Legal Grounds for Strike-Out Applications

Under Order 18, rule 19(1) of the Rules of the High Court, a pleading can be struck out if it:

1. Shows no reasonable cause of action;
2. Is scandalous, frivolous, or vexatious;
3. Prejudices, embarrasses, or delays a fair trial; or
4. Abuses the court process.

The burden of proof in a strike out application lies with the applicant to demonstrate that the case is a plain and obvious one where the other party's claim is bound to fail.

For cases where the applicant is seeking to argue that the pleading shows so reasonable cause of action, the legal basis of the claim must be unarguable or almost incontestably bad.

Where an applicant is considering arguing that the pleading is scandalous, the allegations in the pleading need to be outrageous or claim dishonest conduct against another party, which would not be admissible in evidence. A frivolous claim is one that is not capable of reasoned argument, without foundation, or where it cannot possibly succeed. A vexatious claim is one that is oppressive and/or brought or continued in bad faith.

Where an applicant seeks to argue that the pleading may prejudice, embarrass, or delay the fair trial of the action, a liberal interpretation is given by the courts and includes pleadings that contain too many irrelevant matters or fails to address the issues they are supposed to address.

The court has the inherent jurisdiction to strike out pleadings that are an abuse of its process. This includes situations where the defence is a mere sham or where the issue has already been finally determined by a competent court.

Case Study 1: Insurance Agent's Compensation Claim

In the case of Lo Wai Keung v. Hannover Rück SE [2023] HKCFI 420, the High Court struck out an employment claim on the grounds that the Labour Tribunal had exclusive jurisdiction over the matter. The Plaintiff, a former employee of Hannover Rück SE, alleged breaches of statutory duty under the Employment Ordinance and contractual obligations, including damage to his reputation due to his dismissal being unreasonable. The Defendant successfully argued that the claim was an abuse of process as it fell within the Labour Tribunal's exclusive jurisdiction, and no tortious claim had been pleaded. The Plaintiff's attempt to introduce tortious elements, such as defamation, in his Answers to Further and Better Particulars was rejected by the court.

The Plaintiff's appeal against the strike-out decision was dismissed by the Honourable Mr Justice Yeung J, who found that the substance of the claim was rooted in employment contract breaches and statutory provisions under the Employment Ordinance, all within the Labour Tribunal's jurisdiction. The court emphasised that even if amendments were made to the Amended Statement of Claim, they would not suffice to establish a tortious claim. This case underscores the importance of correctly identifying the appropriate forum for employment disputes and the challenges of persuading the court to strike out a claim.

Case Study 2: Deliveroo Rider's Injury Claim

A former Deliveroo rider sought compensation for injuries sustained whilst working. The rider claimed to have sustained injuries to his right hand and clavicle from an accident in February 2022 while on the job. He subsequently made an application for employees' compensation under the ECO. The court struck out the claim, determining the rider was an independent contractor, not an employee. The rider had already received benefits from a voluntary insurance policy, making the claim an abuse of process. The Supplier Agreement which the rider had signed with Deliveroo defined the parties' own understanding of their relationship, describing the rider clearly as an independent contractor as opposed to an employee. The Supplier Agreement also made it clear that the rider was not obliged to do any work for Deliveroo. Instead, the rider had significant freedom as to whether, when and how to provide the contracted delivery services to Deliveroo and if he chose to, he could ask a third person to provide the services in his place.

Case Study 3: Insurance Agent's Compensation Claim

A mother filed a claim under the Employees' Compensation Ordinance (ECO) after her daughter, an insurance agent, committed suicide. The mother alleged that her daughter had been oppressed at work and that her death was due to being bullied whilst she worked as an insurance agent for an insurance company in Hong Kong. She filed a claim demanding compensation in the sum of HK$150,000,000.  The court struck out the claim, ruling it frivolous and vexatious. The deceased was an independent contractor, not an employee, and her death by suicide excluded compensation under Section 5(2)(b) of the ECO. The Judge commented that the Court need not examine the various factors of the deceased's work arrangement to determine whether an employment relationship has been legally formed, as it was already clear to him that the nature of the claim does not fall within the jurisdiction of an ECO claim.

Case Study 4: Disability Discrimination and Constructive Dismissal

The Respondent in the proceedings, Quasar Engineering Ltd, a company previously owned by Longreach QE Holdings (an entity that is part of the Longreach Group), brought a strike out application against its former employee, the Claimant. The Claimant alleged that his ex-employer had breached its statutory duties under the Employment Ordinance and engaged in disability discrimination contrary to the Disability Discrimination Ordinance. The Claimant argued that he was dismissed whilst on paid sick leave, denied annual leave, and made to work on statutory holidays without compensation. The Claimant had terminated his employment claiming constructive dismissal following the Respondent serving notice on him whist he was sick. The Respondent, sought to strike out parts of his claim, arguing that the constructive dismissal claim fell within the Labour Tribunal's jurisdiction and that the Phantom Equity Stock Option (PESO) claim was contractual, not an equal opportunities issue. The Respondent also sought to expunge parts of the Claimant's Witness Statement, claiming irrelevance and breach of confidentiality involving clauses from an agreement between Biosense Webster of Johnson & Johnson and the Respondent.

The Judge dismissed the Respondent's application, reasoning that the Claimant's case extended beyond a simple breach of contract, asserting that the dismissal was due to disability discrimination, thus falling under the District Court's jurisdiction. The Judge found the Claimant's allegations regarding the CEO's micro-management and its impact on communication with Johnson & Johnson, as well as the Claimant's request to remove a non-compete clause, were pertinent to the dispute. Consequently, the Judge did not strike out the contested paragraphs, as they were not plainly objectionable.

Conclusion

A strike-out application may not be possible in all cases, but where it is and the applicant is successful, this will result in the saving of significant legal costs if the whole case can be struck out, avoiding the costs and time in taking a matter to trial.

Links to Deep Dive Articles:

Case study 1: Hannover case - High Court Employment Claim Struck Out for lack of jurisdiction 

Case study 2: Deliveroo case - Deliveroo Rider's Injury Claim

Case study 4: Quasar case - Disability Discrimination and Constructive Dismissal