Fong Chak Kwan v Ascentic Ltd And Others

Judgment Date05 August 2021
Neutral Citation[2021] HKCA 1138
Judgement NumberCACV358/2020
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV358/2020 FONG CHAK KWAN v. ASCENTIC LTD AND OTHERS

CACV 358/2020

[2021] HKCA 1138

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 358 OF 2020

(ON APPEAL FROM HCPI NO. 242 OF 2016)

________________________

BETWEEN
FONG CHAK KWAN
Plaintiff
and
ASCENTIC LIMITED 1st Defendant
BRENTWOOD INDUSTRIES, INC. 2nd Defendant
EMPLOYEES COMPENSATION ASSISTANCE FUND BOARD 3rd Defendant

________________________

Before : Hon Cheung and Yuen JJA in Court

Dates of Hearing : 13 July 2021

Date of Judgment : 5 August 2021

________________________

J U D G M E N T

________________________

Hon Cheung JA (giving the Judgment of the Court) :

I. Background

1. The plaintiff is a Hong Kong permanent resident. He claimed that the 1st and the 2nd defendants were his employers under a contract of employment (the ‘Employment Contract’). The 1st defendant is a Hong Kong company and the 2nd defendant is a company in the United States of America (‘USA’).

2. On 10 October 2014, while the plaintiff was assigned by the defendants to work in a sewage treatment factory in the Mainland in Ningbo City, he accidentally fell into the trench of a tank. He suffered serious personal injuries. He returned to Hong Kong four days after the accident and received medical treatment in hospitals here.

3. On 7 March 2016, the plaintiff commenced the present action against the defendants. The 1st defendant was served in Hong Kong and a defence was filed. The plaintiff then applied for leave to serve a concurrent writ of summons on the 2nd defendant in the USA. On 17 October 2016, Master Roy Yu granted the order (‘the Yu Order’). Leave to serve out was based on three gateways in Order 11, rule 1 of the Rules of the High Court (‘RHC’) :

1) Gateway (C) : the 2nd defendant is a proper and necessary party to the claim;

2) Gateway (D) : the claim is brought for breach of a contract made within the jurisdiction (rule 1(1)(d)(i)) or it was made by an agent within the jurisdiction on behalf of a principal outside the jurisdiction (rule 1(1)(d)(ii));

3) Gateway (F) : the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction.

4. The plaintiff duly served the concurrent writ on the 2nd defendant in the USA. The 2nd defendant did not acknowledge service and an interlocutory judgment was entered against the 2nd defendant for damages to be assessed.

5. The plaintiff and the 1st defendant later reached a settlement of the claim against the 1st defendant. The 1st defendant agreed to pay the plaintiff, inter alia, an ex gratia sum of $325,000 together with another ex gratia sum of $250,000 as costs. The settlement was made on a without admission of liability basis. On 18 May 2018, Master Roy Yu made a consent order in terms of the settlement.

6. Shortly after the settlement on 26 July 2018, the Employees Compensation Assistance Fund Board (‘the Board’) successfully obtained an order to be joined as the 3rd defendant in this case.

7. On 1 November 2018, the Board issued a summons to set aside the Yu Order and the interlocutory judgment and to stay the present action against the 2nd defendant on the basis of forum non‑conveniens.

8. The summons was heard by Marlene Ng J and she dismissed the summons on 29 April 2020. She found that the 2nd defendant is a proper party under Gateway (C). In respect of Gateway (D), she found that the proper basis is that the proper law of the Employment Contract is Hong Kong law under rule 1(1)(d)(iii) and not (i) and (ii).

9. In respect of Gateway (F), she found that the proper basis is based on the first limb of rule 1(1)(f), namely, the damage was sustained in Hong Kong.

10. The Board sought leave to appeal against the Judge’s decision. She granted leave on the ground that the law on Gateway (F) requires further guidance from the Court of Appeal. The Board now appeals.

II. Gateway (F)

11. This focus of the appeal is on Gateway (F) which we will now deal with.

1) The principles

12. This application for obtaining leave to serve originating process (in this case a writ) out of Hong Kong is based on Order 11 RHC. The principles for obtaining leave are 1) there is a good arguable case that the case comes within the gateway, 2) there is a serious issue to be tried on the merits of the case and 3) Hong Kong is the appropriate forum under the principles governing forum conveniens for the trial of the action.

13. The gateway relating to tort is Order 11, rule 1(1)(f) which provides that :

‘ (f) the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction;’

14. The issue that arises is what is the correct interpretation of the term ‘the damage’ in the light of the recent English decisions of Brownlie v Four Seasons Holdings Inc. (Brownlie No. 1) [2018] 1 WLR 192 and Brownlie v FS Cairo (Nile Plaza) LLC (Brownlie No. 2) [2021] 2 All ER 605.

2) Dynasty Line Ltd

15. Before we come to these cases, it is of note that Gateway (F) was previously considered by this Court in Dynasty Line Ltd v Sukamto Sia [2009] 4 HKLRD 454 where this Court followed the approach of the English Court of Appeal in Metall und Rohstoff AG v Donaldson, Lufkin & Jenrette Inc [1990] 1 QB 391 which interpreted the same rule and held :

‘ 33. In considering whether damage is sustained in Hong Kong it is sufficient if some significant damage had been sustained here: see Slade LJ in Metall Und Rohstoff Ag v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 at p.437.’

16. The English rule at that time (which was introduced in 1987) was the same as ours. As Slade LJ observed in Metall & Rohstoff at page 437, until 1987 leave could be given only if the action begun by the writ was founded on a tort committed within the jurisdiction and most of the decided cases turned on that wording. The rule was changed in 1987 to give effect to the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the ‘Brussels Convention’) (see Schedule 1 to the Civil Jurisdiction and Judgments Act 1982) and the decision of the European Court of Justice in Handelskwekerij G.J. Bier B.V. v. Mines de Potasse d’Alsace S.A. (Case 21/76) (‘Bier’) [1978] Q.B. 708. The United Kingdom (‘UK’) was then part of the European Community (‘EC’). Metall & Rohstoff itself was not an EC case, it was concerned with service out on American companies. Slade LJ held at page 437 :

‘ As the rule now stands it is plain that jurisdiction may be assumed only where (a) the claim is founded on a tort and either (b) the damage was sustained within the jurisdiction or (c) the damage resulted from an act committed within the jurisdiction.’

17. Dealing with Conditions (b), Slade LJ stated :

‘ Conditions (b) raises the question: what damage is referred to? It was argued for A.C.L.I. that since the draftsman had used the definite article and not simply referred to “damage,” it is necessary that all the damage should have been sustained within the jurisdiction. No authority was cited to support the suggestion that this is the correct construction of the Convention to which the rule gives effect and it could lead to an absurd result if there were no one place in which all the plaintiff’s damage had been suffered. The judge rejected this argument and so do we. It is enough if some significant damage has been sustained in England.’

18. At page 449, Slade LJ held :

‘ Significant damage has been suffered within the jurisdiction. That is enough. It is not incumbent on M. & R. also to show that that damage was caused by tortious acts committed by the defendants within the jurisdiction.’

3) Brownlie (No. 1)

19. Apart from dealing with jurisdictional cases concerning the EC, the English courts at the same time continue to deal with non‑EC jurisdictional cases. The UK current rules as Baroness Hale of Richmond PSC observed in Brownlie (No.1) (a non‑EC case) are the Civil Procedure Rules (‘CPR’). She held :

‘ 40 Under the CPR, the equivalent rule to RSC Ord 11, r 1(1)(f) was contained in CPR r 6.20(8): “a claim is made in tort, where ― (a) damage was sustained within the jurisdiction; or (b) the damage sustained resulted from an act committed within the jurisdiction.” The definite article was omitted from (a), in line with the holding of the Court of Appeal in Metall und Rohstoff AG v Donaldson, Lufkin & Jenrette Inc [1990] 1 QB 391, 437, that (a) did not require all the damage to be sustained in England; it was enough if “some significant damage” had been sustained here; and similarly that (b) did not require that all the acts constituting the tort be committed in England; it was enough if the tort was in substance committed here. Neither the Rules of the Supreme Court nor the Civil Procedure Rules required that permission be given to serve out of the jurisdiction if the relevant gateway applied; there was always a discretion not to do so, exercised in accordance with the principles laid down in Spiliada Maritime Corpn v Cansulex Ltd [1987] AC 460. In the CPR, this was reflected in rule 6.21(2A): “the court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.’

20. Baroness Hale stated that this ‘gateway’ is now provided under CPR Practice Direction 6B, paragraph 3.1(9)(a) permitting the court to grant permission for service out of the jurisdiction of :

‘ a claim ... in tort where ―(a) damage was sustained [or will be sustained] ... within the jurisdiction ...’

The words in brackets were not in force at the times relevant to the decision, see Brownlie (No. 2) at [9]. The relevant principles in Spiliada referred to by Baroness Hale...

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1 cases
  • Xu Ying v Xu Weihong
    • Hong Kong
    • Court of Appeal (Hong Kong)
    • 21 Septiembre 2021
    ...interpreted as meaning that significant damage was sustained in Hong Kong : Fong Chak Kwan v Ascentic Limited and othersCACV 358/2020, [2021] HKCA 1138 following Dynasty Line Ltd v Sukamto Sia [2009] 4 HKLRD 454. The other situation is where the tort was committed in Hong Kong and the damag......

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