Kwan Yiu Hung v. Aia International Ltd (Formerly Known As American International Assurance Company (Bermuda) Limited

HCA 2407/2014

[2020] HKCFI 1389

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2497 OF 2014

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BETWEEN

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J U D G M E N T

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The Nature of the Dispute

1.This action is a contract dispute between plaintiff (“AIA”, where appropriate) and the defendant (“Kwan”, where appropriate) for breach of a Career Representative Contract dated 1 July 1999 (“the Agreement”). AIA appointed Kwan as an insurance agent, called a “Career Representative” under the Agreement, with effect from 1 July 1999 to procure and transmit to AIA applications for life insurance and annuities in consideration for bonus or commission to be awarded to Kwan.

2.The dispute concerns how and when Kwan’s engagement was terminated, pursuant to which clause of the Agreement, and what consequences follow under the terms of the Agreement. Kwan maintains that the Agreement had been automatically terminated under Clause 26(a) on 30 November 2010, with the result that he continued to be entitled to Production Bonuses after termination.

3.AIA contends that the termination under Clause 26(a) of the agreement was not automatic, but the right to terminate was for AIA alone to invoke, a right which AIA did not exercise. AIA takes the position that the Agreement was validly terminated under Clause 24(b) by a 15-day written notice dated 5 January 2010, such that the termination took effect from 20 January 2010, with Kwan having no further entitlement to Production Bonuses upon termination.

The Issues to be Determined

4.The issues to be resolved by the Court are as follows –

(1)  The proper construction of Clauses 24 and 26 of the Agreement.

(2)  Whether the Agreement was terminated under Clause 26(a) (as the plaintiff contends it was) or under Clause 24(b) (as the defendant contends it was).

(3)  If Kwan succeeds in his argument, what is the quantum of new and renewal production Bonuses that he is entitled to under the terms of the Agreement.

Applicable Legal Principles on Construction of Contract

5.The law on construction of contract is well-established. The leading Hong Kong authority is Jumbo King Ltd v Faithful Properties Ltd [1999] 2 HKCFAR 279. Lord Hoffman NPJ opined as follows (p.296D-I) –

“The Construction of a documents is not a game of words. It is an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard. Not merely to the individual words they have used, but to the agreement as a whole. The factual and legal background against which it was conclude and the practical objects which it was intended to achieve. Quite often this exercise leads to the conclusion that although there is no reasonable doubt about what the parties meant, they have not expressed themselves very well. … of course in serious utterances such as legal documents, in which people may be supposed to have chosen their words with care, one does not readily accept that they have used the wrong words. If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other. … But the overriding objective in construction is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean. Therefore, if in spite of linguistic problems the meaning is clear, it is that meaning which must prevail.”

6.In another case decided shortly before Jumbo King in the House of Lords, Investors Compensation Scheme Ltd v West Bromwich Building Society & Ors [1998] WLR 896, Lord Hoffmann laid down five broad principles of interpretation of contracts, which are summarized below –

(1)  Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2)  The background is the “matrix of facts” includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3)  Previous negotiations of the parties and their declarations of subjective intent are not admissible for the purpose of interpretation of the contract, though admissible in an action for rectification.

(4)  The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words.  The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between different possible meanings of words which are ambiguous, but even to conclude that the parties must, for whatever reason, have used the wrong words or syntax.

(5)  The “rule” that words should be given their natural and ordinary meaning reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.  

7.In a recent judgement of the Supreme Court in Wood v Capita Insurance Services Ltd [2017] 2 WLR 1095 at 1099, Lord Hodge JSC formulated the Court’s task in interpretation of contract in the following terms –

“The court’s task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on the parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of the drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning.

Interpretation is, as Lord Clarke JSC stated in the Rainy Sky case (para.21), a unitary exercise; where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common ‘sense.’

There may often therefore be provisions in a detailed professionally drawn contract which lacked clarity, and the lawyer or a judge in interpreting such provisions may be particularly helped by considering the factual matrix and the purpose of similar provisions in contracts of the same type.”

8.The defendant further relies on Ma CJ’s observations in Fully Profit (Asia) Ltd v Secretary for Justice (2013)16 HKCFAR 351 at §15 as a reminder of the importance of context when interpreting a contract after referring to Lord Hoffmann’s dicta in the two cases referred to above –

“What emerges from these cases – and other authorities on contractual interpretation – is the overall importance of context when construing contractual terms. … It is in my view not particularly helpful in most cases to refer to the ‘ordinary and natural meaning’ of words because, as very often experience tells us, there can be much debate over exactly what is the ordinary or natural meaning of words. The surer guide to interpretation is context.”

Oral Evidence

9.Apart from the documents exchanged during the discovery process, the following witnesses gave oral evidence based on their witness statements, and were cross-examined –

For the plaintiff

(1)  Kwan;

(2)  Kwok Kee Leung (“Ken Kwok”), the direct supervisor of Kwan;

For the defendant

(1)  William Chan, Head of District 27 of AIA, the district of which the Kwan was a member;

(2)  Chan Pui Yiu Eva (“Eva Chan”), an insurance agent of District 27 under AIA);

(3)  Lee Ka Chai (“Joel Lee”), Senior Manager of AIA’s Business Development Department;

(4)  Leung King Chung (“Frankie Leung”), Senior Manager of the Finance Department of AIA.

The Facts

10.I would set out the material facts hereunder, which are not disputed unless otherwise indicated.

11.AIA is a major insurance company. Its operation is divided into business groups called “districts” headed by “Executive District Directors” (“Districts”).  The district to which Kwan belonged since he joined AIA was District 27.  William Chan was one of the founders and at all material times the Executive District Director of District 27 who led and drove the business production of the group.

12.Kwan joined AIA as an insurance agent in July 1999 under the Agreement with AIA.  As of 30 November 2010, he was aged 58, and had been with AIA for more than 10 years.

13.The Agreement was a standard form agreement drafted and provided by AIA.  

14.Clause 24 of the Agreement provides that –

“Subject to sooner determination of this Agreement by the Company in accordance with Clause 26 of this Agreement, this Agreement may be terminated without any reason thereof:-

(a) By the withdrawal of the Company from the territory in which the Career Representative is operating;

(b) By either party upon 15 days’ notice in writing;

(c)   By the death of the Career Representative …”

15.Clause 26 provides that –

“This agreement becomes automatically terminated without prior notice to the Career Representative upon the occurrence of any of the following events –

(a) If the Career Representative does not meet training, production, persistency or other requirements in respect of the Career Representative operations which may be set by the Company from time to time.

(…)

If this Agreement is terminated under 26(a) above and if at the time of termination of this Agreement the Career Representative has attained the age of 55 with a minimum of 10 years’ service or has served the Company for at least 20 continuous years, the Career Representative’s entitlement to the established new renewal Production Bonuses rights hereunder shall not be affected.”

16.Another clause relevant to the dispute is Clause 29, which provides-

“Except for termination of the Agreement as provided under Clause 24(c) hereinabove, the Career Representative’s rights to production bonuses, bonuses or any other benefit, payment, excluding First Year Production Bonuses earned prior to termination, shall forthwith cease upon termination of this Agreement.”

17.One of the requirements to be fulfilled by an employee under the Agreement is production requirement (“PR”). PR is measured by reference to the monetary value in First Year Commission (“FYC”) that the agent succeeds in producing through signing up customers for insurance policies and annuity plans offered by AIA.  The PR referred to under Article 26(a) is a minimum level of production in terms of FYC that the agent is expected to meet, and is a variable figure set by AIA from year to year and widely published in its internal communications. 

18.In order to drive performance, District leadership could set PRs higher than AIA’s PR for their own Districts.  In practice, the agent’s actual performance will need to meet not only AIA’s minimum PR but also the specific target set by each district for its insurance agents, as an agent is at risk of being terminated on notice under Clause 24(b) upon the recommendation of the District Executive Director. The higher district PR would be communicated to team leaders and agents in the district through weekly and other meetings to incentivise them to perform better and bring in more revenue.

19.According to the evidence of witnesses called on behalf of AIA, the table below shows the PR figures in Hong Kong dollars of AIA and District 27 respectively, and the actual performance of Kwan between 1999 and 2010 before he left the company. As will be seen below, since 2005 Kwan’s actual production figures had consistently fallen near the lower end between AIA’s company PR and the District 27 PR.

Year ending 30 November	AIA’s PR	Plaintiff’s Actual Production	District 27’s PR
1999	73,000	*35,020.16	73,000
2000	73,000	85,231.69	73,000
2001	73,000	128,951.77	73,000
2002	73,000	97,887.89	73,000
2003	73,000	109,300.11	73,000
2004	73,000	76,660.11	73,000
2005	73,000	82,951.32	108,000
2006	73,000	93,610.09	108,000
2007	73,000	75,976.94	108,000
2008	58,400	92,162.10	108,000
2009	73,000	92,676.96	108,000
2010	73,000	75,457.88	128,000
2011	73,000	^1,440.03	128,000

*(11 July-30 Nov)        ^(1 Dec-Jan 19)

20.From December 2009 to 30 November 2010, the PR for District 27 became “HK$128,000 FYC”. There is no dispute that during the relevant period, the higher PR figure for District 27 was repeatedly impressed upon the agents, accompanied by clear statements that those who were unable to meet the higher district PR figure would face termination. In an email dated 21 September 2010 addressed to all District 27 agents, it was stated that in view of the shortage of seating available to even those who were able to achieve the higher PR of HK$128,000, those who were only able to achieve a production figure of between HK$73,000 (AIA minimum) and HK$128,000 (District minimum) would be considered for termination (“將考慮不再續約”) [1]. It is not in dispute that William Chan might have told Kwan personally that he would have to go unless he met the District 27 PR.

21.However, Kwan does not accept that prior to the year ending November 2010 there was any District 27 PR higher than the AIA’s company PR that agents of the district were required to meet.  He maintained that it was only in 2009 that he was told for the first time that there was a higher PR to be met by District 27 agents, and that the consequence of not meeting the higher district PR would be termination of his agency contract.  

22.Kwan’s direct supervisor, Ken Kwok, who gave evidence on behalf Kwan, was willing to accept that there were higher PR figures for District 27, but he maintained that before 2010, it had never been said that an agent would face termination unless the District 27 PR was met[2].  He accepted that prior to 2010, there had been requests to attain higher PRs, with prizes and rewards as encouragement.  He described the higher PR figures put forward since 2005 as the PR of District 27 with rewards attached (帶獎勵性的要求), but never was there the consequence of termination for default. According to Ken Kwok, they were treated merely as goals set for District 27 agents to achieve accolades such as Million Dollar Round Table (“MDRT”) [3].  He said he had never heard of the figure HK$108,000 as PR for District 27, and he did not agree that that figure was known as the District 27 PR between 2005-2009.

23.His evidence was contradicted by William Chan, Joel Lee, and Eva Chan, a District 27 agent called on behalf of the defendant. Like Kwan, Eva Chan joined AIA in 1999 and has remained an agent of AIA at the time of her evidence. She deposed to the fact that District 27 has always, throughout the years from 2005, set its own minimum yearly PR in terms of FYC, which was communicated to agents in the district through annual meetings and numerous small team meetings throughout the year. She remembered that when she applied to become a home-stay agent in 2005, she was told that she had to attain the District PR. She understood the District 27 PR as a separate but higher requirement than the PR of AIA, but to her, the two requirements were both to be satisfied. She disagreed that there was no District 27 PR known to its agents prior to 2009.  

24.I have observed Eva Chan as she gave evidence in Court. I find her a credible witness. I accept her evidence as true. I also accept the evidence of William Chan in respect of the existence of a District 27 PR as tabulated in table above, I reject the evidence of Kwan that prior to 2009 he had never heard of a higher PR applicable to District 27 that he was expected to strive for.  However, having considered the evidence of Ken Kwok against the evidence of William Chan and Eva Chan, I am prepared to accept that prior to 2009, Ken Kwok had been under the impression that the higher District 27 PRs are but goals to be achieved with no consequence of termination attached for failure to meet the target. As Ken Kwok was the direct supervisor of Kwan at the material times, it would not be surprising if Kwan was under the impression that he only had to satisfy the AIA PR referred to in the Agreement.

25.The District 27 PR for 2009-2010 was not met by Kwan by 30 November 2010.  His actual production figures were recorded as HK$75,457.88 by that date, barely surpassing the AIA’s contractual minimum.

26.By an email dated 6 December 2010, William Chan, the Executive Director of Kwan’s district, intimated to Kwan that he had failed to meet the District 27 PR of HK$128,000. In the same email, Kwan was informed of the administrative arrangements for District 27 to follow (emphasis supplied) –

“根據2010年11月30日業績報告顯示，閣下2010年全年業績未達27團隊最低要求128000 FYC，現通知閣下27團隊將有以下行政安排：

1)  請閣下於2010年12月9日前收拾私人物品並交還座位鎖匙予秘書処；

2)  暫安排閣下於觀塘B寫字樓（1510室）工作及交收文件，并需繳交1個月行政費用，直至另行通知；

3)  於2010年12月10日起工作證只可進出觀塘B寫字樓；

4)  本人於2010年12月6日内閣會議將與各内閣成員商討終止合約決定，有關終止合約日期將可能於2010年12月31 日生效。”

27.Kwan followed the above instructions on the District 27 administrative arrangements, cleared up his personal belongings and returned the key to his desk drawer to the secretariat.  As stipulated in the email, he had continued access with his key card to the Kwun Tong B office where he had been operating from, although his access was restricted to that office only.  The arrangement, which applied “until further notice”, specifically permitted him to continue to work from the Kwun Tong B office and to submit and receive documents through that office, subject to the payment of an administrative fee. In point 4 of the email, he was expressly informed of what would take place next to determine his fate:  a discussion between William Chan and the “cabinet”, meaning the management. He was also informed of the likely outcome, which was possible termination with effect from 31 December 2010. As Kwan admitted under cross-examination, during that period of time, his position was in a limbo while awaiting the final “sentence” (“妾身未名”, “等判刑”).  Kwan tried to equate a pending decision on his disposal to an actual termination of contract, contending that he was like someone remanded in custody awaiting sentencing. I do not accept the analogy in terms of the legal relationship between him and AIA.

28.It is common ground that Kwan received no notification on or before 31 December 2010 with regard to the postulated date of termination of his contract. That in effect protracted his state of limbo while he continued to await his final disposal by the decision of the management.

29.Ken Kwok told the Court in oral evidence that after the 6 December 2010 email, which was copied to him, he did speak twice to William Chan and asked him to let Kwan stay. His evidence was that he believed it was in the power of William Chan to terminate him because he was the Executive District Director, but Chan told him that he would let the company decide.

30.While Kwan was awaiting to hear from the management, he  admittedly went about his business as an AIA agent as usual[4].  According to Kwan, he had an appointment made with a Ms Chui Sau Mei prior to 30 November 2010 to convert an existing fix-term policy into an annuity.  The original fix-term policy was due to expire on 19 January 2011. When asked under cross-examination whether he considered he was still operating as an AIA agent when he rendered his service to Ms Chui, he claimed not to be sure at the time whether he was terminated yet, but had chosen to go ahead to handle the conversion of policy as a service to the client[5].

31.The meeting between Ms Chui and Kwan took place in mid-December 2010, when Kwan filled in a form for her intended application to convert her soon expiring policy to a new policy. He inserted the date of 20 January 2011 on the form as the intended date of commencement of the new policy so that the new policy could take effect immediately after the expiry of the original policy. Kwan highlighted the fact that the appointment with Ms Chui was made prior to 30 November 2010. However, had Kwan in fact been terminated prior to 30 November 2010, the fact that an appointment for potential business was made prior totermination would not have justified his performing service for and on behalf of AIA as if he was still an AIA agent.  

32.When questioned by Counsel for the plaintiff, Kwan agreed that he considered he was entitled to obtain a policy number because he was still an AIA agent as of January 2011[6]. However, when Kwan approached the AIA secretariat to obtain a new policy number for his client for the converted policy, he was refused on the ground that he was no longer in a position to handle applications for new policies and annuities. He then turned to Ken Kwok for assistance.

33.From the above evidence concerning the period between 6 December 2009 up to the time when Kwan received the letter from the management of AIA dated 5 January 2010, I find that the defendant had continued to be treated as an agent under the employ of AIA, and he continued to act as one while awaiting management decision on his expected termination. While the District 27 leadership was by then clearly aware of Kwan’s failure to meet the District 27 PR, the administrative arrangements set out in the 6 December 2009 email are only consistent with the contract not yet having been terminated, whether automatically or otherwise.

34.According to Ken Kwok’s oral evidence[7], he was approached by Kwan at the beginning of January regarding Ms Chui’s policy. In response to Kwan’s request for assistance, he attempted to obtain a policy number on behalf of Kwan through the District 27 secretariat, but was told that he could not do so.  He then bypassed the District 27 secretariat and submitted the form, on behalf of Kwan, directly to the AIA headquarters. Ken Kwok did receive the policy back with a policy number, and he sent the policy back to Ms Chui.  Contrary to Ken Kwok’s evidence, Kwan refused to admit that he had approached Ken Kwok for help only around 4 January 2011.  I find from the above evidence that contrary to the unclear oral evidence of Ken Kwok in this respect, he had continued to treat Kwan as AIA agent prior to 5 January 2011 by submitting on his behalf an application for a new policy for Ms Chui.

35.It is not disputed that for Ms Chui’s new policy, Kwan was subsequently paid the share of First year Commission he was entitled to as an AIA insurance agent, together with renewal commissions of other policies. Whereas his commission had been settled by autopay in the past, the autopay arrangement was stopped after 6 December 2010. Instead, he received a cheque at the end of March for $20,693.49 from AIA. The Statement of Account[8] shows that the payments covered Ms Chui’s new policy identified by a new policy number.

36.On 5 January 2011, Joel Lee, Senior Business Development Executive of AIA signed off a letter addressed to Kwan terminating the Agreement with effect from 20 January 2011.  Whereas no reference was made to any particular clause in the Agreement, the period of notice given was a 15-day period, and no reason for termination was given. This reflected the decision of the management made following the recommendation of William Chan in a memorandum of even date.

37.On the following day, Kit Tam of the District 27 administration by email informed administrative staff of the termination of Kwan with 15 days’ notice, instructing secretaries within the group to make necessary changes to administrative settings including, inter alia, to invalidate his access card, remove production board name, delete the contact details from the agents list, and collect and access card from Kwan. According to Kwan, by then he only had the access key card left, and he found it unnecessary to return the key card as it would be programmed to deny him access to the Kwun Tong office B in any event.

38.The termination letter of 5 January 2011 was allegedly received by Kwan on 13 January 2011. In response, he wrote a three-page letter in Chinese dated 24 January 2011 addressed to the Vice President and Deputy Chief Agency Officer of AIA. In the letter he complained  of the unfairness of his termination for failure to meet the PR of District 27, referring to the termination letter which gave no reasons for this termination[9]. In the letter he also complained about what he perceived as unfair treatment he received with regard to the allocation of office space and use of office facilities during his time as an AIA agent. He expressed considerable grievance as he did not believe he deserved such humiliation: while he accepted his performance was so-so, it still met the basic PR under his contract (“我雖業績一般但仍達合約基本要求”)[10] .

39.As seen in Kwan’s letter of 24 January 2011, at least in respect of the period between 2009 to 2010, the fact that there were two different sets of PR, one of AIA’s being the contractual PR, and another PR applicable to District 27, is something which Kwan well understood. In this letter, he referred to two disparate sets of PR, and bemoaned the fact that he had attained the lower one stipulated in the contract, though he did not manage to have satisfied the District 27 PR, with the consequence that he was expected to resign of his own accord (“有達合約要求但未達區域HK$128,000之要求… 如不能做到則需自行辭職”)[11].  Kwan’s grievance on the termination by notice is summed up by him under paragraph 3, which was based on his own understanding of company policy and what he considered the “reasonable expectation” of an unambitious agent like himself  –

“…我們被告知, 及就我們所知，公司或區域當然希望我們能多做生意，但只要我們能達到合約的基本要求，我們最少能在AIA生存一直做下去 … 故此我們期望只要能達到合約的基本要求便能留下是相當合情合理的期望！”

40.Thereafter, Kwan received a letter dated 9 February 2011 from the Deputy Chief Agency Officer in reply to his complaint letter of 24 January 2011. In the reply letter it was politely explained to Kwan that the decision to terminate his service was not an easy one, but the management needed to maintain the team work culture with its individual district leaders, and would therefore respect the ultimate decision of William Chan. It was made clear that it was on that basis that the management had decided to terminate him under Clause 24(b) by giving 15 days’ notice.  Kwan was invited to contact Frankie Leung in case he had any further questions. Kwan did not reply any further, nor contact anyone in relation to his termination.

When was the Agreement Terminated?

41.The plaintiff contends that the Agreement was terminated by operation of Clause 26(a) on 30 November 2010, the date of the end of the accounting year, due to Kwan’s failure to meet the PR set by the defendant.   This section examines the objective facts of the termination. Whether the facts did give rise to engagement of Clause 26(a) will be examined in the next section.

42.Now that the evidence has established that there were two sets of PR relevant to Kwan, the first question to be resolved is which set of PR is to be used to measure the production of an agent for the purpose of Clause 26(a).  If it were the lower AIA PR that was applicable to Clauses 26(a), the Agreement would not have been terminable on 30 November 2010 as there is no dispute that the actual production of Kwan in the relevant accounting period met the minimum set by AIA (HK$73,000 FYC), but fell far short of the District 27 PR (HK$128,000).  The plaintiff’s case is therefore at the material time, the District 27 PR has substituted AIA’s published PR to become the contractual PR that triggered the operation of Clause 26(a).

43.However, that was not what Kwan appeared to have believed at the material time. While this Court will not rely on subjective state of mind or post-contractual conduct in the interpretation of a contract,[12] the Court should not ignore evidence of the conduct of the parties at the material time in assessing the credibility of a party’s case and the evidence of its witnesses.

44.It is plain in the passages of Kwan’s letter of 24 January 2011 quoted above that Kwan knew very well his shortfall in meeting the PR was not in respect of the contractual PR (“合約要求”), but a higher PR that was imposed by the leadership of District 27 in order to drive performance and to weed out the non-performing agents despite their fulfilling the contractual PR. He considered the District 27 practice unfair and unreasonable on long-serving agents.   He therefore pleaded with the management to look into the competitive practice adopted in District 27 which he considered incongruous with the culture of AIA as a nurturing and encouraging working environment. He requested the company to restore his contract immediately, and to respond to the questions he raised.

45.It is also plain from the reading of the letter that Kwan did not consider that his contract was terminated under Clause 26(a) for failing to fulfil contractual requirement. Rather, he knew well that it was as a result of the management making a decision to terminate on the recommendation of the leadership of District 27.  In particular, he had treated his employment as having been terminated by the letter of 5 January 2011, giving 15 days’ notice without any reasons stated.[13]  Regardless of whether or not he knew at the time of the precise provision under the Agreement that the management was relying upon, he did not for once dispute AIA’s right to terminate with 15 days’ notice, but only argued that it was unfair in view of the practice in District 27, and requested for reinstatement.

46.In view of the above evidence, it is plainly difficult for the plaintiff to maintain a stance that he had always believed that his contract was terminated automatically by operation of law once he failed to meet the District 27 PR, and the 6 December 2010 email only confirmed it. In cross-examination, he admitted that after 6 December 2010 and before he received the 5 January 2011 letter, he was not sure about his status, and was awaiting “sentence” on his default of meeting the PR (“妾身未名”, “等判刑”). That would explain why he conducted himself as if he was still an AIA agent, only with rights that were further cut back (having been asked to return the key to the drawer of a desk and remove his personal belongings).  In rendering his service to Ms Chui, he admitted that he thought he was still entitled to transact business on the behalf of AIA, hence his attempt to obtain from the secretariat a new policy number for Ms Chui’s converted policy. 

47.Having considered all the evidence carefully, I find that the plaintiff’s understanding of the status of his contract with AIA prior to 5 January 2011 was in line with what he was told in the 6 December 2010 email – that there will shortly be a discussion within the management in a meeting with a view to deciding on whether to terminate him, and subject to a decision being made, termination may happen on 31 December 2010 (12月6日内閣會議將與各内閣成員商討終止合約決定，有關終止合約日期將可能於2010年12月31日生效). It is also in line with the email of William Chan announcing to all agents dated 21 September 2010, that those agents whose production fall between $73,000 and $128,000 FYC will be considered for termination (“將考慮不再續約”). I find that at the time of the email of 6 December 2010, the management has yet to finalise the disposal of Kwan, and was awaiting William Chan’s recommendation, which only came on 5 January 2011.

48.In the letter of 24 January 2011 written to the Deputy Chief Agency Officer, Kwan obviously regarded his employment to have been terminated only by the letter of 5 January 2011. That was the “sentence” he finally received, and he felt aggrieved by it. His request for reinstatement was with regard to the termination effected by the 5 January 2011 letter giving him 15 days’ notice without giving any reasons. 

49.Even after he had been told by AIA management in the letter of 9 February 2011 that the relevant clause under which termination was effected was Clause 24(b), he made no protest. Under cross-examination, Kwan had complained that AIA had shifted their goal posts, and there was nothing he could do. When asked why he did not complain about the shift of the goalposts and claim for the continuing payments of production bonuses that he should have been entitled, he was only able to point to the commencement of this action, which was nearly 4 years after the termination.

50.As pointed out by Counsel for the defendant, the first time the plaintiff put forward the theory that his contract was terminated automatically by operation of law at the point of failure to meet the District 27 PR was when paragraphs 11 and 12 of Statement of Claim were amended and verified by him. Even at the start of the action, which was nearly 4 years after the termination, it was pleaded that the Agreement was terminated by operation of Clause 26(a) on 31 December 2010, not 30 November 2010.  When confronted with his previous stance in the original Statement of Claim, which he verified as true, Kwan explained that the solicitors had misunderstood that the accounting year ended on 31 December, when it ended on 30 November, and that he did not pay attention to the error when signing the statement of truth.

51.The Court does not find that explanation credible. The relevance of the date of 30 November 2010, being the end of the accounting period, was central to the plaintiff’s case and would have been obvious to anyone handling the matter. It was when the attainment of the applicable PR would be reckoned, as already pleaded in §6 the original version of the Statement of Claim.  On the plaintiff’s case, the effect of clause 26(a) being automatic, it would have operated to effect immediate termination on the same date, and not some arbitrary later date. The alleged misunderstanding therefore could not have arisen from a mistake made on the date of the end of the accounting year.

52.Even if the Court is not to take into account the subjective belief and the conduct of Kwan, and the conduct of his case, the objective facts established in documentary and oral evidence likewise provide strong support to the proposition that the Agreement was in fact terminated not on 30 November 2010, but on 20 January 2011 by notice dated 5 January 2011.

53.The email dated 6 December 2010 was the first communication in evidence dated after the year-end deadline of 30 November 2010 that discussed the predicament of Kwan as an agent of AIA.  It clearly states that the discussion with the management was to take place shortly, a decision was pending, but the Agreement may be terminated with effect from 31 December 2010.  The administrative measures to be taken confirmed rather than denied his right to continue to work as an AIA agent in the meantime, allowing him continued access to the Kwun Tong B office, the right to receive and submit documents to AIA, and the right to the use of the office subject to payment of an administration fee.  All these rights are necessarily privileges reserved only for AIA agents and employees, and can hardly be expected to be extended, even as a matter of courtesy, to anyone who had been peremptorily dismissed under Clause 26.

54.The contemporaneous evidence supports the proposition that prior to 5 January 2011, William Chan had yet to seek the decision of AIA management to terminate Kwan. In a memorandum dated 5 January 2011 intituled the “Termination List”, he submitted the name of Kwan and two other agents to the AIA management as agents recommended for termination. The memorandum bears Joel Lee[14]’s written instructions in response as follows –

“Dear Susanna, Please process the [handwriting unclear] with effective on 20 January 2011.”

Although the manuscript of Joel Lee is unclear - he may have written “resignation” rather than “termination”, but he could only have meant “termination”. A resignation could only have been voluntary, and no resignation had been received to be processed.  I note that Counsel for the plaintiff in his cross-examination of Joel Lee did not suggest otherwise. I conclude that the decision to terminate Kwan was only made on 5 January 2011, with Lee penning his instruction to his staff to process the termination with effect from 20 January 2011.  Pursuant to his instructions,  the notice of termination was issued to Kwan on the same day.

55.When Kwan proceeded to meet with Ms Chui in December 2010 to advise and assist her to convert her expiring insurance policy to a suitable new policy, Kwan was acting in no other capacity than as an AIA agent.  According to undisputed evidence, the insurance application form submitted by Kwan through his direct supervisor Ken Kwok was dated 4 January 2011, signed by Kwan as the agent procuring the business for AIA and by his supervisor Ken Kwok. AIA received the application on 17 January 2011, approved the insurance application and issued a policy No. B616629257 to Ms Chui[15].  Kwan later received first year commission payment from AIA in respect of the new insurance policy.

56.The Court accepts that the reason for the secretariat of District 27 denying Kwan a new policy number on his application was not evidence of his having been terminated as an agent, but was an administrative measure reflecting the fact that he was awaiting decision from AIA as to when his contract was to be terminated, as indicated in the 6 December 2010 email. William Chan has explained in evidence that the reason was to prevent orphan policies to be issued which no active agent would take care of. Even if this was not to be expected by an AIA agent in the position of Kwan, who was yet to be terminated, it did not in fact cause Kwan any loss in the end, as Ken Kwok did manage to get the headquarter office to accept the policy application, and issue the policy to Ms Chui as a policy procured by Kwan, with commission payable to him.

57.The plaintiff purports to rely on the evidence of Ken Kwok in support of the proposition that the Agreement was terminated on 30 November 2010. However, the evidence of Ken Kwok provides no support to the plaintiff’s case at all. In his witness statement, he stated that “據我理解，關宇洪由於未能在2010年11月30日前達到全年最低業績要求，引致他與公司的合約終止了。” His statement could only be read as a statement of cause and effect, which is uncontroversial.  Under cross-examination, he stated that he understood from the 6 December 2010 email that Kwan’s contract was indeed terminated, but when he asked William Chan about it, he was ambiguous (“模棱兩可”）and flippant （“一時一樣”）. In his statement, he confirmed that when he twice called William Chan to ask him to allow Kwan to stay, Chan said it was subject to the company’s decision (“要問公司”).  That could only have indicated that the termination was yet to be finally decided.

58.Ken Kwok then relied on the termination of Kwan’s autopay arrangement and the fact that Kwan received no renewal commission in the month of December as evidence of actual termination by November 30. However, he accepted not only that Kwan was entitled to renewal commission for the month of December, but that the sum was merely held over for payment at a later date.

59.He also insisted that Kwan received no commission for the month of January 2011, but agreed that the entitlement to renewal commission for life insurance policies would all depend on whether there were customers paying monthly renewal premium during that month. However the statement of account[16] rendered to Kwan showing the details of the cheque payment in March 2011 was clear: for the month of December 2010 he received renewal commission amounting to $10,255.43, and for the month of January 2011, he received first year commission for Ms Chui’s policy in the sum of $9,740.58 and renewal commission in the sum of $690.26. He did not receive further commission payment even for renewals after the date of his termination on 20 January 2011.

60.The Court also accepts that the termination of the autopayment upon the issue of the notice of termination on 5 January 2011 was of no consequence to the plaintiff’s case.  It is common ground that commission would usually be paid by AIA to agents by autopay on the 25^th day of the month.  By stopping the plaintiff’s autopay, AIA allowed time for its accounting department to work out if any amount was outstanding from Kwan which needed to be set off from commission payments due to him.  As matters transpired, in March 2011, Kwan did receive payment by cheque, sent to his supervisor Ken Kwok, of the commission due to him in the period running up to 20 January 2011, which payment he accepted.

61.According to the objective facts found above, I find that the Agreement was not treated by either party as terminated on 30 November 2011, but was terminated by the defendant by written notice dated 5 January 2011 with effect from 20 January 2011.

Was Clause 26(a) engaged by Reason of Failure to meet District Pr?

62.This question involves an interpretation of the Agreement as a whole to assess whether the reference to production requirement “of the Company” under Clause 26(a) could have been substituted by the District 27 PR, as the defendant contends. I remind myself that according to established principles, I am to ascertain what the parties using those words against the relevant background would reasonably have been understood to mean.  

63.The starting point is to note that the Agreement stipulates different ways in which the contract may be terminated. Clause 24 provides for three situations where AIA may terminate with 15 days’ notice in writing but without giving any reason, “subject to sooner determination of this Agreement by the Company in accordance with Clause 26”. These three situations as provided under Clause 24 are: (a), where the Company ceases to have business in the territory; (b) giving 15 days’ notice; and (c) by the death of the agent. Whereas sub-clauses (a) and (c) cater for extreme situations where either party to the contract ceases to exist, sub-clause (b) specifically provides AIA with a means of termination of an agent on 15 days’ notice without giving reasons.  

64.It follows that even where other reasons for termination of an agent exists, it is perfectly open to AIA to choose to terminate an agent under Clause 24(a) by giving 15 days’ notice in writing but without giving reasons.  Joel Lee in his evidence explains that this provision is generally relied on by AIA to terminate agents, as may be advised by the District leadership, while avoiding any controversy over the reasons for termination. I accept his evidence as it accords with common business sense. Indeed, I do not believe it is disputed, as a matter of interpretation of the Agreement, that even if an agent meets both the company PR and the district PR, he could still be lawfully dismissed under Clause 24(b) on 15 days’ notice in writing with no reason given.

65.On the other hand, Clause 26 provides for four grounds for termination without any notice period but on stipulated grounds. Apart from (a) which provides for termination upon failure to meet the various minimum standards “as set by the Company from time to time”, (b) provides for termination upon bankruptcy proceedings being initiated against the agent, (c) provides for termination upon breaches of the Terms and Conditions of the Agreement, and (d) provides for termination for fraud and dishonesty.  In other words, the agent is liable to be told to leave the company right away in any of the four situations above.

66.In ascertaining which set of PR at the relevant time was the applicable PR “of the Company” under Clause 26, the relevant factual matrix would include the following undisputed facts –

(1)  The party with whom Kwan had entered into the Agreement was AIA. The reference to “the Company” in the Agreement was a reference to AIA.

(2)  AIA’s PR is a minimum contractual requirement under the Agreement that would trigger Clause 26(a).

(3)  The leadership of a District has the incentive to drive its agents harder by imposing a higher PR to apply to that district alone.  It follows that different districts may have different district PRs higher than the PR set by AIA.

(4)  The Executive District Director has the power to influence the termination of an agent of the District by making recommendations to the AIA management to terminate certain agents within the district.

(5)  One of the factors that creates pressure on District leadership to weed out non-performing agents is insufficient office space available for use by agents. On the plaintiff’s own account, there was a surge in the number of agents in 2010 after the move of office to new premises.

67.From the evidence set out in the previous section dealing with the facts, it is seen that Kwan admits to being well aware of AIA’s published PR for 2009-2010, which he refers to as the “contractual PR” (“合約要求”). He knew that the District 27 PR, which he said he only became aware of in 2009, was a set of higher PR separate and distinct from the contractual PR.  Kwan maintains that since it has repeatedly been publicized in District 27 that failure to meet District 27 PR would lead to termination, he regarded the District PR to have substituted the contractual PR. I do not see how the statement made by District 27 leadership could possibly have the effect of changing the terms of the Agreement with AIA, where the AIA PR remained a “contractual” standard as Kwan knew it. I consider Kwan’s interpretation of Clause 26(a) that the contractual PR referred to therein was substituted by a higher PR of the District simply by the District leadership imposing a threat of termination for failure to meet the higher PR is unsustainable. It ignores reality under the Agreement that a non-performing agent who fails to meet the higher standard expected of him in the District could nevertheless be terminated or phased out (“淘汰”[17]) under Clause 24 with no reason given, even though he could not be terminated without notice for default under Clause 26(a).

68.The Court notes, on the other hand, that the admissions of Kwan and Kwok that there was a clearly stated District 27 PR at least for the accounting year 2009 to 2010 that was made known to District 27 agents is at variance with the plaintiff’s pleaded case in §3A of the Amended Reply, which addresses §§5(1c)(b), 5(1c)(c) and 5(1d) of the Re-Amended Defence, covering all the material times when Kwan was an agent of AIA:-

“It is averred that the Plaintiff was only required to meet the Defendant’s production requirement and was never informed of the existence of 27 District’s production requirement, if any.”

69.It is common ground that at the end of November 2010, Kwan’s actual production in terms of FYC surpassed the AIA PR, which was $73,000 FYC. He did not fail the contractual PR, and Clause 26(a) was plainly not triggered.

70.Indeed, Kwan’s grievance as expressed in his letter of 24 January 2011 was precisely grounded upon the perceived unfairness in his termination despite his achieving the contractual requirement (“合約要求”).

71.On behalf of Kwan, it was argued in oral opening submissions that the defendant had in §4 of the Re-Amended Defence admitted that the PR of the Company was $128,000 as pleaded in §7 of the Amended Statement of Claim, which Kwan failed to reach, hence triggering the operation of Clause 26(a). In response, the defendant points out that the admission made in respect of §7 of the Amended Statement of Claim was expressly subject to, inter alia, §5 of the Re-Amended Defence, under sub-paragraph (1c) of which was pleaded the following –

“(a) the minimum production requirement in terms of First Year Commission set by the Defendant …was HK$73,000.00 per year …

(b) however, each minimum production requirement was the minimum target set by the Defendant which was subject to any specific target set by each district for its insurance agents”.

A table was further set out under §5(1d) with respective columns for the “Defendant’s production requirement” and “27 District’s production requirement”.

72.It is therefore clear that on the defendant’s case, the “PR of the Company” is different and distinct from the PR of the district. The Court does not accept that there was any admission on the defence case that the Defendant’s PR for the year 2009 December to 2010 November was $128,000.

73.I find that the reference to “requirements … set by the Company from time to time” in Clause 26, in so far as it relates to production requirements, refer to the PR set by AIA for the relevant accounting year, and not the higher PR set by a district that would vary from district to district.  Against the background facts of each district striving for higher achievements among its agents, and the presence of Clause 24(b) in the Agreement, it would not make sense if the contractual minimum stipulated in Clause 26(a) is to read as a minimum which can be varied from time to time by the individual business groups to a level that differs from one district to another.

74.It follows from the above findings that Clause 26(a) was not engaged, and had no room for application on the plaintiff as at 30 November 2010.  The facts as previously set out also support the defence case that Clause 26(a) was not, and had never been, intended to be relied on by AIA to terminate the plaintiff.  

75.It also follows from the findings in the preceding two sections that it was under Clause 24(b) that the Agreement was terminated.

Interpreting the meaning of Clause 26 & Clause 24

76.Based on the findings made above, the plaintiff’s case fails, and it is unnecessary to consider the plaintiff’s arguments on how Clause 26 should be interpreted to take automatic effect on 30 November 2010.  However, I shall deal with the points advanced in deference to the parties’ arguments.

77.Clause 26 begins as follows –

“This agreement becomes automatically terminated without prior notice to the Career Representative upon the occurrence of any of the following events - …”

It contains at the end of the clause a saving provision (“the Saving Provision”) as follows –

“If this Agreement is terminated under 26(a) above and if at the time of termination of this Agreement the Career Representative has attained the age of 55 with a minimum of 10 years’ service or has served the Company for at least 20 continuous years, the Career Representative’s entitlement to the established new renewal Production Bonuses rights hereunder shall not be affected.”

78.The plaintiff’s case is that Clause 26(a) operates whether or not the defendant intended it to, and regardless of the defendant’s notice in writing of 5 January 2011 purporting to terminate the Agreement under Clause 24(b), which the plaintiff contends is invalid and of no effect.

79.The defendant contends that the right of termination under Clause 26 is for it alone to exercise, short of which the operation of Clause 26 is not triggered.

80.The defendant finds support in the above interpretation in the express wording of Clause 24, which provides that the operation of the clause is “subject to the sooner termination of this CR Contract by the Company in accordance with Clause 26 of this CR Contract”. In other words, Clause 24 can be relied on if AIA has not taken action under Clause 26 to terminate the Agreement.

81.When reading the Agreement as a whole, it is clear that the purpose of Clause 26 is to provide for a means for AIA alone to exit the contractual arrangement in certain limited situations: for failure to satisfy even basic requirements, for serious misconduct or personal financial trouble of the agent. In contracts of this type, these situations can be seen to justify immediate termination, such that the insurance company is excused from having to wait for a 15-day period upon giving notice.  I refer to the matters set out in the discussion of the facts above, in particular, the facts that form part of the matrix of facts to be considered by this Court while in search of the objective meaning of the term of contract.

82.It is also apparent that the Saving Provision (which applies to  sub-clause (a) only)  aims to provide a safety net for older agents with declining productivity. It gives the qualified agents the possibility of continuing to enjoy production bonuses after their termination for falling below the minimum PR set by AIA.  This provision is however subject to other legitimate means of termination without the benefit of the saving provision.   This the plaintiff appears to be well aware, as seen in his letter to the management of 24 January 2011. On the third page of his letter, he said “本人今年已經58嵗， 循規蹈矩服務AIA十多年，根據合約我最少也有資格轉爲“退休agent”，但今日卻落得被。。。AIA公司無理終止合約“. The reference to his qualification to convert into a “Retired Agent” is obviously a reference to the Saving Provision. As much as Kwan argued it was “unreasonable” and harsh for AIA to exercise the power to terminate an aging agent of long service, he did not suggest that there was no such right under the Agreement to choose to terminated under Clause 24.

83.It is not disputed that any agent, old or young, regardless of their length of service, is subject to the Clause 24(b) termination upon 15 days’ notice in writing. An agent qualifying under the Saving Provision is in a position no different from any other agent, who is expected to continue to strive to meet not only minimum requirements but higher requirements in order to secure their employment[18], as he continues to be at the risk of termination under Clause 24(b) subject to the Company invoking Clause 26(a) to give him the status of a “Retired Agent”[19].  There is nothing in the Agreement that suggests that the continued payment of production bonuses is a right guaranteed for an agent of advanced age and/or long service by way of retirement benefits, as the plaintiff had hoped to obtain.

84.It is obvious that at least some of the occurrences that would trigger the operation of Clause 26, particularly those under sub-clauses (b), (c) and (d) which are in the nature of serious breaches or misconduct, or serious personal financial trouble, are matters which the management of AIA could well be unaware of immediately upon their occurrence.  Indeed, whether an agent is at a certain time in breach of any of the “Terms and/or Conditions” of the Agreement is open to argument, and is something even the agent himself may not be aware. It would therefore make no commercial sense at all if the words “automatically terminated” were to be given its literal meaning in the clause, with the possible consequences that one or both of the parties to the Agreement may not even know that an event triggering its operation has occurred. In my view, to adopt the plaintiff’s interpretation would be to attribute to the parties an intention which they plainly could not have had.

85.It is noted that Clause 26(a) in particular concerns meeting of AIA’s company standards or requirements that the leadership of the district would be in a position to monitor. However, bearing in mind the operation of AIA through “districts”, the management would not be in a position to make corporate decisions under the contracts without being informed of circumstances that might affect the company’s contractual rights. The occurrence of events that could trigger the “automatic” termination without the management being able to ascertain their occurrence and/or timing would create serious difficulties for both parties in establishing their respective rights and liabilities, and would likely generate disputes. It is difficult to imagine parties to the Agreement would have intended that consequence.

86.Further, it is the leader of each of the Districts who would be in the best position to decide whether the continued employment of an agent would be in the best business interest of the District and AIA. Automatic termination unnecessarily takes away any opportunity for the exercise of discretion in favour of the agent on the part of the district leadership in making recommendation to the management, which could be detrimental both parties. An agent not qualifying for any benefit under the Saving Provision would likewise be caught by the automatic operation of the provision, such that it gives no room for any exercise of discretion. Both from the point of view of the agent generally and that of AIA, automatic termination would bring no particular benefit but significant potential harm. The surrender of control and the possibility of exercise of discretion by the parties again makes no business sense at all, and could hardly be what the parties had intended.

87.The plaintiff places huge emphasis on the words “automatically terminated” in order to take benefit from the Saving Provision. The plaintiff argues that the Saving Provision is for the protection of an agent of advanced age and long service, and is designed not to be taken away at will from the agent by AIA. When construed literally, the wording of the clause stipulating the consequences of breach could mean that the termination takes effect from the time of the occurrence of one of the paragraphs under the clause. The plaintiff argues that for an agent that qualifies under the saving provision, the benefit to continued payment of production bonuses after termination would be liable to be taken away by AIA at will. The interpretation is therefore alleged to be unfair and should not be adopted.

88.The plaintiff’s argument on unfairness could only have very limited application, ie confined to sub-clause (a) and limited to agents qualifying under the Saving Provision. On the other hand, if the interpretation of the plaintiff is adopted, it will impact on all agents and in respect of all the other sub-clauses namely (b), (c), and (d), with effects that would make no commercial sense, as analysed above.

89.The defendant’s argument is strengthened by the fact that despite Kwan having been unable to meet the District 27 PR at least since 2005, the Agreement has never been automatically terminated, nor did he believe it was. Kwan’s only answer was to deny the existence of any District 27 PR higher than the AIA PR between 2005 to 2009, which this Court has already rejected.

90.Bearing in mind the principles on contractual interpretation, I am unable to accept the plaintiff’s submission on the interpretation of Clause 26(a). If the interpretation proposed by the plaintiff were adopted, it would create far greater potential unfairness and administrative difficulties for parties not only AIA, but including agents not qualified to take benefit under the saving provision.  I am not persuaded that those consequences were intended by the parties. As cautioned by the courts in the above cited authorities, the Court should bear in mind the possibility that the terms agreed to may not equally serve the best interest of all the parties, and should not be swayed in its judgment by the alleged unfairness to one party resulting from a particular interpretation of the term as a reason for rejecting it. I am inclined towards accepting the defendant’s interpretation that the rights to termination under Clause 26 was for the plaintiff to exercise only, and enables the plaintiff to terminate without notice when any one of the sub-clauses is met, subject to the Saving Provision which applies to Sub-clause (a), but not other sub-clauses which involve serious breaches, dishonesty or bankruptcy.

91.On the other hand, Clause 24 operates in favour of both parties. It caters for situations where the contract needs to be terminated out of no fault of either party (withdrawal of AIA from Hong Kong, or death of the agent), or where either party chooses to terminate the contract with 15 days’ notice in writing without having to give reasons. Under this clause, AIA may terminate an agent for lack-lustre performance, or for discord between agent and supervising officer, as the case may be, or for any other reason. On the other hand, an agent may wish to leave employment to join a rival company, or to depart for personal or any other reason.  In either case, no reason needs be provided to justify the termination, however unreasonable or frivolous such reasons may be.  The only condition is that the notice period has to be observed.

92.This is clearly the bargain which the parties have entered into to give each other an easy exit from the contract, and it makes eminent commercial sense. I also accept the evidence of Joel Lee that AIA would prefer to use Clause 24(b) to terminate an agent regardless of the true reason for the termination, so as to avoid any cause for litigation.  This makes plain business sense. Likewise, an AIA agent planning to join a rival company can be expected to rely on this clause so as to avoid having to disclose his plans, thereby to avoid potential litigation.

93.When Clause 26 is read together with Clause 24, it is clear that the Agreement provides for different ways in which the contract may respectively be terminated at AIA’s option for misconduct or serious failure, or by both parties for no given reason. The express right to terminate without reason but on 15 days’ notice was mutual. I do not see there is any commercial reason on either side for that right to limited by a prior automatic operation of Clause 26 without AIA being in a position to exercise its judgment or choice on the occurring of an event caused solely by the conduct or failure of the agent it may or may not even know about.  

94.Bearing in mind the nature and operation of the trade, the presence of the other provisions for termination, and the purpose of the respective clauses, a contextual interpretation would drive towards the conclusion that the plaintiff’s interpretation is untenable.

95.I therefore uphold the interpretation advanced by the defendant and reject the arguments of the plaintiff.

Conclusion

96.The plaintiff’s claim is dismissed in its entirety.

97.I make an order nisi that the costs of the action be to the defendant to be taxed if not agreed. For the avoidance of doubt, the costs order nisi does not include a certificate for two counsel. 

98.The costs order nisi will become absolute on the lapse of 14 days from the date of this judgment, unless any of the parties make contrary submissions on the costs order in writing, to be filed and served within 14 days hereof. The opposite party shall have a right of reply within 7 days thereafter, with no further submissions to be filed unless invited by the Court. Any written submissions the parties may wish to make in respect of the costs order nisi should be limited to 2 pages in A4 size.  

99.It remains for me to thank counsel on both sides for their invaluable assistance, and in particular, the parties for their patience in awaiting the delivery of this judgment.

Mr Damien Wong, instructed by Huen & Partners, for the plaintiff

Mr Paul Lam SC and Mr Vincent Lung, instructed by Hom & Associates, for the defendant