Endozo Maylin Palomar v. Lee Chi Ming

HCA 1176/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1176 OF 2011

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DECISION

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1.Two summons lie before me for determination. The first is an appeal against the order by Master de Souza of the 24^th June 2013 and the second is an application by the Defendant to strike out the Plaintiff’s Statement of Claim.

2.The subject matter of the two applications essentially relate to similar considerations and they can conveniently be dealt with at the same time.

3.The Plaintiff at the relative time was engaged by the Defendant as a Domestic Helper.

4.She commenced her employment in July 2009.

5.According to her evidence, her relationship with the Defendant and his wife was not a happy one.

6.On 26 August 2009 the Defendant accused her of stealing money from his wallet. She denied his accusation but notwithstanding this the Defendant and his wife searched the room she was occupying and did not find any incriminating notes.  She had permitted the Defendant to search her purse and she was able to account for the money in the purse.

7.She thought that this was the end of the matter.  However the following day the Defendant served upon her a notice terminating her employment.  This gave her one month’s notice of determination and required her to work out the notice.

8.It did not purport to dismiss her for cause.

9.On 9 September the Defendant again accused her of stealing a $100 bank note.  This was late in the evening.  A search was undertaken and nothing was found.

10.She went to bed and was awoken when Police Officers knocked on her door and asked to come in so that they could conduct a search of her room and possessions.  She learnt that the Defendant had dialed 999 and requested the Police to come to the flat and search her room.

11.She agreed to the search being conducted.  One of the Police Officers found a $100 note hidden under her mattress.

12.The Defendant then matched the number on the note with a list of numbers he had prepared and said that the number on the note corresponded with one of the numbers on his list.

13.The Police Officers then arrested her and she was taken to Kwun Tong Police Station.  At the Police Station she made a statement in which she denied that she had committed the theft.

14.On 10 February 2010 she appeared at the Kwun Tong Magistracy. She pleaded not guilty but after a trial she was convicted of theft.  She was sentenced to 9 weeks imprisonment.  Her application for bail pending the determination of an appeal against conviction was refused.  She served 49 days in prison which took into account a discount for her good conduct.

15.Her appeal was heard by Madam Justice C.M. Beeson.

16.The Judge quashed the conviction on the grounds that it was unsafe and unsatisfactory.  In her Reasons for Judgment the Judge was critical both of Mr. Lee, the Defendant, in this case and of the Magistrate who convicted the Plaintiff.  She considered that the sentence which had been imposed was harsh and that in all the circumstances she should have been granted bail pending appeal.

17.On 27 May 2010 the Plaintiff attended at a Labour Tribunal and lodged a claim against the Defendant.

18.It is important to consider in detail the claim which the Plaintiff was making in the Labour Tribunal.

19.This being the case I produce an extract from P.11 onwards of the claim she submitted:

“7. On 8 September 2009, at about mid-night, the Defendant accused me again of stealing HK$200. He asked me how much money I had. I told him that I had only HK$2,320. I had received my wages on 2 September 2009. The wages had been paid to me after deduction of HK$50 for a strainer I had allegedly damaged. After returning the money I had borrowed in the first month from my friends, I had with me HK$2,320. The Defendant once again searched all my belongings. The Defendant told me that he had the serial numbers of the notes I had allegedly stolen. When I asked to see the serial numbers he said he had lost it. He said if I did not return HK$200 to him he would call the police. I had not stolen the money. I was innocent. So I told him that he could call the police. On that day he did not call the police. I became worried about the Defendant’s constant accusation and telephone a friend in my church, Shyla Astelero, and she advised me to write down the serial numbers of my own money. I followed her advice and wrote the serials numbers of the money in my wallet on a piece of paper that night, a copy of the list of the serial numbers is attached and marked Annex 2.

8. On 9 September, 2009, at about mid-night, the Defendant accused me once again of stealing HK$100. I showed him the serial numbers I had written of the money in my wallet. He then checked the money in my wallet and compared the serial numbers and they matched. He then continued to search in my room including the drawers where the clothes of one of his daughters were kept. He searched for about 30 minutes but did not find the alleged missing money. I then went to sleep. At about 2 a.m. I was awoken by the police in my room. They had been called by the Defendant. They told me that the Defendant’s wife would search my luggage. She did not find anything. Then the police searched only my bed and found a $100 bank-note between the mattress and the sheet on my bunk bed. I was surprised by this as I was not aware that it was there. The police crossed checked the serial number of the bank note with a list of serial numbers given by the Defendant to the police and it matched with one of the numbers. I was tried for the offence of theft in Kwun Tong Magistrate’s Court. I was convicted and was sentenced to 9 weeks imprisonment. I filed Appeal No. HCMA 213 of 2010 in the High Court of the Hong Kong SAR against the said conviction and applied for bail pending appeal but my application for bail was denied. Consequently my appeal was heard after I had completed my sentence which was reduced to 49 days for my good behavior.

9. In the said Appeal my conviction was quashed. However, as I had already served my sentence before the appeal was heard, grave injustice was done to me. In her Reasons for Judgment, Honourable Judge CM Beeson delivered a finding that there were “inherent improbabilities” in the case, which raised doubts and made my conviction unsafe and unsatisfactory. She considered that given the attitude adopted by the Defendant towards me, for example by his searches which showed little or no respect for my privacy, legal rights or convenience, “a frame-up could not be ruled out”. The Honourable Judge also stated in par.39 that “the evidence showed PW1 as somewhat obsessive in his insistence that thefts had occurred; that the Appellant was responsible for them and his remarkably feudal attitude to domestic staff raised the possibility at least that his personal animosity may have caused him to make false accusations”.

10. The Honourable Judge also questioned the Magistrate’s judge’s decision to deny my application for bail and commented that the sentence was too severe. The Honourable judge added that “the Appellant had been dealt with harshly and unfairly” because I had served my whole sentence before the appeal was heard. A copy of the “Reasons for Judgment” is attached and marked Annex 3.

11. Since my terminal dues had not been paid I filed a claim with the Labour Department. At the conciliation meeting on 22 April 2010 I was given a cheque for HK$1,935.30 by the Defendant towards my arrears of wages from 3^rd to 9^th September 2009, air-ticket and travelling allowance as partial settlement of my claims. However, I had not been able to cash the cheque because it is payable to account payee only and I do not have a bank account. I attempted to open an account but was unable to because I could not provide a proof of address as I am no longer employed and am staying in a shelter. Accordingly I am adding this to my claim and will return the cheque to the Defendant. A copy of the Partial settlement agreement and the cheque is attached and marked Annex 4 and 5 respectively.

12. In addition, in error I had not claimed for arrears of wages from 29 June 2009 to 1 July 2009 (3 days), which I now claim. I am also claiming for 17 days wages in lieu of notice, bus-fare to my place of origin, and damages for breach of trust and confidence by the Defendant for making false accusations against me.

13. My claim for damages for breach of trust is based on the principles of Bachicha v Poon (CACV 55 of 2000 court of Appeal, formerly DCCJ 1546 of 1999). Accordingly I am claiming for continuing financial losses calculated based on the wages I would have earned from the date I had been arrested for theft and continuing until this matter is settled.

14. I am advised that the High Court has recently held, finally resolving a previous conflict of authority, that the Labour Tribunal has jurisdiction to hear and determine all monetary claims falling within its jurisdiction, even if such claims should involve a claim for unliquidated damages (including general damages): see Samulde Ma Violeta Cabaya v Kwan So Han Sandy, HCLA 93/2003 (unreported), per Chung, J at paragraphs 35-37. A claim for a sum of money which arises from the breach of a term, whether express or implied, of a contract of employment falls within the exclusive jurisdiction conferred on the Labour Tribunal by paragraph 1(a) of the Schedule to the Labour Tribunal Ordinance, Cap 25.

15. Breakdown of claims:

Particulars		Amt in HK$
Arrears of wages	29/6/09 to 1/7/09 (3 days) 2/9/09 to 10/09/09	354.15 $1,073.00
Wages in lieu of notice	10/9/09 to 26/9/09 (17 days)	1,963.22
Bus fare to place of origin	Manila to Laguna	120.00
Damages for Breach of trust: Loss of income (par.13 and 14) Visa fees	Wages from 26/9/09 to 27/5/10 $160 x 6	28,774.73     960.00
TOTAL		33,245.10

I, Maylin Palomar Endozo, solemnly and sincerely declare that the facts which I have set out in this statement are true to the best of my knowledge and belief and I am prepared to testify to their truth upon my oath at the trial of my claims before the Labour Tribunal of Hong Kong.

Signed: Maylin Palomar Endozo   Dated: ” 

20.At the commencement of the hearing the Presiding Officer, Ms. Mary Wu, advised the Plaintiff and Mr. Lee how the proceedings would be conducted and suggested that the parties might wish to agree a compromise of the claim.  She adjourned the hearing for this purpose.

21.The parties did reach a settlement of the claim.  It was in this form:

“Claim No.: LBTC1952/2010

Claimant:   ENDOZO MAYLIN PALOMAR

Defendant:  LEE CHI MING

*Defendant Company (by Representative): ___________

BY CONSENT:

1.    I ENDOZO MAYLIN PALOMAR, the Claimant, agree to accept the sum of $20,000.00 in full and final settlement of the Claim.

2.    I LEE CHI MING, *the Defendant, agree to pay the sum of $20,000.00  in full and final settlement of the Claim.

3.    Payment to be made on 22.6.2010 and arranged by themselves.  Dated this 22nd day of June 2010.

__________________	_____________________
(Claimant’s signature)	(*Defendant/Defendant’s
	Representative’s signature)

I T.A.GAMIAD? hereby confirm that I have faithfully interpreted the above to CLAIMANT in TAGALOG language/dialect to the best of my ability and skill.

___________ (Interpreter)  ”

22.This settlement was then reduced into an Award the operative part was in these terms:

“1. By consent, the Defendant shall pay $20,000.00 to the Claimant in full and final settlement of this claim herein.

2. Payment to be made on 22.6.2010 and arranged by themselves.

3.  No order as to costs.”

23.On 13 July 2011 the Plaintiff issued the writ in this action. Paragraph 1 of the Statement of Claim reads:

“Introduction and Summary

1. As further particularised herein below:

1.1. The Plaintiff sues the Defendant in the tort of malicious prosecution and breach of contract;

1.2. The Defendant, who employed the Plaintiff as a domestic helper in his family home, maliciously and falsely framed the Plaintiff for the theft of HK$100;

1.3. The Defendant, having recorded the serial number of the HK$100 banknote, planted and/or caused it to be planted in the Plaintiff’s bedsheets. The Defendant then falsely reported the ‘theft’ to the police, who arrived at the Defendant’s home and found the HK$100 banknote in the Plaintiff’s bed sheets;

1.4. The Plaintiff was charged with theft on the basis of the Defendant’s false complaint. On the strength of false evidence given by the Defendant in Court, the Plaintiff was convicted and sentenced to 9 weeks’ imprisonment;

1.5. The Plaintiff appealed. She was denied bail pending appeal. She served her entire sentence before the appeal was heard. At the appeal, the Plaintiff’s conviction and sentence were overturned, the High Court Judge holding that the Defendant’s evidence was insufficiently credible to found a conviction, and that: “a frame-up cannot be ruled out as a possibility”. ”

24.The Defendant made an application to Master de Souza under Order 18 rule 19 to strike out the Plaintiff’s Statement of Claim.

25.This application was dismissed hence the present appeal.

26.The Master did not give written reasons for his decision, which form part of the record.

27.The basis of the Appeal is that the claim amounts to a re litigation of a compromised claim which was duly settled on the 22 June 2010.

28.The Defendant was represented by Mr. Paul Leung.

29.Mr. Leung submitted on the authority of Johnson v Gore Wood & Co [2002] 2 AC 1 that even when the first action was concluded by a settlement the principles of Res Judicata could be invoked.

30.Further it was evident from paragraph 22–024 of the 31^st  Edition of Chitty on Contracts (2012):

“A compromise may by consent be made the subject of a judgment or order of the court. A consent judgment will ordinarily extinguish by merger the contract of compromise, but a consent order will not have this effect. It does not itself constitute a contract, but it is sufficient evidence of the contract of compromise on which it is based, and such contract is no less a contract and subject to the incidents of a contract because there is superadded the command of a judge. …” (para 22-024).”

31.This being the case the usual legal principles relating to the construction of contracts are applicable.

32.In considering the correct approach to be adopted, it is helpful to consider the observation made by Ma CJ at page 82 and 83 of his judgment in Ko Hon Yue v Chiu Pik Yuk [2012] 15 HKCFAR 72

“F. Issue 2: Does the prosecution of the present action constitute an abuse of the process of the Court?

82. The abuse that is known as the Henderson v Henderson abuse (or res judicata in the wider sense – the nomenclature is not important) is derived from the case of that name. It has been developed and explained by the House of Lords in Johnson v Gore Wood & Co [2002] 2 AC 1, by the Judicial Committee of the Privy Council in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd and Brisbane City Council v A-G for Queensland [1979] AC 411, by the English Court of Appeal in Bradford and Bingley Building Society v Seddon [1999] 1 WLR 1482 and by our Court of Appeal in Ngai Few Fung v Cheung Kwai Heung [2008] 2 HKC 111 and Chiang Lily v Secretary for Justice [2009] 6 HKC 234. The essence of the doctrine is that a party ought generally not to be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings.

83. For reasons that will become evident presently, it is unnecessary in order to resolve this part of the appeal to go into the precise ambit of the principles regarding this form of abuse, although for my part, I would say that the present state of the law is reflected by the decision of the House of Lords in Johnson v Gore Wood & Co and of the Court of Appeal in Chiang Lily v Secretary for Justice. For present purposes, it is sufficient just to refer to the following facets of the doctrine:

(1) The starting point is to recognise that the doctrine is founded on an abuse of process. As Lord Wilberforce said in Brisbane City Council v A-G for Queensland, “it ought only to be applied when the facts are such as to amount to an abuse: otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation”: (p.425).

(2) This concern (that a party ought not lightly to be deprived of the right to have serious matters litigated) was echoed by Lord Millett in Johnson v Gore Wood & Co : (p.59D-G).

(3) It must therefore be essential when striking out a claim on this basis (and thus preventing a litigation of that claim) that an abuse is found to exist in seeking to raise in subsequent proceedings claims or issues which could and should have been raised in earlier proceedings. This abuse will usually take the form of the other party being “vexed” (or in some cases, the terms “oppressed”, “unjustly harassed” or “unjustly hounded” are used) by the subsequent set of proceedings: Johnson v Gore Wood & Co, 31A-B.

(4) The abuse can also take the form of the administration of justice being brought into disrepute: see Chiang Lily, 256D-G ([58]) referring to Hunter v Chief Constable of the West Midlands Police [1982] AC 529. With the procedural reforms introduced by the Civil Justice Reform in 2009, the courts in Hong Kong must now, when exercising their procedural powers, increasingly bear in mind not just the parties before them in any particular litigation but also the position of other litigants in the court process. RSC O.1A r.1 (f) states as one of the underlying objectives of the court’s procedural powers under the Rules to be “to ensure that the resources of the court are distributed fairly”.

(5) In examining aspects such as abuse, the court is concerned with balancing interests: not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice. It is important therefore here to emphasise that when the court is dealing with the Henderson v Henderson type of abuse, it is not looking at an absolute bar to litigation such as issue estoppel or cause of action estoppel. On the contrary, in considering this type of abuse, the court is required to assess a number of factors and balance competing interests. See here, Bradford and Bingley Building Society, 1490F-H. It is also worth making the following observations at this juncture:

(a) There is conceptually an important distinction between absolute bars such as issue estoppel and the type of abuse with which we are concerned. In the former situation, the party who seeks to re-litigate an issue or cause of action has already had his day in court, whereas in the latter situation, that party has not: cf Johnson v Gore Wood, 59D (“It is one thing to refuse to allow a party to re-litigate a question which already has been decided; it is quite another to deny him the opportunity of litigating for the first time a question which is not previously being adjudicated upon” (Lord Millett)).

(b)  The assessment of different factors and balancing competing interests can be said to be an exercise of a discretion.  A number of decisions of the English Court of Appeal have cast doubt on whether the court does indeed exercise a discretion as such: see Aldi Stores Ltd v WSP Group Plc [2008] 1 WLR 748, 762C-D ([16]) and Stuart v Goldberg Linde [2008] 1 WLR 823, 845E-846C ([81]).  It is unnecessary for present purposes to decide whether or not a discretion is actually being exercised. The more important point to bear in mind is that an appellate court is obliged to pay sufficient regard to the decision of the court below and should be reluctant to interfere where the decision is based on the assessment or balancing of a number of factors.  Nothing in the two said cases suggests otherwise; in fact, quite the contrary.”

33.In giving careful consideration to the facts of this case and adopting the relevant principles of construction of the contract which was struck between the parties at the Labour Tribunal, I am satisfied that essentially the claim which is being pursued in this case for malicious prosecution are so similar as to the amount to an abuse of the process of the court.

34.Adopting the dicta of Ma CJ this is a case where it would be appropriate to strike out the Statement of Claim.

35.Mr. Deng for the Plaintiff submitted that the Defendant’s contentions were misconceived.

36.He argued that the claims which were being pursued of the Plaintiff were on an entirely different nature.

37.The claim which the Plaintiff was making in the Labour Tribunal was a claim in contract whereas the claim in the instant proceedings was based upon the Tort of malicious prosecutions.

38.It was also relevant to add that the jurisdiction of the Labour Tribunal which was conferred by the Labour Tribunal Ordinance Cap.25 was limited to the claims specified in the schedule.  These are set out as follows:

“1. A claim for a sum of money which arises from –

(a) the breach of a term, whether express or implied or (if relevant) arising by force of section 10(1) of the Minimum Wage Ordinance (Cap. 608), of a contract of employment, whether for performance in Hong Kong or under a contract to which the Contracts for Employment Outside Hong Kong Ordinance (Cap. 78) applies; (Amended 8 of 1976 s. 49; 59 of 1999 s. 3)

(aa) the breach of a term, whether express or implied or (if relevant) arising by force of section 10(1) of the Minimum Wage Ordinance (Cap. 608), of a contract of apprenticeship; or (Added 8 of 1976 s. 49)

(b) the failure of a person to comply with the provisions of the Employment Ordinance (Cap. 57), the Minimum Wage Ordinance (Cap. 608) or the Apprenticeship Ordinance (Cap. 47), (Amended 39 of 1973 s. 9; 8 of 1976 s. 49)

other than a claim specified in the Schedule to the Minor Employment Claims Adjudication Board Ordinance (Cap. 453). (Amended 61 of 1994 s. 48; 15 of 2010 s. 19)

2. A claim for contribution under section 26(2).

3.   Notwithstanding paragraphs 1 and 2, the tribunal shall not have jurisdiction to hear and determine a claim for a sum of money, or otherwise in respect of a cause of action, founded in tort whether arising from a breach of contract or a breach of a duty imposed by a rule of common law or by any enactment.”

39.I do not see this as an insuperable barrier in this case.

40.The compromise which is based upon contract was entered into prior to the actual commencement of the hearing.

41.When a hearing before the Tribunal includes claims of a tortious nature it is always open to the Presiding Officer to order that the case be transferred to the District Court.  Provision for this are contained in section 10 of the Labour Tribunal Ordinance.  It may well be the case that had a settlement not been concluded the Presiding Officer may have ordered that the case be so transferred.

42.There is a further aspect of this matter.

43.It is evident from the judgment of Ribeiro JA (as he then was), at 844 of Semana Bachicha v Poon Shiu Man [2000] 2 HKLRD 833 that suggests that unliquidated damages relating to the type of situation arising in the present case can properly come within the scope of matters coming before the Labour Tribunal:

“D. The Malik decision

What the Malik v Bank of Credit and Commerce International SA (in liquidation) [1998] AC 20 decision stresses is that the remedy in damages for breach of a contract of employment is not restricted to damages for wrongful dismissal. The general measure of damages rules in the law of contract are applicable to other types of breaches giving rise to other types of pecuniary loss.

Thus in Malik v Bank of Credit and Commerce International SA (in liquidation), the plaintiffs’ entitlement to notice, money and statutory redundancy pay was not in issue (see [1998] AC 20 at pp.33 and 44). The nature of their claim was summarised by Lord Steyn (at p.43) as follows:

The claim was for damages for pecuniary loss allegedly caused by the bank’s breach of an implied contractual obligation of mutual trust and confidence.  The foundation of the claim was the assertion that the bank had been operated in a corrupt and dishonest manner and that, despite the personal innocence of the employees, they have subsequently been unable to obtain employment in the financial services industry. The applicants described their claims as being for “stigma compensation.”

The House of Lords upheld the existence of the implied obligation relied on. In Malik v Bank of Credit and Commerce International SA (in liquidation) [1998] AC 20, the term took the form of “an implied obligation to its employees not to conduct a dishonest or corrupt business”, but as Lord Nicholls pointed out (at pp.34-35), such a term was:

… no more than one particular aspect of the portmanteau, general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner the employment contract implicitly envisages.”

44.This reasoning was followed by A. Chung J at 659 in Samulde Ma Violeta Cabaya v Kwan So Han [2004] 2 HKLRD 658:

“(2)  On a true construction of the Labour Tribunal Ordinance (Cap.25) (the Ordinance), the Tribunal had jurisdiction to hear claims for liquidated as well as unliquidated damages. The Tribunal, being a small claims tribunal, was intended to be an informal, simple forum and could hear all “monetary claims” which was generally accepted to include claims for both liquidated and unliquidated damages.”

45.It will be noted from a consideration of the details of the claim being made by the Plaintiff in the Labour Tribunal that approximately 80% of the particulars related to the unhappy experience the Plaintiff suffered as a result of her trial and conviction.  Although the label “malicious prosecution” was not used, I have no doubt that in substance what the Plaintiff was complaining about was the breakdown of the relationship between her and her employer and that this being the case proceeding with this action would amount to an abuse of the process of the court.

46.Accordingly I order that this claim is to be struck out and the appeal against Master de Souza’s Decision must be allowed.

47.I  make an Order Nisi that the Defendant will have his costs.  Also I order that both parties costs are to be taxed in accordance with the Legal Aid Regulations.

Mr. Earl Deng, instructed by Vidler & Co., assigned by D.L.A., for the Plaintiff

Mr. Paul Leung, instructed by Edmund Cheung & Co., assigned by D.L.A.,  for the Defendant

Please refer to CACV247/2013 for the relevant appeal(s) to the Court of Appeal.