Law Kwai Wing v. Mandatory Provident Fund Schemes Authority and Another

HCAL 66/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 66 OF 2011

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BETWEEN

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Before: Hon Lam J in Court

Date of Hearing: 2 September 2011

Date of Judgment: 2 September 2011

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J U D G M E N T

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1.In this matter, the Applicant seeks leave to apply for judicial review to challenge what he called the decisions by the Mandatory Provident Fund Schemes Authority in terms of rejecting his complaint.

2.The Applicant was employed by Shun Tak China Travel Ship Management Limited.  On 15 April 2010 he was dismissed by Shun Tak.  Since May 2000, the Applicant participated in Shun Tak’s Staff Provident Fund Scheme.  Because of the fact that the Applicant was employed as a seafarer under the provisions of the Merchant Shipping (Seafarers) Ordinance, the Applicant was regarded as an exempted person, therefore not within the scope of the Mandatory Provident Fund Schemes Ordinance [“MPFSO”].  Therefore, instead of joining a scheme within the purview of the MPFSO, the Applicant joined the Shun Tak scheme which was first operated within the scope of the Occupational Retirement Schemes Ordinance [“ORSO”].  Later on it was transferred into a voluntary contribution scheme.

3.The provisions of the voluntary scheme provided benefits to the Applicant, but it also provided that if the Applicant was dismissed in his employment, the employer’s contribution to the scheme would be forfeited and paid back to the employer.  In that respect, the voluntary scheme was less favourable than schemes under the MPFSO.

4.After the termination of his employment and the forfeiture of his benefits in respect of the employer’s contribution under the voluntary scheme, the Applicant wrote letters to the MPFS Authority [“the Authority”] to complain about the situation.  The Authority responded by letters on 12 November and 10 December 2010 respectively.  They referred the Applicant to the statute and explained by reason of the fact that the Applicant was employed under the Merchant Shipping (Seafarers) Ordinance, he was not within the scope of the MPFSO.

5.The Applicant did not accept that explanation and he sought legal advice.  He obtained legal aid to pursue the matter and his lawyers wrote another letter to the Authority again on 13 May 2011.  In the letter, the Applicant’s solicitor said that the Authority’s construction of the ordinance violates Article 36 of the Basic Law and Article 22 of the Hong Kong Bill of Rights.  It was asserted that the Applicant, being a permanent resident of Hong Kong, is entitled to have retirement benefits protected by the MPFSO.

6.The Authority responded on 26 May 2011. The Authority did not agree that the articles referred to in the Applicant’s solicitor’s letter were relevant to the matter.  The Authority went on to say:

“Forfeiture of the employer’s contribution to the Applicant’s retirement scheme is governed by the applicable scheme rules, and it is a private contractual arrangement recognised by law, and the Applicant has already pocketed accrued benefits derived from his own contributions in his employment, notwithstanding that he was dismissed by his employer. Even if the Applicant’s accrued benefits under the voluntary scheme had not been transferred to an MPF scheme, the accrued benefit derived from the employer’s contribution are still subject to forfeiture under the scheme rules. The forfeiture clause is common to provident fund schemes in the industry. The existence of the forfeiture clause and the employer’s right to exercise it cannot be construed as a breach of Article 36 of the Basic Law. Exercise of the right of forfeiture by an employer in accordance with the applicable scheme rules is not an unlawful act forbidden by law.”

7.It went on to deal with Article 22 of the Bill of Rights.  In the penultimate paragraph of that letter, the Authority said:

“We are bound by the MPFSO in the performance of our duties, and cannot go beyond the powers conferred on us by the MPFSO. We are therefore not in the position to interpret and make judicial decisions on constitutional issues of Basic Law and human rights.”

These responses from the Authority - namely, the three letters - were said to be their decisions which the Applicant sought to challenge by the present application. 

8.At the outset of this morning’s hearing I asked counsel for the Applicant to explain what the Applicant said the Authority should have done in view of the complaint by the Applicant.  Counsel told me that the Authority should have upheld the complaint and then told the employer - that is, Shun Tak - to refund to the Applicant the employer’s contribution under his scheme.

9.I do not find any provision under the ordinance which provides the Authority may exercise their power to direct an employer to do so and counsel has not been able to specify for my benefit any such statutory power on the part of the Authority.  Taking the matter further, assuming that the Authority did act in the manner as suggested by Mr Kwok, no doubt Shun Tak would respond by referring to the relevant statutory provisions in the MPFSO.  The most relevant provision is section 2(1) in the definition of “employee”.  For the purpose of the ordinance, the statute provided that: 

“‘Employee’ has the same meaning as in the Employment Ordinance other than a person excluded by section 4(2) of the Employment Ordinance.”

10.As I have explained when I referred to the correspondence, by reason of the relevant provisions in the Employment Ordinance and the Merchant Shipping (Seafarers) Ordinance, the Applicant was an excluded person for the purpose of the MPFSO.

11.Mr Kwok submitted that despite that definition the Authority should have construed the meaning of “employee” as if that exclusion is not applicable because of the relevant provisions in the Basic Law and the Bill of Rights.  I cannot agree.  As a matter of reality, even if the Authority took one view and the employers took another, it does not seem to me that there is anything the Authority could usefully do in terms of pursuing the matter for the benefit of the Applicant.

12.If the Applicant wishes to challenge the scheme of the ordinance, in my view he should have done so a long time ago when he was told that he would be joining a scheme other than that under the MPFSO because of the exclusion in the definition section of the ordinance.  Instead, he had decided to accept the situation and joined a scheme under the ORSO and then subsequently, the voluntary scheme.  He had taken the benefit under this voluntary scheme.  I need not go into the details though the evidence was there and counsel for the putative respondent has referred to them in his skeleton submissions.

13.Therefore, the Applicant has never joined a scheme which is under the purview of the MPFSO.  As a result, the Authority simply has no jurisdiction or power to take the matter further.

14.In any event, I do not think the Authority can, on its own, disregard the statutory definition in section 2(1) of the MPFSO.

15.From what I have heard, the challenge based on the Basic Law and the Bill of Rights is by no means plainly and obviously a sound one.  In any event, the Authority should not be the proper putative respondent for such a challenge.

16.I am satisfied that the Applicant’s proposed application for judicial review has no prospect of success, and therefore leave is refused.

(Submissions re costs)

17.The Applicant should pay the putative respondent’s costs, with certificate for two counsel.  Applicant’s own costs be taxed under the Legal Aid Regulations.

Mr Kwok Sui-hay, instructed by Messrs Kwok, Ng & Chan, for the Applicant

Mr Gerard McCoy SC and Mr Daniel Hui, instructed by Mandatory Provident Fund Schemes Authority, for the Respondent

Mr Newton Chan, GC of the Department of Justice, for the Interested Party