Mohammad Khurshid Qazi v. Karbhari Jal Nadirshaw t/a Jal N. Karbhari & Co, Solicitors & Notaries

DCCJ 3838/2019

[2020] HKDC 928

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3838 OF 2019

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BETWEEN

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JUDGMENT

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1.This is a somewhat unusual case.

2.The plaintiff claims he had not been paid any monthly salaries at all or given any annual leave for a span of 12 years while he was working for the defendant. He says he was dismissed on 9 February 2009 and was not paid long service payment or one month’s salary in lieu of notice to terminate.

3.On 4 November 2009, he made his claim in the Labour Tribunal.  On 27 November 2009, his claim was heard by the Labour Tribunal, which ordered it to be transferred to the Court of First Instance.

4.Being made aware by the Labour Tribunal that his claim was subjected to the limitation period of 6 years and in the CFI action, the plaintiff confined his claims to those within the limitation period, which total to HK$2,301,667.

5.After periods of inaction and delay, and on 26 June 2019, this claim was transferred to the District Court.  This is the trial of his claim.

6.The plaintiff used to be legally aided but is no longer.  He acts in person at this trial.  The defendant is represented by Mr Ramanathan SC (leading Mr Peter KM Chung).  The plaintiff is the only witness for his case, his only other witness having failed to appear.  After the close of the plaintiff’s case, the defendant elects not to call any witnesses.

Background

7.The plaintiff was born in 1949 in Pakistan.  He is well educated, holding a Bachelor of Arts and a Bachelor of Laws degree from a university in Pakistan and a Master of Laws degree from the University of Warwick in Britain. He came to Hong Kong from the U.K. in 1994.

8.Since October 1994 and to gain work experience in the local legal field, he began working on a voluntary basis for the defendant in his former firm Karbhari & Cham, Solicitors (“the Former Firm”).  Since March 1995, the Former Firm registered with the Law Society the plaintiff as one of the firm’s law clerk.  The plaintiff said he continued to work for the defendant on voluntary basis since but was, in gist and succinctly, remunerated intermittently on an ad hoc basis. 

9.On 23 May 1997, the plaintiff and the Former Firm signed a 2-page written employment agreement (“the 1^st Agreement”).  The terms of employment therein stipulated were, among others, that monthly salary was HK$20,000 per month (inclusive of HK$3,000 housing allowance), the plaintiff was entitled to three weeks paid annual leave upon the completion of one year plus statutory holidays, the employment could be terminated by either side giving a month’s notice and the duration of employment was 4 years renewable upon mutual consent.

10.On 1 August 1999, apparently due to the fact that the defendant was leaving the Former Firm and commencing his practice as Jal N. Karbhari & Co (“the Firm”) with him as the sole proprietor, the plaintiff and the defendant signed another 2-page employment agreement (“the 2^nd Agreement”). The terms stipulated therein were the same as the 1^st Agreement save the plaintiff’s monthly salary was increased from HK$20,000 to HK$25,000. Under the 2^nd Agreement, the duration of the employment was also 4 years renewable upon mutual consent.

11.When I refer to the 1^st Agreement and the 2^nd Agreement together, I shall call them “the Employment Agreements”.

12.It is common ground that after the expiry of the duration of the 2^nd Agreement on 31 July 2003, the plaintiff continued to be employed by the defendant upon mutual consent.  

13.The defendant says that the amount of monthly salary had been varied on 3 occasions by oral agreement between the parties, two occasions during the currency of the 2^nd Agreement, while the last around late 2007.  The plaintiff disputes all of them.

14.For one reason or another, the relationship between the plaintiff and the defendant had been deteriorating.

15.It is not disputed that since January 2008, the plaintiff rarely attended the office of the Firm and he had hardly done any work for the defendant.

16.On 9 February 2009, there was a meeting in the office of the Firm between the plaintiff and the defendant.  The plaintiff’s allegation is that on that occasion the defendant dismissed him and the dismissal was to take effect the next day.  The defendant’s version is that there were disagreements voiced out, but the employment relationship had already ended by then or it was ended by the plaintiff himself.

17.As said, in early November 2009, the plaintiff made a claim against the defendant in the Labour Tribunal.

18.There are two other matters that need to be mentioned to complete the background.

19.Firstly, in October 1994, the plaintiff also successfully registered himself with the Court Interpreters’ Office as a part-time interpreter for English/Urdu/Pushto/Punjabi languages/dialects.  Since then and at all material times, the plaintiff had been working as such interpreter/translator part-time.

20.Secondly, by a letter dated 17 August 2012[1], the Law Society informed the defendant that its attention has been drawn to allegations of purported sharing of profit costs by the defendant with the plaintiff over which it had a duty to investigate.  By another letter 30 November 2012[2], the Law Society informed the defendant that based on the information before the Committee, it was resolved that no further action was to be taken by the Law Society.

The plaintiff’s pleaded case and the defendant’s pleaded defence

21.The plaintiff pleads that he received from time to time commission payments from the defendant up to 50% on costs received from clients that the plaintiff had introduced; and that these commission payments were the only monies he received from the defendant after the date of the 1^st Agreement[3]. No particulars whatsoever about these alleged commission payments were given or able to be given by the plaintiff, save that they were paid in cash[4]. It is also not mentioned whether these alleged commission payments were received by him in addition to or in lieu of his entitlement to salaries under the Employment Agreements. 

22.The plaintiff then pleads that he has not received at all any salaries or other benefits stipulated in the Employment Agreements, or any “double month” bonus payment at Chinese New Year or any payment in lieu of notice upon termination or any other payment (save the commissions above-mentioned).

23.The plaintiff pleads that he was entitled to the “double month” bonus payment at Chinese New Year on the basis of an implied term in the Employment Agreements.

24.The plaintiff denies that the monthly salary had been varied as pleaded by the defendant (see paragraph 26 below).

25.The plaintiff claims under the 2^nd Employment Agreement and the Employment Ordinance for:-

(a) Unpaid salaries for 6 years at HK$25,000 a month	HK$1,800,000
(b) Annual leave pay at 3 weeks per annum	HK$118,599
(c) “Double month” bonus for 6 years	HK$150,000
(d) Severance/long service pay	HK$208,068
(e) One month’s salary in lieu of notice to terminate	HK$25,000
Total:	HK$2,301,667

26.The defendant in his Amended Defence admits signing the 2^nd Agreement.  He avers that the terms of the plaintiff’s employment were varied by the parties and performed as varied, as follows:-

(a) It was mutually agreed that commencing from 1 September 2001, the plaintiff’s salary would be HK$5,000 a month, and the plaintiff was duly paid this sum until 31 May 2003.

(b) In or about June 2003, it was again mutually agreed that commencing 1 June 2003, the plaintiff’s salary would be HK$4,500 a month, and the plaintiff was duly paid this sum until 31 December 2007.

(c) As the plaintiff was busy with his own interpretation work and work sparingly for the Firm, it was mutually agreed that from January 2008, the plaintiff would no longer be paid a monthly salary but would be paid on a pro rata basis if and when the plaintiff undertook any work for the defendant, and therefore since 1 January 2008 the plaintiff was no longer a member of the MPF scheme of the Firm.

27.The defendant denies that there was an implied term that the plaintiff would receive the “double month” bonus, that the defendant had ever paid the plaintiff the alleged commission payments.  The defendant avers that it was the plaintiff who ceased working for the defendant since 10 February 2009.

28.The main issue to be resolved therefore is the question of fact as to whether the plaintiff received any salaries (whether HK$20,000 and HK$25,000 a month as set out in the Employment Agreements or as varied as alleged by the defendant) or other benefits under the Employment Agreements.

Assessing the credibility of a party’s case

29.The following guidance summarized by DHCJ Au (as he then was) in Lee Fu Wing v Yan Po Ting Paul[5], though trite, is worth repeating as a valuable reminder :

“53. In assessing the credibility of a party’s case on a particular issue, I accept the submissions of [counsel] that the Court should take into considerations the following:-

(1) Whether the party’s case is inherently plausible or implausible.

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable.

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility.

(4) The demeanour of the witnesses.”

30.I start by surveying the available documentary evidence relating to the payment of salaries.     

The documentary evidence

31.The following documents are those proffered by the parties relating to this main issue.  According to the defence case and the defendant’s salary records, the plaintiff’s salaries were all paid in cash, and therefore there were no other documents evidencing payment.  The authenticity of all these documents, save the last item, is not disputed.

The defendant’s salary records

32.The defendant produced 8 pages of the salary records of the plaintiff. Save the first page which covers the period between August 1999 (the month the 2^nd Agreement was signed) and December 2000, the remaining pages each covers a year on each page.  They together cover the period between August 1999 to December 2007.  Each page contains a table, with the information pertaining to the particular month set out in each row.  They set out, among others, the salary for that month, the total amount received and date.  There is a box in each role containing a signature acknowledging receipt of the amount.

33.In evidence, the plaintiff confirms that he signed in those records acknowledging receipt from August 1999 up to the month of April 2006 (“the Signed Salary Records”).  The plaintiff’s case is that the signatures thereon against the months of May 2006 until December 2007 (“the Disputed Salary Records”) were not his.  I will return to that.

34.The Signed Salary Records show that:-

(a) his salary was HK$25,000 a month from August 1999 up to August 2001;

(b) his salary then after was HK$5,000 a month from September 2001 to May 2003;

(c) however, from June 2002 to February 2003, the total amount received was HK$4,750 and it was recorded against each such months that there was a MPF deduction at HK$250 each month;

(d) For March, April and May 2003, the total amount received reverted back to HK$5,000;

(e) His salaries from June 2003 until April 2006 were recorded as HK$4,500 a month with no MPF deductions recorded.

35.In respect of the rows covering April and May 2003, the plaintiff confirms in evidence that the dollar values “$5000” in the “Total Amount Received” column were written by him.

36.I pause to observe that the Signed Salary Records show not only that the plaintiff has signed to acknowledge the receipt of the monthly salaries, but there were also the same variations in the amount of the monthly salary in the same period as pleaded by the defendant; and the plaintiff has signed against them to acknowledge receipt.

37.I have mentioned that the plaintiff says that the signatures on the Disputed Salary Records were not his but were forged.  He complained about forgery loudly in the Pre-trial Review before this court and in his written opening. At the hearing in the Labour Tribunal, the defendant explained that because the plaintiff refused to sign, the accounting staff of the Firm signed on his behalf.  As will be seen, the amounts of income declared by the plaintiff in his tax returns for the years between 2006 to 2008 (the period covered by the Disputed Salary Records) were the same as set out in the Disputed Salary Records.  This issue about these signatures therefore fades into unimportance. For the purpose of resolving the claim before me, I do not find it necessary to delve into it further or to decide on it.

The plaintiff’s own tax returns and letter to IRD

38.The plaintiff declared in his tax returns the following yearly incomes:-

Tax year	Income from the Firm	Income from interpretation work
1999/2000	The plaintiff filled therein : “copy of return enclosed” (the employer’s return filed by the Firm reported his income as HK$200,000; his total assessable income as stated in the Notice of Assessment was HK$212,648)
2000/2001	$300,000	$17,136
2001/2002	$160,000	$3,060
2002/2003	$60,000	$19,380
2003/2004	$55,000	$129,430
2004/2005	$54,000	$69,966
2005/2006	$54,000	$102,364
2006/2007	$54,000	$149,811
2007/2008	$40,500	$186,828
2008/2009	“salaries tax return not received”	$88,444

39.It can be noted that there was a steady increase in the plaintiff’s income generated by his interpretation work in the tax years 2005/2006, 2006/2007 and 2007/2008, which was consistent with the defendant’s pleaded case set out in paragraph 26(c) above.

40.It is the defendant’s submission, which I accept after comparing the figures, that the above yearly incomes from the Firm declared by the plaintiff were the same in amount as the plaintiff’s income as set out in the defendant’s salary records above, thus:-

Tax year	Income from the Firm declared in the plaintiff’s tax return	Monthly income according to the defendant’s salary records
2000/2001	$300,000	$25,000 x 12 months = $300,000
2001/2002	$160,000	$25,000 x 5 (April to August 2001) + $5,000 x 7 = $160,000
2002/2003	$60,000	$5,000 x 12 = $60,000
2003/2004	$55,000	$5,000 x 2 (April and May 2003) + $4,500 x 10 = $55,000
2004/2005	$54,000	$4,500 x 12 = $54,000
2005/2006	$54,000	$4,500 x 12 = $54,000
2006/2007	$54,000	$4,500 x 12 = $54,000
2007/2008	$40,500	$4,500 x 9 (April to December 2007) = $40,500

41.In evidence, the plaintiff confirms that he did pay tax to the Inland Revenue according to the incomes he so reported and declared in the said tax returns.

42.On occasions through out his oral evidence, the plaintiff explains that he so declared his incomes in all these years because those incomes were already reported by the Firm in the employer’s returns that it had filed, and there was little he could have done about it.  I find that, as such an educated and sophisticated person, he knew he was required by law to declare in his tax returns the truth, that he could have declared that he had no income (or declared the alleged commission payments) and could have taken up the matter with the defendant.  Yet, he did none of these and continued to pay taxes, especially in 2000/2001 and 2001/2002, that according to him he should not be liable to pay!?  I reject his such explanation as totally unreasonable, untenable and incredible.

43.Moreover, by a letter dated 14 January 2002 signed by the plaintiff and addressed to the Commissioner of Inland Revenue (“the IRD Letter”), the plaintiff wrote:-

“RE : TAX RETURN FOR 2000-2001 & 2001-2002

This is to invite your kind attention to the above, for my wife and myself. I enclose herewith copies of demand notices for both.

My terms of employment have been altered since September 2001. This has effected (sic) my total earnings for the year 2001-2002. I would very much appreciate if our income tax is kindly re-assessed in accordance with actual earnings for the said year.

…

Yours faithfully,

[signature]

M.K. Qazi” (my emphasis)

44.There is no suggestion from the plaintiff of any other alteration in his employment terms in around September 2001.  The only alteration thus far put forth is the defendant’s pleaded case that the plaintiff’s monthly salary was by agreement varied from HK$25,000 to HK$5,000 commencing from 1 September 2001.

The Employer’s Returns of Remuneration and Pension filed by the defendant regarding the plaintiff

45.The defendant produced his Employer’s Returns to the Inland Revenue regarding the plaintiff from the tax years 1999/2000 to 2007/2008.  The amounts of incomes reported in all these returns matched those declared by the plaintiff and as set out in the defendant’s salary records.

The MPF records

46.From the summaries of MPF record provided by HSBC regarding the plaintiff, it is shown that:-

(a) the plaintiff joined the scheme on 1 September 2001;

(b) the relevant income was HK$5,000 from September 2001 to May 2003, and then after reduced to HK$4,500 until December 2007, and then after was $0 until 31 October 2009 when the plaintiff was no longer a member;

(c) the defendant made the 5% contribution month from September 2001 until December 2007, and then after did not make any further contribution; and

(d) the plaintiff made his 5% contribution from September 2001 to May 2003 and stopped making any contribution then after.

A statement with the heading “MR. QAZI’S STATEMENT”

47.The plaintiff says this document[6] supports his case.  The defendant disputes the authenticity of this document.

48.This is a one-page printed document with the said heading.  The plaintiff says it was prepared by the accounting staff of the Firm.  It is undated.  It contains on its face no information showing who its maker was. The top half of the page contains a table that contains 4 columns respectively headed “YEAR”, “MONTH”, “EMPLOYER” and “EMPLOYEE”, and 17 rows, one for each month.  The beginning month was September 2001 and ended with January 2003. Under the column “EMPLOYER” and against each month is the figure of “250” in each of the cells.  Likewise, under the column “EMPLOYEE” and against each month is the figure of “250” in each of the cells.  These figures apparently represent monthly MPF contributions.  The bottom part contains some simple letters and figures, the names of two counsel, a figure next to each name and then some amounts.  In evidence, the plaintiff claims that the statement shows the calculation of his commission, but he does not explain what the letters and figures mean.  In regard to such claim, I note that there is no information whatsoever given in the statement as to the name and details of the client, the file reference number, the nature of the matter for which legal service was rendered, items of work done or any dates – information one would expect would normally present.  In any event, the statement contains no information that might throw light as to whether the monthly salaries were or were not paid to the plaintiff.

49.As noted, the plaintiff’s case is that though commission payments were allegedly paid to and received by him, the salaries under the Employment Agreements were and are still owing.  I therefore do not find this statement, even if it had the purport as the plaintiff now says (on which I make no finding), is not relevant or probative to the issue in question. 

Has the plaintiff proved that he has not been paid any salary as alleged?  Credibility and reliability of his evidence

50.It is abundantly clear from my survey above that these documents (save the last item) all show that monthly salaries have been paid to the plaintiff and the amount of his monthly salary had been varied in the manners alleged in the defence case.  These documents were all contemporaneous documents made in the course of time spanning years. Importantly, some of these documents were made and proffered by the plaintiff himself, and many were indisputably signed by him.  

51.Furthermore, it is undisputed that in all these 12 years when, according to the plaintiff, he was not paid even one month of salary, he continued to work for the defendant, he has made no complaints or claims whatsoever to whosoever, not even once.  In evidence, he accepts that he has not even brought this matter of non-payment up orally with the defendant.  I find such state of affairs defiles belief, if the plaintiff’s claim were true.

52.In evidence, the plaintiff says[7] unabashedly that the incomes from the Firm he declared in the said tax returns were not true, and that the defendant’s salary records and his acknowledgements of receipt were also not true, in that he has not received any of those incomes in all those years.

53.The question for this court therefore is whether I find the plaintiff’s evidence of such sufficient credibility and reliability such that I find the alleged non-payment proved on balance of probabilities despite all these documents showing consistently the contrary.

54.I have no hesitation to conclude that I do not find his evidence credible and reliable.

55.To start with, I caution myself that by his own admission, and indeed assertion so as to further his present claim, the plaintiff had repeatedly and consistently in those years made false declarations and knowingly signed false acknowledgments of receipts.  His testimony therefore must be treated with circumspection.

56.I have observed and listened to the plaintiff carefully when he was giving evidence.  I find that he was often evasive and often avoided answering questions put to him directly by referring to other subjects and matters to distract.  I find that over many matters he was giving the court incredible and disingenuous explanations.  I will set out a number of instances below by way of example.  I have also taken into account the other instances alluded to herein in paragraphs 42, 51 and 63 to 69.

57.In cross-examination, he was pressed by Mr Ramanathan as to why he did not at all bring the matter of non-payment of his salary up with the defendant, he answered to the effect that he expected the other party (the defendant) would know his obligation and would honour it, and he was not the kind of person that would pester others to honour his promise; and he maintained this as his reason for not complaining or demanding payment for all these years. Evidently, the plaintiff had been expending time and effort in working for the defendant day in day out and months after months, expecting to be paid the right salary, not to mention he had a family to support and the high living expenses in Hong Kong to defray.  It is utterly unbelievable that a sophisticated and educated employee like the plaintiff would endure working without the promised rewards for 12 years, and not somehow make a claim for it or quit the employment, just because of courtesy.  I find his explanation totally incredible and most disingenuous.

58.Moreover, when asked similarly by the Presiding Officer of the Labour tribunal on 27 November 2009, the plaintiff gave the following answer on oath[8]:-

“COURT: Okay, so .. now, you signed the contract, right?

CLAIMANT: Yes.

COURT: But you were not paid according to the contract.

CLAIMANT: Correct.

COURT: So did you ask for it?

CLAIMANT: I knew I would not be paid.

COURT: So, I suppose that the answer is, no …

CLAIMANT: That is correct, your Honour.

COURT: … you didn’t ask?

CLAIMANT: That is correct, your Honour.

COURT: And, on the understanding that you would not be paid because you thought that you would not be paid.

CLAIMANT: Correct.

COURT: So, why then, you thought you would not be paid?

CLAIMANT: Because the way the defendant runs his practice is that there is an official salary for the staff, but they are not actually paid. Instead, all of his staff bring their own clients and they are paid a commission out of that.

COURT: So, are you saying that the so-called employment agreement is only a sham?

CLAIMANT:  Most probably it is, and I’m not very proud in admitting that I’m a part of it, your Honour.”

59.That was a completely different answer than the one the plaintiff now gives at this trial.

60.When asked why the plaintiff would still sign the 2^nd Agreement in August 1999, when for 2 years the defendant had failed to pay him his monthly salary as stipulated under the 1^st Agreement, the plaintiff answered to the effect that he signed as he thought the increase in salary of HK$5,000 a month was meant to compensate him.  By August 1999 and according to him, the defendant had already owed him 26 months’ salaries in the total sum of HK$520,000.  An increase in HK$5,000 a month would take 104 months to recoup the salary owed.  More unbelievable still, if that were really his expectation when he signed the 2^nd Agreement, then the further non-payment months after months of this new salary of HK$25,000 after the 2^nd Agreement was signed should have spurred the plaintiff to some sort of action.  Yet, there was none whatsoever in the next 9 years when not a single dollar was paid to the plaintiff by way of salary.

61.In all, I am not at all impressed with the plaintiff as a witness and am in serious doubt that he has told the court the truth or the whole truth.  I do not find his evidence at all credible or reliable.

62.In the premises, I find that his allegation that he has not been paid the salaries under the Employment Agreements, and specifically under the 2^nd Agreement, which is completely contradicted by the said documentary evidence, not proved on balance of probabilities.  I would therefore dismiss the plaintiff’s claim for unpaid salaries.

The plaintiff’s admission that the Employment Agreements were sham

63.In the transcript of proceedings before the Labour Tribunal quoted above, it can be seen that based on the evidence given by the plaintiff, the Presiding Officer asked and the plaintiff then admitted that the Employment Agreements were sham.

64.On 11 June 2018, the plaintiff filed a short supplemental witness statement explaining that:-

“I understood [the Presiding Officer] was saying the word “shame”.  I therefore believed that the word “sham” was wrongly transliterated and written as such in the transcript. As I heard and understood the word as pronounced and, as I thought at the time, meant by the Presiding Officer to be “shame”, I made the reply as indicated above…”[9]

65.Regarding the veracity of such explanation, the other parts of the transcript are very telling.

66.After the quoted passage in the transcript, the Presiding Officer and the plaintiff had further exchanges in which the word “sham” was used 10 more times.  I will not quote them all, but most of them:-

“CLAIMANT: Most probably it is, and I’m not very proud in admitting that I’m a part of it, your Honour.

COURT: So, if it is a sham, then why then the court should enforce it?

CLAIMANT: It is entirely up to the honourable tribunal to decide what it wishes to enforce and what it doesn’t wish to enforce.

COURT: But if it is really a sham, I would tell you that the court may not enforce it.

CLAIMANT: Correct.”[10] (my emphasis)

“COURT: … - if the court accept your submission that the agreement signed by both parties is a sham document, then the court will not enforce it.

CLAIMANT: I understand that, your Honour.”[11] (my emphasis)

“COURT: No, then they’re a sham, right ? Are they a sham arrangement ? Answer the question.

CLAIMANT: If by “sham” your Honour means false …

COURT: Yes, I did mean that. Yes.

CLAIMANT: A false sheet, yes, it most certainly is. It’s a false sheet. A false record.

COURT: In that case, it is a sham arrangement. If they’re a false record, you did not receive this amount of money and it was never intended that you would be paid this amount of money, according to you, right ? Am I correct to say so?

CLAIMANT: Yes.

COURT: In that case, the whole arrangement is a sham agreement. In that case – well, it is up to you but it’s likely that the court will dismiss the whole case …

CLAIMANT: No problems.”[12] (my emphasis)

67.It can be seen from these exchanges that there could have been no mis-hearing or misunderstanding or wrong transliteration as the plaintiff alleged in his supplemental witness statement.  On the contrary and very clearly, the plaintiff knew the Presiding Officer was referring to a falsehood and the plaintiff himself answered and admitted such as well.

68.Moreover, at trial and when asked if he would confirm that his case is that the Employment Agreements were sham, the plaintiff dodged the question by saying he did not know what “sham” meant in the English language.

69.I find the plaintiff’s explanations completely disingenuous, false and incredible; and I reject them.  I find that the plaintiff has explicitly admitted before the Labour Tribunal on oath that the Employment Agreements (and the related arrangements) were sham, and specifically that it was never intended he would be paid the amount of salary there promised.

70.Mr Ramanathan refers me to two English cases : Roger Stone (HM Inspector of Taxes) v Richard Henry Hitch & Others[13] and A v A v St George Trustees Limited and Others[14] concerning the meaning in law of “sham”, that a sham transaction is a void transaction and various principles concerning the determination of whether a document or transaction is sham.  Suffice for me to quote the passage from Diplock LJ (as he then was) in Snook v London & West Riding Investments Ltd[15], which was cited in both of the above cases:-

“As regards the contention of the plaintiff that the transactions between himself, Auto-Finance, Ltd. and the defendants were a “sham”, it is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create….that for acts or documents to be a “sham”, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating.”

71.It is thus well established that the intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating must be a common one shared by all parties to the act or document.  In the present case, it will not be right for me to make any finding against the defendant that he had such a common intention without hearing his evidence; nor I think it is right for me to fault him for electing not to give evidence as this point about the Employment Agreements being sham is never part of the plaintiff’s case pleaded against the defendant in this claim.  It was only brought up in the Labour Tribunal which the plaintiff admitted to, and which admission the plaintiff now seeks to, but fails to, explain away.

72.I therefore only hold that the plaintiff’s such admission is an alternative ground whereby I would reject such part of his present claims founded on the Employment Agreements.

Pay in lieu of annual leave

73.Despite having made a claim for annual leave pay at 3 weeks per annum for over 6 years in the total sum of HK$118,599, the plaintiff in his witness statement said nothing in relation to this claim.

74.At trial, the plaintiff maintains that he had never been given any annual leave during his employ with the defendant.  In cross-examination, he admits taking a long trip to Pakistan in 1998.  He also accepts that he had taken another trip to U.K. arriving in Hong Kong on 10 November 1999[16] (more than 3 months after the 2^nd Agreement was signed).  He could not confirm whether he had taken any annual leave for that trip as he could not remember whether it was a long trip or a short one.  He said he would know by referring to his passport.  His passport pages evidently would show whether, and if so, when in these years he has taken long trips whether to Pakistan or the U.K. or anywhere else.  However, he has not in the long time span of this litigation made any discovery of his passport pages; nor has he given any reasonable explanation for not having done so.  I am entitled to and would draw an adverse inference against him that those pages may contain information that is adverse to his claim.  Based on that adverse inference and the unfavourable view this court holds regarding the credibility and reliability of his testimony, I do not find this claim proved on balance of probabilities.

“Double month” bonus

75.The plaintiff says he is entitled to this bonus by virtue of an implied term in the Employment Agreements, specifically, the 2^nd Agreement. The only evidence proffered in support of the implication of that term is:-

“Again, as the rest of the clerical staff moving with the defendant to his new firm were, to my knowledge and understanding, also to be paid an additional month’s salary as a bonus payment for the Chinese New Year, it was also understood between us and expected by me that I would also be paid the additional month salary as a bonus for Chinese New Year”[17]

76.I reject the plaintiff’s such claim for the following reasons:-

(a) As held above, it was the plaintiff’s explicit admission that it was not intended that he would be paid according to the express terms of the Employment Agreements. A fortiori, there would and could be no further obligation to be implied into an agreement even the express terms of which were not intended to be performed.

(b) According to the plaintiff’s own evidence, different arrangements applied to the “clerical staff” and the law clerks – the clerical staff were paid by cheques while the law clerks were paid by cash.

(c) There is no factual basis proved as to why such term is necessary to give business efficacy or that the term must be so obvious that “it goes without saying”.

Long service/severance payment

77.The plaintiff claims this payment as “long service/severance payment”.  According to the plaintiff’s case, he was not dismissed by reason of redundancy or being laid off within the meaning of s 31E of the Employment Ordinance, he is therefore not entitled to severance payment under s 31B.

78.The defendant however accepts that the plaintiff is entitled to long service payment under s 31R of the Employment Ordinance, and as provided therein, calculated under s 31V(1).  Section 31V(1) reads:-

“31V. Amount of long service payment

(1) Subject to this Part, the amount of a long service payment payable under section 31R(1) or 31RA(1) shall be calculated by allowing—  

(Amended 105 of 1991 s. 4)

(a) in the case of a monthly rated employee, two-thirds of his last full month’s wages, or two-thirds of $22,500, whichever is less; and

(b) in any other case, 18 days’ wages based on any 18 days chosen by the employee and occurring during his last 30 normal working days, or two-thirds of $22,500, whichever is less,

(Amended L.N. 264 of 1995)

for every year (and pro rata as respects an incomplete year) of employment under a continuous contract by his employer subject in all cases to a maximum payment not exceeding, where the relevant date occurs in a period specified in column 1 of Table A in the Seventh Schedule, the amount specified in column 2 of that table opposite to the period.

(Replaced 41 of 1990 s. 12. Amended 5 of 1995 s. 7)”

79.The plaintiff claims that the “last full month’s wages” for the purpose of this calculation is HK$25,000, while the defendant submits it should be HK$4,500.  As I discussed above, all the documentary evidence, particularly the plaintiff’s own tax returns, supports that the plaintiff’s monthly salary had been varied in the manners as claimed by the defendant.  I therefore hold that the last full month’s wages for the purpose of this calculation should be HK$4,500.

80.The plaintiff claims that he was employed for 13 years and 318 days, beginning from 30 March 1995 when he was registered as a law clerk of the Former Firm up to 10 February 2009.  The defendant now does not seriously dispute that the plaintiff was dismissed on 10 February 2009 but says the employment began when the 1^st Agreement was signed on 23 May 1997, because the plaintiff worked on voluntary basis prior to that day.  As there is no evidence from the defendant now to dispute that the plaintiff, though worked on “a voluntary basis”, did as he alleged receive ad hoc remunerations from the defendant between March 1995 to May 1997, I agree with the plaintiff’s position that his employment began in March 1995.

81.Thus, the long service payment should be $4,500 x 2/3 x 13.87 years = HK$41,610.

82.The defendant submits, and I accept, that under s 31Y, the defendant is entitled to set the sum off against the MPF received by the plaintiff.  Section 31Y reads:-

“31Y. Long service payment to be reduced by amount of gratuities and benefits in certain cases

If an employee becomes entitled to payment of a long service payment under this Part and—

(a) because of the operation of the employee’s contract of employment, one or more gratuities based on length of service or one or more relevant occupational retirement scheme benefits have been paid to the employee; or

(b) a relevant mandatory provident fund scheme benefit is being held in a mandatory provident fund scheme in respect of the employee, or has been paid to or in respect of the employee,

the long service payment is to be reduced by the total amount of all of the gratuities and benefits to or in respect of the employee to the extent that they relate to the employee’s years of service for which the long service payment is payable.”

83.In evidence, the plaintiff accepts that he has already withdrawn and received all the MPF contributed during his employment with the Firm, which totalled to between HK$30,000 and HK$35,000, the precise amount he could not now recollect.  In the circumstance, I would use the median and find that he has received HK$32,500.

84.Setting HK$32,500 off from HK$41,610 MPF received, the net amount is HK$9,110 and the plaintiff is awarded it under this head.

One month’s pay in lieu of notice to terminate

85.The defendant accepts that the plaintiff is so entitled, but the amount should be HK$4,500.  For reasons already expressed above, I agree and so award.

Disposal

86.In the premises, I dismiss all the plaintiff’s claims save the claims for long service payment and one month’s pay in lieu of notice in the respective sums of HK$9,110 and HK$4,500, totalling to HK$13,610.  I give the plaintiff judgment for this sum.

87.As for interest, Mr Ramanathan submits that the plaintiff should not be awarded any from the date of the Labour Tribunal hearing on 27 November 2009 as it was recorded in the transcript that the defendant has made an open offer of HK$300,000 to the plaintiff[18] in the hearing, which the plaintiff declined.  Therefore, had the plaintiff accepted the offer, he would have had use of the money since then.  The plaintiff does not seriously dispute this and I agree in such circumstances, no interest should be awarded since then.  Thus, I would award interest on the sum of HK$13,610 at prime rate of 5% per annum from 11 February 2009 to 27 November 2009 and then at judgment rate from the date of this judgment until full payment.

88.In light of the said open offer and in the circumstance, I would not make any costs order nisi but would direct that:-

(a) Within 21 days after the date this judgment is handed down and failing agreement between the parties as to the appropriate costs order to make, parties do lodge with court and exchange their respective written submissions on costs, setting out the terms of the costs order sought, supporting arguments with authorities, and attached thereto copies of correspondence or other documents they would rely on (if any);

(b) Parties may, if advised, lodge and exchange their respective reply written submissions within 14 days then after;

(c) The question of costs will be decided on paper unless otherwise directed.

89.I thank Mr Ramanathan, Mr Chung and the plaintiff for rendering their assistance to the court.

The plaintiff appeared in person

Mr Kumar Ramanathan SC and Mr Peter KM Chung, instructed by Jal N Karbhari & Co, for the defendant