Introduction

Recently, when determining the employment disputes in the case, Deutsche Bank AG (Hong Kong Branch) v Daniel Mamadou-Blanco HCA 1514/2011 (“Deutsche Bank Case”), Deputy High Court Judge Lok commented that “the existing state of law relating to the jurisdiction of the Labour Tribunal is unsatisfactory” (paragraph 40 of the Judgment).  In fact, the Deutsche Bank Case is an illustration of the issues which may arise because of the exclusive jurisdiction of the Labour Tribunal over certain employment related claims as stipulated in the Labour Tribunal Ordinance (Cap. 25 of the Laws of Hong Kong).  As such, should the LTO be amended to better define its jurisdiction?

Facts of the Case

1.       The Plaintiff is a company within the Deutsche Bank AG group of companies.

2.       The Defendant is a former employee of the Plaintiff.

3.       The Plaintiff alleged that the Defendant had disclosed to a Plaintiff’s competitor the confidential information about the names, details of the remuneration packages of 15 of his colleagues so as to assist that competitor in recruiting those employees.

4.       The Defendant and 8 of the aforesaid 15 colleagues subsequently joined that Plaintiff’s competitor.

5.       The Plaintiff claimed against the Defendant for damages for breach of his duties of good faith and fidelity by encouraging his colleagues to leave the Plaintiff and to join a competitor.

6.       The Plaintiff also claimed against the Defendant for a declaration that the Defendant is still bound by the non-competition and non-solicitation of employees clauses as stipulated in the contract of employment.

7.       The Defendant tried to strike out the Plaintiff’s claim on the ground that the Plaintiff’s claim is one within the exclusive jurisdiction of the Labour Tribunal.

Jurisdiction of the Labour Tribunal

The jurisdiction of the Labour Tribunal is set out in the Labour Tribunal Ordinance (“LTO”).

S.7 of the LTO provides that the Labour Tribunal shall have exclusive jurisdiction to determine the claims specified in the Schedule of the LTO (“the Schedule”). 

The Schedule of the LTO stipulates that:

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

(a) The breach of a term, whether express or implied, 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.

… … …”

 *Notes:    the Labour Tribunal does not have jurisdiction to adjudicate a claim for a sum which does not    exceed HKD8,000.

Whether the Labour Tribunal has exclusive
jurisdiction over the Plaintiff’s claim?

Paragraph 1 of the Schedule of the LTO only covers a claim for “a sum of money”.  Therefore, whether the Labour Tribunal has jurisdiction over a claim depends on the type of relief claimed by the Plaintiff.

a.            A claim for a “sum of money” includes unliquidated claim

The Plaintiff did not specify the amount of damages claimed (a claim for unliquidated damages).  However, by virtue of various previous decisions of the Court, the words “a sum of money” in the Schedule of the LTO includes a claim for unliquidated damages.  Therefore, in this respect, such a claim is within the exclusive jurisdiction of the Labour Tribunal (but it is subject to whether paragraph 3 of the Schedule of the LTO is applicable as explained below).

b.            The Labour Tribunal has no jurisdiction over a Non-monetary claim

The Plaintiff also claimed for a declaration that the Defendant is still bound by the non-competition and non-solicitation clauses as stipulated in the contract of employment.  The Labour Tribunal does not have jurisdiction over such non-monetary claim.  However, based on the available evidence, the Court found that such non-monetary claim is purely “window dressing” as the effect of the restrictive provisions would have expired fairly soon.  Moreover, even if the Defendant were in breach of those non-competition and non-solicitation clauses, an award of damages would be sufficient remedy for the Plaintiff.  Therefore, such non-monetary claim will not assist the Plaintiff in defending the Defendant’s striking out application.

c.            The claim for breach of confidence can be founded in both contract and tort

The Plaintiff alleged that the Defendant had passed the confidential information about his colleagues to the Plaintiff’s competitor to assist it to recruit such employees and the Defendant had allegedly misused such confidential information.

The Plaintiff had not expressly pleaded but the Court took the view that its claim is in substance a claim for breach of confidence which can be founded both in contract and in tort. Therefore, by virtue of paragraph 3 of the Schedule of the LTO, the Labour Tribunal has NO jurisdiction over the Plaintiff’s claim.

d.            Order of the Court

The Court took the view that the damages for the breach of confidence would be more or less the same as the damages for the breach of fiduciary duty caused by the Defendant in encouraging his colleagues to leave the Plaintiff and join its competitor.  Therefore, it is actually one single claim for “a sum of money” which is based on 2 separate causes of action.  Hence, the Court of First Instance has jurisdiction over the entire claim.  The Plaintiff’s claim was not struck out and the Plaintiff was granted leave to amend the Statement of Claim to specifically include the breach of confidence claim against the Defendant.

What possible revisions shall be made to the LTO?

There is often an overlap between claims under the contract of employment (e.g. breach of the terms of employment contract) and tort (e.g. breach of confidence as in the Deutsche Bank case).  Therefore, there is always some tension between the operation of paragraph 1 and 3 of the Schedule of the LTO. 

Deputy High Court Judge Lok made the following comments in the Deutsche Bank case, “………. the Labour Tribunal was intended as an informal forum for employees to pursue their claims for wages and other statutory payment in a speedy manner.  I doubt whether it was the intention of the legislature that the Tribunal should be asked to adjudicate complex claims by employer against employee for breach of fiduciary duties.  In my view, it can avoid a lot of unnecessary arguments if such kind of claim is excluded all together from the jurisdiction of the Labour Tribunal.  In such case, the Tribunal can focus on and has more resources to deal with the more pressing claims by employees for unpaid wages and other statutory payments”.

Conclusion

We have to wait and see if and when the Schedule of the LTO will be revised to better define its jurisdiction so that it can better serve the major purpose for which it was established. In the meantime, one must take great care in the formulation of the claim to ensure that the relevant proceedings are instituted in the proper forum so that the claim will not be struck out, whether from the Court or from the LTO, for lack of jurisdiction.