Endozo Maylin Palomar v. Lee Chi Ming

CACV 247/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 247 OF 2013

(ON APPEAL FROM HCA NO. 1176 OF 2011)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Cheung JA :

Background

1.1  The plaintiff was the former employee of the defendant.  Her contract commenced on 29 June 2009 although actually she was only asked to begin work on 2 July 2009.  On 27 August 2009 the defendant terminated her employment by a one month notice of termination.  Prior to the notice, the defendant had accused her of theft which she denied.  On 8 September 2009 the defendant again accused her of theft.  This was repeated on 9 September 2009.  This complaint resulted in the Police being called by the defendant.  The plaintiff was subsequently charged with theft of $100.  She was convicted and was sentenced to nine weeks’ imprisonment.  She spent 49 days in prison with the rest of the term being remitted for good behaviour.  She successfully appealed against her conviction.  Beeson J commented in her Reasons for Judgment (HCMA 213/2010) that :

‘ 38. Given the attitude adopted by [the defendant] towards the [plaintiff], for example by his searches which showed little or no respect for the privacy, legal rights, or convenience of the [plaintiff], a frame-up cannot be ruled out as a possibility, particularly as no attempt was made to clarify what the movements of [the defendant’s] wife and his daughters’ were during the relevant period, or to exclude them from any involvement.

39. The evidence showed [the defendant] as somewhat obsessive in his insistence that thefts had occurred; that the [plaintiff] 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.’

1.2  The plaintiff then commenced her present action seeking damages for breach of the employment contract and for malicious prosecution.  The defendant applied to strike out her claim on the ground that it amounted to a re-litigation of a compromised claim that she had previously brought in the Labour Tribunal against the defendant.  Master de Souza dismissed the application and on appeal, the decision was reversed by Deputy High Court Judge Mayo.  The plaintiff appealed.  We allowed the appeal and set aside the orders below at the conclusion of the hearing.  I now give the reasons.

The Labour Tribunal proceeding

2.1  On 27 May 2010 the plaintiff commenced a claim in the Labour Tribunal.  In the Form of Claim (Form 2) she sought a total of $34,263.82 which was made up as follows :

1) Wages in lieu of notice	$1,996.44
2) Arrears of wages	$1,312.66
3) Air-ticket	$1,000
4) Food and Travelling Allowance for going back to her country	$100
5) Travelling expenses	$120
6) Visa fee	$960
7) Damages for breach of trust	$28,774.72

2.2  In her statement filed in support of her claim (Form 3) she gave the background of her claim.  She referred to the background of the termination of her employment, the defendant making allegations of theft against her, her conviction and eventual acquittal on appeal.  She stated that she was claiming her arrears of wages etc ‘and damages for breach of trust and confidence by the defendant for making false accusations against [her]’.  The parties compromised this claim by the defendant paying $20,000 as full and final settlement of her claim.

Principles on abuse of process

3.1  Striking out a claim by reason of res judicata in the wider sense pursuant to the principle in Henderson v Henderson 67 ER 313 and Yat Tung Investment Co. Ltd v. Dao Heng Bank Ltd and Anor [1975] AC 581 or abuse of process pursuant to Johnson v Gore Wood & Co [2002] 2 AC 1 is based on the principle 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 (Ko Hon Yue v Chiu Pik Yuk (2012) 15 HKCFAR 72 at 113 per Ma CJ).  The determining factor is whether the subsequent proceedings constitute an abuse of process.

3.2   Lord Bingham of Cornhill observed in Johnson v Gore Wood and Co at page 31 :

‘ ……I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.’ (emphasis added)

3.3   Ma CJ at paragraph 83(2) of Ko Hon Yue stated :

‘ (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)’

3.4  This Court in何建民v.香港警務處處長and othersCACV 175/2012, CACV 200/2012, CACV 228/2012 and CACV 229/2012 briefly referred to the recent judgment of the English Supreme Court in Virgin Atlantic Airways v Zodiac Seats UK Ltd [2014] AC 160 where Lord Sumption was of the view that res judicata in the wider sense and abuse of process are distinct although overlapping concepts.  Mr Paul Leung, counsel for the defendant, who referred to this authority did not seek reliance on any specific part of it.  He asked us to adopt the broad merits-based assessment approach of Lord Bingham.

Basis of the decision

4.The Judge held that :

‘ 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.’

No abuse

5.In my view there is no abuse of process.  I cannot see how the defendant can be said to have been vexed by the tort claim which had not been raised before. 

1)  Jurisdiction of the Labour Tribunal

6.1  The starting point of the discussion is that the cause of action of malicious prosecution is a tort claim.  The Labour Tribunal has jurisdiction to hear, among other things, a claim for money which arises from, among other things, breach of a term of a contract of employment.  It does not have jurisdiction to hear a cause of action based on tort.  This can be seen from paragraphs 1(a) and 3 of the Schedule to the Labour Tribunal Ordinance (Cap 25) which identify the jurisdiction of the Labour Tribunal :

‘ 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;

…

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.’

6.2  If the plaintiff wishes to pursue her tort claim for malicious prosecution, she has to pursue it elsewhere either in the District Court or the High Court, depending on the amount of damages she seeks to recover from the defendant.

2)  Tort claim not included in earlier case

7.1  It is further abundantly clear that the plaintiff’s Form 2 does not include any tort claim for malicious prosecution.  The reference to the defendant making false accusations against her was part of the narration of the background of her claim and specifically to the claim for damages for breach of trust and confidence.  This claim although unliquidated, is, nonetheless, a claim based on an employment contract.  In Semana Bachicha v Poon Shiu Man [2000] 2 HKLRD 833 at 844 this Court per Ribeiro JA (now Ribeiro PJ) adopted the following principle :

‘ 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.” ’

7.2  It is not necessary to decide for the purpose of this appeal, whether such a claim is nonetheless a claim for ‘a sum of money’ within the meaning of paragraph 1 of the Schedule as was decided by A Chung J in the case of Samulde Ma Violeta Cabaya v Kwan So Han [2004] 2 HKLRD 658 at 659 and therefore falls within the jurisdiction of the Labour Tribunal.  What is important is to recognize that such a claim is not a tort claim.

3) Nature of damage different

8.Further, damages for breach of trust and confidence are different from damages recoverable for a tort claim based on malicious prosecution.  Mr Earl Deng and Mr Ian Chau, counsel for plaintiff, rightly submitted that in respect of malicious prosecution, non-pecuniary damages may be awarded including damages for injury to reputation, injury to feelings by reason of being prosecuted, loss of liberty and the injury to feelings that can result from the loss of liberty : McGregor on Damages (18^th Ed) at §§38-004 to 38-005 and T v Shiu Wai Tuen [2011] 4 HKLRD 443 at paragraph 44.  By contrast, in respect of damages for breach of contract of employment, there can be no recovery for mental distress arising from injury to feelings or injury to reputation, even where there is breach of the implied term of trust and confidence : McGregor on Damages at §28-028.

4)  Compromise of the contractual claim only

9.1  In the circumstances, the compromise of $20,000 accepted by the plaintiff in her Labour Tribunal claim can only be properly construed as a compromise of that claim, no more and no less.  It does not matter that the compromise did not specify that it was only for that claim because looking objectively, that must be the purpose of the compromise because the tort claim was not even raised in the earlier claim. Once this point is recognized then it cannot be an abuse for the plaintiff to raise her tort claim in the present action.  Her counsel had properly conceded that her contractual claim in the present action should be struck out.

9.2   It is true that the present tort claim and the earlier contractual claim are based on the same factual background but to rely on this to mount a case of abuse will be a mechanistic approach without considering, at the same time, the different causes of action and relief and the restricted jurisdiction of the Labour Tribunal where the compromise was reached. 

9.3   The present case is very much akin to Susan Louise Vincent v Servite Homes Limited [2002] EWCA Civ 852 where the plaintiff first commenced a personal injury action against her employer for negligence.  The claim was settled by a consent order which said that the settlement sum ‘represents damages for pain, suffering and loss of amenities’.  Later the plaintiff sued the employer for benefits under an insurance scheme set up by the employer.  It was held by the English Court of Appeal that there was no abuse because as Rix LJ held at paragraph 36, among other things, that the second cause of action was based on the contract of employment while the earlier action was based on tort.  At paragraph 43, he held that :

‘ Of course, the claim for benefit could have been raised in earlier proceedings. Perhaps it would even have been better if it had been but that by itself, as Lord Bingham has said, does not make the later proceedings necessarily abusive. Therefore for those reasons this ground of appeal succeeds…...’

9.4   Although the settlement of the first action specified that it was for pain, suffering and loss of amenities, I do not regard it to be a pivotal consideration in the absence of any indication that the first action itself included the contractual benefit claim raised in the subsequent action.

9.5   Unlike Susan Louise Vincent the plaintiff here was not even entitled to raise her present tort claim in the earlier Labour Tribunal proceedings.

9.6   In Pathak Ravidutt v Sanjeev Maheshwari (unreported, DCCJ 3031/2009, 4 May 2010), Deputy District Judge Kent Yee (as he then was) declined to strike out a claim on facts similar to the present case.  In my view he was correct.  The decision did not turn solely on the fact that in the settlement of the first action there was a reservation by the plaintiff of his right to claim against the defendant in the future.  What is equally important is the different causes of action involved in the two actions.

9.7   To say the very least, this is not a plain and obvious case for striking out the claim.

Conclusion

10.Accordingly the appeal was allowed with costs to the plaintiff.  Certificate for one counsel was granted.  The parties’ own costs are to be taxed in accordance with Legal Aid Regulations.

Amendment to the statement of claim

11.The plaintiff conceded that certain paragraphs in her statement of claim relating to the contractual claim should be struck out.  We granted the plaintiff leave to amend the statement of claim so as to allow the plaintiff to properly formulate her action based on the tort claim only.

Hon Chu JA :

12.I agree.

Hon McWalters JA :

13.I agree.

Mr Earl Deng and Mr Ian Chau, instructed by Vidler & Co., assigned by Director of Legal Aid, for the plaintiff

Mr Paul H M Leung, instructed by Edmund Cheung & Co., assigned by Director of Legal Aid, for the defendant