X V. MELVYN KAI FAN LAI LEIGH & ORGANGE LIMITED

DCEO 4/2016

[2019] HKDC 122

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EQUAL OPPORTUNITIES ACTION NO 4 OF 2016

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DECISION

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1.  This is the 1^st respondent’s application to vary the costs order nisi made herein on 30 November 2018. The 2^nd respondent, whose attendance has been excused, takes a neutral stance and has no comment on the application.

2.  By way of background, the claimant complained in this action that she had been sexually harassed by her supervisor, the 1^st respondent, whilst she was working under his supervision and that the 2^nd respondent, as her employer, had failed to do what was necessary to prevent sexual harassment in the workplace.

3.  By a judgment handed down on 30 November 2018, I dismissed the action after trial and made a costs order nisi in paragraph 189 of the judgment to the general effect that each party shall bear its own costs.

4.  By his summons, the 1^st respondent invites me to vary that order nisi and, instead, order the claimant to generally pay the 1st respondent’s costs of the whole action on a party and party basis and with certificate for counsel, to be taxed if not agreed.

5.  It is common ground that the normal rule of costs following the event does not apply to these equal opportunity proceedings.  Instead, section 73B(3) of the District Court Ordinance, Cap 336, 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;

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

6.  In ER v Li Kwok Chang, Lawrence [2018] 1 HKLRD 1104, I generalised a few principles from a number of local authorities, including D v S; FD v Shek Kwok Ngai [2017] 2 HKLRD 940, Sit Ka Yin Priscilla v Equal Opportunities Commission, unreported, DCEO 11/1999, 27 October 2010, and Cano-Shearer & others v Cathay Pacific Airways Limited, unreported, DCEO 1/2001, 1 November 2002.

7.  This morning, Ms Herbert for the 1st respondent and Ms Souza for the claimant each referred me to different aspects of the abovementioned local authorities as well as the overseas judgments referred to therein, such as ET Maler Limited v Robertson [1974]1 ICR 72 and Wilson v Phoenix contracting services Pty Ltd & Anor (1998) EOC 92-936.  Be that as it may, they do not really dispute the principles I generalised in the ER case.

8.  As I said in that case, if costs are readily ordered against unsuccessful claimants, those aggrieved by discrimination and related conduct such as sexual harassment may be deterred from seeking legal redress and the policy of the equal opportunity legislations would be frustrated.  This will not be conducive to the objectives of the legislations to eliminate discrimination and to change prejudicial attitudes that may exist in our society.  On the other hand, the court should be able to protect respondents from unmeritorious claims.  In an attempt to strike a balance, the legislature has decided that there should generally be no order as to costs, but the court retains the power to make an order in two exceptional circumstances, namely when the proceedings were brought maliciously or frivolously, and when there are special circumstances that warrant an award. The burden is on the one who asks for costs to demonstrate his entitlement.

9.  In this instance, the 1st respondent is invoking both the “frivolous limb” and the “special circumstances” limb.  In that regard, there is no dispute that, first, proceedings were brought frivolously when the claimant subjectively knew that there was no substance in his or her claim and that it was bound to fail.  A claim is also frivolous if, objectively considered, it is so manifestly misconceived that it can have no prospect of success.  Secondly, the court is given a wide discretion under the special circumstances limb to do justice.  Whilst it is impossible to list out all the circumstances in which costs may be awarded, the court should bear the rationale behind the costs arrangement in mind when determining the issue.

10.  Turning to the substantive argument, it is the 1st respondent’s case that the following four matters show that the claim was brought frivolously and they amount to special circumstances justifying an award of costs in his favour:-

(1)  the claim was time barred;

(2)  the claim was not supported by evidence;

(3)  the Equal Opportunities Commission (“the EOC”) chose to withdraw legal assistance from the claimant; and

(4)  the offers jointly made by the respondents to settle this case were not taken up by the claimant.

11.  On the first matter, whilst I agree that it should have been apparent to the claimant that her claim was not within time and that she could not have invoked section 82(2)(a) of the Sex Discrimination Ordinance to salvage the situation for want of a written certification from the EOC, it was by no means certain that I would not have exercised the residual discretion under section 83(3) in her favour to entertain her claim.  I do not agree that objectively viewed, the claim had no prospect of success and was deemed to fail.

12.  On the second matter, Ms Herbert has compared this case with the case of Sit Ka Yin Priscilla.  In that case, the court ruled that the claim was brought frivolously.  It was said that the case involved a personnel dispute between the parties and rested on suspicion on the part of the plaintiff without any supporting evidence.  It was also said that “there was not even one single hint in the evidence” to suggest that the impugned decisions had been affected by any of the proscribed grounds.  See paragraphs 10 to 12 of that judgment.  The court also ruled that there were special circumstances justifying an award of costs against the plaintiff in that case because if there had been no costs consequences, any person whose employment had been terminated by his employer might be encouraged to file an unmeritorious claim without any consequences.  See paragraph 13 of that judgment.

13.  In my view, this case is very different. 

(a)  No one has suggested that there had been any personnel dispute between the parties and I have ruled against the 1st respondent on his case that the claimant had been motivated to claim against him to avenge her boyfriend’s termination of employment.  See paragraphs 174 to 184 of the judgment.

(b)  Ms Herbert has made the point that much time was taken at trial unnecessarily to deal with the impugned WhatsApp messages.  As submitted by the claimant at the trial, these messages might be looked at differently if I had found for the claimant on her complaints involving physical contact and staring and scanning.

(c)  As submitted by Ms Souza, the court’s assessment after hearing all the evidence that the claimant had nonetheless failed to establish her claim does not detract from the extensive and detailed evidence provided by the claimant in support of her claim in this case.

14.  As sexual harassment in a workplace is likely to be covert, an award of costs against the claimant in the circumstances of this case would, in my view, deter those aggrieved by sexual harassment from seeking redress, and the policy of the legislations would be frustrated.

15.  On the third matter, there is no evidence as to why the EOC withdrew its legal assistance.  This is very different from the Cano-Shearer case cited by Ms Herbert, where the reason was apparent.  See paragraph 21 of that judgment.

16.  Ms Herbert has asked me to draw an adverse inference against the claimant for not explaining why legal assistance had been withdrawn.  I do not think I can do that.  There may be all sorts of reasons why the EOC chose to withdraw its legal assistance.  The point was not sufficiently canvassed at trial and we do not know, based on the present state of the evidence, if the claimant even knew the reasons.  In my view, it would not be fair to take this against the claimant when the underlying reason remains unknown.

17.  Lastly, the respondents offered $120,000 shortly after the commencement of the action to settle the claim.  That was rejected by the claimant.  The respondents later increased their offer to $300,000, which was also rejected. 

18.  The respondents’ offers involved the payment of money.  However, they were not made by way of a sanctioned payment in accordance with Order 22 of the Rules of the District Court.  If he had done so, he would have secured the consequences set out in Order 22, such as an order that the plaintiff would pay any costs incurred by the defendant after the latest date on which the payment or offer could have been accepted without requiring the leave of the court.

19.  The 1st respondent is presently seeking an even more favourable costs order, in that he is asking for the costs of the whole action.  Despite what was mentioned in their letter dated 12 August 2016 at the time of the first offer, Ms Herbert argued at the hearing that Order 22 procedure did not apply to these proceedings.  I do not agree.  Rule 4 of the District Court Equal Opportunities Rules, Cap 336G (“the EO Rules”), provides that the Rules of the District Court do apply with necessary modifications, to the extent of any matter for which no provision is specifically made in Part 2 of the EO Rules.  There is nothing in Section 73B of the District Court Ordinance or Part 2 of the EO Rules to displace the application of Order 22.

20.  In the circumstances of this case, it will make a mockery of the Order 22 procedure if the 1st respondent is able to get something that he could not have achieved had he diligently followed the Order 22 procedure.

21.  In any event, the claimant had made counter-offers in rejecting the respondents’ offers.  In relation to the last offer of $300,000, the claimant indicated that she was willing to receive a lesser sum in exchange of a letter of apology from the 1st respondent and a letter of regret from the 2nd respondent, which would be subject to terms of confidentiality to be agreed by the parties.  Somehow that was not taken up by the respondents.  In the end, I am not convinced that the claimant had unreasonably refused to settle with the respondents.

22.  For the above reasons, I reject the 1st respondent’s contention that the claim was frivolously brought or that there were special circumstances in this case to award costs against the claimant.

23.  I confirm that section 73B(3) of the District Court Ordinance should apply and make the costs order nisi absolute.