a result of his being different in his race.

34. As mentioned earlier in paragraphs 20 and 21 herein, this has been confirmed in the Plaintiff’s own affidavit.

35. In my view, the Plaintiff can under no circumstances persuade the court that there was a causal link between his alleged unfavourable treatment and his race.  Hence, no reasonable cause of action has been pleaded by the Plaintiff as there is no chance of success in so far as his claims under the RDO are concerned.

36. Besides, it is also my view that, given the Plaintiff’s clear evidence as to the cause of his alleged unfavourable treatments, the claims of the Plaintiff under the RDO were not bona fide and are vexatious. 

37. For the above reasons, the Plaintiff’s claims under the RDO are liable to be struck out.

Constructive Dismissal 

38. The doctrine of constructive dismissal is conveniently summarized in Halsbury’s Laws of Hong Kong[7]:

“An employee is justified in terminating the employment contract without notice and refusing to go on further in the event of his having a reasonable apprehension of danger to life or personal injury as a result of continuing the work. Such a right extends to cases where the employee has been misled into anticipating the provision of precautionary measures rendered reasonably necessary by the nature of the work. An employee is also permitted to terminate without notice where an employer subjects the employee to severe ill-treatment such as verbal abuse or fails to carry out the employer’s contractual obligations. So long as an employer’s contractual breach is of a sufficiently serious nature, an employee is permitted to terminate without the need to give notice.”

39. In essence, an employee is entitled to terminate the employment without notice when he was so badly treated by his employer or his employer has committed a breach of the employment contract, to a sufficiently severe extent that justifies the employee’s decision to immediately leave the employment.  An employee who has been constructively dismissed shall be entitled to all statutory benefits, for instances long service payment, severance payment, wages in lieu of notice…etc.

40. What was pleaded in the Statement of Claim concerning constructive dismissal is that:

“I resigned due to racial discrimination caused by intolerable working conditions that led to ill health and a sexual allegation that inept management failed to deal with, which I believe are grounds for my constructive dismissal.”

41. Whether or not there is constructive dismissal in a particular case is a question of mixed facts and law.  Apart from whether the employee can establish the alleged ill-treatment or breach of contract, it also depends very much on the gravity of the alleged mistreatment or breach of employment contract, if established.  These are questions to be tried.

42. Although I have much doubt on the Plaintiff’s chance of success in establishing constructive dismissal from his allegations, I cannot say at this stage that it is impossible.

43. However, the Plaintiff does not in his Statement of Claim ask for the proper remedies for a claim of constructive dismissal. What he has claimed instead are:

1.   The full salary (including commission) that I would have received had I had the same commission structure and rates as my Chinese Counterparts for the months from December 2010 to July 2011 (Eight Months) based on my previous performance from August 2010 to November 2010 (and Seasonally adjusted.) HKD 200,000.

2.   October and November 2010, I received no commission, so I wish to claim for this based on the same commission and rates as my Chinese Counterparts.  HKD 400,000.

3.   Damages to Health.  HKD 600,000.

4.   Damages to Feeling (making me suffer unnecessarily for over 3 months as a result of the allegation) (Treating me less favourably than my Chinese Counterparts).  HKD 600,000.

5.   Legal fees.  HKD 63,000.

6.   Damages to Career.  HKD 600,000.

7.   Punitive Damages.  HKD 600,000.

8.   TOTAL CLAIM HKD 3,063,000.

44. None of the above heads of damages are awardable in a claim of constructive dismissal.  Even if the Plaintiff can establish constructive dismissal, which I have much doubt in it, the Plaintiff will not be successful in claiming the above pleaded damages. 

45. Should there be any application before me to amend the Statement of Claim to include the proper head of damages for constructive dismissal, I would probably not allow it as the only claim left is now a pure employment claim which can be more appropriately dealt with by the Labour Tribunal.

46. In the premises, the Plaintiff’s claim on constructive dismissal is also liable to be struck out, but without prejudice to the Plaintiff’s right to bring this part of his action again at the Labour Tribunal.

Order

47. The Statement of Claim be struck out and the Plaintiff’s action against the Defendant, subject to paragraph 46 herein above, is dismissed.

48. I make a costs order nisi that costs of this action, including the costs of the Defendant’s time summons and striking out summons, be to the Defendant, to be taxed if not agreed, with certificate of counsel.  This costs order nisi will become absolute upon the expiry of 14 days from the date of this Decision.  Parties may apply to vary within the time.