ZHU LI v. MAYER BROWN JSM (a firm)

DCCJ 977/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 977 OF 2012

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DECISION

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Introduction

1.  On 7 September 2012 I made an order that the Amended Statement of Claim be struck out and the plaintiff’s action be dismissed (“the Striking Out Order”).

2.  I also made a costs order nisi that the plaintiff do paythe defendant’s costs of this action (including the costs of the application), to be taxed if not agreed with Counsel Certificate for the hearing on 28 June 2012 (“the Costs Order Nisi"). 

3.  On 20 September 2012, the plaintiff took out a Summons to (amongst other things): -

(a) seek leave to appeal the Striking Out Order; and

(b) vary the Costs Order Nisi.

(“the plaintiff’s Summons”)

4.  On 21 September 2012, the defendant also took out a Summons to (amongst other things) vary the Costs Order Nisi (“the defendant’s Summons").

5.  The defendant’s Summons was listed to be heard before me on 26 March 2013, and the plaintiff’s Summons, was listed to be heard before me on 6 August 2013.

6.  After my decision on 7 September 2012, the plaintiff has filed two affidavits dated 20 September 2012 and 25 March 2013 in support of her application.   In the Affidavit filed on 20 September 2012, in addition to setting out her grounds for leave to appeal and application to vary the Costs Order Nisi, the plaintiff sought to adduce additional evidence trying to re-argue the dispute.  The plaintiff also tried to adduce  fresh evidence in her Affidavit filed on 25 March 2013. 

7.  I shall deal with the fresh evidence contained in the affidavits when I come to consider the Plaintiff’s application for leave to appeal.

Costs Order Nisi

8.  The plaintiff seeks to vary the Costs Order Nisi to the extent that:

(a)  the defendant should pay the plaintiff her costs of this action on the ground that this action was caused by the defendant; and

(b)  alternatively, (i) the defendant should pay the plaintiff’s costs relating to the defendant’s application under O.12 r.8 and O.14A; and (ii) the Counsel Certificate should be disallowed altogether or most of the Counsel’s fees should be disallowed.

9.  On the other hand, the defendant applies to vary the costs order to the extent that:-

(a) the defendant should be allowed a certificate for two counsel;  and

(b) the defendant should be entitled to a sum of money summarily assessed in lieu of taxed costs.

10.  As I said before, the hearing of the defendant’s Summons was fixed for 26 March 2013, and the plaintiff’s Summons, was fixed for 6 August 2013.  At the hearing on 6 August 2013, Ms. Lam, appeared for the defendant, submitted that most of (if not all) the arguments of the plaintiff on variation of the Costs Order Nisi had already been submitted to me at the hearing on 26 March 2013, and it would be an abuse of the process for the plaintiff to re-visit or re-argue the same issue. 

11.  I find that there is no abuse of process as alleged because the submissions made by the plaintiff at the hearing on 26 March 2013 were to oppose the defendant’s application whilst the submissions made on 6 August 2013 were to support her own application.   Further, I note that I have not made a decision on the defendant’s Summons, and the principle of res judicata is inapplicable.    

12.  Notwithstanding that the defendant’s Summons was heard before the plaintiff’s Summons, I shall deal with the plaintiff’s Summons on the issue of costs first.

13.  The plaintiff, acting in person, submitted that the defendant (the winning party) should pay the costs of the plaintiff (the losing party) in the striking out application.  Upon reviewing my decision on 7 September 2012, I take the view that there is no sufficient justification in this case for me to depart from the general principle that costs should follow the event, and I reject the plaintiff’s submissions in this regard.

14.  Next, the plaintiff submitted that the defendant should pay the plaintiff’s costs relating to the defendant’s applications under O.12 r.8 and O.14A since the defendant withdrew the same only at the beginning of the hearing. 

15.  I am not persuaded by this argument either.  I have reviewed the hearing bundle for the substantive hearing, and noted that, in essence, the plaintiff’s argument was that there was no employer-employee relationship between the plaintiff and the defendant, and hence, the District Court should have jurisdiction over the dispute.  I find that the plaintiff would have run the same argument irrespective of whether or not the defendant had withdrawn its applications under the aforesaid orders, and it cannot be said that any costs have been wasted as a result of the withdrawal.

16.  Lastly, the plaintiff suggests that no Counsel Certificate should be allowed.  I shall deal with this below in detail.

Applicable principles

17.  The applicable principles are set out in the judgment by Master Poon, as he then was, in Xin Juan Trading Co. Ltd v NPH Petrochemical Ltd, unreported HCA 18159/1998, the material parts of which are reproduced in HKCP 2013 at 62/App/48, page 1183:-

“In Hong Kong, where the taxation is on the party and party basis, it has been held in Xin Juan Trading Co. Ltd v. NPH Petrochemical Ltd, unreported, HCA No. 18159 of 1998 and CACV No. 276 of 1998, by Master Poon, that Juby v. London Fire and Civil Defence Authority; Saunders v. Essex C.C., unreported, April 24, 1990, referred to in the Supreme Court Practice 1999, para. 62/A2/12 does not apply. The master, after ruling that it was justified to employ a senior counsel for the appeal, disallowed the fees of the junior counsel. After distinguishing the Juby case, the master stated the approach thus:

‘In the absence of a court order whether to allow two counsel on taxation is a matter of the taxing master’s discretion. The Court of Appeal will not interfere unless it can be shown that the master has erred in principle: Gorfin v. Odhams Press Ltd. [1958] 1 All E.R. 578, CA.

After the abrogation of the two counsel rule, the client and his solicitor, when instructing counsel, have to decide whether to instruct a leader and if so, whether to instruct a junior also? Depending on the choice made, the client will be represented either by a junior counsel alone, or by leading counsel alone, or by both. On taxation, the taxing master has to determine whether or not the costs were necessary or proper and he must necessarily do so after the event, when leading counsel was in fact instructed. Because leading counsel can now accept instructions without a junior, the first step is to ask whether it was necessary or proper to instruct a leader, even if one counsel was required or actually briefed. In this connection, the following factors are relevant:

(1) the nature of the case;

(2) difficult questions of fact or law;

(3) the complexity, difficulty or novelty of the issues involved;

(4) the skill, specialised knowledge or expertise required for the case;

(5) where money or property is involved, its amount or value;

(6) the importance of the matter to client;

(7) the general importance of the case, of example as affecting other case;

(8) if a junior counsel had already been instructed, the experience, competency and seniority of that junior;

(9) whether the other side has instructed a leader: see British Metals Corporation Ltd. v. Ludlow Brothers (1913) Ltd. [1938] Ch. 774.

The above list is not exhaustive. Depending on the circumstances, other reasons why a leader is required may exist.

The next question is if a leader is instructed, should a junior be instructed also. Again, the taxing master will have to decide if the employment of the junior was necessary or proper in the circumstances. Particular reasons why a junior may be necessary or proper include:

(1) assisting with the proper preparation of the case, for example, when the case was complex or heavy documentation is involved;

(2) assisting with the court proceedings by, for example, examining or cross-examining some witnesses, or dealing with a certain part of the case, for example, expert evidence or damages, etc;

(3) carrying out legal research on difficult or novel questions of law.

Again, these reasons are not exhaustive. Other may exist. But I do not think that senior counsel’s own wish to have a junior to assist him is relevant. Instructing a junior is justified only if the interests of lay client require so: cf. para.3, Annex 6 of the Hong Kong Bar Code.

Where a junior counsel has been instructed first and a leader is subsequently instructed, the same questions arise, namely, was it necessary or proper to instruct the leader and if so, was it necessary or proper to instruct or to retain the junior.  The relevant factors are the same.’”

18.  I have reviewed my decision on 7 September 2012 and also reminded myself of the general principle set out above.

19.  I have also taken into account that the plaintiff is acting in person.

20.  After balancing all the relevant factors, inter alia, the complexity of the issues and the importance of the hearing in the proceedings, I maintain my view that the hearing warrants the engagement of Miss Lisa Wong SC by the defendant.

21.  I now turn to the defendant’s application.

22.  Ms. Lam submits that it is necessary and proper to instruct a junior in the circumstances of this case:-

(a) to assist with proper preparation of the case, given the unusual points of law and remedies sought by the plaintiff;

(b) to carry out legal research on the various questions of law raised by the plaintiff’s pleadings; and 

(c) the engagement of junior counsel has resulted in some costs savings for the defendant, as leading counsel’s fees have correspondingly been reduced.

23.  On the other hand, the plaintiff submits that in the circumstances of this case, it is neither necessary nor proper for the defendant to engage one senior counsel plus one junior for the following reasons:-

(a) the nature of this case is an interlocutory for striking out, and the legal principles for striking out are well established;

(b) the plaintiff made no contentions to the relief for apology and investigation report at the substantive hearing.  In any event, such issues are straight forward and involve no difficult questions of fact or law;

(c) the sole issue for the Court’s determination is whether the Defendant’s pleaded case falls within the jurisdiction of the Labour Tribunal; and  

(d) this is a District Court case, and the amount involved cannot justify the engagement of a Senior Counsel.

24.  Although I find that the hearing warrants the engagement of Miss Lisa Wong SC, after taking into all relevant factors, I am not satisfied that this is an appropriate case to allow a certificate for two Counsel.  My reasons are as follows:

(1) issues identified are limited by the parties.  The extent of research is not as far reaching as contended by the defendant; and

(2) the substantive hearing was only a chambers hearing, and no cross examination of witnesses or detailed analysis of evidence required.

25.  I therefore refuse the defendant’s application to have a certificate for two Counsel. 

Summary Assessment

26.  I have heard submissions from both parties.  The whole action has been disposed of by the striking out application.  I agree with the defendant that the defendant’s costs of this action should be assessed summarily instead of going through taxation proceedings, in light of the spirit of the CJR.

27.  The plaintiff also raises an issue that the defendant’s costs should be treated as a litigant in person in assessing costs.

28.  In relation to this contention, O. 62, r. 28A(6) of the Rules of District Court clearly provides that for the purpose of assessing costs, a litigant in person referred to in r.28A does not include a litigant who is a practising solicitor. The defendant is a law firm in Hong Kong and hence should not be considered as a litigant in person pursuant to O.62 r.28A(6).

29.  I have reminded myself the 2-stage test for summary assessment as laid down by the Court of Appeal Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512.

30.  I have also considered the following factors in the assessment exercise- 

(1) Senior Counsel has been instructed, and there should be reduction of time allowed for the main fee earner of the defendant.

(2) Certificate for only one Counsel is allowed;

(3) The striking out application, by its nature, does not require a lengthy affidavit on factual issues;

(4) The defendant’s dual capacity as a “client” and “legal representative”; and

(5) Several items of disbursement claimed by the defendant should not be allowed in party and party taxation in any event.

31.  I assess the defendant’s costs at HK$267,000.00, namely HK$65,000.00 being profit costs, and HK$202,000.00 being disbursements (inclusive of fees of Miss Lisa Wong SC). 

Leave to Appeal

32.  The plaintiff also asks for leave to appeal. Her grounds are as follows (as per her draft notice of appeal filed on 30 July 2013): -

“ (1) The learned Deputy District Judge wrongly found that the parties disagreed as to whether the contract in question is a contract of employment. The Judge ought to have found that it was undisputed that there was no employment contract between the Plaintiff and the Defendant.

(2) The learned Deputy District Judge was wrong in fact and in law in holding that the contract in question was a contract of employment. The Judge was wrong to have relied on the Affidavit of Noeleen Marry Farrell dated 8 May 2012 on behalf of the Defendant in determining this factual issue. The Judge failed to have a due regard to the pleadings and affidavit evidence of the Plaintiff on the issue.

(3) The learned Deputy District Judge was wrong in law by looking at the pleadings only to determine if the Plaintiff’s case fell within the exclusive jurisdiction of the Labour Tribunal in that the court’s inherent jurisdiction was invoked and affidavit evidence was considered.

(4) The learned Deputy District Judge wrongly found that the Plaintiff’s claim for breach of contract was a claim for breach of a term(s) of a contract of employment in that the pleadings did not plainly disclose such a claim and in that it was undisputed that there was no employment contract between the parties. The Judge ought to have found that it was a claim for breach of contract falling within the jurisdiction of the District Court.

(5) The learned Deputy District Judge wrongly found that the Plaintiff’s claim for medical expense was a claim for breach of an implied term of a contract of employment in that the pleadings did not plainly disclose such a claim and in that it was undisputed hat there was no employment contract between the parties. The Judge ought to have found that it was a claim in tort falling within the jurisdiction of the District Court.

(6) The learned Deputy District Judge was wrong to rule out the Court’s jurisdiction to hear the Plaintiff’s claim for payment under the EO in that such claim was on the basis of no employment contract between the parties.

(7) The learned Deputy District Judge was wrong to consider whether the remedies for an apology and investigation report are available in law without fully examining the relevant facts and law. The Judge ought to have found that it was the cause of action but not the remedies sought that was decisive in this striking out application.

(8)  The learned Deputy District Judge wrongly exercised her discretion in striking out and dismissing the action in that this was not a plain and obvious case for striking out and in that legal viability of the cause of actions was sensitive to the facts concerning the nature of the contract in question.”

33.  The applicable principles for granting leave to appeal are set out  by the Honourable Mr. Justice Hartman JA (as he then was) in KNM v HTF v HMW v HFN HCMP 288/2011: -

8. Leave to appeal shall not be granted under section 63A of the District Court Ordinance unless this court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice that the appeal should be heard.

9. The relevant test of whether an appeal has a reasonable prospect of success under section 63A is whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal.  A reasonable prospect of success therefore means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be “probable”.

34.  As I said before, apart from repeating  her submissions and arguments which had been submitted to me at the previous hearing on 28 June 2012, the plaintiff  tried to adduce fresh evidence to support her application for leave to appeal.

35.  I shall now deal with such fresh evidence. As regards the Affidavit by the plaintiff filed herein on 20 September 2012, the fresh evidence disclosed includes: -

(i) a letter from the Beijing Office of the defendant to the plaintiff dated 9 August 2010 concerning the secondment of the plaintiff to the defendant;

(ii) correspondence exchange between the plaintiff and the defendant (including its Beijing Office) during the period from 9 September 2011 to 21 March 2012; and

(iii) the employment contract between the plaintiff and 中国国际技术智力合作公司 (“CICC”) dated 23 July 2010.

36.  As regards the fresh evidence disclosed in the plaintiff’s Affidavit filed herein on 25 March 2013, the fresh evidence disclosed includes-

(i) a contract made between CICC and the Beijing Office of the defendant dated 1 January 2010; and

(ii) a Defence dated 21 December 2012 prepared by the Beijing Office of the defendant in a Labour Arbitration in Beijing in opposition to the allegations made by the plaintiff in the arbitration together with a List of Exhibits dated 9 January 2013 (with no documents attached) (“the Arbitration Defence Documents”);

(iii) Official webpage of the defendant;

(iv) defendant’s Guide to Employment Laws in the PRC; and

(v) Email from the plaintiff to the defendant dated 9 May 2012. 

37.  It seems that the plaintiff is trying to re-argue that there was a tri-party relationship among the plaintiff, CICC and the Beijing Office of the defendant whereby the plaintiff was dispatched by CICC to work for the defendant’s Beijing Office, and the defendant’s Beijing Office subsequently dispatched the plaintiff to work for the defendant by way of secondment, and, hence, there was no employer-employee relationship between the plaintiff and the defendant, and as a result of which, I should not have held that the District Court has no jurisdiction over this dispute.

38.  The plaintiff also tried to rely on the averment made by the defendant’s Beijing Office in the Arbitration Defence Documents claiming that “事实上，朱力并未与孖士打香港建立任何劳动关系或雇佣关系，与朱力建立劳动关系的始终是中智公司，本代表处是用工主体” (in the plaintiff’s own translation: "In fact, Zhu Li has not entered into any labour relationship or employment relationship with Mayer Brown JSM in Hong Kong, as it was CICC with whom Zhu Li entered into Labour relationship all along and this representative office is the entity using the labour").

39.  It is settled that leave to adduce fresh evidence on appeal will not be given unless the conditions set out in Ladd v Marshall [1954] 1 WLR 1489 are satisfied:

(1)  The evidence could not have been obtained with reasonable diligence at the first instance.

(2)  The evidence, if adduced, would probably have an important influence on the outcome of the case.

(3)  The evidence must be such as is presumably to be believed.

40.  Having considered the fresh evidence as disclosed in the affidavits, save and except the Arbitration Defence Documents, the fresh documents so disclosed in the Affidavits should have been disclosed before the substantive hearing on 28 June 2012.  There had been no explanation from the plaintiff as to why such evidence could not be adduced at the first instance and, therefore, condition No.1 of Ladd v Marshall test has not been satisfied.

41.  Regarding the Arbitration Defence Documents, I am aware that it is impossible for the plaintiff to disclose the same at the substantive hearing.  However, the averment is no more than an assertion made by the Beijing Office of the defendant.  In this regard, I repeat my analysis in paragraphs 27 to 30 of my Decision and conclude in paragraph 31 that “The evidence before me was that the terms agreed between the parties were for an employment relationship, nothing else.”  In other words, even if the Arbitration Defence Documents are adduced, they would not probably have an important influence on the outcome of the case, and condition no. 2 of Ladd v Marshall test has not been satisfied.

42.  In the premises, I am of the view that the Ladd v Marshall test has not been satisfied and the fresh evidence shall not be admitted.

43.  The submissions in support of the grounds of appeal as set out before are simply repeated arguments and submissions that had been submitted at the hearing on 28 June 2012. They had already been dealt with in my decision dated 7 September 2012 and I shall not repeat my reasoning here again.

44.  Without any fresh evidence, there is nothing before me to show that any of the plaintiff's grounds of appeal can be established and I am, hence, not satisfied that there is a reasonable prospect that the Court of Appeal will form a decision different from mine.

45.  Accordingly, I consider that there is no reasonable prospect of success in the intended appeal and the plaintiff’s application for leave to appeal is therefore refused.

Order and Costs

46.  Neither the plaintiff nor the defendant has been fully successful on the issues on variation of the Costs Order Nisi.  I therefore, order that there be no order as to costs for (a) the costs of the defendant’s Summons and (b) the costs of the plaintiff’s Summons in relation to the plaintiff’s application to vary the Costs Order Nisi (which I apportion to be 30% of the costs of the plaintiff’s Summons).

47.  Regarding the costs in relation to the plaintiff’s application for leave to appeal, i.e. the remaining 70% of costs of the plaintiff’s Summons, I order that such costs should be awarded to the defendant.

48.  I therefore make the following Order: -

(a) the costs of this action be to the defendant and summarily assessed at HK$267,000.00;

(b) the plaintiff’s application for leave to appeal be dismissed;

(c) there be no order as to costs in relation to the defendant’s Summons dated 21 September 2012;

(d) 70% of the costs in relation to the plaintiff’s Summons dated 20 September 2012 be to the defendant;

(e) a statement of costs on the said 70% of the costs shall be filed and served by the defendant within 14 days from the date of this decision;

(f) grounds of objection shall be filed and served by the plaintiff within 14 day thereafter; and      

(g) there will be summary assessment of the paying party’s costs on paper without a hearing.

Delay

49.  The plaintiff complained about the delay of the resolution of this case and that justice has been denied because of the delay. For the record, I shall deal with this issue in this decision.

50.  After reviewing the whole Court file, I note that quite a lot of the delay was in fact caused by the plaintiff.  I set out the chronology below for the record.  

51.  My decision was handed down on 7 September 2012.  Thereafter, the parties took out their respective Summons and the hearing of both Summonses had been fixed to be heard on 5 December 2012.

52.  Subsequently, due to the plaintiff’s legal aid application made on 13 November 2012, I ordered that the hearing be adjourned with liberty to restore.  The plaintiff’s legal aid application was refused on 26 November 2012. 

53.  After the 42-day mandatory legal aid stay had expired, by their letter dated 11 December 2012, the defendant’s solicitors wrote to the Court to advise that their clerk would attend the Office of the Listing Clerk on 27 December 2012 to fix a date for the adjourned hearing of the defendant’s Summons.  Such letter had been copied to the plaintiff by email and registered post.

54.  By an email to the defendant’s solicitors dated 17 December 2012 with a copy to the Court, the plaintiff informed the defendant’s solicitors, inter alia, that “I shall only be able to fix a hearing date after a final decision on my legal aid application is given or affordable legal representation is obtained, whichever is earlier”.

55.  On 27 December 2012, the defendant’s Summons was re-fixed, to be heard on 22 January 2013, in the absence of the plaintiff. 

56.  By a letter dated 4 January 2013, the plaintiff wrote to the defendant’s Solicitors informing them that she would not be able to attend the hearing on 22 January 2013 as she was pre-occupied on that date, and requesting the hearing date to be re-fixed. A letter of similar contents dated 5 January 2013 was also sent to the Court by the plaintiff.

57.  After considering the respective written submissions made by the plaintiff and the defendant, I acceded to the request of the plaintiff to adjourn the hearing originally fixed for 22 January 2013.  Finally, the hearing of the defendant’s Summons was heard before me on 26 March 2013.  

58.  As to the plaintiff’s Summons, the plaintiff only restored the adjourned hearing on 27 March 2013 and this explains why the plaintiff’s Summons only came before me for arguments on 6 August 2013.