RAJ KUMAR MAHAJAN v. HCL TECHNOLOGIES (HONG KONG) LTD AND OTHERS

CACV 46/2008 AND CACV 49/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 46 OF 2008 AND 49 OF 2008

(ON APPEAL FROM HCA NO. 954 OF 2005)

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J U D G M E N T

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Hon Rogers VP:

1.  I agree with the judgment of Le Pichon JA.

Hon Le Pichon JA:

2.  These are appeals from orders made by Burrell J on 24 January 2008 (1) allowing the plaintiff’s appeal and restoring leave to serve the second defendant out of the jurisdiction, and (2) dismissing the third defendant’s application to discharge orders that had granted leave to serve the third defendant out of the jurisdiction.  At the conclusion of the hearing judgment was reserved which we now give.

Background

3.  This is an action by the plaintiff against all three defendants to recover monies said to be due upon the termination of his employment in 2004.  There is a separate cause of action against the third defendant for breach of contract and breach of warranty arising out of two oral agreements relating to the plaintiff’s bonus.  The first defendant is the wholly owned Hong Kong subsidiary of the second defendant which is the holding company listed in India.  The third defendant is the chairman and chief executive of the second defendant.  The second defendant operates internationally, having some 34 subsidiaries worldwide.  The judge considered that the issue at the heart of these interlocutory proceedings is the identity of the plaintiff’s employer.

4.  The plaintiff’s claims against the defendants are to be found in the following paragraphs of Form 2:

“6.  By an oral agreement reached in a meeting held in Amsterdam on 24 February 1999 (the “Amsterdam Meeting”) between the Claimant and the 3^rd Defendant on behalf of the 1^st Defendant (the “Revised Contract of Employment”), the Claimant was employed by the 1^st Defendant as a Managing Director-Asia Pacific Region based in Hong Kong to oversee various offices of the HCL Group in the Asia Pacific Region beginning from 1 March 1999.

7.  The Revised Contract of Employment was partly evidenced by:-

(a)  a handwritten note prepared by the Claimant contemporaneously on 24 February 1999 (the “Amsterdam Note”);

(b)  a letter dated 5 March 1999 issued to the Claimant by the HRD Head;

(c)  a further letter dated 12 March 1999 issued to the Claimant by the HRD Head;

(d)  an employer’s return of remuneration and pensions for the year ended 31 March 2000 filed by the 1^st Defendant as employer to the Inland Revenue Department of Hong Kong.

8.  As regards the Amsterdam Note pleaded in paragraph 7(a) above:-

(a)  The Claimant was instructed by the 3^rd Defendant to prepare the Amsterdam Note to record certain specific items that were agreed in the Amsterdam Meeting on the same day.

(b)  The 3^rd Defendant had gone through the Amsterdam Note with the Claimant and suggested two corrections which were incorporated manually by the Claimant in the presence of the 3^rd Defendant:

(i)  The posting date was revised from 1 “May” 1999 to 1 “March” 1999;

(ii)  The words “till 30/6/2002” was inserted in point 5 of the Amsterdam Note.

(c)  The Claimant gave 3 copies of the Amsterdam Note to the 3^rd Defendant immediately on 24 February 1999.

  …

10.  Alternatively:-

(a)  The Amsterdam Meeting was held between the Claimant and the 3^rd Defendant on behalf of the 2^nd and/or the 3^rd Defendants.

(b)  The Claimant was employed by the 2^nd and/or 3^rd Defendants under the Revised Contract of Employment.

(c)  The Claimant was promoted and seconded by the 2^nd and/or 3^rd Defendants to the 1^st Defendant as the Managing Director-Asia Pacific Region with effect from 1 March 1999 pursuant to the terms pleaded in paragraph 9 above.”

In short, the claim is that the first defendant or the second defendant and/or the third defendant was the plaintiff’s employer.

5.  All three defendants have been served.  The claim is a “Form 2” claim made in the Labour Tribunal which has been transferred to the High Court.  On 13 June 2007, Master de Souza set aside the claim against the second defendant on the grounds that it did not fall within Order 11, rule 1(1)(c) and/or that there was no serious issue to be tried against the second defendant.  The plaintiff appealed that decision and the appeal came before the judge together with a summons by the third defendant to discharge five orders made by other masters which, taken together, granted leave to serve the third defendant out of the jurisdiction.  The judge allowed the plaintiff’s appeal from the master’s decision and dismissed the third defendant’s summons.

This appeal

6.  Mr Wong SC who appeared for the second and third defendants (collectively “the defendants”) challenged the judge’s decision on what he described as (1) the admission and jurisdiction point, and (2) the cause of action and no serious issue to be tried point.

The admission and jurisdiction point

7.  Mr Wong SC’s submission was that the judge had made an error of law in his approach to Order 11 because he had used as his starting point the causes of action in Form 2.  The basis of that submission appears to be founded on Mr Wong’s reading of Order 11, rule 1(1)(c) and Order 11, rule 4(1)(d) which provide as follows:

“ 1.-(1) … service of a writ out of the jurisdiction is permissible with the leave of the Court if in the action begun by the writ-

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    (c)    the claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto;”

“4.-(1) An application for the grant of leave under rule 1(1) must be supported by an affidavit stating-

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    (d)    where the application is made under rule 1(1)(c), the grounds for the deponent’s belief that there is between the plaintiff and the person on whom a writ has been served a real issue which the plaintiff may reasonably ask the Court to try.”

8.  Mr Wong submitted that a precondition of Order 11, rule 1(1)(c) is that there must be a claim brought against a person who is duly served within the jurisdiction (i.e. the first defendant) and the person out of the jurisdiction is a “necessary or proper party thereto”.  He stressed that some ‘emphasis’ has to be placed on the word “thereto”.  By that I understand Mr Wong to be saying that because of the additional requirement imposed by Order 11, rule 4(1)(d) regard is to be had to the claim brought against the first defendant alone at the time leave is sought and nothing else.

9.  The Form 2 was served on 19 April 2005.  The first defendant’s defence was filed on 28 May 2005, admitting that it was the plaintiff’s employer.  It was said that, consequently, by the time the leave application was made on 15 July 2005, the issue of the identity of the employer had ceased to be an issue and as a result of that admission, the only ‘real issue’ left was the assessment of quantum.  It was further submitted that had that matter been brought to the attention of the court, leave would never have been granted because it could not be said at the date of the leave application that the second defendant and the third defendant were necessary or proper parties to the ‘real issue’ left against the first defendant.

10.  Stated simply, the plaintiff’s case is that one or more of the three defendants is/are liable for the sums claimed.  Had the first defendant not made an admission in his defence, there would be no question but that the second and third defendants would be “necessary or proper parties” to the plaintiff’s claim.  Although indirectly put, Mr Wong’s submission, in essence, is the same as that made below, namely, that the first defendant’s admission operates as a bar to the plaintiff’s continuation of his action against the second and third defendants.  The judge addressed and (in my view correctly) rejected that argument for the reasons stated in paragraphs 11, 13 and 14 of his judgment.

11.  In my view, the first defendant’s admission does not have the effect of binding the plaintiff so that he cannot thereafter pursue other defendants whom he is suing in the alternative.  It is one thing for the plaintiff, when presented with such an admission, to decide to drop his action against the others defendants.  It is quite another to say that he has no choice in the matter.  It is certainly of potential advantage to the plaintiff to have the ability to choose against which of several defendants to enforce judgment.  I agree with the judge that alternative pleas may be advanced in parallel and that the alternative is not necessarily “secondary”.

12.  Further, I do not consider that Order 11 is to be read in the manner Mr Wong suggests.  Under rule 1(1), regard can properly be had to “the action”.  The action has to be looked at as a whole and there is nothing there that suggests that only the claim against the defendant within or out the jurisdiction who has been duly served should be considered.  Order 11, rule 4(1)(d) does not alter or affect that reading of rule 1(1).  As stated in Hong Kong Civil Procedure 2009 at 11/1/17, the reason for rule 4(1)(d) is to “safeguard against a specious claim against the original defendant being used as a device to found jurisdiction to serve another party outside the jurisdiction”.  Plainly, that requires a consideration of the entire action.  To isolate out and to have regard only to the claim of the defendant who has been duly served would be to adopt an unnecessarily ‘blinkered’ view and there is nothing in the rules to justify such an approach.  To the contrary, the annotation to Order 11, rule 1 (at 11/1/7) states:

“(d)  The court must decide the application on the basis of the cause or causes of action expressly mentioned, in the writ or statement of claim…”

13.  Further, as Mr Smith SC who appeared for the plaintiff submitted, the first defendant’s admission does not provide an answer to the question whether other persons might also be his employer.  Where the plaintiff has chosen to bring alternative claims against different defendants, it is a matter for him if he does not wish to accept, at that stage of the action, that the first defendant is his only and true employer.  I agree.

14.  For all these reasons, Mr Wong’s submission on jurisdiction falls to be rejected.

The cause of action/no serious issue to be tried point

15.  Mr Wong submitted that there is a fundamental distinction between what is pleaded in paragraphs 6-8 and 10 of Form 2 (set out in § 4above) and what he termed the “one set of facts” case where one set of facts is pleaded and it is to be inferred from the facts as pleaded that either A or B or C offered the employment.  Mr Wong’s reason for saying that what has been pleaded is nota “one set of facts” case appears to be because the plaintiff’s case is firmly grounded on the agreement reached at the Amsterdam meeting.

16.  Paragraphs 6-8 and 10 of Form 2 state no more than that an agreement was reached but it remains unclear whether the third defendant was acting on behalf of the first defendant or the second defendant or himself.  The March letters appear to support that position.  For my part, I consider the substance of what the plaintiff has pleaded indistinguishable from what the “one set of facts” case described by Mr Wong and I have considerable difficulty discerning the ‘fundamental distinction’ to which Mr Wong made reference.

17.  Paragraph 7 of the pleading referred to four documents as evidencing the agreement reached.  Mr Wong seized on the fact that Mr Smith’s skeleton submissions (at § 8 (2)) described three of them, being the three letters (“the March letters”) issued by Mr Baksi, the executive vice president of the Human Resources Development Department of the second defendant (“the HRD”), as “extremely ambiguous”.  It was said that since, on the plaintiff’s own case, the evidence in support was “extremely ambiguous”, he has failed to demonstrate that there is a serious issue to be tried.

18.  The March letters were issued by the head of the HRD.  But he was not an officer of the first defendant.  The letterhead used was that of a company bearing the same name as the second defendant but has an address in Bermuda rather than India which is where the second defendant is resident.  It has nowhere been suggested that the plaintiff’s employer was a Bermudan company.  Put in this context, the March letters are plainly equivocal as to the identity of the party offering employment to the plaintiff.  Hence the source of instructions given to the Bermudan company and the HRD that resulted in the March letters being sent to the plaintiff is a matter to be resolved at trial which, in turn, could throw light on the issue of the true employer(s).

19.  The judge recorded three of the twelve factors identified by the plaintiff as pointing to his employment by the second defendant and noted that the third defendant authorised a number of financial transactions directly involving the plaintiff, such as personal loans and bonuses.  Suffice it to say that I see no basis for interfering with the judge’s conclusion that the plaintiff has carried the burden of demonstrating that there is a serious issue to be tried.

Conclusion

20.  I would dismiss this appeal.  I would also propose that there be an order nisi of costs in favour of the plaintiff.

Hon Rogers VP:

21.  There will accordingly be an order in terms of paragraph 20.