Panalpina (Hong Kong) Ltd v. Ulrich Haldemann

HCA009664A/1982

Master and servant. Claim and counterclaim in High Court. Counterclaim for quantified but unliquidated damages. High Court most suitable forum. But exclusive jurisdiction given to Labour Tribunal under Labour Tribunal Ordinance. No discretion in High Court - compelled to stay counterclaim contrary to merits. Stewart & Others v. The Hong Kong Philharmonic Society Limited (unreported) followed: The National Ebauch Ltd. v. Rishi Kaumer Bhatnagar 1981 H.K.L.R. 114 not followed.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: The Hon. Mr. Justice Hunter.

Date: 16th June, 1983.

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JUDGMENT

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1. This case has revealed what I regard as a very unfortunate omission in the drafting of the Labour Tribunal Ordinance Cap. 25, namely the failure to give any discretion to the High Court. Section 7 of the Ordinance provides :-

I can see no escape from the conclusion that this section draws a rigid line between this Court and the tribunal, and that where the tribunal has jurisdiction this Court is excluded. The tribunal is expressly given a discretion to decline jurisdiction, section 10. No such discretion is given to the High Court. Sadly no one seems to have thought that the High Court ought to have such a discretion or that a core might arise in the High Court which, it was manifestly more just and convenient, should be tried there, for example by reason of its size or complexity, the conduct of the parties, or the fact that it spanned the dividing line sought to be drawn in the Schedule.

2. The facts alleged in the pleadings can be summarised simply. The defendant says that he was employed by the plaintiffs initially for 26 months, with provision for automatic continuance for a like period in the absence of prior determination. There was, he says, a detailed written contract containing provision for remuneration and a wide variety of fringe benefits such as accommodation, travel etc. The contract he says was automatically renewed for the further 26 months but he was then dismissed when there was some 14½ months still to run. During the contractual period the plaintiffs kept a running ledger account in the defendant's name which was debited with various payments made to him or on his behalf. At the time of the defendant's dismissal this account showed a balance in the plaintiff's favour of $35,828.02.

3. On 14th October 1982 the plaintiffs issued a writ for this sum on "an account stated and acknowledged". No particulars of the stating or acknowledgment were given. The plaintiffs sought summary judgment. The defendant. put in a defence and counter-claim, verified on affirmation, which:-

4. On 24th December 1982 the Master gave the plaintiffs judgment on the claim under Order 14, but ordered a stay of execution on the counterclaim. This order would seem to me to be wrong in form having regard to the defence of set off raised and from my part I would have given leave to defend. But the practical effect was the same so there was no appeal. The plaintiffs then launched the present summons which asks principally for:-

5. I am quite unable to see any merit in this application. The whole dispute arises out of the contract of employment. The so-called account stated and acknowledged was stated and acknowledged between master and servant, and the obligations in relation to it arose out of the service agreement.  The plaintiff chose to sue in the High Court and has obtained the benefit of a judgment therein. The pleadings are nearly complete in this Court. If well founded the counterclaim is potentially large, and is quite different from the simple, run of the mill, one month's notice type of case. It raises potentially difficult questions on measure of damages and mitigation. The case cries out for legal representation in the interests both of the parties and the Court. But I have found no escape from this statutory strait jacket.

6. The defendant relied principally on the decision of Roberts C.J. in National Ebauch Ltd. v. Rishi Kaumar Bhatnagar 1981 H.K.L.R. 114 to the effect that the Tribunal's jurisdiction was limited to claims for liquidated damages and that the High Court had jurisdiction to hear claims for unliquidated damages. The operative words in the Schedule are:-

7. Liquidated damages arise "where the parties to a contract, as part of the agreement between them, fix the amount which is to be paid by way of damages in the event of breach, ..... as a genuine pre-estimate", per McGregor en Damages 14th edition paragraph 341.   It is wholly exceptional to find such a provision it a service agreement. It is equally wholly exceptional to obtain specific performance of a. service agreement.   It follows that practically every case involving a breach of a service agreement gives rise to a claim for unliquidated damages, see Yip Wan-chiu v. Magnificent Industrial Ltd. 1974 H.K.L.R. 183. Section 8A of the Employment Ordinance (Cap. 57) may have added in Hong Kong a special category of statutory liquidated damages in certain circumstances. But this is only since 1975 and it cannot affect the. construction of a 1970 Ordinance.

8. But to say that damages are unliquidated is not to say that they are general in the pleading sense, or at large. With very few exceptions, e.g. loss of reputation, and more recently loss of a holiday, damages for breach of contract are not general but special, and have to be precisely particularised and quantified. Contracts of service are no exception to this. The claim here was thus properly particularised and quantified. In an attempt to defeat this application and to bring himself specifically within the National Ebauch decision the defendant applied for leave to amend the counterclaim (inter alia) by deleting the particulars. But when I pointed out that these particulars were essential to the claim, whether it was pursued in this Court or before the labour Tribunal, the application for leave to amend was abandoned.

9. In my judgment the phrase "sum of money" must be construed in the light of the fact that practically every claim for "breach of a term ..... of a contract" will be for damages unliquidated in law but quantified in practice. It follows, I think that the phrase must cover such claims.  I agree with Roberts C.J. that the legislature anticipated a "quantified" claim and a claim that was "ascertained" or ascertainable. But I regret that I cannot agree that this makes the claim one for liquidated damages, or that it limits m the Tribunal's jurisdiction to such claims. This conclusion seems to me to be supported by paragraph 3. No claim "founded in tort" can be for liquidated damages.  It may contain a calculated or special damages element; but the bulk is likely to be for general damages. I am much comforted to know that the same conclusion was reached by O'Connor J. on 18th December 1979 in Stewart and Others v. The Hong Kong Philharmonic Society Limited. Unfortunately as this decision was not reported, it was not cited to Roberts C.J.

10. A further complicating feature arose in National Ebauch because the claim there could be put both in contract and in tort. This raised the further problem as to whether the claim was "founded" in tort: How that concept was to be tested when both claims were equally open: And whether divided jurisdiction was inevitable with the Tribunal being compelled to hear one part and the High Court the other. Such futile barren arguments would also be avoided by the granting of discretion to the High Court.

11. I am therefore constrained by the rigidity of the Ordinance to make orders quite contrary to the merits of the case. I can only hope that the Tribunal itself may agree with me and exercise the discretion it alone has to decline jurisdiction, and refer the matter back. I have not been asked to interfere with the judgment on the claim and it would now be futile to do so.I now order:

Representation:

Mr. Benjamin Yu instructed by Messrs. Ronald Wong & Co. for Plaintiff.

Miss Ma of Messrs. S.P. Ma & Co. for Defendant.