Au Kwai Fun, Judy and Others v. Cathay Pacific Airways Ltd

DCEO 4/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EQUAL OPPORTUNITIES ACTION NO. 4 OF 2007

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BETWEEN

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Coram : HH Judge Lok in Chambers

Date of hearing : 24 September 2007

Date of submission of further written submissions : 22 October 2007

Date of handing down of Decision : 7 January 2008

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DECISION

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1.This is an application by the Respondent, made by summons issued on 3 July 2007, for an order, pursuant to O. 18 r. 19 of the Rules of the District Court, Cap. 336 (“RDC”), that the Claimants’ Statement of Claim be struck out or alternatively, pursuant to O. 14A of the RDC, for the determination of the questions of law specified in the said summons, and in either case for the dismissal of the action.   

2.The application is supported by the Affirmation of Li Ka Lai Elizabeth, who is the Cabin Crew Administration Manager of the Inflight Services Department of the Respondent.  The facts set out in Ms. Li’s Affirmation are not controversial as no affidavit evidence has been filed on behalf of the Claimants to oppose this application.

Background of the application

3.It is the Claimants’ case that the Respondent had unlawfully discriminated against them by reason of their being women in respect of the terms of employment it afforded them and subjecting them to a detriment contrary to ss. 5(1)(a), 11(2)(b) and 11(2)(c) of the Sex Discrimination Ordinance, Cap. 480 (“SDO”).

4.The Claimants joined the Respondent as cabin attendants on various dates between 1975 and 1979.  Under the conditions of service applicable to the Respondent’s flight attendants by that time, female flight attendants were normally required to retire from service in that capacity upon attaining the age of 40, though with the possibility, but no assurance, of being transferred to ground duties thereafter, whereas male flight attendants were normally permitted to continue in service in that capacity until they reached the age of 55.

5.These conditions of service provided for the payment to flight attendants of a retirement grant upon being compulsorily retired at the retirement age applicable to their sex according to a formula whereby the amount of the retirement grant in any particular case was, in part, calculated by reference to the number of eligible years of service (“the Old Scheme”).

6.Each of the Claimants was compulsorily retired when respectively they each reached the age of 40.  They were then each paid a retirement grant according to the prescribed formula.  After their compulsory retirements, each of the Claimants accepted a series of 5-yearly extension contracts on much the same terms as applied to their previous employments save and except that they were expressly excluded from any further retirement benefits (“the Extension Contracts”).

7.The SDO was then enacted in Hong Kong in 1996.  On various dates in 1997 and 1998, the fifth of the Extension Contracts of each of the Claimants expired when they reached the age of 45, and the Claimants ceased to work for the Respondent altogether.

8.In 1999, the Respondent offered to re-employ former flight attendants, including all the Claimants, on terms, inter alia, as follows: (a) the flight attendants would be re-employed in the same capacity when they previously left the Respondent; and (b) the Respondent would provide each such person with full compensation for loss of salary, allowances and bonuses for the period between the date of cessation of employment and the date of commencement of re-employment.  For easy reference, this period would be referred to in this judgment as the “Gap Years”.

9.Each of the re-employment contracts also contained a term in the following similar wording:

“

Full and Final Settlement of All Outstanding Claims

By signing these terms of reinstatement you hereby accept such terms freely and as full and final settlement of any claims that you might otherwise have against the [Respondent] either in respect of the circumstances under which you previously employment was not renewed or in respect of any remedies, whether arising by statute or otherwise, that you might otherwise have, or have had, against the [Respondent] in respect of such non-renewal.”

10.The terms on which the Claimants were offered re-employment provided that, on acceptance, the Claimants would be eligible to join the Respondent’s Provident Fund Scheme (“PFS”).  The PFS rules in place in 1999 provided that only the years of service after a cabin attendant, whether male or female, joined the PFS would count for the purposes of calculating retirement benefits.

11.After their final retirements at the age of 55, the Claimants obtained the retirement benefits under the PFS.  However, it is the Claimants’ case that the Old Scheme is a more generous scheme as compared with the PFS, and the retirement benefits obtained under the PFS are much less as the Respondent did not take into account the Gap years as eligible years of service in calculating the retirement benefits.

12.On the basis of these facts, the Claimants allege that, taking the period of employment of each Claimant as a whole from her first engagement to her final retirement at the age of 55, they had been subject to a “continuing regime” of discrimination by reason of their sex which was only partially remedied by their re-employment and the terms on which such re-employment was offered to them.  It is also the Claimants’ case that terms in the re-employment contracts made in 1999 were discriminatory in nature, as they were less favourable than those offered to their male counterparts who joined the Respondent at the time of the first engagement of each of the respective Claimants.  The Claimants therefore claim for the loss of the retirement benefits that they would otherwise have got under the Old Scheme by reference to the years of service from their first engagements until their final retirements at the age of 55.  The total amount of the claims is about $10,000,000.

13.The Respondent disputes the claims on the following grounds:

(i)	it is wrong in law to view each Claimant as having been continuously employed by the Respondent from her first engagement to her final retirement at the age of 55, and so it cannot be said that the Claimants were subject to a “continuing regime” of discrimination;
(ii)	the offers of re-employment made in 1999 were made in full and final settlement of any claims that the Claimants might otherwise have had against the Respondent, and so the Claimants are bound by the settlement agreements;
(iii)	s. 11(4) of the SDO provides a defence to the Respondent as it specifies that statutory provisions prohibiting discrimination would not apply to “provision relating to death or retirement” made for a woman before 15 October 1997;
(iv)	the Claimant’s claims are time-barred under s. 86(1) of the SDO; and
(v)	the terms of the re-employment agreements made in 1999 were not discriminatory in nature.

The meaning of “employment” under the regime of the SDO and waiver of the claim

14.As the first two issues are inter-related, I will deal with them together.

15.In substance, the Claimants’ claims are framed in the following manner.  The entire history of each of the Claimants’ employment from the first engagement to the final retirement at the age of 55, including the period when she was engaged on a series of the Extension Contracts, each of just 1-year’s duration after the mandatory retirement upon attaining the age of 40, the subsequent cessation of her service upon reaching the age of 45, and the period of service since she was reinstated, involved a continuing course of conduct by the Respondent which was unlawfully discriminatory against each Claimant within the meaning of the SDO.  Although the Respondent, under the re-employment agreements, paid the Claimants compensation for the loss of earnings which they had suffered during the Gap Years, they were not compensated for being precluded from accruing retirement benefits during: (a) the 5 years of the Extension Contracts; and (b) the subsequent period of exclusion from the Respondent’s service, and they therefore suffer damages as a result.

16.It is submitted by Mr. Collins, counsel for the Claimants, that the offer of re-employment made in 1999 was, in the first place, an explicit recognition by the Respondent that the Claimants should never have been compulsorily retired at all.  The decision to make that offer was undoubtedly prompted by the changes in the legal framework brought about by the enactment of the SDO, and that was why the offer letters sent to the Claimants in 1999 contained, inter alia, the following:

“	I attach a copy of a CX CCNL Special newsletter of 16th July 1999 advising of the Company’s decision to extend the retirement age to 55 years of age for female cabin crew, who joined the Company before July 1993.  This will ensure that we comply with the Sex Discrimination Ordinance that was introduced in December 1996.
	In light of the above decision to extend the retirement age, we would like to offer you the opportunity to return to your position as if you had not left the Company, i.e. you will receive the salary and benefits that you would have had had you continued your service with the Company. ………
	Please note that this is offered as a one-off opportunity, due to the change in legislation with the Sex Discrimination Ordinance, and that if you do not wish to take it up there will be no entitlement to do so in the future.”

17.Mr. Collins also submits that even according to the “farewell” or reference letters sent to the Claimants when they finally retired, they were treated as if they had served the Respondent from their first engagements to their final retirements at the age of 55, and it was only in the letters sent to the Claimants on 14 September 2007 that the Respondent sought to amend the years of service in each reference letter by deducting the Gap Years.  Hence, according to the Claimants’ submission, the object of the re-employment was to restore that which had been unlawfully taken away from the Claimants and to re-establish the continuity of an employment which was unlawfully interrupted, and it is therefore an error to treat the reinstatement of employment simply as a matter of re-employment.

18.In support of his submission, Mr. Collins relies on the judgment of the Court of Appeal in Helen Tsang v Cathay Pacific Airways Ltd (No. 2) [2001] 4 HKC 585.  In that case, the claimant worked as a cabin attendant for the same Respondent.  She reached the age of 40 in 1992 and was asked to retire by the Respondent but she, like the Claimants in the present case, continued to work for the Respondent under a series of back-to-back contracts.  After the claimant reached the age of 45 in October 1997, she was not offered any extension of her employment.  Instead of accepting the offer of re-employment in 1999, she brought an action for unlawful discrimination against the Respondent.  At the first instance, HH Judge Saunders, as he then was, ruled the case in favour of the claimant.

19.At the hearing of the appeal, the Respondent argued that even though its retirement policy prior to 1993 was discriminatory, but since the claimant’s employment ended in October 1992 when she received the retirement entitlements, and thereafter she was employed on separate and independent contracts of one year’s duration, there was no contravention of the provisions in the SDO which only came into effect on 20 December 1996 during the currency of the claimant’s last extension contract.  As the statutory provision did not have any retrospective effect, the contract of employment was not unlawful.  The Respondent further argued that the trial judge was in error in considering that the claimant’s employment was continuous as “employment” in the light of the actual contractual context.

20.In upholding the judgment of the lower court, the Court of Appeal held that:

(i)	the SDO should be interpreted with a purposive approach so that its objects could be achieved, and it was clear that the SDO went beyond any contractual terms which might have been concluded between the employer and the employee;
(ii)	it was employment at large which afforded a person with the statutory protection under the provisions in the SDO, and so the claimant was in the employment of the Respondent when the SDO came into effect;
(iii)	in the case of discrimination in the field of employment, what mattered was the existence of a policy or regime pursuant to which decisions may be taken from time to time, not a specific act of an employer which triggered its application to the complainant; and
(iv)	throughout the claimant’s employment by the Respondent, there was a discriminatory policy in place with reference to which decisions were taken from time to time, and so the discrimination suffered by the claimant was not a “one-off” act that predated the entry into force of the SDO, rather it was a continuing act of discrimination that extended to the end of the period during which the claimant was employed by the Respondent.

Based on the aforesaid, the Court of Appeal held that the lower court was right in holding that the Respondent was guilty of discrimination when the SDO came into effect.

21.In law, it is clear that there was no employment relationship between the Claimants and the Respondent in the periods from the respective dates on which the last of the Claimants’ respective Extension Contracts expired until the dates on which they were each re-employed, ie. the Gap Years.  However, the Claimants submit that the court, in construing the protection under the SDO, should go beyond the terms in the employment contracts.  Coupled with the fact that the Respondent had, by reference to its acknowledgment in the reference letters and the same capacity in which each of the Claimants was re-employed, treated the Claimants as its employees from their first engagements to their final retirements at the age of 55, the Claimants claim that they had been subject to a continuing regime of discrimination, and the waiver clause in the so-called “re-employment” agreements does not have any effect for the purpose of determining the Respondent’s liability under the SDO.  As the retirement benefits obtained by them are less than those received by the comparable male cabin attendants who joined the Respondent at the dates of the respective Claimants’ first engagements, the Respondent is liable to pay compensation for its unlawful discrimination.

22.I cannot accept such argument.  As I see it, there are two important distinctions between the facts in the Helen Tsang’s case and those in the present one.  In the former, although the claimant was working under the last of her Extension Contracts at the time of the enactment of the SDO, there was no break in the employment relationship between the parties, and so one can still say that the claimant was by then subject to a continuing regime of discrimination.  However in the present case, each of the Claimants ceased to work for the Respondent after the termination of the last Extension Contract, and there was a de facto break in the employment relationship in the Gap Years.  In such circumstances, it cannot be right to say that the Claimants still worked for the Respondent in the Gap Years even for the purpose of the SDO.  The second important distinction is that there was a waiver clause in each re-employment agreement which would, in my judgment, operate to extinguish the Claimants’ claims.

23.To me, the relationship between the parties was a simple one.  The Claimants ceased to work for the Respondent after the expiry of their last Extension Contracts.  Prior to that, the Claimants had been subject to a regime of discrimination under the Respondent’s past retirement policy.  After the enactment of the SDO in 1996, the Claimants were entitled to commence action for unlawful discrimination against the Respondent, just like the claimant in the Helen Tsang’s case.  In order to avoid such legal claims, the Respondent, after the termination of the Claimants’ respective employments under the previous regime, offered to re-employ the Claimants on terms common to all the cabin attendants by that time.  The Respondent also offered to pay compensations to the Claimants, on the condition that the Claimants agreed to waive any claims arising from the past discriminatory retirement policy.  This was a genuine attempt to settle all legal claims arising from the previous unlawful act, and to allow the Claimants to continue with the existing claims is simply contrary to the terms of the settlement agreements made in 1999.  Hence, the waiver clause operates to extinguish the claims.

24.I entirely agree with the approach adopted by the Court of Appeal in the Helen Tsang’s case.  As the SDO is a piece of social legislation with a view to eliminate sex discrimination, the statutory provisions should be construed in a manner which would not defeat the object of the legislation.  However, I cannot see why the legislature should prevent an employer, who had previously adopted a discriminatory practice, to make a genuine attempt with the employee to settle a claim arising from the past unlawful act and for them to make a fresh start in their relationship.  If the Claimants’ argument is correct, it would never be possible for parties to settle a discrimination claim, as the court would always reopen the issue and to examine whether the employees have been adequately compensated under the settlement agreements.

25.We can also test the Claimants’ argument in another way.  Suppose in 1999, the Respondent offered to pay monetary compensations without the option of re-employment to the Claimants to settle any claims arising from the previous unlawful discrimination.  Each Claimant agreed and a settlement agreement was reached.  In such case, even Mr. Collins cannot dispute that the settlement agreements are binding on the parties, and the court would not reopen each agreement by examining whether the settlement sum is reasonable by comparing that with the benefit that would have been received by a comparable male cabin attendants who joined the Respondent at the time when each of the Claimants was first engaged.  In such case, why is the inclusion of the re-employment as part of the settlement agreement makes the difference?

26.Neither can the Claimants benefit from the statements made by the Respondent in the reference letters about the years of service of each of the respective Claimants.  Obviously, the Respondent made a mistake in the first batch of letters which it sought to rectify in subsequent correspondence.  In any event, what the Respondent said about the years of service is not relevant for the court in determining the true legal relationship between the parties, whether under the regime of the SDO or otherwise.

27.At one stage, Mr. Collins seems to suggest that the settlement agreements are not genuine ones as the Claimants had no alternative to the terms being put forward if they desired to be re-employed.  As Mr. Collins puts it, “the Respondent had the Claimants over a barrel”.  But I do not agree.  Firstly, there is no affidavit evidence put forward by the Claimants to substantiate such allegation.  Secondly, it is clear that after the enactment of the SDO, the Claimants had the right to commence legal actions against the Respondent to claim for damages arising from the early unlawful dismissal of the Claimants, just like the claimant in the Helen Tsang’s case who had decided to exercise such right.  With such option available to them, the Claimants were not bound to accept the Respondent’s offers.  Thirdly, as part of the settlement agreements, the Respondent offered to pay full compensation to the Claimants for the loss of salary during the Gap Years, even if the Claimants were not actually working for the Respondent by that time.  Although the income earned by the Claimants from other employment might be deducted from the compensation, the Claimants, in getting the full compensation for loss of salary, did not need to go through the scrutiny of the court in assessing their damages, for example, whether they had discharged the duty of mitigation of loss.  In such case, the re-employment offered to the Claimants in 1999 was, in my judgment, a genuine attempt by the Respondent to settle any claims arising from the previous discriminatory retirement policy.  Having accepted the settlement terms, the Claimants have no right to maintain the present claims.

Validity of the waiver clause

28.Mr. Collins further submits that the waiver clause in the re-employment contracts is either void or unenforceable under ss. 87(1)(b) and 87(2) of the SDO.

29.I disagree.  S. 87 reads as follows:

“	87.	Validity and revision of contracts
		(1)	A term of a contract is void where-
			(a)	its inclusion renders the making of the contract unlawful by virtue of this Ordinance;
			(b)	it is included in furtherance of an act rendered unlawful by this Ordinance; or
			(c)	it provides for the doing of an act which would be rendered unlawful by this Ordinance.
		(2)	Subsection (1) shall not apply to a term the inclusion of which constitutes, or is in furtherance of, or provides for, unlawful discrimination against a party to the contract, but the term shall be unenforceable against that party.
		(3)	A term in a contract which purports to exclude or limit any provision of this Ordinance is unenforceable by any person in whose favour the term would operate apart from this subsection.
		(4)	Subsection (3) shall not apply to a contract settling a claim to which section 76 applies.
			………”

30.It is clear from s. 87(4) that the prohibition against contracting-out would not apply to a term in a settlement agreement.  As the waiver clause is part of the settlement agreement, it is not void under the section.  However, Mr. Collins makes two submissions about the section.  Firstly, s. 87(4) provides that s. 87(3) shall not apply to a contract settling a claim to which s. 76 applies.  As the waiver clause is not a provision which purports to exclude or limit any provision of the SDO, such clause is not a term falling within s. 87(3).  It then follows that s. 87(4) has no relevance.  Secondly, Mr. Collins argues that s. 87(4) contemplates a claim which is actually in being, at least to the extent that a letter before action asserting it has been made and possibly that proceedings have actually been commenced.  It does not apply to a contract to compromise in advance all conceivable and still yet inchoate claims which may arise.

31.I also cannot subscribe to such arguments.  Had there been no settlement agreements, the Claimants would have the right to commence legal proceedings for sex discrimination against the Respondent.  The effect of the waiver clause is to exclude and limit the Claimants’ right under the SDO, and it is therefore a term falling within s. 87(3).  It then follows that s.87(4) is applicable in the present case.

32.Further, s. 87(4) does not refer to a claim in being, and instead it mentions a claim to which s. 76 applies.  S. 76, on the other hand, provides that a person who has committed an act of discrimination within the meaning of the SDO may be made the subject of civil proceedings in like manner as any other claim in tort, and proceedings of such nature can be commenced in the District Court.  According to the plain wording of such statutory provision, there is simply no requirement for the issuance of pre-action letter or the commencement of legal proceedings in order to justify the legitimacy of the settlement agreement.  Hence, if a person has a possible claim under the SDO, it is permissible for the relevant parties to settle the claim under s. 87(4). 

33.As I understand the position, one of the duties of the Equal Opportunities Commission is to facilitate parties to a complaint to settle any possible discrimination claim.  With such effort, a lot of conciliation agreements would be made before the commencement of legal proceedings.  If Mr. Collins’ argument is correct, these conciliation agreements would not be binding and it would not be possible for any parties to settle a discrimination claim before the commencement of legal action.  This simply cannot be right.  Hence, the waiver clause in the 1999 re-employment agreements operates to extinguish the Claimants’ claims.

Exemption under s. 11(4) of the SDO

34.This would have been sufficient to dispose of the present application.  However for the sake of completeness and not to waste the effort of the research conducted by counsel, I feel obliged to deal with the remaining issues in this application.

35.It is the Respondent’s case that it can benefit from the exemption in relation to retirement provision in s. 11(4) of the SDO.  S. 11 reads as follows:

“	11.	Discrimination against applicants and employees
		(1)	It is unlawful for a person, in relation to employment by him at an establishment in Hong Kong, to discriminate against a woman –
			(a)	in the arrangements he makes for the purpose of determining who should be offered that employment;
			(b)	in the terms on which he offers her that employment; or
			(c)	by refusing or deliberately omitting to offer her that employment.
		(2)	It is unlawful for a person, in the case of a woman employed by him at an establishment in Hong Kong, to discriminate against her -
			(a)	in the way he affords her access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford her access to them;
			(b)	in the terms of employment he affords her; or
			(c)	by dismissing her, or subjecting her to any other detriment.
			………
		(4)	Subject to subsection (5), subsections 1(b) and (2) shall not apply to provision in relation to death or retirement made for a woman before 15 October 1997 in so far as any such provision continues for that woman on and after that date.
		(5)	Subsections (1)(b) and (2) shall apply to provision in relation to death or retirement of the kind mentioned in subsection (4) in so far as, in their application to such provision in relation to retirement, they render it unlawful for a person to discriminate against a woman-
			(a)	in such of the terms on which he offers her employment as make provision in relation to the way in which he will afford her access to opportunities for promotion, transfer or training or as provide for her dismissal or demotion;
			(b)	in the way he affords her opportunities for promotion, transfer or training or by refusing deliberately omitting to afford her access to any such opportunities; or
			(c)	by dismissing her or subjecting her to any detriment which results in her dismissal or consists in or involves her demotion.”

36.Ss. 11(4) and 11(5) were actually adopted from s. 6(4) of the Sex Discrimination Act (“SDA”) in England.  As regards the reason why “provision in relation to death or retirement” was treated as an exception, Browne-Wilkinson J expressed the following view in Robert v Tate & Lyle Food and Distribution Ltd. [1983] ICR 521, at pp. 528-529, which was approved by Lord Templeman in Duke v Reliance System Ltd. [1988] 1 AC 618 at p. 637A:

“

We consider that the purpose of section 6(4) is fairly apparent.  Parliament, in enacting the [SDA] of 1975, was seeking to eliminate all discrimination between men and women.  However, it was faced by a widespread and inherently discriminatory practice deeply embedded in the social organization of the country, namely, the differential in retirement ages between men and women.  This differential treatment was blatantly discriminatory.  However, the effect of such discriminatory practice percolated throughout society.  State pensions reflected the differential; the vast majority of occupational pension schemes reflected the differential; normal ages of retirement maintained the differential.  Accordingly, unless all this was to be swept away, the [SDA] had to exclude claims arising out of this inherently discriminatory practice.  For this reason section 6(4) appeared in the [SDA].”

37.In England, it was held in Roberts v Cleveland Area Health Authority, Garland v British Rail Engineering Ltd., MacGregor Wallcoverings Ltd. v Turton [1979] 1 WLR 754 that the words “provision in relation to death or retirement” in s. 6(4) of the SDA means provision “about” death or retirement, with the additional comment by Lord Denning that such phrase is indeed “very wide” (at p. 757B).  As the claims herein relate to the differential treatments under the previous retirement scheme of the Respondent, they are prima facie covered by the exemption under s. 11(4).

38.However, the matter does not rest here as the exemption is subject to the qualifications in s. 11(5).  In this regard, Mr. Collins provides me with a useful account about the historical development of the corresponding statutory provision in England, which is extremely helpful in assisting the court in construing the ambit of the exemption.  As this part of the judgment would only be obiter dicta, I would try my best to be as brief as possible.

39.When the SDA was enacted in 1975, s. 6(4) just provided that provisions concerning unlawful discrimination in the employment context did not apply to “provision in relation to death or retirement”.  There was no provision similar to s.11(5) of the SDO.  As the wording of the exemption was “wide”, a number of different retirement-related provisions were held by the English Court of Appeal in Roberts v Cleveland Health Authority, Garland v British Rail Engineering Ltd., MacGregor Wallcoverings Ltd. v Turton, ibid. as falling within the ambit of the exemption.  In the case of Roberts, retirement scheme which provided for differential retirement ages for men and women fell within the exemption.  In the Garland’s case, the Court of Appeal held that retirement scheme which provided for differential travel concessions for the families of ex-employees after retirement, with families of male ex-employees entitled to obtain the travel concessions but those of female ex-employees did not, was also covered by the exemption.  The last case of MacGregor was about a complaint by a woman that she was discriminated against because of differential retirement ages for men and women, with 65 for men and 60 for women, depriving her of the benefit of a redundancy scheme by which employees over 60 who were made redundant received 10 weeks’ additional pay because she, as a woman, could never qualify for it.  All these schemes fell within the exemption.

40.Only the case of Garland proceeded to the House of Lords, and there was then an issue as to whether discrimination as to the post-retirement travel concessions was compatible with the European Community law.  A preliminary ruling was sought from the European Court of Justice (“ECJ”), which held that the practice was discriminatory under Article 119 of the Treaty of Rome (the E.E.C. Treaty): the travel concession was an extension into retirement of facilities granted during employment, thereby enabling them to be treated as “pay” for the purposes of that Article.  The House of Lords accordingly allowed the appeal, thus restoring the decision of the Employment Appeals Tribunal which had interpreted s. 6(4) as not extending so far as to cover a privilege that had existed during the subsistence of the employment.

41.Despite the successful appeal in the Garland’s case, the decision in the Robert’s case, which concerned the lawfulness of imposing different retirement ages, remained untouched.  As a result, the courts in the latter cases of Robert v Tate & Lyle Ltd. [1983] ICR 521 and Duke v G.E.C. Reliance Ltd., ibid., held that schemes which concerned differential retirement ages for men and women were covered by the exemption.

42.There was then an important development in the case of Marshall v Southampton and South West Hampshire Health Authority [1986] 2 All ER 584, which was heard shortly before the case of Duke v G.E.C. Reliance Ltd., in which the English Court of Appeal referred the dispute to the ECJ for a ruling about the compatibility with the Community law.  This related to another simple differential retirement ages scheme, and the ECJ held that such differential provision offended the guarantee of equal treatment of sexes enshrined in Article 5(1) of the Council Directive 76/207, which reads as follows:

“	Application of the principle of equal treatment with regard to working conditions, including the conditions governing dismissal, means that men and women shall be guaranteed the same conditions without discrimination on the grounds of sex.” (emphasis added)

Article 7(1) of the Directive only exempted differential ages for granting retirement pensions in the form of social security benefits.

43.The ECJ reinstated the view it had taken in the earlier case of Burton v British Railways Board [1982] 3 All ER 537 that the term “dismissal” contained in Article 5(1) must be given a wide meaning, and the following comment was expressed in the judgment:

“	Consequently, an age limit for the compulsory dismissal of workers pursuant to an employer’s general policy concerning retirement falls within the terms ‘dismissal’ construed in that manner, even if the dismissal involves the grant of a retirement pension.” (at p. 598h)

44.This landmark decision prompted the legislature in England to make urgent amendments to the SDA and the Equal Pay Act to bring them in line with the Community law as declared in the Marshall’s case.  As a result, s. 6(4) of the SDA was substantially revised in 1986 with the addition of a provision similar to the existing s. 11(5) of the SDO.  It also brought an end to the uncertainty as to whether retirement scheme which provided for dismissals upon attaining different retirement ages was lawful.

45.When the SDO was enacted in 1996, the Hong Kong legislature decided to adopt the same modifications in s. 6(4) of the SDA, and so the historic development in England provides a very good background for me in construing the meaning of our ss. 11(4) and 11(5).  In my judgment, as the word “dismissal” is used in ss. 11(5)(a) and 11(5)(c), it is clear that a retirement scheme which provides for differential retirement ages, even if such scheme was made prior to 15 October 1997, is unlawful, because such scheme provides for the dismissal of female employees upon reaching an earlier retirement age.  This must be the case, otherwise the claimant in the Helen Tsang’s case would not have been able to succeed in her claim, and this is also in line with the English position taking into account the requirement of compliance with the Community law.  However, if the retirement scheme just provides for differential retirement benefits for male and female employees which does not involve dismissals upon reaching different retirement ages, for example the provision of differential travel concessions as in the Garland’s case, then such scheme may fall within the exemption.

46.Notwithstanding the above, the Respondent submits that the claims herein are covered by the exemption.  As I understand it, the argument runs as follows.  It may be the case that a scheme which provides for differential retirement ages is unlawful, and the aggrieved employees can make a claim for loss of salary that could have been earned by them had they not been unlawfully dismissed at an earlier retirement age.  However, such employees cannot claim for loss of retirement benefits arising from such earlier dismissal, because such claim is one which concerns “provision relating to retirement” and is therefore caught by the exemption.

47.If that is the argument put forward by Mr. Ashley Burns S.C., counsel for the Respondent, that simply cannot be right.  As the retirement scheme which provides for differential retirement ages is unlawful, a claim for loss of retirement benefits would only be part and parcel of the claim for unlawful discrimination.  What should be considered by the court is that whether the retirement scheme as a whole is covered by the exemption.  If such scheme does not fall within the exemption and is unlawful, as it is in the present case, the aggrieved employees would be able to claim for loss of retirement benefits together with other loss of earnings, as these are all damages arising from the unlawful discrimination on the part of the employer.

48.As I see it, with the qualifications in s. 11(5), the ambit of the exemption under s. 11(4) is rather limited.  It would only cover cases where the differential treatments in the retirement scheme do not involve dismissal, promotion or transfer of an employee, otherwise it would be difficult for the employers to rely on such exemption.  In the present case, since the previous retirement policy involved early dismissals of the Claimants which resulted in loss of retirement benefits, the Respondent cannot rely on the exemption under s. 11(4).  Hence, although it is only an academic point, I find against the Respondent on such issue.

Time-bar

49.Based on my ruling above on the continuity of the employment contracts, it would not be too difficult for me to deal with the two remaining issues in the present case.

50.It is also the Respondent’s contention that the claims are time-barred under s. 86(1) of the SDO, which provides that the court shall not consider a claim under the SDO unless proceedings in respect of the claim are instituted within 24 months from the time when the act complained of was done.  S. 86(3) empowers the court to extend the time for the commencement of the claim if it is just and equitable to do so. 

51.It is the Claimants’ argument that they had been subject to a continuing regime of discrimination from their first engagements by the Respondent to their final retirements, and so the time for the commencement of the action would not have started to run until the dates of their respective final retirements at the age of 55.  However, as I have analyzed above, the Claimants had ceased to work for the Respondent after the respective dates of the termination of their final Extension Contracts upon reaching the age of 45.  Before that, it can be said that the Claimants had been subject to a continuing regime of unlawful discrimination, just like the claimant in the Helen Tsang’s case.  However, after they had obtained the retirement benefits under the Old Scheme and they had ceased to work for the Respondent, it would be too far fetched, even considering the object of the SDO, to say that they were still subject to a continuing regime of discrimination.  The time for the commencement of proceedings then started to run when they were unlawfully dismissed by the Respondent upon the expiry of their last Extension Contracts.  They had the right to bring legal proceedings against the Respondent for the past discrimination, but the Claimants decided not to do so and chose to accept the offers of re-employment made by the Respondent in 1999.  As I see it, such offers were made with a view to settle any claims arising from the past unlawful discrimination, and so the re-employment represented a fresh start in the relationship between the parties.  Hence, as the present claims were commenced more than 2 years after the termination of the respective Claimants’ last Extension Contracts, the claims are now time-barred.

The choice of suitable comparator

52.The same reasoning applies to the choice of suitable comparator for the purpose of determining the lawfulness of the re-employment contracts made in 1999.  Obviously, if one has to determine whether the retirement policy under the Old Scheme, which provided for differential retirement ages of 55 for men and 40 for women, was discriminatory, then the suitable comparator must be a male cabin attendant who joined the Respondent at the time of the first engagement of each Claimant.  By making such comparison, it is common ground that the Respondent’s previous retirement scheme was unlawful, and the Claimants had the right to commence legal action against the Respondent.  However, the relationship under the old regime terminated upon the expiry of the last Extension Contracts when each of the Claimants reached the age of 45.  Later when the Respondent offered to re-employ the Claimants, such offer was part and parcel of the settlement agreement in respect of any discrimination claims under the previous retirement scheme, and the re-employment marked a fresh start in the relationship between the parties.  Hence, in determining whether the terms under the re-employment agreements were lawful, the suitable comparator must be the male cabin attendants who joined the Respondent in 1999.  Adopting such a comparator, the terms in the re-employment agreements were not discriminatory.

Conclusion

53.By reason of the aforesaid, the claims in this action are wholly unsustainable as the Claimants had already waived such claims by  accepting the offers of re-employment in 1999, and their claims are also time-barred under s. 86(1) of the SDO.  In such circumstances, I strike out the Statement of Claim and dismiss the action.

54.For the sake of completeness, I also answer the questions of law framed by the Respondent for determination as follows:

(i)	whether, in accepting the terms upon which each of the Claimants (a) were reinstated as employees of the Respondent and (b) were offered compensation on reinstatement in 1999, the Claimants compromised and/or waived any claims that they might then have had against the Respondent, whether pursuant to the SDO or at all, in relation to the earlier non-renewal of their respective contracts of employment: the answer is “yes”;
(ii)	whether the express provision in each of the Claimants’ respective yearly extension contracts which subsisted on 15 October 1997 to the effect that there was no entitlement to retirement benefits, are or were exempted from the provisions of s. 11 of the SDO by virtue of sub-section (4) thereof: the answer is “no”;
(iii)	whether the terms upon which each of the Claimants was re-employed as an employee of the Respondent were non-discriminatory within the meaning of the SDO and, for the purposes of determining this question, whether the correct comparator is or was a male cabin attendant who either commenced employment or who was re-employed in 1999 or who might have commenced employment or might have been re-employed in 1999: the answer is “the terms were non-discriminatory and the correct comparator was a male cabin attendant who commenced employment in 1999”.

55.Pursuant to s. 73B(3) of the District Court Ordinance, Cap. 336, I make an order nisi that the parties shall bear their own costs of the action, which shall be made absolute 21 days after the date of the handing down of this decision.

56.Finally, I would like to express my gratitude to both counsel for their invaluable assistance rendered to this court.

Mr. James Collins, instructed by Messrs. Massie & Clement, for the Claimants

Mr. Ashley Burns S.C., instructed by Messrs. Johnson, Stokes & Master, for the Respondent