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HCA 1225/2014
[2022] HKCFI 443
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1225 OF 2014
________________________
| BETWEEN |
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UNIVERSE ARTISTE MANAGEMENT LIMITED
(寰宇藝人管理有限公司) |
Plaintiff |
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and
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KONG YI CHING ELANNE (江伊晴) |
1st Defendant |
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(FORMERLY KNOWN AS KWONG LING (江玲)) |
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ORIENTAL PROSPEROUS INT’L ENTERTAINMENTS LIMITED
(東旺國際娛樂有限公司) |
2nd Defendant |
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Before: Deputy High Court Judge MK Liu in Court
Dates of Trial: 4 - 8, 11, 12, 15, 18, 20 - 22 October & 1 November 2021 and 21 January 2022
Date of Judgment: 18 February 2022
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JUDGMENT
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TABLE OF CONTENT
A. BACKGROUND..
B. THE PARTIES’ RESPECTIVE CLAIMS.
C. THE AGREED ISSUES.
D. THE PRINCIPLES.
E. THE EVIDENCE..
E1. AC..
E2. DL..
E3. Yeung.
E4. AL..
E5. Tsui
E6. KC..
E7. D1.
E8. Chau.
E9. Chung.
E10. Lee.
F. MY FACTUAL FINDINGS.
G. ANSWERS TO THE AGREED ISSUES.
G1. Issue 1 – Who should bear the Production and Promotion Costs?.
G2. Issue 2 – Whether the 2004 Agreement, 2005 Agreement, and the 2008 Agreement are valid and enforceable?.
G3. Issue 3 – Whether P has breached the 2004 Agreement, the 2005 Agreement and the 2008 Agreement?.
G4. Issue 4 – the Option.
G5. Issue 5 – Whether there should be repayment from one party to another party?
G6. Issue 6 - Remedies.
H. DEPOSITION..
1.This case is a saga between the plaintiff (“P”) on the one hand and the 1st defendant (“D1”) on the other hand. The disputes herein stemmed from the following 3 written agreements in Chinese (collectively “the Contract”) signed by P and D1:
(1) an agreement dated 3 May 2004 (“the 2004 Agreement”);
(2) an agreement dated 30 September 2005 (“the 2005 Agreement”); and
(3) an agreement dated 6 November 2008 (“the 2008 Agreement”).
2.There is no dispute that:
(1) D1 was born on 30 September 1987. At the time of the 2004 Agreement, she was still a minor. The 2004 Agreement was signed by P and D1, and was also signed by D1’s parents, ie Mr Kwong Kin Fung (“the Father”) and Madam Chau Lai Yung (“Chau”).
(2) The 2005 Agreement was signed by D1 when she attained the age of 18.
(3) As to the 2008 Agreement, apart from P and D1, the remaining party to this agreement is the 2nd defendant (“D2”). D2 is a company limited owned by D1.
3.By the Order of the Registrar dated 24 August 2016, the issue of liability in this action would be tried separately from and before the issue of quantum. Accordingly, these proceedings are divided into Part I and Part II. Part I is the determination of liability and Part II is the assessment of quantum. The trial before me is the trial on liability, and this judgment is the judgment in Part I of these proceedings.
A. BACKGROUND
4.I would first set out the agreed background and the parties’ respective contentions.
5.On or about 3 May 2004, the 2004 Agreement was signed by P, D1, and D1’s parents. P claims that the 2004 Agreement is binding upon D1. However, D1 contends that:
(1) In about March or April 2004, Mr Chan Ming Fai Arnold (“AC”), who was a director of P at that time, said to D1 at P’s office that P wished to enter into an artiste management contract with D1.
(2) On or about 2 May 2014, D1 and Chau attended P’s office and had a conference with AC therein (“the Conference”).
(3) At the Conference, AC told Chau and D1 that the signing of the artiste management contract was very urgent, and that it was necessary for the contract to be signed and returned to P the following day.
(4) AC, in order to induce D1 to enter into the 2004 Agreement, told Chau and D1 at the Conference that the terms in the 2004 Agreement were standard terms that were typical in the entertainment industry, and that all artiste management contracts contained similar terms (“the Representation on Industry Standard”).
(5) The Representation on Industry Standard is in fact untrue.
(6) In the Conference, after Chau said that the contractual period of 10 years was far too long, AC promised and/or represented to D1 and Chau that if D1 did not want to extend her contract with P at the end of the 10-year contractual period, P would not exercise and/or would not insist on exercising the option of extending the contract for a further term of 5 years (“the Option”) and D1 would not be required to renew the contract (“the Promise regarding Renewal”).
(7) Induced by and in reliance on the Representation on Industry Standard and the Promise regarding Renewal, D1 and Chau signed the 2004 Agreement on or about 3 May 2004.
(8) P is estopped from exercising the Option and/or insisting on the exercise of the Option and/or requiring D1 to renew the Contract pursuant to the Option.
6.The 2004 Agreement contains, inter alia, the following terms[1]:
(1) Clause 1:
“合約期
合約期於2004 年5 月 3 日起至2014 年5 月 2 日止，共拾 (10) 年 (以下簡稱為「合約期」)。合約期滿後，藝人同意優先與經理人續約 (詳情見「合約條款」第 9 條)。”
“Contract Period
The contract period shall be from 3rd May 2004 until 2nd May 2014, ten (10) years in total (hereinafter referred to as the “Contract Period”). After the Contract Period expires, the Artist agrees to give priority to the Manager to renew/extend the contract (for details see clause 9 of the “Contract Terms”).”
(2) Clause 2:
“委任
藝人委任經理人而經理人接受藝人委任在合約期內作為藝人在全世界地區內的唯一、獨家及專有全權代理之經理人，並全權代表藝人接洽及代理全世界的演藝事業及簽訂有關之一切協議及合約。”
“Authorisation
The Artist appoints the Manager and the Manager accepts the appointment by the Artist to act as the sole, exclusive and fully authorised manager of the Artist worldwide during the Contract Period, who has plenary authority to represent the Artist in negotiating and handling matters of the Artist’s entertainment career around the world and to sign all agreements and contracts relating thereto.”
(3) Clause 3(a)
“佣金
…… 作為經理人於本合約提供服務和產生相關費用和支出的代價，藝人同意支付和經理人同意接受佣金，其佣金的百份比率是按以下期間的藝人收入 (未減除任何費用及開支) 計算：
期間 佣金百份比
合約期內首五年 65%
合約期內後五年 55%
……”
“Commission
(a) Subject to there being no violation of clause 3(b) of the “Contract Terms”, and in consideration of the services provided under this Contract and the relevant costs and expenses incurred by the Manager, the Artist agrees to pay and the Manager agrees to accept a commission, the percentage of which is calculated according to the income of the Artist in the following periods (before deduction of any costs and expenses): -
Period Commission Percentage
First five years of Contract Period 65%
Last five years of Contract Period 55%
In respect of clause 3 of the “Contract Terms”, the day that the Artist starts to receive her income shall be the earliest of the following: the day on which the Artist signs the job’s contract, the day on which the Artist starts her job or service, [or] the day on which the Artist starts to receive income.”
(4) Clause 5(a)
“經理人於合約期內需按「合約條款」第 5 條(b)或(c) 款定期安排給予藝人一份帳單表 (簡稱「帳單表」) (其內容屬結論性及對藝人有約束力) 及支付藝人根據本合約第 4 條 (a)所述的實際的收入款項。每個帳單表將列明由經理人代表藝人收取的收入款項的銀碼及經理人在此等款項收取的佣金及其收取比率及預支款項的對銷情況。”
“(a) The Manager shall during the Contract Period on a regular basis arrange for the provision of a statement of account (abbreviated “Statement”) (the contents of which are conclusive and binding on the Artist) to the Artist according to clause 5(b) or (c) of the “Contract Terms” and pay to the Artist the actual amount of income as described in clause 4(a) of this Contract. Each Statement will set out the amount of income received by the Manager on behalf of the Artist the commission received by the Manager from such income and the Manager’s commission ratio and how the amount of advance payments has been set off.”
(5) Clause 6
“墊支費用
在不損害「合約條款」第 7 條的原則下，經理人可以自由決定是否代藝人墊支任何款項，而這些墊支款項將從藝人收入中 (扣除支付經理人之佣金後) 扣除及抵銷。”
“Advance Payments
Without prejudice to clause 7 of the “Contract Terms”, the Manager is free to decide whether or not to pay any sum of money on behalf of the Artist, and these advance payments will be deducted from and set off against the income of the Artist (after deducting the commission of the Manager).”
(6) Clause 9
“續期優先權
(a) 藝人特此給予經理人首個五年期的續期權利 (以下簡稱「首個續約期」)，惟首個續約期之條款及細則將最少在與本合約條件相同的情況下訂定。倘若經理人決定履行本項被賦予之續期權利，藝人同意經理人只須於本合約期終止日前三十天以書面形式通知藝人，並於本合約期終止日前簽定有關之首個續約期的條款及細則。藝人不得借故以任何理由推遲及／或不履行本項條款。
(b) 雙方同意在首個續約期後，藝人將給予經理人優先洽談續期權伍 (5) 年 (以下簡稱「優先續期權」)。藝人保証在接洽或接受第三者有關與本合約條款與條件 1.1相符之演藝事業工作前，藝人必須履行以下三項條款：
i. 在首個續約期後八十天內，倘若藝人在與其他經理人之接洽時，必須通知經理人及取得經理人之同意；
ii. 倘若經理人提出的續約條件與藝人屆時接洽之其他經理人所提出的條件相同，藝人將給予經理人優先權續權；
iii. 經理人向藝人發出優先續期權之要求起計八十天內，藝人給予經理人獨家優先洽談，若倘雙方在本項所定的八十天內仍未簽訂有關細則，在限期屆滿後，藝人將回復自由身與第三者簽訂任何協議。
(c) 假若經理人並未按「合約條款」第 9 條(a) 款於合約期滿前與藝人洽談續期或達成續約協議，藝人亦不可在未取得經理人書面同意下與第三者簽訂任何與演藝事業有關之合約。本條款於合約期完結後八十天內仍然生效，特此聲明。”
“First Right of Renewal
(a) The Artist hereby specifically gives the Manager the first right of renewal for the first five-year period (the “First Renewal Period” hereinafter) whilst the contractual terms and details for the First Renewal Period will be determined under the circumstances that the terms and conditions will be at least the same as the conditions of the original contract. If the Manager decides to exercise the right of renewal conferred under this provision, the Artist agrees that the Manager is only required to give notice in writing to the Artist 30 days prior to the expiry of the Contract Period, and to sign the relevant terms and conditions for the First Renewal Period before the expiry of the Contract Period. The Artist shall not by any excuse delay and/or refuse to comply with this clause.
(b) The Parties agree that after the First Renewal Period, the Artist shall give the Manager the first right to negotiate the renewal for 5 years (the “First Right of Renewal” hereinafter). The Artist undertake to, before negotiating with third parties about, or accepting from third parties, jobs of entertainment career consistent with clause 1.1 of the “Terms and Conditions” of this Contract, comply with the 3 conditions as follows:
i. within 80 days following the First Renewal Period, if the Artist negotiates with other managers, she must inform and seek approval from the Manager;
ii. if the conditions of renewal offered by the Manager are identical to the conditions offered by other managers with whom the Artist negotiates at that time, the Artist shall give the Manager the First Right of Renewal;
iii. within 80 days following the Manager’s issuance of the request to the Artist of the First Right of Renewal, the Artist shall give the Manager the exclusive and first right of negotiation, and if the Parties within the 80 days hereunder have not signed the contract with regard to the relevant details, after the expiration of the time limit of 80 days, the Artist shall be free to enter into any agreements with third parties.
(c) If the Manager fails to negotiate or reach an agreement with the Artist on the issue of extension in accordance with clause 9(a) of “Contract Terms” before the Contract Period, the Artist is not allowed to sign with any third party any contract relevant to her entertainment career. This clause is effective within the 80 days after the Contract Period.”
(7) Terms and Conditions[2], §1.1
“演藝事業: 包括但不限於在電視、電影、電視電影、舞台、戲劇、互聯網、現場之個人或集體表演和活動、唱片、錄音、錄影、主持、廣告 (任何形式)、廣播、模特兒、剪綵、宣傳推廣等之演出及經理人可全權使用包括但不限於藝人於戲內及／或真實之名字、肖像、映像、照片、形象、造型及聲音 (簡稱「有形及無形項目」) 製作成任何產品包括但不限於任何商品及贈品並通過任何媒介及渠道及於合約期內或外作牟利或非牟利之發行、銷售及發放。”
“Entertainment Career: including but not limited to performance in television, movies, tele- movies, stage, drama, internet, individual or collective live performance or activities, records, sound recordings, video, hosting, advertising (in any form), broadcasting, modeling, ribbon cutting, publicity and promotion, and the Manager shall have full right to use including but not limited to the Artist’s name used in drama and/or real name, portrait, photograph, image, style and sound (referred to as “tangible and intangible items”) for making into any product including without limitation any commercial goods and gifts for profit-making or non-profit making distribution, sale or release through any media and channels within or outside the Contract Period.”
(8) Terms and Conditions, §1.2
“藝人收入： 包括
(a) 藝人之所有收入包括在合約期內，所有簽訂之藝人的服務合約或藝人於合約期內提供之工作 (無論此工作在合約期滿前或後完成) 而衍生之任何形式的收入，包括但不限於版稅、花紅、利潤、演出或服務費、演唱會之現場演出費及／或藝人所賺取之任何其他的酬金；及
(b) 在合約期間，藝人收到任何關於在合約期前其提供之工作之收入，包括但不限於版稅；及
(c) 藝人於本合約日期前答應或簽定之工作，而須要在合約期內履行之工作的酬金；及
(d) 於任何情況下，藝人於合約期內之收入及酬金且絕不包括經理人於合約期內所發行含有藝人演藝事業之一切音像產品所得之一切收益。而藝人於合約期內可支取收入之任何項目 (包括但不限於有形及無形項目) 於合約期外如有任何收益及版權均全屬經理人所有，一概與藝人、監護人／擔保人及其日後之其他經理人 (以下簡稱「有關人士」) 無涉，有關人士不得循任何途徑向經理人追討任何收入。(本條款 1.2(d)於合約期外仍生效)。”
“Artist’s Income: including
(a) all income of the Artist, including within the Contract Period, all income in whatever form arising from signed service agreements of the Artist or work provided within the contract Period (whether completed before the expiry of the Contract Period or after), including but not limited to: royalty, bonuses, profit, performance or service fee, performance fee for live concert performances and/or any other remuneration procured by the Artist; and
(b) any income received by the Artist within the Contract Period in relation to work provided prior to the Contract Period, including but not limited to royalties; and
(c) remuneration received by the Artist from work agreed or signed prior to the Contract Period, but is required to be completed within the Contract Period; and
(d) remuneration received by the Artist under any circumstances within the Contract Period, but not including the remuneration received by the Manager within the Contract Period as a result of issuing all audio products in relation to the Artist's Entertainment Career. As for any item from which the Artist could obtain an income within the Contract Period (including but not limited to tangible or intangible items), any earnings and copyright accruing after the Contract Period all belong to the Manager, and shall not be interfered by the Artist, her guardians or guarantors and any manager she may have in the future (hereinafter referred to as the “Relevant Persons”), and the Relevant Persons shall not through any means claim for any income from the Manager (this clause 1.2(d) is effective outside the Contract Period).”
(9) Terms and Conditions, §2.1
“經理人聲明及承諾
(a) 經理人聲明及承諾於合約期內：
(i) 經理人會以其盡合理的努力為藝人在演藝界所有形式及媒體取得工作機會及代藝人洽談該工作的最佳條件。
(ii) 在演藝娛樂事業上給予藝人各方面指引，而對所有有關藝人在演藝界之利益及發展之事務，亦提供各方面指導。
(iii) 經理人之管理制度內並不存在褓母制，故藝人及藝人成員如需聘用助理人員，各項費用均由藝人自行負責。但必須由經理人以合理薪金聘請及管理。
(iv) 經理人或其僱員並不需要向藝人提供其獨家之服務或運用其所有時間處理藝人之事務。本合約之任何條款不應被理解為限制經理人去處理其他與藝人可能相似或與其競爭的人士的事務之權利或限制經理人進行任何與藝人相似或與其競爭的商業活動之權利。”
“The Manager’s Declaration and Undertaking
(a) The Manager declares and undertakes that within the Contract Period:
(i) the Manager will use its best reasonable efforts to obtain work opportunities in all forms and media of the entertainment industry for the artist and on behalf of the Artist to negotiate the best terms for such work.
(ii) to provide guidelines to the Artist in respect of the performing arts and entertainment career in all aspects, and also to give guidance in all aspects to the Artist in relation to all matters relating to the interest and development of the Artist in the entertainment industry.
(iii) there exists no system of “babysitter” under the management system of the Manager, and thus if the Artist and the members of the Artist need hire assistants, the Artist shall be personally responsible for all expenses, whilst the assistants must be retained at reasonable salary and supervised by the Manager.
(iv) the Manager or its employees are not required to provide exclusive service to the Artist or to engage all its time managing the affairs of the Artist. None of the provisions in this Contract should be interpreted as imposing limitations on the rights of the Manager to manage the affairs of persons engaging in activities similar to those engaged by the Artist or who may be in competition with the Artist, or to limit the rights of the Manager in engaging in commercial activities which may be similar to those engaged by the Artist or in competition with the Artist.”
(10) Terms and Conditions, §2.2
“藝人保證及承諾
(a) 藝人有絕對能力及權力簽訂本合約及於合約期內不會及將不會委任或授權第三者執行經理人按照本合約所獲得之獨家授權。
(b) 藝人是以自由身份同意簽署本合約，合約期內，並無任何合約羈束而抵觸或影響藝人履行本合約規定之一切責任。
(c) 藝人保證 (除非已於本合約附件披露) 藝人於本合約日期前並沒有參與任何與上述第 1.1 條款之服務或工作相類的服務或工作。
(d) 藝人須將所有其收到之聘用查詢或條件等轉介予經理人，而經理人有絕對權利代表藝人去洽談每個工作。在未得到經理人之書面同意前，藝人不得接受任何工作 (包括但不限於上述第 1.1 條款所覆蓋之範圍)。
(e) 經理人無須為代表藝人洽談及藝人可能演出之合約或協議所引起對藝人的損失負上任何責任。
(f) 藝人保證遵守及履行經理人及衹有經理人與任何其他公司，私人或團體所訂下有關藝人服務之合約或協議。
(g) 藝人須按照本合約規定專業及全心全意地提供其服務及全部履行本合約中藝人之責任及義務。
(h) 未得經理人書面同意前，藝人或任何人等及公司不得簽署或口頭同意、參與、發展或提供藝人之形象、照片、名字等與任何其他公司、個人或團體或參與其他娛樂演出及宣傳有關之工作，即使無酬之義務性質工作亦在限制範圍之內。
(i) 藝人須悉力履行所有經理人替藝人所接洽及安排的工作，以達到最佳之質素。藝人絕不可作出任何言詞及行為令經理人蒙受名譽或任何實際之損失，也不可作出任何不合法或不道德的行為。
(j) 在任何時間藝人在未得經理人同意下不可擅自離開經理人所指定的工作地點。
(k) 藝人全心全力向經理人提供其最佳服務，並按照經理人之指示之日期、時間、準時親自到達經理人所指定的工作地點 (不論在香港或以外地區)。
(l) 藝人須不時通知經理人其行踪並向經理人提供其所在地、最新地址及聯絡電話號碼，俾使經理人可在合理時間內不論日夜能與藝人聯絡或向其發出通告。
(m) 遵照經理人指示及安排參加任何及所有與藝人工作有關之製作會議、拍攝演出、宣傳活動及酬酢。
(n) 暸解及遵守經理人屬下演員所應有之標準，服從及按照經理人指派職員及工作有關之高級人員所指揮而工作。
(o) 若經理人因本合約內的委任或因藝人的行為疏忽、懈怠或不履行職責而蒙受或支付任何成本、索賠、費用，藝人須全部賠償予經理人。
(p) 藝人在本合約期間不能懷孕。
(r) 即使本合約內包含任何相反之條款，藝人同意經理人有絶對權力為藝人在各樣事情上作出最後決定及藝人同意絕對遵守及履行經理人之所有有關之決定。
(s) 藝人必須自行負責其一切個人開支以履行其於本合約的職責，包括但不限於服裝費、交通費、膳食、住宿費、受訓及學習費用等。但藝人獲得第三者提供該等費用則除外。
(t) 藝人同意按經理人之要求就証明經理人擁有本合約內任何權益而簽署任何有關証明文件。
(u) 藝人謹此聲明在合約期間其演藝事業上若有任何法律上的問題均享有咨詢獨立法律意見之權利和機會。藝人在簽署本合約前已在知情下放棄合約期內咨詢獨立法律意見之權利。
(v) 藝人同意尋求經理人所提供的法律顧問處理及協助藝人於合約期或續約期內有關其演藝事業的一切相關問題。惟經理人所提供的法律顧問並不需要向藝人提供其獨家之服務或運用其所有時間處理藝人之有關事務。
(w) 倘因藝人引起之理由 (包括但不限於藝人因懷孕而引起之理由) 而其未能履行經理人或經理人在本合約期內代表藝人與任何公司、個人或團體訂立有關藝人演出服務之合約或協議時，藝人願意承擔全部責任並賠償經理人因此而引起之損失。
(x) 藝人承諾在未取得經理人的書面同意下，任何時間 (包括合約期內或合約期外) 均不得擅自向第三者直接或間接透露本合約的任何內容。本條款於合約期完結後仍然生效，特此聲明。”
“The Artist’s Guarantee and Promises
(a) The Artist has the absolute capacity and power to enter into this Contract and within the Contract Period shall not and will not appoint or authorize a third party to enforce the exclusive authorization which is acquired in accordance with this Contract by the Manager.
(b) The Artist agrees to enter into this Contract in her free capacity. Within the Contract Period there is no contractual limitation which contradicts or affects the performance of all obligations under this Contract by the Artist.
(c) The Artist guarantees that (unless already disclosed in the Annexures of this Contract) the Artist before date of this Contract did not take part in any service or jobs similar to any service or jobs as stated in clause 1.1 hereinabove.
(d) The Artist shall refer all enquiries or conditions that they receive for engagement of her service to the Manager, and the Manager shall have the absolute right to represent the Artist to negotiate for each job. Without the prior written consent of the Manager, the Artist must not accept any job (including but not limited to the scope covered by the terms in clause 1.1).
(e) The Manager shall not be liable for any loss suffered by the Artist arising from the Manager’s negotiating for and on behalf of the Artist about contracts and agreements in relation to the potential performance of the Artist.
(f) The Artist undertakes to comply with and perform the contracts or agreements in relation to the Artist’s service made by the Manager and between only the Manager and any other companies, persons, or organizations.
(g) The Artist shall in accordance with the provisions of this Contract professionally and wholeheartedly provide the services and perform all of the Artist's obligations and duties under this Contract.
(h) In the absence of prior written consent of the Manager, the Artist, any person or company must not consent in writing or orally, participate, develop or provide the Artist’s image, photo or name etc. to any other company, individual or group, or participate in other entertainment performances and related publicity work and even voluntary work without payment would still fall within the scope of restrictions.
(i) The Artist shall diligently perform the work procured and arranged by the Manager for the Artist in order to achieve the best quality. The Artist shall absolutely not make any statements or commit any acts which would render the Manager suffer damage to its reputation or any actual loss, and also not commit any illegal or immoral acts.
(j) Without the approval of the Manager the Artist at any time shall not leave the working place designated by the Manager.
(k) The Artist shall wholeheartedly provide her best services to the Manager and arrive at the working place designated by the Manager punctually in accordance with the instructions in date and time given by the Manager (no matter inside or outside Hong Kong).
(l) The Artist must from time to time inform the Manager of her whereabouts and provide her location, newest address and contact number to ensure the Manager could, at reasonable times whether during the day or night to stay in contact with the Artist or to issue any notice to the Artist.
(m) In compliance with the Manager’s instructions and arrangements take part in any and all production conferences, filming and performance, advertising activities, and social engagements relevant to the work of the Artist.
(n) Understand and comply with the necessary standard applicable to artists under the Manager, obey and work according to the instructions given by the staff appointed by the Manager and the senior officer relating to the work.
(o) The Artist shall fully indemnify the Manager for any costs, compensation or expenses suffered or paid by the Manager as a result of the appointment under this Contract or the negligent behaviour, slackness or failure to perform the duties on the part of the Artist.
(p) The Artist must not become pregnant during the Contract Period.
(r) Notwithstanding any contradicting provisions contained in this Contract, the Artist agrees that the Manager has the absolute authority to make final decision on all sorts of matters on behalf of the Artist, and the Artist agrees to comply with and perform all the relevant decisions of the Manager absolutely.
(s) The Artist must be responsible for all personal expenses necessary for performing her obligations in this Contract, including but not limited to: expenses on clothing, transport, meals, residence, training and education fees etc. However, this is not so where a third party provides for such expenses on behalf of the Artist.
(t) The Artist agrees to comply with the Manager’s request to certify that the Manager has any of the rights contained within this Contract and sign any relevant documents of proof.
(u) The Artist hereby declares that within the Contract Period the Artist has the right and opportunity to seek independent legal advice on any legal matters in relation to her Entertainment Career. The Artist has prior to signing this Contract knowingly abandoned the right to seek independent legal advice within the Contract Period.
(v) The Artist agrees to seek the legal consultant provided by the Manager to deal with and to assist the Artist in all questions relevant to her Entertainment Career within the Contract Period or the renewal period. However, the legal consultant provided by the Manager is not required to provide independent services to the Artist or to utilize all his time to deal with matters relevant to the Artist.
(w) If the Artist fails to perform the contracts or agreements in relation to the Artist’s performance service made between the Manager or the Manager on behalf of the Artist and any companies, persons, or organizations within the Contract Period for reasons caused by the Artist (including but not limited to the reasons caused by Artist’s pregnancy), the Artist is willing to take all responsibility and indemnify the Manager for the loss arising therefrom.
(x) The Artist undertakes that in absence of the written consent of the Manager she shall not at any time including (within or outside the Contract Period) directly or indirectly disclose to third parties any content of this Contract. It is hereby declared that this clause shall remain effective after the expiration of the Contract Period.”
(11) Terms and Conditions, §9
“提早解約
9.1 在本合約日期內，如果藝人意圖終止其於本合約所覆蓋的演藝事業 (即本「條款及條件」第 1.1 條所覆蓋之範圍) 或因任何其他私人原因導致藝人意圖解除其在本合約之責任，藝人應以書面向經理人作出有關申請，而經理人有絕對權利去決定是否批准藝人之申請，若經理人決定批准該申請，經理人亦有權決定以甚麼條件批准該申請。
9.2 如在合約期內藝人根據本「條款及條件」第 9.1 條被解除本合約上的職責 (以下簡稱「解約」)，在解約當日起計7 年內，藝人未得經理人書面同意下，不得向任何人仕、商號或公司提供屬於本合約經理人接受委任所經理的範圍內的服務 (即本「條款及條件」第 1.1 條所覆蓋之範圍，以下簡稱「該等服務」)。同時藝人同意如未得到經理人的書面同意而提供該等服務時，於經理人在法律上的權利及利益未被影響的基礎上，經理人有權向司法機關申請禁制令禁止藝人向任何人仕、商號或公司提供該等服務，並可佔有藝人因該等服務而賺取的所有收入，另外經理人亦有權要求藝人向經理人根據假設沒有解除藝人職責情況下賠償經理人的損失和利潤上的一切可能出現的減損。此項條款在本合約終止後仍具有法律效力。
…………”
“Early Termination
9.1 Within the Contract Period, if the Artist intends to terminate her Entertainment Career as covered by this Contract (that is the area covered by clause 1.1 of the “Terms and Conditions”) or for any other personal reasons resulting in the Artist’s intention to be relieved of her responsibilities within this Contract, the Artist shall make an application to the Manager in writing, and the Manager has the absolute right to decide whether to accept the artist’s application. If the Manager decides to permit the Artist’s application, the Manager also has the right to determine the conditions required for such permission.
9.2 If the Artist is terminated according to clause 9.1 under “Terms and Conditions” (hereinafter referred to as “termination”), within 7 years from the date of termination, the Artist must not, without the Manager’s consent, provide services which are within the area for which the Manager was authorized to manage (that is the area covered by clause 1.1 of “Terms and Conditions”, hereinafter referred to as “the Services”). At the same time, the Artist agrees that if she had not obtained written consent from the Manager, without prejudice to the rights and interests of the Manager, the Manager has the right to apply for an injunction to prevent the Artist from providing the Services to any person, firm or company, and could possess all income received by the Artist by reason of the provision of the Services; and the Manager also has the right to request that the Artist compensate the Manager for all possible losses or any decrease in profit of the Manager as if the Artist had not been relieved of her duties. This clause remains effective after the termination of this Contract.
…………”
(12) Terms and Conditions, §15
“合約條款之獨立性
(a) 本合約每一條均可被獨立分割。如在本合約上有任何條款被擁有管轄權的法庭裁定為不能執行，該失去效力之條款將不會影響本合約內其他條款，而所有不受此影響的條款仍維持有效及帶有約束力。
…………”
“Independence of the Contractual Provisions
(a) Each of the provisions of this Contract can be independently severed. If any provision of this Contract is declared by courts having competent jurisdiction to be unenforceable, the invalid provision shall not affect the remaining provisions of this Contract and such unaffected provisions shall remain valid and binding.
…………”
7.On or about 30 September 2005, the 2005 Agreement was signed by P and D1. The terms of the 2005 Agreement are nearly identical to those of the 2004 Agreement. The terms set out in the above are also contained in the 2005 Agreement. There is no dispute that the purpose of signing the 2005 Agreement was to have an updated contract when D1 attained the age of majority. D1 contends that she was also induced to sign the 2005 Agreement by the Representation on Industry Standard and the Promise regarding Renewal.
8.P says that in early 2006, P and D1 entered into an oral agreement (“the 2006 Oral Agreement”). It is P’s case that:
(1) P was and is a member of a group of companies known as Universe Group.
(2) The Universe Group was and is mainly in the business of video and film production and distribution.
(3) Before entering into the 2004 Agreement, P expressly told D1 that D1 was signed as an actress artiste but not as a singing artiste.
(4) However, after the signing of the 2005 Agreement, D1 had made repeated oral suggestions to Mr Lam Shiu Ming, Daneil (“DL”)[3] and Mr Yeung Kim Piu, Bill (“Yeung”)[4] that P should develop her singing career and to produce sound recordings for her.
(5) DL and Yeung rejected the suggestions and instead attempted to look for a record company which might be willing to sign up D1 as a singer, but no record company was willing to do so.
(6) In view of the above, DL and Yeung had in about early 2006 orally told D1:
(a) D1 could produce her sound recordings on the clear understanding that she would be responsible for all the production and promotion costs and expenses incurred and P would not make any investment in those productions.
(b) P would assist D1 in the management of her music career and provide administrative support.
(7) D1 orally agreed to the proposed arrangement.
(8) Since D1 did not have the financial means to produce her sound recordings, upon the oral requests made by D1, DL and Yeung orally agreed that the production and promotion costs incurred would first be paid by P on behalf of D1, but D1 had to repay P and P could be reimbursed by the incomes and earnings of D1.
(9) Consequently, D1 started producing her sound recordings in about April 2006.
9.On 29 June 2007, DL and Yeung procured UML to be registered as a member of International Federation of the Phonographic Industry (“IFPI”).
10.D1 says that in around mid-2007, after perusing the statements issued by P to her (“the Statements”) bi-annually, D1 discovered that P had wrongfully charged to her account numerous items of non-personal expenditure incurred for the production of D1’s entertainment incomes and P’s commissions (“the Production and Promotion Costs”). D1 says that the Production and Promotion Costs were incurred by P and/or other companies associated with DL. D1 contends that in accordance with the Contract, those costs should be borne by P and should not be paid by her.
11.It is D1’s case that after discovering the above, she sought explanation from Ms Lee Choon Bee, Kelly (“Lee”), who was a senior artiste manager in P and taking care of D1 at that time. Lee told D1 that the deductions was the standard practice. Subsequently, Yeung through Lee informed D1 that if D1 wished to issue music recordings, she would have to bear the Production and Promotion Costs.
12.D1 says that in December 2007, Chau saw the Statements and made a complaint to Lee.
13.In July to September 2008, there were false accusations in the media alleging D1 was in an affair with DL (“the 2008 Incident”). D1’s case is that she wanted to have a press conference to clarify the matter, but P refused to allow her to hold such a press conference. P only allowed D1 to tell the press that she was innocent. She was not allowed to say anything more. During this period, P forced D1 to release the album “Shining” notwithstanding D1’s unwillingness to do so. D1 was under an impression that P would bear the production and promotion costs of this album, for DL said that he would support this album.
14.D1 says that at a later time in 2008, she discovered from the Statements that all the production and promotion costs of the album “Shining” were charged to her account. D1 raised the matter with Lee and told Lee that she could not continue to work for no money and at the same time be accused out of the blue of being a home-wrecker. Lee told D1 that nothing could be changed. Lee also told D1 that P had other artistes and P could promote another girl instead of D1.
15.On or about 6 November 2008, the 2008 Agreement was signed. The terms of the 2008 Agreement are nearly identical to those of the 2004 Agreement and the 2005 Agreement. The terms set out in [6] above are also contained in the 2008 Agreement. D2 has been added as a party to the 2008 Agreement. In relation to the 2008 Agreement, the parties’ respective cases are as follows:
(1) D1’s case is that:
(a) In May 2008, D1 received a “Notification of Remuneration paid to Persons other than Employees” from the Inland Revenue Department. As per the said notification, during the period from 1 April 2007 to 31 March 2008, D1 received artiste’s fees of HK$324,520 from P. D1 was astonished as all along she had not received any net income from P. D1 was also really worried that she would have to pay tax on this amount. She therefore spoke to Lee about this. Lee then related the reply from the senior management of P to D1. The senior management advised D1 to start her own company. Lee gave D1 the names of P’s accountants. With P’s assistance, D1 set up D2. D1 did not quite understand why it would be necessary to set up D2 and how could tax be saved by this method. She just did what P told her to do.
(b) Lee also told D1 that D1 had to sign a new contract with P which would include D2. D1 thought that she had to sign it, for she was heavily indebted to P as shown in the Statements. The only way she could make money to repay the debts was to continue to work. At the time of signing the 2008 Agreement, she was also influenced by the Representation on Industry Standard and the Promise regarding Renewal.
(2) P’s case is that:
(a) The 2008 Agreement was signed at the request of D1 for D1’s tax saving purpose.
(b) D2 is a company limited formed by D1, and is solely owned and controlled by D1.
(c) DL executed the 2008 Agreement and also an agreement to cancel the 2005 Agreement on behalf of P. Save that D2 was added as one of the contracting parties and D1 also entered into a personal guarantee in favour of P[5], the terms and conditions of the 2008 Agreement in effect remained essentially same as those of the 2005 Agreement. D1, who was then 21 years of age, also executed the 2008 Agreement on behalf of D2. Both the 2008 Agreement and the said personal guarantee were written in Chinese.
(d) There was no good reason, and indeed unnecessary, for P to request D1 to re-execute an agreement to replace the 2005 Agreement to simply add D2 as a party to the agreement. It was not P to ask D1 to enter into the 2008 Agreement. The 2008 Agreement was signed upon the request made by D1.
(e) Since the 2008 Agreement was entered into at the request of D1, D1 and D2 (collectively “Ds”) should not be allowed to dispute the validity or enforceability of the 2008 Agreement in any way.
16.On 7 October 2009, DL and Yeung procured UML to be registered as a member of Composers and Authors Society of Hong Kong (“CASH”).
17.It is P’s case that in about mid-2009, P and Ds have an oral agreement (“the 2009 Oral Agreement”).
(1) In about mid-2009 Agreement, in view of the huge sum incurred by D1 in producing the sound recordings for which D1 had to repay P, DL and Yeung told D1 through Lee that in place of the commission which P was entitled to charge under the artiste management contract, only the following sums would be charged:
(a) for “records income” (唱片收入) (ie income derived from the sale of sound recordings), P would charge 20% of the gross amount of “records income” as administration charges while ULV as the distributor would charge 20% of the gross amount of “records income” as distribution charges;
(b) for “music income” (音樂收入) (ie income derived from the sound recordings other than “records income”, which include mainly royalties received from CASH, IFPI and other telecommunication companies and online music platforms), P would charge 20% of the gross amount of “music income” as the administration charges.
(2) In other words, D1 would be entitled to:
(a) 60% of the gross income generated from the sale of D1’s records based on the wholesale price thereof from time to time; and
(b) 80% of the other gross incomes generated from D1’s other music products.
(3) D1 acting on her own and on behalf of D2 had no objection to the aforesaid arrangement which came to be recorded in the Statements and those Statements were approved by Ds by signing back them, or alternatively Ds consented or acquiesced to the arrangement by not raising any objection to the Statements and/or should be estopped from raising any objection.
18.P says that on 15 January 2010, D1 had a personal music concert.
19.In March or April 2010, D1 produced the song “BABAYA”.
20.On or about 23 November 2010, with P’s consent, D1 signed a contract with a record company in Beijing, 北京鳥人藝術推廣有限責任公司 (New Run Entertainment Co Ltd, “New Run”). The contract was for a term of 3 years as from 23 November 2010 to 31 December 2013, by which New Run would produce songs album for D1 in Mainland China at its costs and with the copyright of the sound recordings belonged to New Run. That contract was terminated on 30 November 2013.
21.According to D1, on or about 4 June 2011, after seeing the huge sums owed to P from the Statements, she went to Shek O with the thought of committing suicide there. She made a phone call to DL for the first time in Shek O. She told DL that she was unfairly treated by P. She was emotional and was crying at that time. DL listened to her and said that he would deal with D1’s concerns.
22.In mid-2011, there was a dinner (“the 2011 Dinner”) attended by DL, Mr Lam Siu Keung, Alvin (“AL”)[6], Lee, Chau and D1. D1 says that in that dinner, DL made a promise to her and Chau that D1 would have net income in the following year and the total in her statements would be a positive figure (“the 2011 Promise”).
23.In 2011, with P’s consent, D1 signed a contract with a record company in Hong Kong, Stars Shine International Limited (“Stars Shine”), by which Stars Shine would produce songs album for D1 in Hong Kong at its own costs and with the copyright of the sound recordings belonged to Stars Shine. The term of the contract was from 1 February 2012 to 31 January 2015. That contract was terminated on 30 November 2013.
24.According to D1, in 2011, the rent of her residence increased. She was unable to afford the new rent with the living expenses lent to her by P, taking into account that P would not allow D1 to take public transport except taxi. D1 related her situation to Lee, and Lee told this to DL. Sometime thereafter, Yeung asked D1 to go to a restaurant. D1 met DL, AL, Yeung and Lee in the restaurant. DL suggested to D1 that she should buy a flat, and said that P would give her assistance. D1 said she would look around. A few months later, at P’s office, DL suggested to D1 in the presence of Lee and Yeung that P would lend D1 money to purchase a flat, and in return D1 should renew the contract with P for a further period of 10 years. D1 immediately and politely refused to take up this offer.
25.On 8 June 2012, P issued a Chinese notice to Ds (“the 1st Notice”). There is no dispute that Ds received this notice. P’s case is that by the 1st Notice, P has validly exercised the Option under Clause 9(a) of the Contract and there would be a renewed contract between P on the one hand and Ds on the other hand from 3 May 2014 to 2 May 2019 (“the Renewed Contract”).
26.At about the Chinese New Year in 2013, Lee left P.
27.D1 says that in March 2013, D1 confronted DL and Yeung about the promise that D1 would have net income and would have profits. DL said that P would advance HK$500,000 to D1, and D1 could tell her mother that this was her income. On or about 2 April 2013, Yeung gave HK$500,000 to D1. Yeung told D1 that the sum was a loan to D1, but D1 should tell her mother that the sum was her income.
28.There was a dinner at DL’s home in 2013 (“the 1st Dinner Meeting in 2013”). As to this dinner, the parties’ respective cases are as follows:
(1) P’s case is that:
(a) The dinner took place in February 2013 and was attended by DL, Yeung and D1. At the dinner, D1 requested to raise her entitlement from 45% to 55% and also to set aside another 5% of the income to cover her expenses for car, promotion and cosmetics. D1 further said that Chau was worried about her as D1 did not seem to have much savings.
(b) In response, DL told D1 that P could give D1 a lump sum as an advance payment so that she could ease Chau’s concern. As to D1’s request for increasing her share of income, DL said that D1 would have to agree to be P’s artiste for a further 5 years (“the Further Extended Term”) on top of the extended term (“the Extended Term”) as provided in the Option contained in the Contract. DL further suggested to D1 that P would also consider providing her an advancement as down payment for purchasing a flat if she wished to do so.
(c) D1 did not respond to or express any view on DL’s proposal concerning the Further Extended Term and financial subsidies for her to purchase a flat but orally agreed to take a cash advancement of HK$500,000.
(d) Following the discussion in that dinner, in order to allay the concerns of Chau as said by D1, on 2 April 2013, P forwarded a sum of HK$500,000 as an advance payment to D1, which D1 had duly accepted.
(2) D1’s case is that:
(a) The dinner took place in or around May 2013 and was attended by DL, AL, Yeung and D1. In that dinner, D1 sought to negotiate the terms of the new contract which would cover the Extended Term. D1 suggested that her entitlement under the new contract should be increased from 45% to 55%. DL indicated no objection to the proposal and agreed to the same.
(b) However, shortly after that dinner, D1 received a telephone call from Yeung. Yeung told her that what DL meant at the dinner was that P would grant the 10% increase only if D1 agreed to a further period of 10 years on top of the Extended Term. D1 protested and demanded to speak to DL.
29.There was another dinner in 2013 (“the 2nd Dinner Meeting in 2013”). As to this dinner, the parties’ respective cases are as follows:
(1) P’s case is as follows:
(a) This dinner took place in around May 2013 at a restaurant called “北角新斗記” (Xin Dau Ji) and was attended by DL, Yeung and D1.
(b) In this dinner, DL and Yeung talked about the renewal of the 2008 Agreement with D1. D1 again requested for a raise of 10% of her income but did not indicate whether she would accept a further renewal of 5 years on top of the Extended Term. Then DL and Yeung counter-proposed that the sharing of income could be split between P and D1 in 45% and 55% ratio for the Extended Term and then 30% and 70% ratio for the Further Extended Term. D1 showed no indication whether she would accept DL’s counter-proposal. As DL saw no urgency on the Further Extended Term, the topic was not pursued further in the dinner.
(c) About 2 to 3 weeks thereafter, Yeung orally asked D1 for her view on DL’s proposal made during the 2nd Dinner Meeting in 2013. D1 did not make any indication or ask any questions.
(2) D1’s case is as follows:
D1’s case is that the 2nd Dinner Meeting in 2013 was organized by her when she returned to Hong Kong in July 2013. The dinner took place at the restaurant 新斗記 (Xin Dau Ji) in North Point. In that dinner, DL repeated his offer of lending money to D1 to buy a flat. D1 told DL that a further period of 10 years on top of the Extended Term would be an extension of 15 years, which was too much. D1 also said to DL that DL had promised her in the 1st Dinner Meeting in 2013 to increase D1’s entitlement without any the condition of adding additional 10 years. DL simply said that he was drunk in that dinner and did not remember what he had said. D1 insisted that she would not sign a new contract on the new terms proposed by DL and Yeung.
30.On or about 13 January 2014, D1 attended a fashion show event organised by the Hong Kong Trade Development Council, “香港‧華麗秀” at the Hong Kong Convention and Exhibition Centre. Due to the placement of a large mirror at the bottom of a photography backdrop, up-skirt photos of D1 were taken and were widely circulated among the general public, which caused D1 serious embarrassment and distress (“the Up-skirt Photo Incident”). It is D1’s case that she requested P to follow up on the Up-skirt Photo Incident, to take action to remove the offending photos from the internet, and to press for remedial action, but P failed to take any remedial action.
31.In February 2014, there was a birthday party of Mr Lam Wing Hong (林永匡) (“Hong”), the chief editor of Headline Daily (頭條日報). Somethings happened in this birthday party (“the Feb 2014 Incident”). As to this incident, the parties’ respective cases are as follows:
(1) P’s case is as follows:
(a) On 19 February 2014, DL held a dinner which was a usual gathering with the reporters after Chinese New Year as attended by Hong and Mr Yuen Dong Leung (“Dong”, a reporter of Headline Daily).
(b) During the dinner, Hong and Dong orally asked DL if P would be interested to have Mr Paco Wong (“Paco Wong”) of Sun Entertainment Culture Ltd (太陽娛樂) (“Sun Entertainment”) to assist D1 in producing song records. Hong and Dong said that Paco Wong would attend the birthday dinner of Hong. They further suggested that P should firm up with Paco Wong thereat.
(c) D1, DL, AL and Yeung then attended a dinner on 26 February 2014 to celebrate the birthday of Hong (“the Birthday Dinner”). Dong was also present at that dinner.
(d) Apart from celebrating Hong’s birthday, another aim of the Birthday Dinner was for P to discuss song records matter of D1 with Paco Wong. Upon Yeung’s enquiry prior to the Birthday Dinner, D1 rejected the idea of working with Paco Wong for production of song records. Accordingly, at the beginning of the Birthday Dinner, DL had in front of D1 told Dong that his suggestion of working with Paco Wong was turned down. D1 did not object or show any dissatisfaction at all.
(e) Later, when AL and Paco Wong came to join the Birthday Dinner, Dong repeated his suggestion to Paco Wong for producing song records for or together with D1. With a complete change of her attitude, D1 expressed great interest in working with Paco Wong but nothing concrete was then discussed as DL was not sure of the exact position of D1.
(f) Paco Wong and Hong and two other guests left the Birthday Dinner early. The people remained were DL, AL, Yeung, Dong and D1, who were all getting a bit drunk. Dong then started complaining about P’s rejection of his suggestion and accusing P for, inter alia, failing to discharge its duties as D1’s manager. He further said that he was D1’s good friend and he wanted to be her manager.
(g) Arguments between Dong on the one side and Yeung, AL and DL on the other side ensued. Dong became agitated and started to provoke Yeung. Being provoked, Yeung threw a glass receptacle (玻璃杯) onto the floor near Dong. Dong then stood up intending to attack Yeung but was restrained by AL and DL, who tried to calm down both Yeung and Dong. Dong then declared that P had become an enemy of Headline Daily from that moment and then he left.
(h) D1 remained silent during the whole argument. However, D1 refused to help to calm down Dong despite being asked by AL to do so. After Dong left, AL asked D1 whether she had any dissatisfaction about P and she replied in negative. When AL further asked her why she did not stop Dong from making those inappropriate comments and creating the conflicts, D1 replied that she did not see any problem for her friend to fight for her benefits. Afterwards, she said she was drunk and then left.
(i) Neither DL nor AL nor Yeung ever shouted at D1 or pressurized her to sign an agreement for the Extended Term at the Birthday Dinner.
(2) D’s case is as follows:
On 26 February 2014, D1 attended a birthday dinner, celebrating Hong’s birthday. Both Hong and Dong were present at the Birthday Dinner. The dinner was also attended by DL, AL, and Yeung. At the end of the dinner, after the other people left, DL, AL and Yeung became furious towards Dong and D1. They accused D1 of telling people about her dissatisfactions with P. Yeung became violent and threw whiskey tumblers, red wine glasses and bottled water at D1 and Dong. After Dong left, DL, AL and Yeung shouted at D1 for around 20 minutes and continuously pressurized her to agree to sign an agreement for the Extended Term.
32.On 4 March 2014, P issued another Chinese notice to Ds (“the 2nd Notice”) to exercise the Option. There is no admission in the pleadings that Ds have ever received this notice, and there is no evidence showing the receipt of this notice by Ds. However, in the agreed chronology, it has been agreed that the 2nd Notice was sent to Ds on 4 March 2014.
33.On 18 March 2014, P sent a letter to the solicitors acting for Ds, asking Ds to sign an agreement for the Extended Term.
34.On 24 March 2014, Ds’ solicitors wrote to P, informing P that Ds would not sign an agreement for the Extended Term.
35.Since March 2014, D1 refused to take phone calls or accept delivery of correspondence from P, and failed to be contactable by P. D1 also declined to participate in a film called “Girls Police Academy” as requested by P.
36.D1 says that on or about 16 April 2014, DL made derogatory statements concerning D1 to the press.
37.The 10-year period provided in the 2008 Agreement ended on 2 May 2014.
38.On 30 June 2014, P commenced these proceedings against Ds.
B. THE PARTIES’ RESPECTIVE CLAIMS
39.P seeks the following reliefs:
(1) a judgment against Ds for damages to be assessed in lieu of specific performance of D1’s and D2’s obligations under Clause 9(a) of the 2008 Agreement;
(2) an order against Ds in terms of the following:
Repayment of the sum of HK$1,101,906.70 but settling off against it or giving credit for the said sum of HK$151,239.79 and such further income and earnings of D1 as may be received by P;
(3) an order dismissing Ds’ counterclaim; and
(4) costs.
40.Ds counterclaim for the following:
(1) a declaration that the 2004 Agreement, the 2005 Agreement and the 2008 Agreement and each of them, are void and/or unenforceable;
(2) a declaration that the aforesaid agreements are to be rescinded;
(3) an account of profits and payment of the sums found due on the taking of the account, with the Production and Promotion Costs to be borne by P and credit being given for reasonable remuneration for work done on D1’s behalf;
(4) an order for all necessary accounts and inquiries to be undertaken in relation to all profits/income generated by the exploitation of D1’s artistic career;
(5) as an alternative to the above:
(a) damages for breach of the aforesaid agreements;
(b) damages for misrepresentation;
(c) damages and/or equitable compensation for breach of fiduciary duties;
(d) a declaration that P is liable to account to D1 and/or D2 on the basis of wilful default;
(e) an order for all necessary accounts and enquiries to be taken and payment of all sums found to be due to D1 and/or D2;
(6) as a further alternative:
(a) an order that all necessary accounts and enquiries to be taken;
(b) the sum found due to D1 and/or D2 as money had and received by P to the use of D1 and/or D2;
(7) compound interest on the damages and on the sums awarded to D1 and D2;
(8) an order dismissing P’s claim; and
(9) costs.
41.In this judgment, I would discuss and determine whether the parties have provided the necessary legal and factual basis in support of their respective claims. For reasons which will become obvious, it would not be necessary for me to discuss some of the reliefs claimed by the parties.
C. THE AGREED ISSUES
42.The order made by Lisa Wong J in the pre-trial review held on 22 June 2021 (“the PTR Order”) provides, inter alia, that:
“9. The parties shall be bound by the agreed dramatis personae, chronology of events, statement of agreed facts and agreed list of issues.” (Emphasis added)
43.Pursuant to the PTR Order, the parties have prepared a List of Agreed Issues. Subsequently, the parties have amended that list and submitted the Amended List of Agreed Issues (“ALAI”) to the court on 1 November 2021. The parties agreed that by reason of the PTR Order, they are bound by the ALAI. Accordingly, the issues to be resolved by the court in this trial are those set out in the ALAI. As per the ALAI, the issues to be determined by me are as follows.
44.Issue 1: In accordance with the true meaning of the Contract, the Production and Promotion Costs are to be borne by P or by D1.
45.Issue 2: Whether the 2004, 2005, 2008 Agreements are valid and enforceable;
(1) Was the 2004 Agreement binding on D1 as an agreement with a minor;
(2) Did AC make the Representation on Industry Standard, and if so, was such representation false;
(3) Was the 2004 Agreement obtained under misrepresentation by P, and how does this affect the 2008 Agreement;
(4) Were the 2005 and 2008 Agreements obtained under undue influence;
(5) Were the 2004, 2005 and 2008 Agreements contracts in restraint of trade;
(6) Were the 2004, 2005 and 2008 Agreements unconscionable bargains;
(7) Whether P could rely on waiver, estoppel, acquiescence, and/or laches to preclude Ds from raising objection to the Contract.
46.Issue 3: Whether P had breached the 2004, the 2005 and the 2008 Agreements;
(1) If yes, whether D1 and D2 are time barred from raising any claim in relation to breaches occurred more than before 6 years before D1 and D2 lodging their Defence and Counterclaim herein;
(a) Whether the alleged breaches were deliberately concealed in that they were committed in circumstances under which it is very unlikely to be discovered for some time;
(b) The relevance, if any, of clauses of the Contract, including §§2.2(u), 2.2(v), 2.2 (r) and 9.2 of the Terms and Conditions;
(2) Whether P owed the duties as pleaded by D1 and D2, and in particular whether P owed fiduciary duties to D1 and assumed trustee-like responsibilities in receiving and holding the income or receipts of D1 on her behalf;
(3) The relevance of s.20 of the Limitation Ordinance;
(4) Whether P had committed the pleaded breaches, including:
(a) breach of fiduciary duty to act in good faith, to act in D1’s best interests, not to act in a manner to destroy the relationship of mutual trust and confidence, not to put itself in a conflict of interest, not to act for its own benefit or the benefit of third parties, to advise D1 to seek independent legal representation in cases of conflict and/or potential conflict;
(i) if the proper construction of the Contract was that the Production and Promotion costs were to be borne by P, whether P had obtained the consent of D1 to charge the same to D1’s account;
(ii) whether some of DL’s companies, namely UML, UECGC, ULV and UDE had received profit/income from D1’s sound recordings without having obtained the informed consent of Ds;
(iii) whether P had made the Representation on Industry Standard, and the representation in relation to the Production and Promotion Costs, and whether such representations were false;
(iv) in relation to the 2008 Incident, whether P failed to convene a press conference to clarify on behalf of D1 despite numerous requests from D1 for one;
(v) whether D1 was pressured to release her album “Shining” against her wishes at such time and charged the entire cost of the production and release of such album to her account;
(vi) whether D1 was promised in 2011 that D1 would be able to receive income in 2012, and such promise did not materialise;
(vii) whether D1 had proposed her entitlement to her income in the contract for the Extended Term to be adjusted from 45% to 55% and DL on behalf of P agreed to this, but subsequently Yeung told her that what P meant was that she would get the 10% increase only if she agreed to a further 10-year period on top of the Extended Term, and when D1 protested, DL denied any agreement and said he was drunk and did not remember what he said;
(viii) whether P failed to follow up on the Up-skirt Photo Incident in January 2014;
(ix) whether at the Birthday Dinner, Yeung became violent and threw whiskey tumblers, red wine glasses and bottled water at D1 and her friend, and afterwards continuously pressured her to agree to sign the contract for the Extended Term;
(x) whether DL made derogatory statements concerning D1 to the press in or around April 2014;
(b) Breach of its duty to take reasonable care in the exercise of its powers and the performance of its functions as the manager of Ds and to conduct its duties up to a reasonable standard;
(i) issues same as those under subparagraph (a) in the above;
(ii) whether P failed to quote reasonable fees/consistently quoted unreasonably high fees for D1;
(iii) whether P had worked for 10 years achieving success in her career as an artiste but only received a monthly advance and failed to obtain any income reasonably commensurate with her degree of success or at all.
(c) Whether P breached its obligation to give proper and complete account of D1’s income.
(5) Whether D1 was entitled to rely on estoppel by convention to contend that there was a common assumption that D1 are entitled to receive income from D1’s sound recordings and that P is estopped from going back on such representation or common assumption to rely on §1.2(d) of the Terms and Conditions; if so, whether P had failed to obtain any income for D1 in her album “天空之樹”.
(6) Whether D1 and D2 had validly terminated the 2008 Agreement by refusing to take phone calls or accept delivery of correspondence from P and otherwise failing to be contactable by P and by declining to take up a role in the film “Girls Police Academy”, or alternatively by refusing to enter into a new contract for the Extended Term.
47.Issue 4: Whether P is entitled to exercise the Option under Clause 9(a) of the 2008 Agreement.
(1) Was the Option un-exercisable where there is a serious breakdown of mutual trust and confidence between the parties, and if so, was there a serious breakdown of mutual trust and confidence between the parties;
(2) Was the Option unenforceable by reason that the requisite notice is not given 30 days before the end date of the 2008 Agreement (2 May 2014), ie 2 April 2014;
(3) Was the Option unenforceable by reason of the terms of the agreement for the Extended Term (“the Renewed Contract”) being uncertain;
(4) Was the Option unenforceable by reason of the terms of the Renewed Contract being a contract in restraint of trade or being an unconscionable bargain;
(5) Can Ds rely on estoppel, ie the Promise regarding Renewal, to contend that P is not entitled to assert its right to exercise the Option if D1 did not want to extend her contract with P at the end of the 10-year period;
(6) Is P entitled to rely on estoppel by convention to contend that Ds are estopped from denying that Ds would renew the Contract;
(7) If P had validly exercised the Option or if Ds are estopped from denying that P had exercised the Option, whether P is entitled to an order for specific performance, and what would be the terms of the Renewed Contract;
(8) If P had validly exercised the Option or if Ds are estopped from denying that P had exercised its Option, whether P is entitled to an order for damages or in lieu of specific performance;
(9) If P had validly exercised the Option or if Ds are estopped from denying that P had exercised its Option, whether P is entitled to an order for damages.
48.Issue 5: Whether P is entitled to repayment of the sums allegedly due to P according to the Statements issued by P, or whether D is entitled to the repayment of the Production and Promotion Costs.
(1) If the 2004, 2005 and/or 2008 Agreements are valid and enforceable, what should be the proper construction of the Agreements in relation to the Production and Promotion Costs;
(2) If the 2004, 2005 and/or 2008 Agreements are valid and enforceable, and if the proper construction is that P is to bear the Production and Promotion Costs, whether P can rely on estoppel and/or equitable doctrine of settled account.
(a) Whether D1 had protested to P when D1 signed the Statements;
(b) Whether P had “clean hands”, including whether P had knowingly and falsely contended that there was an industry rule for artistes to bear production and promotion costs, whether P had pressurized D1 to sign the Statements, including requiring D1 to sign the Statements before it was willing to develop D1’s singing career, and whether P had breached duties owed to Ds in the Agreements;
(c) Whether the Statements were rendered void or unenforceable on the basis of a mistake or misrepresentation, ie whether there was no industry rule for artistes to bear Production and Promotion costs, and P misrepresented to D1 that there was such an industry rule;
(d) Whether P is entitled to rely on the fact that P advanced money to D1 (ie the circumstances of the transfer of the sum of HK$500,000 to D1) and/or developed D1’s career as a singing artist to found an estoppel.
(3) If the 2004, 2005 and/or 2008 Agreements are valid and enforceable, whether Ds are time barred from taking issue with the Statements;
(4) Whether P and D1 had entered into the 2006 Oral Agreement and 2009 Oral Agreement as contended for by P, and if so, whether P would be entitled to rely on the same.
(5) If Ds are liable to pay sums allegedly due to P according to the Statements issued by P, whether Ds are entitled to any set off.
49.Issue 6: Given the answers to the above, what should be the appropriate remedy.
50.In the ALAL, the parties have also set out the admissibility of the following witness statements as agreed issues to be determined by the court:
(1) the witness statement of Chan Hei Ning (“CHN”, also known as Cero Chan) dated 3 February 2017; and
(2) the witness statement of Ngan Pui Yan (“Ngan”) dated 8 February 2017.
The answers on these issues are set out in [63] to [65] below.
D. THE PRINCIPLES
51.A person of full age and understanding is bound by the document signed by him, unless a recognized legal basis for concluding that his apparent consent has been in some way vitiated or that reliance on the document by some other person falls into some category of unconscionable conduct justifying relief in equity. Choosing to sign a document without knowing its contents cannot be a sufficient reason for not being bound by the document. As said by Ribeiro PJ in Ming Shiu Chung & Others v Ming Shiu Sum & Others[7]:
“84. …Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory’s assent or adherence to what that document states. Where such a person has signed a document which purports to have legal effect, the law has never regarded it as enough to show that he signed without knowing its contents for the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed. But they are held to the documents which they have chosen to sign unless there is shown to be a recognized legal basis for concluding that their apparent consent has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity.
85. Thus, in Saunders v Anglia Building Society [1971] AC 1004 at 1016, Lord Reid warned against an approach, like that of the Court of Appeal, which inverts the general rule:
‘We find in many of the authorities statements that a man’s deed is not his deed if his mind does not go with his pen. But that is far too wide. It would cover cases where the man had taken no precautions at all, and there was no ground for his belief that he was signing something different from that which in fact he signed. I think that it is the wrong approach to start from that wide statement and then whittle it down by excluding cases where the remedy will not be granted. It is for the person who seeks the remedy to show that he should have it.’
86. And in Bank of China (Hong Kong) Ltd v Fung Chin Kan & Another (2002) 5 HKCFAR 515 at p.533, Litton NPJ acknowledged:
‘… the fundamental principle that, generally speaking, when a person signs a legal document, he or she is bound by the act of signature: As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood.’” (Emphasis added)
52.In respect of evaluating the evidence given by witnesses, a valuable guidance can be found in Hui Cheung Fai and another v Daiwa Development Limited[8], in which DHCJ Eugene Fung SC said:
“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce) ……
78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: e.g. Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).
79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.
80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36 - 37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).”
53.Similar guidelines can also be found in Lee Fu Wing v Yau Po Ting Paul[9], in which DHCJ Au (as he then was) said:
“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.”
54.The principles set out in Northampton Borough Council v Cardoza and others[10] are also helpful:
“36. As to the considerations applicable to evaluating evidence, a useful starting point is Goff J’s (as he then was) observation as to resolving conflicts of evidence in Armagas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 LL Rep 1 at p.57
‘… Where there is a conflict of evidence … reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth’.
37. Factors relevant to the evaluation of a witness’s evidence were identified by Lewison J (as he then was) in Painter v Hutchinson [2007] EWHC 758 (Ch) at [3] when addressing the unsatisfactory nature of the defendant’s approach to giving evidence. These included: evasive and argumentative answers, tangential speeches avoiding the question, blaming legal advisers for pleading, disclosure and evidence shortcomings, self-contradiction, internal inconsistency, shifting case, new evidence, and selective disclosure. This was not intended to be an exhaustive list, but it is important and very helpful.
38. A useful recent reminder or guidance on the approach to the evidence of factual witnesses, and expanding on the guidance given by Goff J in The Ocean Frost, was given by Leggatt J (as he then was) in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm). After noting that human memory is fallible and that the process of litigation and preparing for trial tends to interfere further with the reliability of human memory, particularly where a lawyer has had a hand in drafting a witness’s evidence and the witness’s memory has been refreshed by reading documents, Leggatt J concluded that the best approach for a judge to adopt at the trial of a commercial case is to base factual findings on documentary evidence and known or probable facts and the inferences to be drawn therefrom. Witness evidence, written and oral, is not without purpose; but, its principal uses are to subject the documentary record to scrutiny and to evaluate the witness’s motivations, personality and working practices.
39. In similar vein, in the recent case of Freemont (Denbigh) Ltd v Knight Frank LLP [2014] EWHC 3347 (Ch) reference was made to an article written by Bingham J (as he then was) entitled “The Judge as Juror: The Judicial Determination of Factual Issues” published in Current Legal Problems 38 in 1985. Bingham J considered the approach to deciding upon the reliability of a witness’s evidence and regarded the following to be helpful indicators of where the truth lies: the consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred; the internal consistency of a witness’s evidence; and, the consistency of a witness’s evidence with what (s) he has said or deposed on other occasions. Bingham J considered that the credit of a witness in matters not germane to the litigation was of less assistance, and that the demeanour of a witness was on the whole not a reliable pointer to a witness’s honesty.”
55.In respect of lies told by a factual witness on a central issue, the reminder given by Sir John Dyson in MA (Somalia) v Secretary of State for the Home Department[11] has to be borne in mind:
“31. ....... where a claimant tells lies on a central issue, his or her case will not be saved by general evidence unless that evidence is extremely strong. It is only evidence of that kind which will be sufficient to counteract the negative pull of the lie. But much depends on the bearing that the lie has on the case……
32. Where the appellant has given a totally incredible account of the relevant facts, the tribunal must decide what weight to give to the lie, as well as to all the other evidence in the case, including the general evidence……
33. ...... where the appellant tells lies on a central issue in the case, the [tribunal] may conclude that they are of great significance……It will be a matter for the [tribunal] to decide whether the general evidence is sufficiently strong to counteract what we have called the negative pull of the appellant’s lies.”
56.Where there is a long passage of time between the events and the trial, contemporaneous documentation is of particular importance. In Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd [12], Stock JA (as he then was) said:
“…… Comparison with contemporaneous documentation is always an aid to reliability of oral testimony, unless there is reason to believe that the documentation is contrived or materially incomplete; but where the passage of time between events and trial is as long as it was in the present case, and where there is such a host of contemporaneous documentation, as there was in this case, the documentation must, I would have thought, assume a special importance. ……
I would venture to suggest that the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one would expect it to have been created, as well as to inherent probabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known. This is particularly so in a case such as the present, where events have taken place so long before trial and where there exists a mountain of contemporaneous documentation that can be used to point the way. This is not to say that the documentation should have been treated as if it stood on its own, not to be explained, contradicted or supported by oral testimony. It is however to say that in this case the approach adopted to assessment of the facts placed far too much emphasis on character impression and too little upon what was suggested by the documentation and by the inherent probabilities in their historical context. That documentation, as well as conflicts within the evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements – these are the factors which in a trial such as this, so long removed from the time of the events in question, were likely to be of particular use in assessing the facts ……” (Emphasis added)
57.As to whether any adverse inference should be drawn against a party by reason of the absence of a particular witness at the trial, the principles are as follows:
(1) In Kao Lee & Yip v Koo Hoi Yan & Others, Ma J (as he then was) said[13]:
“None of the Defendants gave evidence. In these circumstances, adverse inferences may be more easily drawn against them and correspondingly, any inferences favourable to KLY can more confidently be drawn as well: - see Polaroid Far East Ltd v Bel Trade Co Ltd [1992] HKLR 447 at 454; Jones v Dunkel (1958-1959) 101 CLR 298. This is of course providing that the rest of the evidence allows such inferences to be drawn and that such evidence is credible in the first place.”
(2) In Wisniewski v Central Manchester Health Authority, Brooke LJ said[14]:
“From this line of authority I derive the following principles in the context of the present case: -
a. In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.
b. If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.
c. There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.
d. If the reason for the witness's absence or silence satisfies the court, then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.”
(3) On the question of drawing adverse inferences by reason of the absence of a witness, the Court of Appeal has given guidance in Li Sau Keung v Maxcredit Engineering Ltd[15], which has been applied by DHCJ Lisa Wong (as she then was) in South China Securities Ltd v Lam Kwen Yuen[16]. In that case, the learned judge said:
“7. …… I take note, of the principle that where a person without explanation fails to call as a witness a person who he might reasonably be expected to call, it is open to the Court to infer that that person’s evidence would not have helped that party’s case. See, eg Li Sau Keung v Maxcredit Engineering Ltd [2004] 1 HKC 434, 443E–444C, per Le Pichon JA citing O'Donnell v Reichard [1975] VR 916, 929, per Newton and Norris JJ. The same principle would apply to a failure without proper explanation to produce a document or other real evidence that a party might reasonably be expected to disclose.” (Emphasis added)
58.With these principles in mind, I turn to analyse the evidence in these proceedings.
E. THE EVIDENCE
59.P has filed witness statements from the following witnesses:
(1) AC
(2) DL
(3) Yeung
(4) AL
(5) Tsui Pui Fan (“Tsui”)
(6) Chan Hau Chuen, Keith (“KC”)
(7) Ngan
60.P has called all these witnesses to give evidence at the trial, save and except Ngan. Ngan was the assistant artiste manager in P from about May 2009 to August 2010. She was assigned by P to take care of the matters of D1.
61.Ds have filed witness statements made by the following witnesses:
(1) D1
(2) Chau
(3) Chung Sherman (“Chung”)
(4) Lee
(5) CHN
62.Ds have called all these witnesses to give evidence at the trial, save and except CHN. CHN is D1’s friend and the de facto manager of D1 for about two and a half years from mid-2014.
63.Both Ngan and CHN have not given any live evidence at the trial, have not confirmed their respective witness statements under oath and have not been subject to the cross-examination of the other side. I do not see any reason why their witness statements should be treated as admissible evidence in these circumstances. Further, even if their witness statements are admissible, since the veracity of their evidence has not been tested by cross-examination, I would attach no weight to their evidence.
64.Counsel for Ds have tried to persuade me by submitting that CHN’s witness statement can be regarded as admissible hearsay evidence, and counsel has referred me to Lily Cheung v Cheung Wai Kwok[17], in which DHCJ Leung allowed the witness statements made by the 2nd defendant in that case to be relied on as hearsay evidence, for the 2nd defendant was prevented by his post-statement mental incapacity from attending the trial to verify his statements and to testify. With respect, I am of the view that Ds cannot derive any assistance from the Lily Cheung case.
(1) In Lily Cheung, the learned judge in fact expressly said:
“61. The question is whether the statement should be excluded without prejudice to the interests of justice in the circumstances of the case. As mentioned, in the normal case where there is no excuse for the failure to call the witness or for the refusal of the witness to testify, the answer may be more readily apparent.”
(2) In her 2nd affirmation, D1 said that she had been unable to contact CHN since late July 2021. With respect, I cannot treat CHN’s witness statement as admissible evidence in the circumstances. I would not speculate why CHN did not come to the court to give live evidence. However, the fact is that she has not confirmed her witness statement under oath and has not been subject to cross-examination. There is no evidence showing that she has been prevented from illness or other reason from coming to the court. In my judgment, to treat CHN’s witness statement as admissible evidence, or to attach any weight to the matters mentioned in that witness statement, would not be fair and proper and would not be in the interests of justice in these circumstances.
65.Counsel for P has invited me to treat Ngan’s witness statement as admissible evidence and to attach weight to that witness statement. I decline to do so. As explained below, in my judgment, there is no proper explanation as to her absence in the trial.
E1. AC
66.AC mentioned the following in his evidence:
(1) He was an investment banker. He had known DL since 1997. He joined P as a director in about February 2004 for the purpose of assessing whether it would be feasible to effect a separate listing of the business of P on the Hong Kong Stock Exchange. He had no experience in the entertainment industry before joining P. After having understood the business and the operation of P, he was of the view that it would be difficult to have P as a listed company on the Hong Kong Stock Exchange, because the profit requirements necessary for listing were not fulfilled.
(2) He was one of the adjudicators at the final round of the competition 伙頭智多星 (“the Competition”) held in about March 2004. During cross-examination, it was suggested to him that being an adjudicator in the Competition did not appear to be relevant to his assessment of P’s suitability for listing. AC answered that he agreed to be an adjudicator in the Competition so that he would know the process of choosing artistes, and this would be relevant to his assessment. He said that his understanding of how P made money was that P would obtain incomes from its artistes by obtaining commissions from the artistes’ incomes. He had seen one or two contracts between P and P’s artistes.
(3) His evidence as per his witness statement is that after the final round of the Competition, D1, who was the 2nd runner up, and her then manager from Star Art Entertainment (“Star Art”), approached him. D1 said that she was very determined to join P as an artiste, and her then manager urged him to consider signing D1 up as P’s artiste. He therefore relayed D1’s request to P’s management (at that time, the other directors of P were DL and Ms Chiu Suet Ying (“Chiu”, P’s director from 2001-2010, and ex-wife of DL)).
(4) At the trial, AC said that when he mentioned D1 to the other directors of P (ie DL and Chiu), they already knew D1. In his oral evidence, AC stated for the first time that DL was one of the adjudicators at the Competition, and Chiu was also present at the Competition.
(5) In his witness statement, AC said that it was the talent controllers of P, Mr Anthony Chow (“Chow”) and/or Ms Perie Lai Hoi San (“Lai”), who were in charge of liaison with D1 about the possibility of P entering into an artiste management contract with her, and AC was not supposed to be overseeing this aspect of the artiste management business of P. At the trial, AC said that the role of talent controllers is to accompany artistes to work locations, and to discuss terms of work. AC said that the talent controllers were only administrative staff, and the decision to choose to have a contract with which artiste was made by the management of P. AC also said that Chow merely told him the information stated in a talent requisition form, and Lai told him that D1 was willing to keep fit and to undergo orthodontic treatment.
(6) AC said that he had no involvement in the negotiation with D1. It was Chow and/or Lai in charge of the negotiation. The decision to sign up D1 was made by Chiu. AC said that he had only seen a talent requisition form (“the 1st Requisition Form”) signed by him. As shown in this form, the “Request Date” was 15 March 2004. That form was requested by Elaine, who was P’s staff. The proposed terms of the contract between P and D1 were set out in this form. The form was checked by Chow and approved by Chiu and AC. AC said that he had never seen the contract between P and D1, and AC also said that he had in fact never seen any draft of that contract.
67.Having seen and heard AC’s evidence, it is inherently improbable that AC did not take any part in the negotiation between P and D1. It is also inherently improbable that AC has never seen a draft of the contract between P and D1.
(1) Apart from the 1st Requisition Form, there is another talent requisition form (“the 2nd Requisition Form”). The “Request Date” as shown in the 2nd Requisition Form was 28 April 2004. This form was requested by Lai. At the top right-hand corner of this form, there is a word “Final”. The proposed terms of the contract as set out in this form in fact have been incorporated into the 2004 Agreement. The 2nd Requisition Form was approved by Chiu.
(2) As shown by these two requisition forms, the negotiation between P and D1 should begin in about mid-March 2004. AC’s signature on the 1st Requisition Form is significant. It shows that AC must have discussed with Chiu whether P should sign up D1 and if yes, on what terms. If AC has simply referred D1 to DL and Chiu and AC has no involvement at all in any step in the process leading to the 2004 Agreement as claimed by him, there would be no reason for AC putting his signature on the 1st Requisition Form. As shown in the 2nd Requisition Form, the requisition form in fact could be approved by only one director of P.
(3) The talent controllers were only administrative staff. The terms set out in the 1st Requisition Form would not be the talent controllers’ decision, but would be the decision of the directors signing the forms. In other words, it was a decision jointly made by Chiu and AC that the terms set out in the 1st Requisition Form should be proposed to D1 in the negotiation process. Thus, AC in fact has taken part in the negotiation process leading to the 2004 Agreement.
(4) In my view, AC has tried to distance himself from the 2004 Agreement and claimed that he had no involvement in any matter leading to that agreement.
68.I refuse to accept AC’s assertion that he had no involvement in the negotiation process leading to the 2004 Agreement. Since AC’s evidence on this crucial issue is unreliable, I refuse to attach weight to his evidence.
E2. DL
69.DL mentioned the following in his evidence:
(1) He had been in the entertainment industry for 35 years, and that his business at the early stage was buying movies and then producing video products, which were products with which customers could use to watch movies at home. In his view, “音像產品” included video products and music products.
(2) At a later time, the market changed and people started to watch movies online. DL therefore focused on movie production. Originally, the Universe Group did not issue CDs. Later, it was because of D1, the Universe Group started to issue CDs. DL said that the main focus of the Universe Group was on movies and television programs. P never sold CDs, but P issued or distributed “音像產品”, including CDs. By this, DL meant that P would purchase the copyright of concerts and would issue CDs of the concerts. DL was the chairman and managing director of the holding company in the Universe Group. The final decisions of the holding company and its subsidiaries rested on DL.
(3) P was set up in August 2001. From 2001 to 2004, Chiu was actively involved in the business of P, and most decisions of P were made by Chiu, although DL would also have a say. AL joined the Universe Group in 2003 or 2004, and was the Chief Operating Officer of the Universe Group. AL was involved in drafting movie contracts, and distribution contracts, but not in drafting artiste management contracts.
(4) When an artiste joins P, P would just give him or her the standard form artiste management contract to sign. The standard form was created in 2001. DL was not sure who drafted the standard form. DL had all along known the contents of the standard form.
(5) DL said that under an artiste management contract, P would bear some burden and this was an investment. The financial burden borne by P (not including the loans advanced to the artiste) were remunerations paid to DL, the rent and utilities fees of P’s office, and expenses incurred in entertaining clients. DL’s connections would also be an asset provided to the artiste under the artiste management contract. DL said that P had arranged D1 to act in movies without charging D1 anything. Further, the salaries of D1’s mangers, like Lee and Yeung, were paid by P and not by D1.
(6) D1 said that all production and promotion costs related to the generation of the artiste’s income would be borne by the artiste, except for those related to movies. The production and promotion costs related to movies would be paid by the movies company. Sometimes, the production and promotion costs related to an event held in a shopping mall would be paid by the shopping mall. In any event, P would not bear any production and promotion costs.
(7) In respect of the Statements, DL said that in respect of the deductions as set out in the Statements, he would discuss the same with D1, and meetings would be held for this purpose every 3 months. Such meetings had been attended by DL, Yeung, Lee and D1. At first, these discussions would be between either DL or Yeung on the one hand and D1 on the other hand. After Lee joining P, the discussions would be between Lee and D1.
(8) As for fee quotes, these were matters handled by Yeung and Lee, but they would seek approval from DL. Lee had to follow Yeung’s instructions.
(9) At the trial, DL said that there was no oral agreement in 2006. The so-called 2006 Oral Agreement was a reminder to D1 only. It was necessary to give a reminder to D1 in 2006, because the expenses related to the production and promotion of music was particularly high.
(10) DL agreed that his thinking was that since the Universe Group only focused on movie production, so D1 was signed as an actor. However, the contract between P and D1 was an all-encompassing one and not limited to her acting career.
(11) DL said that if having a development in the singing field could help an artiste’s career, the only consideration P would have in considering whether to allow the artiste to sing would be whether he or she was willing to bear the costs. Provided that the artiste was willing to bear the costs, the artiste would have full autonomy over the decisions of production of songs, including the scale and the costs. P would not interfere.
(12) DL said that P would nevertheless continue to make advancements to the artiste, even if the artiste had not signed the Statements issued by P. DL agreed that since the final decision on all matters rested with P, P would have no need to seek prior approval before charging expenditures to its artistes. He said if there were disagreements as to whether some expenditures ought to be charged, P would discuss the matter with the artiste. However, there was never any disagreement between P and its artistes on the items in the Statements. Under cross-examination, it was put to DL that there were deductions in the Statements issued to D1, in respect of which there was no prior approval from D1[18]. It was put to DL that this was inconsistent with his previous evidence in relation to the regular meetings every 3 months. DL said that previously, he said that some development directions would be discussed in these meetings. He did not say that the deductions in the Statements would be discussed in these meetings.
(13) I have checked the transcripts of the trial. In his oral evidence, DL in fact did say that every deduction would be discussed with D1 first, and after that, the deduction would appear in a statement.[19]
(14) Dl said that an artiste might need 10 years to develop his or her career in order to become popular, and he or she might only be able to have a net income in the 5 years thereafter.
(15) In relation to the 2008 Incident, he knew that D1 wanted to have a press conference to clear her name, but he considered that a press conference would not be suitable. He had already clarified the matter by issuing a declaration. The declaration mentioned by DL in fact is something said by DL to the press and not a document issued by DL.
(16) During cross-examination, DL was asked questions concerning a notice to the accounting department dated 13 July 2009 (“the 2009 Notice”)[20]. The 2009 Notice was relied on by P as evidence in support of the 2009 Oral Agreement. DL confirmed that the signatures on the 2009 Notice were his signature and Yeung’s signature. DL was asked by what means he conveyed the matters in the 2009 Oral Agreement to D1, and DL said that he told D1 the matters concerning the 2009 Oral Agreement at a time prior to the date of the 2009 Notice. He said that the discussion between him and D1 took place in around 2007 or 2008, before the 2008 Incident. He said that the accounting department as stated in the notice in fact meant the holding company of the Universe Group. DL said that he would treat different companies in the Universe Group as different “departments”.
(17) Subsequently, DL’s attention was drawn to [65] of his witness statement dated 21 February 2017, in which DL said that the discussion concerning the 2009 Oral Agreement took place in June 2009. According to his witness statement, the decision was made by DL and Yeung, and they asked Lee to convey the message to D1. As per his witness statement, this is the 2009 Oral Agreement. In response to this question, DL said that what had been stated in his witness statement was wrong. The 2009 Oral Agreement was not made through Lee. As to when the matters in the 2009 Oral Agreement were discussed with D1, DL said that he could not clearly remember. DL tried to give some explanations by saying that CDs were sold on a consignment basis, and the sale proceeds would come back at a later time. P would take stock and record the income in one go annually. In my view, what has been said by DL cannot satisfactorily explain the glaring discrepancy between his oral evidence concerning the 2009 Oral Agreement and the evidence as per his witness statement on the same matter.
(18) DL said that he did not know why the matters concerning D1’s income from music and records were not discussed until 2009. The first time he and Yeung discussed how to divide D1’s music and records income between P and D1 was at a time after the 2008 Incident, at around the end of 2008. He said that before D1 issued her first CD, he told D1 that if D1 did not bear the production and promotion costs and expenses of her songs and music records, P would not allow D1 to develop her career as a singing artiste.
(19) In 2011, D1 told him that her mother was unhappy about D1’s indebtedness to P, so DL arranged a meal with Chau.
(20) DL said that D1 had never called him at around midnight. DL was then referred to the SMS exchanges (“the 2011 SMS Exchanges”) between him and D1[21], which show that there was a telephone conversation between DL and D1 in the night before 4 June 2011, DL said that he did not remember that conversation. The relevant SMS exchanges are as follows:
(a) 4 June 2011, 08:42
DL: “不要洩氣，只要知道有問題，而又有心去解決問題的話，係冇問題解決不了的，知嘛? 況且我會支持你的，記得08年我都同你講過一番話，回來詳談”
(b) 4 June 2011, 12:38
D1: “真係好多謝你老闆! 我知道你係一個會明白我地既人!! 多謝你半夜聽我訴心聲呀! 好呀，等你回來談!”
(21) DL later said that D1 was not too stressed during the call, and that night she did not tell him that she intended to commit suicide. DL agreed that subsequent to the telephone conversation, he arranged D1 to be a major actor in the film “高舉愛”, and asked D1 to gain 20 pounds for the purpose of the film.
(22) DL said that D1 had never indicated to him that she wanted to quit and not to continue her career as an artiste. In respect of the 2011 Promise, DL said that in the 2011 Dinner, Chau said that D1 wanted to quit. DL then said that D1 might quit and she would not be required to repay all the sums owed to P, provided that D1 would leave the entertainment field and would not re-enter the field in future. DL then asked D1 whether she wanted to continue to work, and D1 said she did. DL told Chau that D1 would receive net income in future, but he did not specifically refer to 2012. At that time, DL was quite sure that D1’s income would increase, for he had plans for D1. DL said that he all along thought that D1 wanted to be a star, and DL did not think that D1 would quit.
(23) In September 2011, DL through Lee proposed a 5-year extension after the Extended Term to D1. Later, Lee reported to him that D1 would agree to the 5-year extension proposed by DL, but she requested that the incomes during these 5 years should be shared between her and P in the ratio of 90% to 10%. DL counter-proposed that the incomes would be shared between D1 and P in the ration of 80% to 20% (“the 80:20 Proposal”). D1 accepted this counter-proposal.
(24) In September 2011, there was a discussion between DL and D1 in P’s office. In this discussion, D1 told DL that she had a plan to buy a specific property in North Point. Dl was prepared to request P to give her some financial assistance in the matter.
(25) As to the 1st Dinner Meeting in 2013, DL said that the dinner took place at his home in February 2013. In that dinner, D1 sought to have a 5% increase in her entitlement for 2014-2019, and in response DL said that D1 would have to agree to a further 5-year term, ie 2019-2024. D1 did not respond to DL’s proposal. In his oral evidence, DL agreed that the HK$500,000 cash advance provided to D1 was for easing the worries of Chau, and that was separated from the issue of extension of D1’s contract with P.
(26) As to the 2nd Dinner Meeting in 2013, DL said that in this dinner, D1 asked for a 10% increase in her entitlement. DL replied and proposed to add the Further Extended Term after the Extended Term. The Further Extended Term would be from 3 May 2019 to 2 May 2024. DL said that the Extended Term would be P’s entitlement under the Contract, and there would be no need to negotiate anything regarding the Extended Term. If D1 wanted to negotiate, something after the Extended Term would need to be discussed in one go. D1 did not indicate whether she would accept to have the Further Extended Term. DL and Yeung then counter-proposed that during the Extended Term, P and D1’s respective shares of the income could be 45% and 55%, and their respective shares during the Further Extended Term could be 30% and 70%. D1 did not indicate whether she would accept this proposal.
(27) In respect of the Up-skirt Photo Incident, DL said that he did not know that D1 was troubled by the incident. DL himself did not do anything to follow up the matter.
(28) As to the Feb 2014 Incident, DL said he would not allow D1 to sign an independent contract with Sun Entertainment as that would be a breach of the Contract. DL said that in the Birthday Dinner, he was drunk. However, he remembered that there was a quarrel. DL said Dong provoked Yeung. Yeung threw a glass receptacle (玻璃杯) on the ground, and that Yeung was drunk and angry. DL said that Yeung’s action was intentional and not accidental. DL said Dong asked why P did not allow D1 to sign a contract with Paco Wong, and provoked Yeung. DL also said Dong and D1 might have been near where the glass hit. At first, DL said that he did not remember whether he pointed at D1 and scolded her. A moment later, DL said that he remembered that he scolded D1 but could not remember what he had said.
(29) DL was asked why Chow and Lai were not called by P to give evidence in this trial, and DL said he did not know. As to why P had difficulties in calling Ngan to give evidence. DL said he believed that there were some personal reasons.
70.In my view, DL is not a satisfactory witness. His oral evidence contradicts his own witness statement and P’s pleaded case on various aspects. His evidence on various essential matters are convoluted. DL cannot be regarded as a reliable witness.
71.It is plain and obvious that DL’s evidence concerning the 2006 Oral Agreement given under cross-examination contradicts P’s pleaded case and the contents of DL’s own witness statement.
(1) In [18(b)] of the Re-Amended Reply and Defence to Counterclaim, it is pleaded:
“(vi) ……, [DL] and [Yeung] had in about early 2006 orally told [D1]:
(aa) [D1] could produce her sound recordings on the clear understanding that she would be responsible for all the production and promotion costs and expenses incurred and [P] would not make any investment in them;
(bb) [P] would assist [D1] in the management of her music career and provide administrative support;
(vii) [D1] orally agreed to the proposed arrangement but as [D1] did not have the financial means to produce her sound recordings, on the oral request of [D1], [DL] and [Yeung] orally agreed that the production and promotion costs incurred would first be paid by [P] on behalf of [D1] but [D1] had to repay [P] and [P] could be reimbursed by the income and earnings of [D1]”
(2) In his witness statement dated 21 February 2017, DL said:
“35 …… [Yeung] and I had in about early 2006 orally told [D1] in the office of [P] that she could produce her songs and sound recordings on the clear understanding that she would be responsible for all the expenses incurred (including production and promotion costs) in doing so and [P] would not make any investment in them, though [P] would assist [D1] in the management of her music career and provide administrative support. That being the essence of the discussions, [D1] orally agreed to the aforesaid arrangement but as she did not have the financial means to pay the aforesaid expenses, on the oral request of [D1], [Yeung] and I orally agreed that such expenses incurred would first be paid by [P] on behalf of [D1] but [D1] had to repay [P] and [P] could be reimbursed out of the income and earnings of [D1] (the “2006 Oral Agreement”). The 2006 Oral Agreement is evidenced by the recording of the expenses so incurred in the Monthly Statements as if they were advances made by [P] to [D1]. I will say more on this below.
36. Based on the 2006 Oral Agreement, [D1] started taking steps to produce her songs and sound recordings.”
(3) The 2006 Oral Agreement pleaded by P and alleged by DL in his witness statement in fact does not serve any meaningful purpose. Given that as per the Contract between P and D1, all the Promotion and Production Costs would be borne by D1 (according to P’s case), it is inherently improbable that it would be necessary for P to have the 2006 Oral Agreement with D1.
(4) In his oral evidence, DL disowned the alleged 2006 Oral Agreement pleaded by P and mentioned by him in his witness statement. Dl changed his evidence and said that the so-called 2006 Oral Agreement was a reminder given to D1 only.
(5) As to whether D1 has given consent to the deductions concerning her songs and music records, DL’s evidence changed from time to time.
(a) In his witness statement, DL’s position was that the deductions were made after the 2006 Oral Agreement. In other words, P had obtained prior consent from D1 before deducting those expenses from D1’s income. However, the alleged 2006 Oral Agreement was disowned by DL at the trial.
(b) As per DL’s evidence given in the trial, there were discussions every 3 months between P and D1 concerning the deductions of expenses from D1’s income.
(c) At a later time, DL’s evidence changed. DL said that the discussions in the meetings every 3 months was not in relation to deduction of expenses.
(d) Later, DL said that before D1 issued her first CD, DL told her that if she would not bear the production and promotion costs and expenses of her songs and music records, P would not allow D1 to develop her career as a singing artiste.
72.The contradictions and inconsistencies set out in the above show that DL’s evidence on the alleged 2006 Oral Agreement and on the alleged discussion between P and D1 on the deduction of production and promotion costs relating to D1’s songs and music records is entirely unreliable.
73.As to the 2009 Oral Agreement, DL’s evidence is problematic.
(1) In the 2009 Notice, it is stated that 20% of the “music income” would be given to P, and 40% of “records income” would be given to the “sales department”. However, according to P’s pleaded case and DL’s witness statement, P would charge 20% of music income, ULV would charge 20% of records income as distribution charges and P would charge 20% of records income as administration charge. P’s pleaded case and DL’s evidence as per his witness statement are inconsistent with the 2009 Notice.
(2) In his witness statement, DL said that the agreement was made with D1 through Lee in June 2009. However, in his oral evidence given in the trial, DL said that he spoke directly to D1. DL further said that he could not remember when the 2009 Oral Agreement was made.
74.The 2009 Oral Agreement is a matter put forward by P in its pleaded case. However, DL’s evidence on this matter is unsatisfactory.
75.Regarding whether every deduction as shown in the Statements has obtained the prior approval from D1, DL’s evidence on this evolved in the course of his evidence. At the beginning, DL in fact has given clear evidence that there would be discussion between P and D1 in respect of every deduction, and the deducted item would only appear on a statement after the discussion. However, at a later time, DL tried to retract what has had said. These changes show the unreliability of DL’s evidence.
76.In respect of the telephone call from D1 to DL in the night immediately before 4 June 2011, DL is clearly evasive on this topic.
(1) At first, DL said that D1 had never called him at around midnight. After being referred to the 2011 SMS Exchanges, DL realized that he could not insist on what he had just said. He then said that he could not remember the conversation.
(2) In view of the contents of the 2011 SMS Exchanges, D1 must have told DL something which was disturbing D1 at that time, and DL must have said something to encourage D1 in that conversation.
(3) D1 in her evidence said that conversation was the first time she made a phone call to DL. D1 knew that DL was the boss, and she should not bypass the manger supervising her (ie Yeung) and contact DL directly. However, at that time, she felt that she had been unfairly treated by P, and she was very stressed at that time. She went to Shek O and intended to commit suicide. She called DL from Shek O. She told DL that she had not been treated fairly by P. When she worked more, she owed more to P. She told DL that she wanted to commit suicide. P would not be able to continue to make money from her after her death. DL listened to her patiently and said that there would be changes in P. DL also gave her some encouragements. She had a nice conversation with DL over the phone. In my view, D1’s evidence is supported by the 2011 SMS Exchanges.
(4) D1’s evidence on this point is further supported by DL’s admission. DL agreed that subsequent to that telephone conversation, DL arranged D1 to be a major actor in the film “高舉愛”. D1’s performance in that film is no doubt an important achievement in D1’s career. The fact that DL has given D1 this opportunity is consistent with the contents of the telephone conversation as told by D1.
(5) That telephone call was the first telephone call made by D1 to DL. It was a phone call made to DL at around midnight, in which D1 told DL that she wanted to commit suicide because she felt that she had been maltreated by P. In these circumstances, it is inherently improbable that DL would forget that conversation.
(6) In my view, DL has deliberately downplayed that telephone conversation to try to conceal the fact that D1 had been feeling being maltreated by P and as a result intended to commit suicide in mid-2011.
77.DL said that he did not know why P did not call Chow and Lai to give evidence in these proceedings. I do not accept this answer.
(1) DL is the chairman of the Universe Group and a director of P. Obviously, DL would be the one ultimately responsible for giving instructions to P’s lawyers. Both Chow and Lai were the talent controllers of P, who had taken part in the process of signing up D1 in 2004. Obviously, both of them would have personal knowledge of what exactly happened in that process. Their evidence would probably shed light on whether anyone had on behalf of P given the Representation on Industry Standard and/or the Promise regarding Renewal to D1 in that process. It is plain and obvious that they would be relevant witnesses in these proceedings.
(2) It is inherently improbable that DL, with the benefit of having advice from those representing P in these proceedings, would have never considered to invite Chow and Lai to give evidence in these proceedings.
(3) In my judgment, DL’s answer that he did not know why P did not call Chow and Lai to give evidence in these proceedings is incapable of being believed.
(4) In the absence of a proper explanation regarding the absence of Chow’s evidence and Lai’s evidence in these proceedings, and in view of my analysis concerning AC’s evidence as set out in the above, I draw an adverse inference against P that if there is any evidence from Chow and Lai, their evidence would not assist P on the matters concerning the Representation in Industry Standard and the Promise regarding Renewal.
78.DL also said that P had difficulties in calling Ngan to give evidence in the trial, because he believed that there were some personal reasons. DL however did not elaborate his answer and did not tell the court what exactly were the so-called “personal reasons”. P has filed a witness statement of Ngan dated 8 February 2017, in which Ngan touched upon various matters in these proceedings, including the Statements, the 2008 Agreement, D1’s concert in 2010, and the production and promotion costs relating to D1’s music career. Again, being the person ultimately responsible for giving instructions on behalf of P, DL must know the exact reasons why Ngan did not give oral evidence in these proceedings. However, he chose to be evasive on this topic and was unwilling to give a straightforward answer. There is no proper explanation regarding the absence of Ngan in the trial. Regarding the matters touched upon in Ngan’s evidence, I draw an adverse inference against P that Ngan’s version is not the truth, and the truth of those matters is set out in the evidence given by Ds’ witnesses.
79.In my judgment, DL is not a reliable witness. Save and except the matters which are not disputed by D1, I refuse to accept DL’s evidence.
80.I should also mention that counsel for Ds has invited me to draw adverse inferences against P by reason of P’s failure to arrange Chiu to give evidence in this case. There can be no doubt that Chiu would have personal knowledge of some essential matters in this case, for she was a director of P from 2001 to 2010, and Chiu was involved in the process leading to the 2004 Agreement. However, neither DL nor any other P’s witnesses has been asked as to why Chiu is absent in these proceedings. Without giving an opportunity to DL or P’s other witnesses to explain the absence of Chiu, it would not be appropriate to draw any adverse inference against P by reason of Chiu’s absence in these proceedings.
E3. Yeung
81.Yeung said the following in his evidence:
(1) Yeung had known DL since 1981 or 1982. He joined the Universe Group in around 1992. He worked as a salesperson in the sales department of ULV for a few years, then until around 2004 joined “the artiste department”, and he said that by this term, he was referring to P. Yeung was the senior manager of P.
(2) In or around 2004, Yeung and DL would see each other every day, and would have meetings to discuss the work progress of artistes once or twice each week. Although he would make decisions on small matters, he would seek directions from DL on something important.
(3) As to what deduction items should be charged to an artiste’s account, Yeung said that in respect of small sums, he would make decisions. Yeung further said that apart from the deductions relating to music products, in fact matters relating to the deductions were all decided by him, although he would seek DL’s opinion occasionally.
(4) In the period 2007-2014, there were around 10 artistes under his supervision. He would meet each artiste around once per month, unless the artiste was participating in filming in Mainland China, in which case he might only see the artiste after 2-3 months. If D1 was not participating in any filming work, he would see her once every 1-2 months, but these were not regular meetings. He would meet D1 if there were things to discuss.
(5) Yeung had regular meetings with Lee, in which they would discuss matters concerning D1, including D1’s career development. He had discussed the scale of D1’s music videos and costs to be incurred with Lee. He and Lee would make decisions on these matters and then informed D1. All along D1 was happy for matters to be handled in this way.
(6) As to the 2006 Oral Agreement, Yeung disagreed that the 2006 Oral Agreement was only a reminder and was not an agreement. Yeung said that the 2006 Oral Agreement was reached in a face to face discussion among DL, Yeung and D1.
(7) Yeung said that in respect of each deduction item in the Statements, D1’s consent had been obtained. Yeung said that in respect of the shoes or clothes bought by D1, these must be deduction items in the Statements, and D1 must have agreed to the same. When D1 agreed to produce music videos, D1 must have agreed to all the relevant expenditures. As to expenses not relating to music production, for example, the breakfast costs of personnel involved in the production of an advertisement[22], Yeung said that he would not seek D1’s prior approval in relation to an item of this kind. He said that after buying the breakfast, the assistant would submit a claim form. The submission of the claim form would mean that D1 has agreed to bear the expenses on the claim form personally. Yeung was sure that the assistant would have obtained D1’s consent before submitting the claim form to P, as this was P’s work instruction (工作指引). As to whether the work instruction was contained in a document, Yeung said that there was no such document at the beginning. However, he changed his evidence at a later time and said that there should be a document.[23] Yeung said that he believed the “artiste department” would train all assistants and teach them how to handle claim forms. Yeung further said that it would not be necessary to have the artiste’s signature on the claim form, for the deduction items would appear on the Statements and the artiste would sign the Statements. Yeung said that a statement would be issued to the artiste each month.
(8) As to the 2008 Agreement, Yeung believed that Lee had told D1 to set up D2 and to have a new agreement with P.
(9) In respect of the 2009 Oral Agreement, Yeung said that he had discussed the matter with DL. Yeung said that a person from ULV (Sandra, who was responsible for the sales of CDs) told him that usually P would get 40% when P was doing the distribution works of CDs for others. Yeung spoke to DL on this matter. They discussed this matter and the accounting department informed them that some music and records incomes of D1 had been accumulated. Upon being asked whether he had given any information to D1 so that D1 could consider whether she might agree to Yeung’s proposal, Yeung said for the first time that he had given a document to Lee, in which the relevant figures had been set out.
(10) As to provision of fee quotes to potential clients, Yeung said that Lee would provide fee quotes to her clients (ie clients having liaison with Lee), and Yeung would provide fee quotes to his clients (ie clients having liaison with Yeung). Yeung would ask persons in the industry to gauge what should be the reasonable market price before putting forward a fee quote to a client.
(11) As to the Up-skirt Photo Incident, Yeung said that he had spoken to a person known as “Lo Mei” from Apple Daily and requested that person not to publish the photos. That person said the matter was trivial and the photos had already been published. Yeung did not say to Lo Mei that P would consider taking legal action if the photos were not taken down. Yeung disagreed that he could have taken further steps than those he had taken.
(12) As to the Feb 2014 Incident, when being asked whether there were arguments in that dinner, Yeung said he could not remember, and that dinner was a happy occasion. Yeung said that after Paco Wong and Hong left, he got drunk and blacked out. Yeung said that there was no unhappy exchange before the dinner. Paco Wong wanted to invite D1 to sing the songs produced by him. Before the dinner, Yeung had related that invitation to D1 and D1 declined to accept the invitation. D1 said she wanted to do TV and movies instead. So Yeung declined Paco Wong’s offer in the dinner. At the end of the dinner, Paco Wong, Hong and Yeung himself were drunk. Yeung disagreed that he behaved violently and threw glass receptacles and bottled water at D1 and Dong. He said that he had a fuzzy memory of that night, but he clearly remembered that he did not do any violent act that night, and he did not throw glass towards the direction of Dong and D1.
(13) In relation to the income from D1’s album called “天空之樹”, Yeung said that when he obtained the income, this litigation had already begun. He did not know how to reach D1.
82.I do not regard Yeung as a reliable witness.
(1) Yeung claimed that an assistant would only submit a claim form to P after obtaining consent from the artiste, as this was P’s work instruction to all assistants. Yeung first said that the work instruction was oral. Yeung later said that the work instruction was written instruction. However, no document produced by P can support what Yeung has said. The claim form and the said work instruction have never been mentioned by Yeung in his witness statements. In my view, all these are matters invented by Yeung in the course of his oral evidence.
(2) Similarly, his evidence that he had given a document with relevant figures through Lee to D1 for consideration before D1 entering into the 2009 Oral Agreement is also not supported by any document produced by P and not mentioned in Yeung’s witness statements. I hold that this is also a matter invented by Yeung in his oral evidence.
(3) As to the Feb 2014 Incident, Yeung’s evidence is contradicted by the evidence of all the other witnesses, including the evidence of DL. DL’s evidence is that Yeung was angry and intentionally threw a glass receptacle on the ground, and Dong and D1 were close to the spot where the glass hit. It is inherently improbable that on the one hand Yeung could not remember what happened that night because he blacked out at that time, but on the other hand Yeung could clearly remember that he did not do any violent act that night and did not throw glass towards the direction of Dong and D1. In my view, Yeung has tried to conceal his violent and improper behaviours at the Birthday Dinner, and Yeung’s evidence regarding the Feb 2014 Incident is untrue.
83.Save and except the matters which are not in dispute, I decline to attach weight to Yeung’s evidence.
E4. AL
84.AL said the following in his evidence:
(1) AL joined the Universe Group in 2002. Prior to that, he had no experience in the entertainment industry. When he joined the Universe Group, there was already a standard artiste management contract.
(2) In his witness statement dated 21 February 2017, AL said:
“9. At that time, [P] considered that the duration of all the artist management contracts made with artists with little or no fame or popularity should last for at least 15 years, and the same was regarded as the starting point of all negotiation with such artists. It is understandable as entertainment industry is highly competitive and it takes time to cultivate and nurture the development, fame and popularity of an artist. Also, a long term engagement was required for building up the normal and positive relationship between the manager (ie [P]) and the artist (ie [D1]) which was mutually beneficially to the parties. Further, a long period of engagement was essential to protect the legitimate interest of the manager in that the manager would only be expected to recover its investment in an artist and to earn profit after the artist had become popular or successful with the passage of time of 10 to 15 years.”
(3) AL was asked on what basis he could say the matters set out in [9] of his witness statement. He said that probably Chiu told him all these, but he could not be sure.
(4) As to the 2011 Dinner, AL said that in that dinner, DL told Chau that there was a chance that D1 would receive positive income in the next year. He had an impression that DL did not use the term “big chance” or “good chance”. However, he could not be entirely sure on this. Also, he could not be entirely sure that DL was referring to D1’s income in 2012. He thought that DL had not used the term “net income” or “positive income”, because although income might increase, P’s advances to Dl might also increase at the same time. It would be difficult to say whether D1 would have net income.
(5) As to the Feb 2014 Incident, AL’s evidence is similar to DL’s evidence. AL also said that Yeung was provoked by Dong, and Yeung threw a glass onto the floor near Dong.
85.Save and except the matters not in dispute, I would not attach weight to AL’s evidence.
(1) AL is a factual witness and not an expert witness. He could only give factual evidence and not opinion evidence. As to whether the restraints in the contract between P and D1 are reasonable or not, these matters would not be subject to AL’s comments. In any event, AL did not have any experience in the entertainment industry before joining the Universe Group in 2002. He would not have the necessary expertise to comment on what would and what would not be reasonable restraints in an artiste management contract. What he said in [9] of his witness statement is only hearsay evidence, and the source of that hearsay evidence is not entirely clear.
(2) In respect of the 2011 Dinner, having seen and heard AL’s evidence, I am of the view that AL in fact did not have a clear memory of that dinner. It would not be safe and prudent to rely upon AL’s evidence to make findings concerning the matters in that dinner.
E5. Tsui
86.Tsui said the following in her evidence:
(1) She was and is an accountant in the Universe Group. According to Tsui, there are 10 odd companies in the Universe Group. She did not know inside the group, whether one company’s profits would be used by another company.
(2) She has been handling the accounting matters in relation to P for a long time. She said that before 2004, P would only do distribution in relation to music products. The first music product issued by P was D1’s music product.
(3) All the Statements concerning the artistes in P were handled by her. She said that documents relating to income would not be annexed to the Statements, for the artiste would know his or her income. The artiste might request to see the supporting documents. However, she had not received any such request from any artiste.
(4) Regarding D1’s records income and music income, her department (ie the accounting department) would receive from P a notice instructing them how to divide the incomes between P and D1. When the accounting department first saw D1’s incomes from music, she asked Yeung how to handle that incomes. At that time, Yeung told her to hold the matter for a while. Yeung said that he would need to speak with P, then would tell her. This event occurred in 2008. Thereafter, in June 2009, it was time to prepare documents for auditing purpose. So she asked Yeung again how to handle D1’s incomes from music-related products. Yeung then told her to divide the incomes between P and D1.
(5) She decided not to put the breakdown (80/20 or 60/40) against the records and music income because she thought it would not be necessary.
87.In my view, Tsui’s evidence that Yeung has related the contents of the 2009 Oral Agreement to her, and that it would not be necessary to state D1’s share of the income from the music products (either 80% or 60%) in the Statements, cannot be reliable evidence. As shown in the Statements, in respect of incomes from other matters (for example, incomes from performances or attending events), if D1 was only entitled to part and not all of those incomes, D1’s entitled share would be stated in the Statements. The lack of any such indication in the Statements would mean that D1 should be entitled to all those incomes. If the 2009 Oral Agreement did exist, it would be the most natural thing to also specify D1’s percentage next to the music income amount on each Statement.
88.The lack of percentage breakdown against music incomes and records incomes on the Statements lends support to Lee’s evidence that she was told that P would not charge commission in respect of D1’s music income.[24]
89.In view of the unreliability of Tsui’s evidence concerning the 2009 Oral Agreement, which is an important episode in P’s case, I do not regard Tsui as a reliable witness as a whole.
E6. KC
90.KC mentioned the following in his evidence:
(1) KC was the financial controller in the holding company of the Universe Group from 1999 to 2016. He agreed that there would be transfers of money among companies in the Universe Group, and such transfers would be booked. There were occasions in which P transferred money to other companies in the Universe Group.
(2) KC agreed with Tsui and supported Tsui’s evidence.
91.In my view, KC does not have personal knowledge of any matter relating to the controversial factual issues in these proceedings. With respect, his evidence does not shed light on the contentious issues in this case.
E7. D1
92.D1 has personal knowledge of the matters raised in her case and she has given evidence in support of the events as mentioned by her in her pleaded case.
93.D1 has also mentioned the following in her evidence:
(1) She did not agree that the advancements from P to her were her incomes. D1 said those were loans to her and she had to repay the same.
(2) Before 2012, when Lee was still the manager taking care of D1, D1 did not have a lot of communication with Yeung. After Lee leaving P, D1 had direct communication with Yeung. Yeung would discuss work-related matters with D1, including fee quotes. She agreed that she began to have involvements in fee quotes after 2012. That was because as time passed, she had some experience in the entertainment industry and began to know what should be the reasonable prices.
(3) For events, P would usually find sponsors who would sponsor D1’s clothing so that no clothing cost would be incurred. In respect of a dress worn by her as shown in a photo (“the Dress”)[25], D1 said that she wore the Dress in the prize-presentation ceremony in the Hong Kong Film Awards (香港電影金像獎), and she was an actor having obtained a nomination in the competition in that year. That was a very important occasion, and her attire should commensurate with that occasion and should be more or less similar to those worn by the other actors in the competition. All the other actors were very famous actors in Hong Kong. She could not wear whatever she chose, for her attire had to be approved by P. There was no sponsor who would pay for her clothing cost at that time. She had requested P to pay half of her clothing cost, but P refused. At the end, the Dress worn by her in that competition was approved by Yeung but bought by D1. The price of the Dress was HK$80,000. D1 was of the view that the Dress was far too expensive.
(4) She had to bear the transportation costs and the food costs of the whole team when she attended events, including events in Mainland China. She also had to pay for the medicines taken by the members of the team.
(5) She complained to P about bearing costs for staff meals. However, Yeung told her that that was the rule, and all staff expenditure related to the artiste’s works would be borne by her.
(6) P also required her to have facial treatments on her own costs. P also disallowed her to take any public transport except taxi. She did not have enough money to meet all these requirements and she had to borrow from her parents.
(7) D1 disagreed that the Statements were given to her every month. She would only be able to see the Statements half a year. In the beginning, D1 would be allowed to bring the Statements to home. When Chau saw the Statements, Chau was shocked. After that incident, P did not allow her to take the Statements back to home. The Statements would be given to her after work, and she would be required to sign the same immediately.
(8) D1 realized that when she had more works, she would owe P more sums. She first saw the Statements in 2006, and at that time, she was told that it was the practice in the industry that the artiste had to bear the costs, and the money would come back soon when she had more works. She was shocked to see that in respect of the first song P asked her to sing, apart from the production costs, she also had to bear all the label costs, and the costs of her photos on the VCDs. D1 thought that the arrangement was unreasonable, for after all, it was P who asked her to sing the song.
(9) At the very beginning, Star Art asked D1 to go to participate in a movie casting activity. D1 went to join that casting activity without telling Chau. A few days later, D1 was told that she had been chosen. Since Star Art introduced her to that movie casting activity, D1 had to sign a contract with Star Art. After D1 signed the agreement with Star Art, she gave the agreement to Chau to sign. Chau in fact did not want D1 to go into the entertainment industry. However, Chau eventually signed that contract.
(10) In about March 2004, D1 accompanied her friend to go the Competition. At that time, it was her friend who enrolled in the Competition, not D1. D1 was merely accompanying her friend. At the venue of the Competition, D1 met Chiu in a toilet. Later, a staff member of P in the venue asked D1 to leave her telephone number, and D1 acceded to the request. Two days later, D1 was informed by P that D1 was chosen to be a candidate in the final of the Competition. From March 2004 to May 2004, Star Art had contacted D1 and told D1 that P wanted to sign D1 as P’s artiste. D1 told Chau that P was interested in her, but Chau did not accept D1 signing a contract with P.
(11) D1 was sure that it was AC meeting her and Chau in the Conference on or about 2 May 2004. P had contacted her before the Conference.
(12) D1 did not remember who paid the compensation money to Star Art, for the matter was dealt with by Chau. She could not remember whether Star Art allowed her to show the Star Art contract to others. In the final of the Competition, she did not remember whether anyone from Star Art was with her. However, in the final of the Competition, she did not go to meet AC and ask AC to give her a chance to join P.
(13) As to whether she was eager to enter into the entertainment industry, D1 said that she did not have a strong urge to do so. Her attitude was a “let me try and see” attitude. She agreed that after the Competition, AC and P’s staff had some discussions with her on several occasions. In those conversations, she told them that Chau would not allow her to sign a contract with P. D1 agreed that P might have said that they were having discussion with Star Art in those conversations.
(14) When she was asked to sign the 2005 Agreement, she thought that she could not refuse. D1 agreed that 2005 Agreement was signed because P needed her to sign a replacement agreement upon her reaching 18 years old. That was what Yeung told her, and Yeung arranged for her to sign the same.
(15) D1 disagreed that before 2006, she said to P that she wanted to sing. When referred to a news article reporting that she wanted to sing, she explained that she had been trained by P to say all these to the reporters. She was taught that she had to say to the media that it was her dream to be a singer, and this was part of the promotion.
(16) When being asked about §9.1 of the Terms and Conditions of the Contract concerning early termination, D1 said that she did raise the issue of early termination orally, but she had not made a written application for early termination of the Contract. She did raise the issue of early termination orally whenever she saw the Statements. She was upset by the figures in the Statements, for those figures showed that although she had worked hard, the debt owed to P was increasing. She did say to P that she did not want to continue any more. Although from 2011 to 2014, the amount owed by her to P as shown in the Statements was decreasing, she thought that no matter how much she worked she would owe money to P. D1 did not agree that a large part of her debt owed to P was due to music expenditures.
(17) D1 did look at the 2008 Agreement again around September 2008 to see why she should bear all the costs. Her understanding was that she was only required to bear her personal costs. But she was not just being charged personal costs, so she asked Lee, and Lee told her that P said this was the industry practice and that all artistes in the industry had to bear production and promotion costs. She first asked Lee and then asked Yeung again to verify, and the response was the same.
(18) In relation to the 2008 Incident, P limited her to say “清者自清” and that she was innocent to the media only, and she could not say anything more than that. D1 was of the view that DL had not done anything to protect her reputation. For three months the news had circulated and no one helped her.
(19) D1 did ask about her incomes as shown in the Statements, and she asked to see the supporting documents concerning her incomes. However, P said that what had been set out in the Statements was all the information which D1 should know. D1 had never seen any supporting documents concerning her incomes, save and except some commercial agreements to which she was a party, such as contracts for advertisements.
(20) D1 said that the details of her music incomes, including the breakdown of royalties, were all not shown in the Statements. When she asked Yeung the details of the music incomes, Yeung said that she would not be able to understand these anyway. She did tell Yeung that she wanted to know, and Yeung said that it would be better to leave the calculations to the accounting department. D1 did not think there was much more she could say.
(21) She was not involved in the process of setting up D2. Lee related D1’s tax issue to KC, and then P made some arrangements with an accountancy firm. Yeung told D1 that it would be necessary to set up a new company to handle the tax matter.
(22) The album “Shining” was released in December 2008. That album was prepared and released within a very short period of time. It was P who wanted to issue this album, notwithstanding D1’s unwillingness to do so.
(23) In 2010, D1 was working in Mainland and met the manager of New Run. New Run asked D1 if she was interested in developing a music career in Mainland, and D1 expressed an interest in doing so. New Run then liaised with P to sign her up. No one had explained to her how the incomes would be split between New Run and herself. She did know that when she signed with New Run, she did not have to bear production and promotion costs for records issued. She was told by P that the arrangement with Stars Shine was same as that with New Run. She trusted P and trusted that P would handle the details.
(24) As to the incident on 4 June 2011, that night she went to Shek O and had an idea of committing suicide there. From 2004 to 2011, she saw that each and every artiste who had terminated his or her contract with P would need to pay a huge sum to P. At that time, as shown in the Statements, she already owed about HK$2.8 million to P. Out of desperation, she made a telephone call to DL. DL listened to her and gave her some encouragements in that telephone conversation.
(25) After that telephone conversation, P paid the fees concerning some promotion photos of D1. D1 felt that this was an encouragement to her.
(26) The 2011 Dinner was arranged by P, because P knew that Chau was repeatedly complaining that D1 was working hard but at the same time was owing more or more to P. In that dinner, DL did say that the Statements would show a positive amount in the next year.
(27) Previously, D1 was living with her parents in an old building. P required D1 to move out and lived in a rented apartment herself. In 2011, the rent of her apartment went up. DL asked D1 to buy a flat, and P would provide a loan to D1 to assist her in acquiring her own property. At that time, she did not take up the loan.
(28) In 2011, DL kept trying to get D1 to renew her contract, but D1 was not ready to discuss the renewal. By 2013, DL was getting impatient on this issue, so D1 tried to have some negotiations with DL to see if there could be a compromise. D1’s understanding was that her contract would end in 2014, and the period of the 11th to the 15th years would be a matter to be discussed by the parties. D1 therefore proposed a 10% increase in her entitlement in the renewed term in the 1st Dinner Meeting in 2013. Apart from increasing D1’s entitlement, there was discussion on the other terms as well, including whether more costs should be borne by P. Many matters would need to be discussed, for she would be in her 30s in that renewed term. The contract term that she could not be pregnant during the contract period, for example, would need to be revisited.
(29) All along, there was no discussion as to the period covering the 16th to the 20th years.
(30) As to the Up-skirt Photo Incident in January 2014, nobody told her what had been done to follow up the matter, despite her asking what P would do to protect her and what would be done. The offending photos are still accessible on websites today.
(31) As to the Feb 2014 Incident, the matters pleaded in her case are true. D1 also said the following in her evidence:
(a) She had known Dong for a few years.
(b) She knew that P wanted her to sign a co-management contract with Sun Entertainment. However, she wanted to finish her contract with P before signing a contract with another company. She did not want to renew her contract with P.
(c) Before the Birthday Dinner, P had told her that they wanted to sign a co-management contract with Paco Wong.
(d) The Birthday Dinner was held in a private room in a restaurant. DL, AL and Yeung spoke with Paco Wong about his coming songs. Yeung said to Paco Wong that P and Paco Wong might arrange D1 to record a song, but D1 refused to accept the arrangement. Then Paco Wong said that he would make a song for D1 without requiring D1 to sign any contract. D1 was very happy when she heard this.
(e) After Hong and Paco Wong left, D1 was required by DL to stay in the room. DL said that he needed to say something to D1. DL was angry and D1 was frightened. She wanted to leave but was not allowed to. Dong was there, and Dong was relatively calm. However, DL was very angry. Dong expressed the view that P should treat D1 better. This made DL very angry. Yeung threw some glass receptacles towards Dong and D1. The glass receptacles did not hit them. Dong became very angry, and he stood up and left. D1 felt very frightened and her feet were all wet. D1 then texted CHN to ask for help. The messages sent by D1 to CHN are as follows (“Messages to CHN”):
“救命。開拖” “死火了” “你上來手”
D1 said that she missed to type the word “幫”.
(f) CHN came to the restaurant. DL and AL yelled at CHN and did not allow CHN to enter the private room. Inside the room, DL, AL and Yeung scolded D1. They blamed D1 for not being willing to have a renewed contract with P and intending to have cooperation with some outsiders. After some time, D1 said that she had terrible headache. D1 was finally allowed to leave.
(g) D1 said that after the Feb 2014 Incident, she went to find a lawyer because Yeung threw glass receptacles to her. She thought that she should either call a lawyer or the police. In fact, her lawyer did tell her that she could call the police, but she thought that she wanted to keep things amicable.
(h) After 2014, she thought that there should be incomes from the Stars Shine CD “天空之樹”, so she asked her solicitors to try to get those incomes. She has no impression of asking Yeung before May 2014, because her incomes from New Run would be reflected in the Statements before that time. As for Stars Shine, she did ask Yeung. She believed that she should have incomes from Stars Shine but not necessarily from New Run.
(i) In the past 7 years while this litigation is ongoing, P has done everything to make sure that no one in the entertainment industry would engage D1 in any production.
94.Counsel for P submits that I should draw adverse inferences against D1 by reason of the absence of CHN and Dong as witnesses in this trial. Counsel submits that both of them would have personal knowledge as to some essential matters mentioned by D1 in her evidence, and yet D1 has failed to arrange them to give evidence in the trial.
95.With respect, I am unable to accept these submissions. I have carefully checked the transcript, and I do not see that counsel for P has ever asked D1 as to why she did not arrange Dong to give evidence in the trial. Without offering an opportunity to D1 to explain why she has not arranged a particular witness to give evidence at the trial, P cannot invite me to draw an adverse inference against D1 because of the absence of that witness in the trial. As to the absence of CHN in the trial, counsel for P has not challenged D1 that what D1 said in her 2nd affirmation is untrue, ie D1 had been unable to contact CHN since late July 2021. In the circumstances, it would not be fair to draw an adverse inference against D1 because of the absence of CHN in the trial.
96.Having seen and heard D1’s evidence, I am of the view that D1 is an honest and reliable witness. Her evidence is straightforward, and she would never shy away from any difficult questions. Her evidence is also consistent with the contemporaneous documents, including the following:
(1) 2011 SMS Exchanges;
(2) an internal payment form of P, showing that P has paid the fees concerning some promotion photos of D1 in July 2011;
(3) a message published on D1’s Facebook on 8 May 2013, in which D1 expressed disappointment as to people taking back their words by using the excuse that they were drunk;
(4) the Messages to CHN; and
(5) the record in the letter of Dr David Chan (“Dr Chan”)[26] dated 20 September 2014 (“Dr Chan’s Letter”), in which Dr Chan said:
“I first attended [D1] on 7th March, 2014.
She had apparently been under tremendous pressure from [Yeung] the manager and [DL] the chairman of the Universe Artists Management Limited since early May, 2013 to renew her 10 year contract which was due to expire in May, 2014.
On the evening of 26th February, 2014, she was asked to attend a meeting with [DL] and [Yeung] at a restaurant in Jordan, Kowloon. In the middle of their meeting, [DL] and [Yeung] suddenly became threatening and abusive. They swore at her with vulgar languages and smashed glasses at her feet. She broke down in tears and believed that they would attack her physically and inflict bodily harm to her. She was in a state of severe panic and she ran out from the restaurant for her life.
Following the incidence, [D1] became severely depressed and agitated. She had been tearful and having palpitations and twitching of muscles associated with difficulty in breathing. She was unable to sleep and was having nightmares most of the times. She kept herself locked up in her apartment all day long and was afraid to go out.
On examination, she was extremely tense, panicky and depressed. She was tearful throughout the interview and was very nervous and stressed when she was attempting to give an account of the incidence.
I am of the opinion that [D1] has been suffering from a Post-Traumatic Stress Disorder (PTSD) associated with severe anxiety, panic attacks, depression and sleep disturbances with night terror.
……”
97.When D1 went to see Dr Chan in March 2014, P had not yet commenced these proceedings. What D1 told Dr Chan in the consultation could not be evidence made up by D1 for the purpose of this litigation.
98.Counsel for P submits that D1 is not a credible witness. Counsel argues that:
(1) There are WhatsApp exchanges between Yeung and D1[27] showing that the Dress worn by D1 in the prize-presentation ceremony in the Hong Kong Film Awards was chosen by D1, not by Yeung.
(2) In respect of the film “White Storm” (掃毒), the part with D1 participation has been cut. The edition was not done as a result of her refusal to renew her contract with P, as claimed by D1 in her evidence. In fact, as shown in the WhatsApp exchanges between Yeung and D1[28], D1 was happy with the edition.
(3) It could not be true that D1 had no eagerness to become a singer. In many WhatsApp exchanges with DL[29], D1 had expressed enthusiasm in her singing career.
(4) The first version of Ds’ Defence was done on 29 September 2014. In the Amended Defence dated 27 August 2018, Ds introduced a §18A. However, §18A was deleted in the Re-Amended Defence dated 9 September 2021. D1 has offered no explanation as to why §18A is deleted in the Re-Amended Defence. §18A of the Amended Defence is as follows:
“18A. After [D1] refused to consent to the new terms of the Renewal Contract as proposed by [DL] and/or Yeung, the attitude of the personnel of P towards [D1] thereafter worsened to the extent that [D1] became suicidal and depressed.”
(5) There are WhatsApp exchanges between D1 on the one hand, and DL and Yeung on the other hand. These WhatsApp exchanges show that there would be discussion between D1 and P, and P would not force D1 to do anything against her will.
(6) There is a material difference between D1’ pleaded case and D1’s evidence regarding the HK$500,000:
(a) §2C (3) of Amended Rejoinder, [2C (3)]”
“After a few days, [Yeung], at the instructions of [DL], at [P]’s office, gave [D1] a cheque in the sum of $500,000.00. Neither [DL] nor [Yeung] ever stated that the $500,000 was merely a loan or an advancement or that the $500,000 was from [P].”
(b) D1’s 1st statement, [54]:
“After a few days, on or around 2 April 2013, [Yeung] asked me to go up to [P]’s office and gave me a cheque of HK$500,000 on or around 2 April 2013. [Yeung] said to me, this is a loan.”
(7) D1 has changed her evidence in several aspects in her 2nd witness statement:
(a) In her first witness statement, D1 said that she made the phone call to DL from Shek O on or about 11 June 2011. However, in her 2nd witness statement, she said that she made the call on 4 June 2011.
(b) After seeing DL’s witness statement dated 21 February 2017, in her 2nd witness statement, D1 agreed that she had accepted the 80:20 Proposal. D1 said that, however, DL subsequently told her that he was referring to having another contract with D1 after 2019, and that contract would also be a contract with a term of 10 years and an option to renew for 5 more years. The 80:20 Proposal was made in relation to the renewed term in this second contract. After hearing this, D1 declined to accept the 80:20 Proposal.
(c) In her 1st witness statement, D1 said that the advancement of HK$500,000 from P to her was by a cheque. However, in her 2nd witness statement, D1 said after seeing the documents produced by P, she confirmed that she made a mistake as to the mode of payment, and she agreed that the advancement of HK$500,000 was paid to her by bank transfer.
99.With respect, I do not agree that D1’s credibility has been affected by these points.
(1) I have read the WhatsApp exchanges between Yeung and D1 on 7 April 2013 concerning the Dress. In those WhatsApp exchanges, D1 requested P to pay for half of the price of the Dress, but Yeung refused. The exchanges are as follows:
|
Time |
Sender |
Contents |
|
5:11pm |
D1 |
標哥，想同你商量一件事。。。。金像獎衣服最後借不了合適的…另一直都希望可以着國際大品牌！現希望可以買一件但費用公司能支持一下嗎? |
|
5:16pm |
Yeung |
我覺得買衫不要讓公司支持贊助…人最緊要有氣質，人着衫，不是衫着人。 |
|
5:16pm |
D1 |
但記者们(們)都說一定要睇問品牌。。。 |
|
5:18pm |
D1 |
確實那天穿什麼都是焦點。 |
|
5:18pm |
Yeung |
你自己很想買衫，我不反對，你大個女，現在是高收入人士。 |
|
5:20pm |
D1 |
我不是很想買衣服…那公司贊助一半可以嗎？ |
|
5:23pm |
Yeung |
我覺得不應同公司攞錢買衣服 |
|
5:43pm |
D1 |
okok那我可以墊支8萬買衣服嗎 |
|
5:43pm |
Yeung |
當然可以啦。 |
D1’s oral evidence is that the Dress was chosen by Davy (the stylist of P, who was under the supervision of Yeung) and D1. D1 said that her attire in the events attended by her, including the prize-presentation ceremony in the Hong Kong Film Awards, must be approved by P. Looking at the aforesaid WhatsApp exchanges, one can only see that Yeung on behalf of P refused to pay half of the price of the Dress. As to whether D1’s attire in the prize-presentation ceremony in the Hong Kong Film Awards must be approved by P, these exchanges in fact do not shed light on this. In fact, there is no evidence from P saying that D1 might wear whatever she wanted in that ceremony without obtaining prior approval from P.
(2) As to whether D1 was happy with cutting the part with her participation in the film “White Storm”, this topic has not been explored in the cross-examination. In particular, the WhatsApp exchanges now being referred to in counsel’s submissions have not been drawn to D1’s attention during cross-examination. D1 has not been offered an opportunity to explain why she said something in those WhatsApp exchanges. In the circumstances, it would not be fair for counsel to make any adverse comment against D1 by relying upon those WhatsApp exchanges.
(3) In some WhatsApp exchanges with DL, D1 said that she was happy when she had some achievements in her singing career, and she would do her best. In my view, there is no contradiction between not being very eager to be a singer, and having satisfaction when being appreciated.
(4) As to the deletion of §18A in the Re-Amended Defence, D1 was not cross-examined on this. As a result, in my view, counsel for P cannot use this as a point against D1.
(5) Although there would be discussions between D1 on the one hand, and Yeung and DL on the other hand from time to time, that does not mean that P would not force D1 to do anything against her will. The Feb 2014 Incident as said by D1 in her evidence (supported by Dr Chan’s Letter) is an important episode showing that there was an irreconcilable difference between P and D1 as to whether there should be a renewed contract, and P was forcing D1 to follow P’s will.
(6) As to the discrepancy between D1’s pleading and D1’s evidence regarding the HK$500,000, D1 was not asked to explain the discrepancy during cross-examination. Since D1 has not been offered an opportunity to explain the discrepancy, counsel for P would not be allowed to use the discrepancy as a point against D1.
(7) It is trite that giving evidence is not a memory test. In my view, the clarifications made by D1 in her 2nd witness statement would not in any way cast doubt on D’s credibility.
(a) The existence of the telephone call from D1 to DL is supported by the 2011 SMS Messages. The time of the call is also supported by the same documentary evidence. D1 explained that when she made her 1st witness statement, due to the lapse of time, she could not remember the exact time of that telephone call. Subsequently, after seeing the SMS Messages disclosed by P, she remembered that the call was made to DL on 4 June 2011. I accept D1’s explanation.
(b) As to the 80:20 Proposal, it is clear that there is no agreement between P and D1 implementing the proposal at the end. That being the case, that must be something preventing the parties from reaching a final agreement. D1’s evidence regarding the 80:20 Proposal is logical and inherently probable. I accept her evidence.
(c) As to the mode of payment regarding the HK$500,000, this matter is immaterial in this trial. Due to the long lapse of time, it is understandable that D1 has made a mistake as to the mode of payment in her 1st witness statement. After seeing the documents produced by P, D1 fairly agreed that the advancement of HK$500,000 was paid to her by bank transfer.
100.Counsel for P argues that from 2004 to 2014, P has advanced a total of HK$2,803,610.65 to D1 without charging D1 any interest. It would be ridiculous to say that D1 did not have any income while what she earned might be less than what she owed to P. In my view, this argument may be relevant in considering whether the contractual bargain between P and D1 is an unconscionable bargain, but is not an argument concerning D1’s credibility.
E8. Chau
101.Chau was a kindergarten teacher before retirement. She mentioned the following in her evidence:
(1) Before she attended the Conference, there was no discussion as to the terms of the contract between P and D1. AC spoke to Chau twice. The 1st conversation took place before the Conference, in which AC told Chau that D1 got the 3rd place in a competition and P wanted to sign D1. The 2nd conversation took place in the Conference. AC showed her the contract and explained the main terms and conditions of the contract to her. The Conference lasted for around half an hour. AC said that P was a listed company, and that the entire entertainment industry used that standard artiste management contract. At the beginning, Chau was against the idea of allowing D1 to enter into the entertainment industry. However, Chau later agreed to give D1 a chance.
(2) AC said that the contract would need to be signed and returned to P the very next day, and Chau could not show it to any third party. Chau signed the contract and arranged her husband to sign the same after the Conference. Chau had a copy of the executed version of the 2004 Agreement. She was not sure if she had a copy of the 2005 Agreement. She had not seen a copy of the 2008 Agreement.
(3) In the Conference, Chau expressed concern as to the long duration of 10 years of the contract. AC told her that although the term as set out in the contract was 10 years, P did not have any artiste who would need to work for the entire period of 10 years. If D1 wanted to quit, she could leave at any time. As to the Extended Term, AC said that if D1 did not want to continue after the 10-year period, D1 could refuse to renew the contract. D1 would have a choice. AC also said that D1 would be responsible for her personal costs. AC said that P was a listed company, and Chau should have no need to worry. Chau had an impression that AC was fair and reasonable, and she trusted what he said in the Conference.
(4) From 2004 to 2006, D1 did not have much work. P asked D1 to remove all her teeth and to install a new set in order to have a better outlook. Chau objected to this. After 2006, Chau would seldom ask D1 about her work. She knew that D1 was working hard but was not earning money, and D1 would need to borrow money from her.
(5) In or about December 2007, Chau saw some statements at home one night, and from those statements Chau realized that D1 would need to bear the expenses of many items, including items which could not be D1’s personal expenses. Chau was shocked and raised the matter with Lee. Lee told Chau that the money would come back at a later time. Chau was not happy with the answer.
(6) The 2008 Incident caused much distress to Chau. Chau was very unhappy that DL’s family matters had affected D1.
(7) Chau was also unhappy that P was dictating how D1 should live. P disallowed D1 to take any public transport except taxi. P prohibited D1 from eating street food. P also required D1 not to live together with her parents and to rent or to buy a flat to live therein.
(8) D2 was established as Lee told D1 that doing so would be more convenient for tax purposes. The event was triggered by a tax document received by D1. Chau did not know why it was necessary to establish a company for tax purposes. She had no expertise in accounting and had never been an accountant. At the very beginning, she worked at a school and was responsible for receiving school fees from parents. After that, she became a kindergarten teacher. She had never done any accounting work.
(9) In the 2011 Dinner, DL said that the 2008 Incident could be treated as publicity, and publicity of this kind could not be purchased by even paying HK$30 million. Chau was shocked and angry when she heard this. She said to DL that even HK$30 million could not compensate the damage caused by this incident to her family. DL said if D1 wanted to quit and marry someone, she could do so and P would not go after her for the debt. Chau said to DL that how could D1 suddenly marry someone.
(10) As to the HK$500,000, D1 gave that sum to her and told her that the sum was D1’s income. She asked her to explain the matter. D1 then apologized and said in fact the sum was a loan to her. D1 told her that P required D1 to ask Chau to stay outside of D1’s work.
102.Counsel for P submits that Chau’s evidence should not be accepted. Counsel submits:
(1) Chau claimed that she was not willing to let D1 enter into the entertainment industry. However, Chau read the 2004 Agreement before signing the same, and did sign the same subsequently. It could not be true that Chau did not want D1 to enter into the entertainment field.
(2) It is inherently improbable that in the 2011 Dinner, Chau would raise the 2008 Incident, for that incident was over and had been water under the bridge by 2011. The purpose of the dinner was to solve D1’s financial problem. It would be rude and unreasonable to accuse DL of having caused the 2008 Incident in the 2011 Dinner.
(3) As to the HK$500,000, Chau said that the HK$500,000 was a loan to D1 on the condition that Chau should not further interfere with D1’s work. If Chau really cared about D1, Chau should not accept the HK$500,000 but asked D1 to return the money to P. Counsel submits that as to why Chau did not ask D1 to return the HK$500,000 to P, Chau was evasive on this topic.
103.With respect, I am of the following view:
(1) Having seen and heard Chau’s evidence, Chau has made herself clear that she did not want D1 to enter into the entertainment industry, but she would give D1 a chance. This is what Chau has said in her evidence. There is nothing inherently improbable in this saying.
(2) Chau’s evidence is that since 2007, she kept on complaining to Lee about the amount owed by D1 to P. Chau also told Lee that the 2008 Incident was not D1’s fault. In or about June 2011, Lee told Chau that DL wanted to talk to her. Then, the 2011 Dinner took place. From Chau’s perspective, her grievances came from (a) notwithstanding that D1 was hardworking, D1 had no net income but only an increasing indebtedness owed to P; and (b) the 2008 Incident. In the context, Chau’s evidence concerning the 2011 Dinner is inherently probable. The comments made by counsel for P, with respect, are not valid points.
(3) In my view, Chau might have not told the real reason why she decided to keep the HK$500,000. However, that would not affect the veracity of her evidence concerning the events in respect of which she has personal knowledge. In fact, the condition attached to the HK$500,000, ie Chau should not further interfere with D1’s work, is evidence showing that before the advancement of the HK$500,000 from P to D1 in early 2013, Chau frequently raised complaints concerning D1’s income and welfare to P.
104.Having considered Chau’s evidence as a whole, I accept the evidence on the matters in respect of which she has personal knowledge. I attach weight to the said evidence.
E9. Chung
105.Chung has been in the entertainment industry since 2005. Her contract with her management company Emperor Entertainment ended in 2020. She mentioned the following in her evidence:
(1) She agreed that Emperor Entertainment had a lot of singers and would produce records for its singers. The time taken for recording a song would range from 1-2 months to half a year. After a song is recorded, a process known as “派台” would occur. The recording company would distribute the song to different platforms, including radio and internet platforms.
(2) She agreed that it would be necessary to wait for some time before getting back money. Income would come after the song became popular, and thereafter different brands would approach the singer. There might be cross overs and jobs would flow from there. She agreed that the time needed for CD income to come back would be around a year after the CD was issued.
(3) When a singer was still fresh, she might take jobs even if the remuneration was just a few thousand dollars. The management company would consider whether the remuneration was reasonable before deciding whether a certain job should be accepted.
(4) She agreed that the copyright of songs produced by her recording company belonged to her recording company.
106.The veracity of Chung’s evidence is not challenged by P. Notwithstanding this, I am of the view that Chung’s evidence is of limited assistance in these proceedings.
(1) Chung is a factual witness and can only give factual evidence. She is not an expert witness and cannot give opinion evidence.
(2) Chung is not involved in all the matters in this case. She does not have personal knowledge of anything related to these matters. Her evidence indeed has very limited value in these proceedings.
E10. Lee
107.Lee said the following in her evidence:
(1) She joined P as an executive officer in around 2004. Her employment was terminated after the Chinese New Year holiday in 2013. When she joined P, her job was mainly arranging schedules of artistes and liaising with media. Lee became D1’s manager since about 2006. In 2008, she was promoted to the rank of senior manager. As a senior manager in P, her work included finding jobs for artistes and quoting fees to potential clients. However, the fee quotations would need Yeung’s approval.
(2) At the beginning, her supervisor was a lady called Sylvia. About 2 months later, Yeung became her supervisor, and Yeung remained as her supervisor until she left P. She started to have direct communication with DL in around 2011, as she wanted to resign at that time. She thought it was unfair that promotion costs would have to be borne by artistes. DL told her that he wanted her to stay and told her that P would change. DL told her that she could speak to him directly if she wanted. After that, some promotion costs of D1 were borne by P. It was after that conversation that she had more discussions with DL regarding business.
(3) She did not agree that an artiste could always depend upon sponsorship, or new hairstylists or new makeup artists who would do not the work on pro bono basis. She did not agree that it was her responsibility to find photographers who would take promotion photos for free, as it would not be possible to find a sponsor for everything.
(4) Chau did ask her why D1 would be responsible for the production and promotion costs, and Lee said that it was the industry standard. She also said if D1 chose to leave, she would not need to bear cost. DL always said this to Lee. She would say this to D1 to comfort her, and did say this often.
(5) She had an impression that the Statements would be given to the artiste every 6 months, but she could not be entirely sure on this.
(6) Her boss had always said that he wanted his artistes to sing. She often heard her boss saying that they should also create singers because promotion would be easier, and P could arrange for karaoke-related products.
(7) DL and Yeung had discussion as to singing songs by D1. D1 was not in the discussion. It was an occasion after work, when DL noticed D1 and then they went to sing karaoke. Then DL and Chiu thought they should arrange D1 to sing the theme song of the Doraemon movie. The bosses had planned to issue music records and thought that D1 was singing well enough, so they wanted to use D1 to test the water. After that, D1 had some fans and so it was considered that she should be launched as a singer.
(8) She agreed that issuing of music records was the reason why D1 owed more money to P. She did not ask D1 not to sing, for she was P’s staff. She would follow P’s instruction, and what she could do is to comfort D1 and to find jobs for her and to try to keep costs low, and to ensure everything running smoothly. D1 was an obedient girl, and did not want to bring trouble to others. She would generally keep her feelings to herself, unless under extreme stress.
(9) She did not know ULV or UDE. She did not know that they were involved in distributing CDs.
(10) While she was working in P, she was taught that each and every agreement must be in writing.
(11) It was Yeung who told her that the artiste being responsible for the production and promotion costs was a standard in the entertainment industry.
(12) In respect of the 2008 Incident, D1 had a suicidal intent when the rumours were circulating in the media. There was an incident where D1 was scolded by people on the street. D1 did tell Lee that she wanted to die. D1 did seek directions from Yeung and DL, but they only told D1 not to do anything and the truth would reveal itself.
(13) As to fee quotes, Yeung would tell Lee to quote a price which would be 200% or more than the reasonable market price, or to try to find out the client’s budget and to quote a certain percentage of the budget as the price. Lee agreed that this was a tactic in negotiation. However, if the fee proposed to the potential client was too high, the fee quote might scare the potential client and the potential client would just go away.
(14) She had never heard about the 2009 Oral Agreement.
(15) In the middle of recording D1’s first disc, “Innocent”, Yeung told her that all the expenses relating to the disc would be borne by D1. After deducting the expenses, P would be prepared to let D1 have all the incomes from her music recordings and P would not charge any commission. Yeung told Lee that there would not be a lot of income from the music recordings.
(16) She agreed that she did not let D1 bring Statements to home, because D1’s emotions were too affected by Chau. Chau kept saying to Lee that the debt owed by D1 to P was too high. Lee related the matter to Yeung, and Yeung thought that Chau was too involved in D1’s matters, so Yeung asked Lee not to allow D1 to bring the Statements to home. Sometimes, the Statements would be given to D1 by an assistant. The assistant would tell Lee that D1 had signed the Statements.
(17) In respect of D1’s concert in 2010, Lee did not know whether P had a profit in the concert.
(18) Lee was in the 2011 Dinner. In that dinner, DL did say that if D1 left the entertainment industry, D1 did not have to repay P.
(19) In respect of the extension of D1’s contract, the first time this was discussed was when the rent of D1’ flat increased and D1 could not afford the increased rent. The rent of D1’s flat was increased by the landlord and D1 could not afford the increased rent. Lee reported the matter to DL, then DL, Yeung and Lee had a meal with D1 in a restaurant. DL told D1 that she should not continue to rent a flat but should buy one. P would support her and lend a sum to her to pay the down payment. In return, D1 would have to renew her contract with P for a period of 10 years. D1 thanked DL and declined the offer.
(20) Subsequently, the 80:20 Proposal was discussed between DL and D1. When Lee conveyed DL’s message to D1, Lee was under an impression that the 80:20 Proposal would apply to the Extended Term, ie the 5 years immediately after the 10-year period specified in the Contract between P and D1. However, DL subsequently clarified and said that the 80:20 Proposal would apply to a new contract with a term of 10 years and an option to renew for 5 more years.
(21) In 2011, Lee could no longer bear the pressure as she had to follow P’s instructions, but she thought that it was unfair to the artistes to do things in that way. So she tendered a resignation letter to Yeung. Thereafter, DL asked her to go to his room and had a talk with Lee. Lee no longer had a copy of her resignation letter. In that conversation, DL said that he would change. As a result of that talk, Lee did not leave P. A few months thereafter, she got a promotion letter. She still retained a copy of the promotion letter.
(22) Lee disagreed that her working performance in P was unsatisfactory. She got 3 promotions in 8 years. If P was unhappy with her, P would not promote her to the rank of senior manager in 2011, and appointed her to deal with P’s artistes’ Mainland affairs.
108.Counsel for P submits that Lee’s evidence should not be believed. Counsel submits that:
(1) Lee has a motive to help D1 as she thinks that D1 has been treated unfairly.
(2) Lee has belittled P’s contributions to D1’s career, probably because she had grudges against P.
(3) As to the 80:20 Proposal, Lee at one time said that the proposal in fact apply to the 5 years after the terms of two 15-year contracts, ie the 31st to the 35th years of the cooperation between P and D1. Lee’s evidence concerning the 80:20 Proposal cannot be true.
109.With respect, notwithstanding those submissions, I am of the view that Lee’s evidence is reliable.
(1) Having agreed to be D1’s witness does not mean that Lee would give untrue evidence under oath.
(2) As to P’s contributions to D1’s career, whether the contributions can be described as great contributions or a lot of contributions is a matter of opinion.
(3) As to the 80:20 Proposal would apply to which period (“the relevant period”), when being asked questions on this, Lee would need to pause and to think for some time. Her evidence on this topic is unclear. However, both DL and D1 said that at one time, they had discussed the 80:20 Proposal. It is also a fact that DL and D1 could not reach an agreement on the 80:20 Proposal at the end. Lee would have no need to give untrue evidence or to be evasive on the matters concerning the 80:20 Proposal. In my view, that she could not give clear evidence concerning the relevant period is merely due to the long lapse of time.
110.Having considered Lee’s evidence as a whole, I conclude that her evidence is reliable, and I attach weight to her evidence.
F. MY FACTUAL FINDINGS
111.Based upon the evidence which is accepted by this court as reliable evidence, subject to the matters set out below, I accept that the factual issues as pleaded in Ds’ case are true. Those issues should be treated as the factual findings made by me.
112.I accept that AC did make the Representation on Industry Standard to D1 and Chau in the Conference. I also accept that the said representation is a statement of fact. However, with respect, I do not see any evidence proving the falsity of that statement. There is no evidence proving that the typical standard in the entertainment industry at the time of the 2004 Agreement was not the one contained in the Representation on Industry Standard. It is trite that a claimant relying upon a misrepresentation to make out a case bears the burden to adduce evidence to prove the falsity of the representation made to him or her.[30] In the absence of any evidence proving the Representation on Industry Standard is a false statement of fact, D1 cannot rely upon that representation as a defence to P’s claim or as a basis in support of her counterclaim.
113.There is also no evidence showing that at the time of signing the 2005 Agreement and at the time of signing the 2008 Agreement, D1 was induced by and relied upon the Representation on Industry Standard.
114.D1 has some unhappy experience while she was working as P’s artiste, and D1 is of the view that she has been unfairly treated by P. However, one may not lose sight and one has to bear in mind that the disputes between P and D1 are contractual disputes, and the rights and wrongs should be governed by the Contract and not by anything else. In the absence of any vitiating factor recognized by the law, the entitlements and the obligations of the parties to the Contract are defined by the Contract. Notwithstanding that the outcome may be harsh to one party, if the Contract stands as a matter of law, the court would not and cannot rewrite the Contract. The court would not interfere merely because one party has simply made a bad bargain.
115.In finding out the entitlements and the obligations of the parties under the Contract between them, what has been said by Lord Hoffmann NPJ in Jumbo King Ltd v Faithful Properties Ltd & Ors[31] has to be borne in mind:
“The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties intended. 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 concluded and the practical objects which it was intended to achieve. Quite often this exercise will lead to the conclusion that although there is no reasonable doubt about what the parties meant, they have not expressed themselves very well. Their language may sometimes be careless and they may have said things which, if taken literally, mean something different from what they obviously intended. In ordinary life people often express themselves infelicitously without leaving any doubt about what they meant. 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 make sense in relation to the rest of the document and the factual background, then the court will give effect to the language, even though the consequences may appear hard for one side or the other. The court is not privy to the negotiation of the agreement - evidence of such negotiations is inadmissible - and has no way of knowing whether a clause which appears to have an onerous effect was a quid pro quo for some other concession. Or one of the parties may simply have made a bad bargain. The only escape from the language is an action for rectification, in which the previous negotiations can be examined. 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 the meaning which must prevail.”
116.Of course, if the bargain is so unconscionable, the court would interfere and would not enforce the contract. However, in order to constitute an unconscionable bargain, it would not be sufficient if there is a mere improvident bargain and inequality, there must also be an element of equitable fraud, victimization, taking advantage, overreaching or other description of unconscionable doings. The principles have been summarized by Ribeiro JA (as he then was) in Semana Bachicha v Poon Shiu Man, in which the learned judge said:[32]
“The Privy Council in Hart v O’Connor [1985] AC 1000, explained the doctrine of unconscionable bargains in the context of the principles of equity as follows: -
‘In the opinion of their Lordships it is perfectly plain that historically a court of equity did not restrain a suit at law on the ground of ‘unfairness’ unless the conscience of the plaintiff was in some way affected. This might be because of actual fraud (which the courts of common law would equally have remedied) or constructive fraud, ie conduct which falls below the standards demanded by equity, traditionally considered under its more common manifestations of undue influence, abuse of confidence, unconscionable bargains and frauds on a power. (cf Snell’s Principles of Equity, 27th ed (1973), pp 545 et seq) An unconscionable bargain in this context would be a bargain of an improvident character made by a poor or ignorant person acting without independent advice which cannot be shown to be a fair and reasonable transaction.’ (at p 1024)
Lord Brightman, who gave the advice of the Board, stressed (at pp 1024 and 1028) the need, not merely for inequality and an improvident bargain, but also an element of equitable fraud, victimisation, taking advantage, overreaching “or other description of unconscionable doings” to justify intervention by the court.”
117.The above have to be borne in mind in analyzing the disputes between P and Ds, which are, after all, contractual disputes.
G. ANSWERS TO THE AGREED ISSUES
118.With all the aforesaid in mind, I now turn to analyze each and every agreed issues. Since the material clauses are present in all the 3 agreements (ie the 2004 Agreement, the 2005 Agreement, and the 2008 Agreement), for ease of reference, the contractual clauses set out in the below are those in the 2004 Agreement.
119.It will become apparent that as a result of my factual findings and my legal analysis as set out in this judgment, some of the questions set out in the ALAI do not arise, and it would not be necessary to answer those questions.
G1. Issue 1 – Who should bear the Production and Promotion Costs?
120.Ds’ case is that properly construed, the 2004 Agreement provides that the Production and Promotion Costs are to be borne by P as the manager, and that D1 is only responsible for her personal expenditure. P’s case is that properly construed, D1 is responsible for all the costs and expenses incurred by and for her in the course of her work as an artiste of P, including the Production and Promotion Costs.
121.The material clauses in the 2004 Agreement are as follows:
(1) Clause 3(a):
“在沒有違反「合約條款」第 3 條 (b) 款的情況下，作為經理人於本合約提供服務和產生相關費用和支出的代價，藝人同意支付和經理人同意接受佣金，其佣金的百份比率是按以下期間的藝人收入 (未減除任何費用及開支) 計算 ……” (Emphasis added)
“Subject to there being no violation of clause 3(b) of the “Contract Terms”, and in consideration of the services provided under this Contract and the relevant costs and expenses incurred by the Manager, the Artist agrees to pay and the Manager agrees to accept a commission, the percentage of which is calculated according to the income of the Artist in the following periods (before deduction of any costs and expenses) ……” (Emphasis added)
(2) Terms and Conditions, §2.2(s)
“藝人必須自行負責其一切個人開支以履行其於本合約的職責，包括但不限於服裝費、交通費、膳食、住宿費、受訓及學習費用等。但藝人獲得第三者提供該等費用則除外。” (Emphasis added)
“The Artist must be responsible for all personal expenses necessary for performing her obligations in this Contract, including but not limited to: expenses on clothing, transport, meals, residence, training and education fees etc. However, this is not so where a third party provides for such expenses on behalf of the Artist.” (Emphasis added)
122.The parties’ dispute in fact falls within a narrow compass, ie whether the Promotion and Production Costs are part of “all personal expenses” mentioned in §2.2(s) of the Terms and Conditions. In my judgment, the answer is “Yes”.
(1) The plain meaning of §2.2(s) suggests that the ambit of “all personal expenses” is very wide and in fact includes the expenses incurred for promoting D1’s entertainment career, ie expenses relating to clothing, training and education (服裝費, 受訓及學習費用).
(2) An artiste would need to establish and maintain an image in the public eye. He or she would need to maintain that image at all times. Clothing would be part of an artiste’s image, and clothing expenses is an important part of the promotion costs of that artiste.
(3) If an artiste is more knowledgeable or has more skills, this may enable him or her to have a better performance before an audience. Hence, expenses incurred in training and professional education can also be regarded as part of the costs promoting the artiste.
(4) If an artiste would need to do a specific job, he or she may need to undergo some training first. For example, if an artiste would need to play a role in a Ku Fu movie, the artiste may need to undergo some Ku Fu training before starting to play his or her role in the movie. The training costs would form part of the production costs relating to the movie. If no third party would bear those costs, in accordance with §2.2(s) of the Terms and Conditions, the training costs (which can be classified as production costs relating to the movie) would have to be borne by D1.
(5) In my view, §2.2(s) clearly envisages and covers Promotion and Production Costs.
(6) This conclusion is also supported by §2.1 of the Terms and Conditions, in which P’s obligations under the 2004 Agreement have been set out. §2.1 reads as follows:
“經理人聲明及承諾
(a) 經理人聲明及承諾於合約期內：
(i) 經理人會以其盡合理的努力為藝人在演藝界所有形式及媒體取得工作機會及代藝人洽談該工作的最佳條件。
(ii) 在演藝娛樂事業上給予藝人各方面指引，而對所有有關藝人在演藝界之利益及發展之事務，亦提供各方面指導。
(iii) 經理人之管理制度內並不存在褓母制，故藝人及藝人成員如需聘用助理人員，各項費用均由藝人自行負責。但必須由經理人以合理薪金聘請及管理。
(iv) 經理人或其僱員並不需要向藝人提供其獨家之服務或運用其所有時間處理藝人之事務。本合約之任何條款不應被理解為限制經理人去處理其他與藝人可能相似或與其競爭的人士的事務之權利或限制經理人進行任何與藝人相似或與其競爭的商業活動之權利。”
“The Manager’s Declaration and Undertaking
(a) The Manager declares and undertakes that within the Contract Period:
(i) the Manager will use its best reasonable efforts to obtain work opportunities in all forms and media of the entertainment industry for the artist and on behalf of the Artist to negotiate the best terms for such work.
(ii) to provide guidelines to the Artist in respect of the performing arts and entertainment career in all aspects, and also to give guidance in all aspects to the Artist in relation to all matters relating to the interest and development of the Artist in the entertainment industry.
(iii) there exists no system of “babysitter” under the management system of the Manager, and thus if the Artist and the members of the Artist need hire assistants, the Artist shall be personally responsible for all expenses, whilst the assistants must be retained at reasonable salary and supervised by the Manager.
(iv) the Manager or its employees are not required to provide exclusive service to the Artist or to engage all its time managing the affairs of the Artist. None of the provisions in this Contract should be interpreted as imposing limitations on the rights of the Manager to manage the affairs of persons engaging in activities similar to those engaged by the Artist or who may be in competition with the Artist, or to limit the rights of the Manager in engaging in commercial activities which may be similar to those engaged by the Artist or in competition with the Artist.”
Nothing in §2.1(a) says that P would bear any monetary expenses.
(7) Reading the 2004 Agreement as a whole, the plain meaning of the agreement suggests that the Promotion and Production Costs should be covered by “all personal expenses” in §2.2(s) of the Terms and Conditions.
123.The Promotion and Production Costs are expenses incurred in building up the artiste’s image. That image would be a personal asset owned by D1. After the expiration of the term of the Contract between P and D1, that image would be possessed by D1, not by P. In these circumstances, it would not be unreasonable to require D1 to bear the Promotion and Production Costs.
124.Requiring D1 to bear all the Promotion and Production Costs may be an onerous term in the Contract. By agreeing to enter into the 2004 Agreement, D1 may have entered into a bad bargain. However, as said in the above, the court would not and cannot rewrite a contract merely because one party has entered into a bad bargain.
125.I have also considered whether requiring D1 to bear all the Promotion and Production Costs is an unconscionable bargain. For the reason set out in the above, the answer is “No”. There is no doubt that the requirement is putting a burden on D1. However, I cannot say that the arrangement constituting an equitable fraud and victimizing D1. Although D1 would need to bear the Promotion and Production Costs, she would receive the benefits (ie gaining fame and popularity) as a result of these payments.
126.Counsel for Ds relies upon the following words in Clause 3(a) and submits that P has the obligation to bear the Promotion and Production Costs under the Contract:
“…… 作為經理人於本合約提供服務和產生相關費用和支出的代價 ……” (Emphasis added)
“…… in consideration of the services provided under this Contract and the relevant costs and expenses incurred by the Manager ……” (Emphasis added)
127.In my view, reading the contract as a whole, “相關費用和支出的代價” in Clause 3(a) means (a) the operational costs of P; and (b) the advance payments mentioned in Clause 6 of the 2004 Agreement.
128.There can be no doubt that P would have some operational costs. That would include the remunerations paid to P’s directors and staff, and the rent and utilities fees of P’s office. In order to provide service to D1 pursuant to the Contract, P would have to bear these operational costs. In my view, “相關費用和支出的代價” in Clause 3(a) would include those operational costs.
129.In order to develop a career in the entertainment industry, the artiste may need the support of some advance payments from P, and P may choose to provide the advance payments to the artiste. There is no provision in the Contract enabling P to charge any interest on those advancements. Further, there is a risk that P may not get back those advancements, if the artiste fails in his or her career. All these would also be “相關費用和支出的代價” in Clause 3(a).
130.In my view, “相關費用和支出的代價” in Clause 3(a) cannot mean the obligation to bear the Promotion and Production Costs, for this would be incompatible with §2.1 and §2.2(s) of the Terms and Conditions.
131.In my judgment, under the Contract, the Promotion and Production Costs fall within the ambit of “all personal expenses” in §2.2(s) of the Terms and Conditions, and should be borne by D1.
G2. Issue 2 – Whether the 2004 Agreement, 2005 Agreement, and the 2008 Agreement are valid and enforceable?
132.D1 was a minor at the time of the 2004 Agreement. The general rule at common law is that apart from contracts for necessaries and contracts for apprenticeship, education and service, a minor’s contracts are voidable at his or her option. Of these voidable contracts there are two classes:[33]
(1) Contracts which are binding on the minor unless he or she repudiates them during minority, or within a reasonable time of attaining his or her majority.
(2) Contracts which are not binding on him or her unless and until he or she ratifies them after attaining majority.
133.The second class includes contracts other than those for necessaries, beneficial contracts of employment and contracts for acquisition of a permanent interest in property which are valid unless expressly avoided.[34]
134.Counsel for Ds submits that since the 2004 Agreement was entered into by D1 at the time when she was a minor, and is not of the class of documents which are binding on the minor unless she repudiates them, it is a contract which is not binding on D1 unless and until she ratified it after attaining her majority. Although the 2004 Agreement has been purportedly ratified by the 2005 Agreement, such ratification was obtained by undue influence. Accordingly, there has not been any valid ratification. Accordingly, the 2004 Agreement would not be binding on D1.
135.Counsel for P submits that whether the 2004 Agreement is binding on D1 is irrelevant, for the 2004 Agreement has been superseded by the 2005 Agreement when D1 attained the age of majority on 30 September 2005.
136.For the reasons set out below, subject to the qualifications mentioned in [153] to [163] (“the Qualifications”), I am of the view that the 2005 Agreement is a valid agreement binding upon D1. By entering into the 2005 Agreement, D1 has affirmed or has ratified the 2004 Agreement. In my judgment, subject to the Qualifications, the 2004 Agreement is also a valid agreement binding upon D1.
137.I have found that AC did make the Representation on Industry Standard to D1 in the Conference. However, I have also found that there is no evidence showing that the representation is false. Accordingly, the Representation on Industry Standard cannot be a matter vitiate the 2004 Agreement, 2005 Agreement and/or the 2008 Agreement.
138.Further, since there is no evidence showing that at the time of signing the 2005 Agreement and at the time of signing the 2008 Agreement, D1 was induced by and relied upon the Representation in Industry Standard, these two agreements would not be vitiated by the Representation on Industry Standard in any event. Since the 2005 Agreement has the effect of confirming the 2004 Agreement, even if the validity of the 2004 Agreement is somehow affected by the Representation on Industry Standard, the problem would have been ratified by the 2005 Agreement.
139.With respect to undue influence, Ds’ pleaded case is that the 2005 Agreement was procured by undue influence of P over D1. There is no plea that the 2008 Agreement was procured by undue influence. Accordingly, the undue influence point pleaded by Ds cannot affect the 2008 Agreement. Further, I also do not see any evidence showing that Ds signed the 2008 Agreement by any undue influence exerted by P over Ds.
140.Ds’ case concerning undue influence as pleaded in the Re-Amended Defence and Counterclaim is as follows:
“17 .…… the terms and conditions in the 2004 Agreement were harsh or overreaching or oppressive. [Ds] intend to rely on the full effect of all terms and conditions therein, which, for the avoidance of doubt, includes the terms under the heading合約條款 (Contract Terms) and the terms under the heading 條款與條件 (Terms and Conditions) in the 2004 Agreement. At trial, [Ds] would say, inter alia: -
Particulars of harshness/oppression
1) [P] provided no undertaking or promise of the exercise of any effort or laying out of costs in promoting [D1]’s career.
2) As the exclusive owner of the right to use [D1]’s name, pictures, photos, images and sound etc. pursuant to clause 3 under “Terms and Conditions, [P] would have ownership of the output produced as a result of exploitation of [D1]’s name, pictures, photos, images and sound etc., and, where [P] made the arrangements necessary for the production or creation of any artistic works or audio recordings, the ownership of the copyright of such artistic works or audio recordings by virtue of the Copyright Ordinance (Cap. 528);
3) The commission of 65% or 55% of the ‘[D1]’s income’, (65% in the first five years of the Contractual Period; 55% in the latter five years) as defined in the 2004 Agreement clause 3 under “Contract Terms”, calculated based on gross income, as opposed to income net of costs and expenses incurred, was excessive and harsh, and was inadequate remuneration for [D1];
4) On top of the commission of 65% or 55% of [D1]’s “income”, [P] would also be entitled to remuneration as a result of the exploitation of [D1]’s name, pictures, photos, images and sound etc., including remuneration obtained through the issue of audio products of [D1] pursuant to clause 1.2(d) under “Terms and Conditions”, which was excessive remuneration;
5) There is no provision for any royalties or any other form of remuneration to be paid to [D1] from [P] for the issue of such artistic works or audio products or for [P]’s exploitation of [D1]’s name, pictures, photos, images and sound etc.;
6) Pursuant to clause 1.2(d) under “Terms and Conditions”, [D1] was not entitled to obtain income from her sound recordings. Even if [D1] was to obtain royalties, [P] would be entitled to 65% of such royalties;
7) The 2004 Agreement was capable of lasting for 10 years pursuant to clause 1 under “Contract Terms”, or 15 years if the Option is duly and validly exercised pursuant to clause 9(a) under “Contract Terms”, or 20 years under clause 9(b) under “Contract Terms”, which is an unreasonably long period and which is an excessive restraint on [D1]’s ability to trade;
8) If [D1] infringed any of the contractual terms of the 2004 Agreement, [P] could terminate the 2004 Agreement without notice pursuant to clause 9.5(a) under “Terms and Conditions”;
9) The 2004 Agreement was not terminable by [D1] without [P]’s permission pursuant to clause 9.1 under “Terms and Conditions”;
10) Even if [D1] is terminated according to clause 9.1 under “Terms and Conditions”, pursuant to clause 9.2 under “Terms and Conditions”: -
i. [D1] would be restrained from trading for a period of 7 years, which is an unreasonably long period having regard to the nature of [D1]’s work;
ii. [D1] would be required to hand over all income received by her by reason of pursuing her Entertainment Career in that 7-year period.
11) Pursuant to clause 2.12.2(r) under “Terms and Conditions”, [D1] is required to comply with and fulfil the decisions made by [P], who had absolute power to make the final decision for [D1] on all types of matters, a term which is harsh and oppressive;
12) [D1] is required to forego pregnancy for a period of at least ten years pursuant to clause 2.2(p) under “Terms and Conditions”;
13) [D1] is required to accept that [P] had the right to manage the entertainment careers of persons who may be in competition with [D1] pursuant to clause 2.1(a)(iv) under “Terms and Conditions”;
14) [D1] is required to abandon her right to independent legal representation during the duration of the 2004 Agreement pursuant to clause 2.2(u) and (v) under “Terms and Conditions”.
…………
22. The 2005 Agreement was procured by the undue influence of [P] over [D1]. [Ds] would say that [D1] reposed trust and confidence in [P].
Particulars of trust and confidence
1) [D1] signed the 2005 Agreement according to the directions of [Yeung] of [P].
2) [P] was the manager, agent and/or representative of [D1] at the time the 2005 Agreement was entered into.
3) [D1] had just attained 18 years of age at the time the 2005 Agreement was entered into.
4) [P] failed to advise [D1] to, and [D1] did not, seek independent legal advice.
23. [Ds] repeat the particulars pleaded in paragraph 17 above, save that the references to the 2004 Agreement are to refer to the 2005 Agreement, mutatis mutandis.”
141.Counsel for Ds has made it clear that Ds are relying upon presumed undue influence, not actual undue influence.
142.In respect of presumed undue influence, the Court of Final Appeal has given clear guidance in Li Sau Ying v Bank of China (Hong Kong) Ltd[35]. The matter should be approached by examining whether there is evidence justifying the inference that the impugned transaction was procured by undue influence. Any attempt to invoke the assistance of an alleged evidential presumption of undue influence would likely to be a source of confusion. In giving the judgment of the Court of Final Appeal, Lord Scott of Foscote NPJ said:
“28 . …… [the courts below] asked themselves whether the case was a Class 2B case, i.e. a case in which on its particular facts a relationship not falling within the Class 2A category had been shown to have become such as to justify the court in applying the same presumption (Slade LJ at p.953). Lord Browne-Wilkinson in Barclays Bank plc v O’Brien [1994] 1 AC 180 adopted Slade LJ’s categorisation of Class 2A and Class 2B cases and said that:
‘… In a Class 2(B) case therefore, in the absence of evidence disproving undue influence, the complainant will succeed in setting aside the impugned transaction merely by proof that the complainant reposed trust and confidence in the wrongdoer without having to prove that the wrongdoer exerted actual undue influence or otherwise abused such trust and confidence in relation to the particular transaction impugned.’ (p.189)
29. Lord Browne-Wilkinson’s approach in O’Brien was broadly endorsed and built upon by the House of Lords in Royal Bank of Scotland plc v Etridge (No. 2) [2002] 2 AC 773 but the use of the expression “presumed undue influence” and, in particular, its use in connection with Class 2B cases was deprecated. Lord Nicholls of Birkenhead at paras 16 and 17 made clear that the expression connoted no more than a shift in the evidential burden of proof, “the equitable counterpart of common law cases where the principle of res ipsa loquitur is invoked”. Lord Hobhouse of Woodborough said, at para. 98 that the Class 2A and Class 2B categorisation derived from the Aboody case had been “the source of much of the confusion which has ensued” and, at para. 105, that “the language of presumption is likely to confuse rather than assist.” He said that:
‘… If at the end of the trial the wife succeeds on the issue of undue influence, it will be because that is the right conclusion of fact on the state of the evidence at the end of the trial, not because of some artificial legal presumption that there must have been undue influence.’ (para. 106)
Lord Hobhouse concluded that:
‘… the so-called Class 2(B) presumption should not be adopted. It is not a useful forensic tool.’ (para. 107)
And I expressed similar views at para. 161:
‘For my part, I doubt the utility of the Class 2B classification … The presumption in Class 2B cases, … is doing no more than recognising that evidence of the relationship between the dominant and subservient parties, coupled with whatever other evidence is for the time being available, may be sufficient to justify a finding of undue influence on the balance of probabilities …’
30. The strong message from Etridge therefore is that, particularly in Class 2B cases, concentration on a so-called presumption of undue influence is likely to detract from the real issue, namely, whether the evidence justifies a conclusion that the impugned transaction was procured by undue influence. ……” (Emphasis added)
143.Having examined the evidence, I am not satisfied that there is sufficient evidence in support of Ds’ case that the 2005 Agreement can be regarded as an agreement procured by undue influence exerted by P over D1.
(1) The 2005 Agreement is identical to the 2004 Agreement in every material aspect. Both D1’s parents have signed the 2004 Agreement. Accordingly, the contents of the 2004 Agreement have been agreed by D1’s parents, who would certainly protect D1’s interests. The 2005 Agreement is a mere reproduction of the material terms of the 2004 Agreement.
(2) Further, the 2005 Agreement was later replaced by the 2008 Agreement. The two agreements are identical in every material aspect. D1 in fact has confirmed the 2005 Agreement by signing the 2008 Agreement. As said in the above, there is no pleaded case and no evidence showing that the 2008 Agreement was procured by undue influence exerted by P over D1.
(3) In these circumstances, I cannot draw any inference that the 2005 Agreement was obtained by P by undue influence. While there can be no prima facie case that the 2005 Agreement was obtained by undue influence exerted by P over D1, that P has not advised D1 to take independent legal advice prior to the execution of the agreement is neither here nor there. Put it simply, on undue influence, there is no prima facie case for P to answer.
144.I am not with Ds on the undue influence issue.
145.Counsel for Ds argue that the Contract should be regarded as in restraint of trade and therefore should not be enforceable.
146.The law concerning restraint of trade has been summarized by the Court of Appeal in Hummingbird Music Ltd v Acconci, in which Rogers VP said[36]:
“23. …… I consider that it is clear that a contract is not regarded in law as being in restraint of trade simply because it ties the parties during the continuance of the contract. The law has always favoured free trade. For that reason monopolies were regarded as being void at common law. The doctrine of restraint of trade as it applies to contracts is a corollary of that, but there is useful reference in the cases to the distinction between contracts which are, in effect, in furtherance of trade and those which are in restraint of trade. Once this distinction is appreciated it can be seen that it is not all contracts that contain a restriction as to whom one of the parties may work for that are considered to be in restraint of trade in the sense that they make that legal doctrine applicable. In the Esso case (at p. 331) Lord Wilberforce said:
‘The doctrine of restraint of trade (a convenient, if imprecise, expression which I continue to use) is one which has throughout the history of its subject-matter been expressed with considerable generality, if not ambiguity. The best-known general formulations, those of Lord Macnaghten in Nordenfelt [1894] A.C. 535, 565 and of Lord Parker of Waddington in Adelaide, [1913] A.C. 781, 793-797 adapted and used by Diplock L.J. in the Court of Appeal in the Petrofina case, [1966] Ch. 146, 180 speak generally of all restraints of trade without any attempt at a definition. Often we find the words “restraint of trade” in a single passage used indifferently to denote, on the one hand, in a broad popular sense, any contract which limits the free exercise of trade or business, and, on the other hand, as a term of art covering those contracts which are to be regarded as offending a rule of public policy. Often, in reported cases, we find that instead of segregating two questions, (i) whether the contract is in restraint of trade, (ii) whether, if so, it is “reasonable,” the courts have fused the two by asking whether the contract is in “undue restraint of trade” or by a compound finding that it is not satisfied that this contract is really in restraint of trade at all but, if it is, it is reasonable. A well-known text-book describes contracts in restraint of trade as those which “unreasonably restrict” the rights of a person to carry on his trade or profession. There is no need to regret these tendencies: indeed, to do so, when consideration of this subject has passed through such notable minds from Lord Macclesfield onwards, would indicate a failure to understand its nature. The common law has often (if sometimes unconsciously) thrived on ambiguity and it would be mistaken, even if it were possible, to try to crystallise the rules of this, or any, aspect of public policy into neat propositions. The doctrine of restraint of trade is one to be applied to factual situations with a broad and flexible rule of reason.’
24. Jonathan Parker J in the Panayiotou case analysed the previous judgments in some depth. At heading B2 on page 67 he addressed the question of which contracts would be considered as falling within the legal category of being in restraint of trade as part of a two stage process of the nature alluded to by Lord Wilberforce. The first stage was to draw a line between those contracts which are in restraint of trade whose reasonableness could then be considered and those contracts to which he referred as merely regulating normal commercial relations between the parties and therefore were free of the doctrine. In this connection he found it helpful to cite the following passage from the speech of Lord Pearce in Esso Petroleum v Harpers Garage (Stourport) Ltd [1968] AC 269. At page 328D-329A his lordship said:
‘The doctrine does not apply to ordinary commercial contracts for the regulation and promotion of trade during the existence of the contract, provided that any prevention of work outside the contract viewed as a whole is directed towards the absorption of the parties’ services and not their sterilisation. Sole agencies are a normal and necessary incident of commerce, and those who desire the benefits of a sole agency must deny themselves the opportunities of other agencies. So, too, in the case of a film-star who may tie herself to a company in order to obtain from them the benefits of stardom (Gaumont-British Picture Corpn., Ltd. v. Alexander [1936] 2 All E.R. 1686); see, too, Warner Bros. Pictures, Inc. v. Nelson [1936] 3 All E.R. 160; [1937] 1 K.B. 209). Moreover, partners habitually fetter themselves to one another.
When a contract ties the parties only during the continuance of the contract, and the negative ties are only those which are incidental and normal to the positive commercial arrangements at which the contract aims, even though those ties exclude all dealings with others, there is no restraint of trade within the meaning of the doctrine and no question of reasonableness arises. If, however, the contract ties the trading activities of either party after its determination, it is a restraint of trade, and the question of reasonableness arises. So, too, if during the contract one of the parties is too unilaterally fettered, so that the contract loses its character of a contract for the regulation and promotion of trade and acquires the predominant character of a contract in restraint of trade, in that case the rationale of Young v. Timmins (1831), 1 Cr. & J. 331 comes into play and the question whether it is reasonable arises.’” (Emphasis added)
147.With respect to counsel for Ds, I am not persuaded that the Contract can be regarded as agreement in restraint of trade. Like the Hummingbird case, I regard the co-operation between P and D1 as governed by the Contract as a joint venture. In this joint venture, P has agreed to use its best reasonable efforts to obtain work opportunities in the entertainment industry for D1 and to negotiate the best terms for such work. P has also agreed to provide guidelines to D1 in respect of her entertainment career in all aspects, and in relation to all matters relating to the interest and development of D1 in the entertainment industry. In return, D1 has agreed to appoint P as her sole manager worldwide. The Contract is a sole agency agreement, by which D1 has tied herself to P in order to obtain from P the opportunities of having works and guidance in the entertainment field. I regard the Contract as between P and D1 as a contract in furtherance of trade, not in restraint of trade.
148.I note that under the Contract, although D1 has completely tied herself to P, P has not tied itself to D1 to the same extent. As stipulated in §2.1(a)(iv) of the Terms and Conditions, P is not required to provide exclusive service to D1 and to engage all its time to manage the affairs of D1. P may also manage the affairs of other artistes, including those whose may be in competition with D1. In my view, this inequality would not make the Contract lose its character of a contract for the regulation and promotion of trade. After all, P is an artiste-management company. Naturally, one would not expect that P would provide management service to D1 only.
149.Counsel for Ds also argue that the Contract is an unconscionable bargain and should not be enforceable. Ds’ case is that in the Conference, AC did not advise D1 to seek independent legal advice, and urged D1 and Chau to return the signed contract to P the next day. AC also made the Representation on Industry Standard to D1. AC also asked them not to show the contract to any other person. With respect, all these factors would not make the Contract as a whole as an unconscionable bargain.
(1) As said in the above, there is no evidence showing that the Representation on Industry Standard is false.
(2) The 2004 Agreement is in Chinese and AC has given time to D1 and her parents to read the agreement. It cannot be said that the contractual bargain is unconscionable because AC has not advised them to seek independent legal advice. As a matter of law, there is no obligation on P to advise D1 to seek independent legal advice before entering into the Contract.
(3) That AC has urged D1 and Chau to return the Contract to P the next day cannot be a matter rendering the contractual bargain as an unconscionable bargain. The fact is that D1 and Chau has never requested to have a longer time to consider the matter.
(4) That AC has asked D1 and Chau not to show the contract to others is also not a matter rendering the contractual bargain as an unconscionable bargain. There is no evidence showing that had this request not been made by AC, D1 and Chau would have had shown the 2004 Agreement to someone, and as a result D1 would have had refused to sign the 2004 Agreement.
(5) Further, it is important to bear in mind that the 2004 Agreement has been confirmed by the 2005 Agreement and the 2008 Agreement. By the time of the 2005 Agreement, D1 has already had plenty of time to consider the terms of the contractual bargain between P and her. After having all these opportunities, she chose to sign the 2005 Agreement to confirm the 2004 Agreement. Similarly, by the time of the 2008 Agreement, D1 has already had a few years to consider the terms of the contractual bargain between P and her. She chose to sign the 2008 Agreement to confirm the contractual bargain again. In these circumstances, what has been said and done by AC in the Conference cannot render the whole contractual bargain unconscionable. After all, any impropriety would have been ratified by the 2005 Agreement and the 2008 Agreement.
150.D1 said in her evidence that when she signed the 2005 Agreement, she was bound by the 2004 Agreement and could not seek independent legal advice as to whether she should sign the 2005 Agreement. The same applied when she signed the 2008 Agreement. With respect, I do not regard these would render the Contract as a whole as an unconscionable bargain. All the 3 agreements are written in Chinese. A reasonable reader without any legal training would be able to understand the meaning of these 3 agreement. I cannot say that signing the 2005 Agreement and signing the 2008 Agreement are not informed choices made by D1.
151.Counsel for Ds also argue that by reason of the matters pleaded in [17] of the Re-Amended Defence and Counterclaim, the terms of the Contract are harsh and oppressive, and hence the contractual bargain is unconscionable.
152.With respect, subject to [153] to [163] below, I do not accept that the Contract between P and D1 is an unconscionable bargain because of the matters pleaded by Ds in their defence.
(1) Although P has not promised to bear the Production and Promotion Costs, P has agreed to find work opportunities for D1 and to negotiate the best terms of such work on behalf of D1. P would also provide guidance to D1 in respect of all the matters relating to her career in the entertainment industry. These efforts are valuable efforts made by P. By these efforts, P has helped D1 to build up her career in the entertainment industry.
(2) §3 of the Terms and Conditions is a term in the Contract, by which D1 has conferred some exclusive rights on P. I do not regard the existence of this term in a sole agency agreement as unconscionable.
(3) The percentage of the commission and the other benefits given to P are matters agreed upon agreed by P and D1 after negotiation. Likewise, the duration of the contract, and the clauses relating to extension of the term of the contract, are also matters agreed upon by P and D1 after negotiation. That D1 does not have a right to terminate the contract without P’s consent is also a matter agreed upon by P and D1. I agree with DL on one point, ie it would be necessary to spend a lot of resources and a very long period of time to groom an artiste. At the being, the artiste is a nobody and no one knows him or her. P has to find work opportunities for the artiste, and to arrange the artiste to work with some popular artistes or to appear in some popular shows or movies. P would also need to arrange promotion activities for the purpose of raising the popularity of the artiste. It is time-consuming and is a long term investment to turn a nobody to a super star. Further, P would support the living of the artiste by providing him or her interest-free advancements. The artiste would not be required to repay the advancements by a specific deadline. All these would be the price paid by P. With all these in mind, I would not say that the commission and the benefits given to P under the Contract are so unreasonable that would render the Contract as an unconscionable bargain.
(4) As to §2.2(r) of the Terms and Conditions, I agree with counsel for P that on a proper construction, that clause only provides that P as the manager of D1 would have the final right to decide on matters concerning D1’s performance of her job under the Contract and D1 should respect such decision. Naturally, for any matter which is unrelated to D1’s work, §2.2(r) would not apply. For example, if D1 wants to see a doctor to have a body check, that would be D1’s private matter and is unrelated to her work. She could certainly do the body check in her free time, and P would not interfere. §2.2(r) would certainly not cover a matter of this kind.
(5) As to §§2.2(u) and (v) of the Terms and Conditions, P’s case is that these clauses would only cover legal advice concerning problems pertaining to the jobs carried out by D1 as an artiste and not concerning any dispute, if any and at all, between P and D1 concerning the Contract. Having considered the terms of these clauses and applying common and commercial sense, I agree that the construction proposed by P is reasonable. I agree with P on this point.
(6) In respect of §2.1(a)(iv) of the Terms and Conditions, as said in the above, since P is an artiste-management company, one would not expect that P should provide management service to D1 only. As a matter of fact, there is no complaint from D1 that she enjoyed less or inadequate opportunity or care from P because of the existence of other artists engaged by P.
153.I agree that §2.2(p) of the Terms and Conditions is unreasonable and unconscionable. That clause requiring D1 not to become pregnant during the term of the Contract. Every woman has the right to bear child, and that right should not be taken away by a contract. The term of the Contract is 10 years, and that would mean that the Contract would prohibit D1 from bearing child in that 10-year period, which is undoubtedly a very long period. P has tried to argue that the prohibition is a normal term in a female artiste contract as the pregnancy of a female artiste would seriously hinder her career if not jeopardizing it. I do not accept this argument. First, there is no evidence showing that the prohibition is a normal term in a female artiste contract. Secondly, I do not accept that pregnancy would seriously hinder the career of a female artiste if not jeopardizing it. There is no evidential basis in support of this saying. Further, to say so would be discriminating pregnant artistes. In my view, §2.2(p) of the Terms and Conditions is an unconscionable prohibition.
154.The prohibition may also be unlawful. Discrimination against pregnant women is prohibited by the s.8 of the Sex Discrimination Ordinance (“the SDO”). By the operation of s.87(1)(b) and (c) of the SDO, §2.2(p) of the Terms and Conditions may be void and may have no effect. However, since issues concerning the SDO have not been raised by the parties in the pleadings and in the ALAI, those matters have not been canvassed in the trial. That being the case, I refrain from expressing a final view on the impact of the SDO on §2.2(p). It would be sufficient for me to say that by reason of the matters set out in the paragraph above, §2.2(p) is unreasonable, unconscionable and unenforceable.
155.However, that §2.2(p) is unconscionable and unenforceable would not render the whole contract void or unenforceable. I agree with P that §15 of the Terms and Conditions is applicable in the circumstances, and §2.2(p) can be severed from the Contract.
156.Counsel for Ds relies upon Midland Business Management Ltd v Lo Man Kui[37] and submits that once a term of the Contract is unreasonable or unconscionable, the term cannot be severed from the Contract and the Contract should be regarded as unenforceable. With respect, I am unable to agree.
157.In Midland Business Management Ltd, Lam J (as he then was) held that based upon the facts in that case, the blue-pencil could not save the particular contract in the case. However, the learned judge cited the blue-pencil test laid down in the English cases with approval. In that case, the learned judge said:
“40. [counsel] adopted the approach on blue pencil test in Sadler v Imperial Life Assurance [1988] IRLR 388 at p. 391-2 (approved by the Court of Appeal in Beckett Investment Group v Hall [2007] ICR 1539 at para. 43). In Sadler, the judge said,
‘In my judgment, the combined effect of those authorities is that a contract which contains an unenforceable provision nevertheless remains effective after the removal or severance of that provision if the following conditions are satisfied,
1. The unenforceable provision is capable of being removed without the necessary of adding to or modifying the wording of what remains.
2. The remaining terms continue to be supported by adequate consideration.
3. The removal of the unenforceable provision does not so change the character of the contract that it becomes ‘not the sort of contract that the parties entered into at all’.’”
158.Each case depends upon its own facts. In this case, I am of the view that removing §2.2(p) from the Contract would not affect the other provisions of the Contract in any way, and would not affect the scope and intention of the Contract. Further, there is no factual dispute between P and D1 concerning §2.2(p) at any time. P has never tried to enforce §2.2(p) against D1. In the circumstances, I am of the view that §2.2(p) can be carved out from the Contract, and the validity and the enforceability of the Contract would not be affected by the severance.
159.In other words, the discussion concerning §2.2(p) of the Terms and Conditions would not affect the rights and obligations under the Contract in this litigation.
160.For the reasons set out in [186] below, I am of the view that the Option provided in clause 9 of the 2004 Agreement is uncertain or unconscionable, and therefore cannot be enforceable. However, the unenforceability of the Option would not affect the other provisions of the Contract. In my view, the Option can be severed from the contract, and the other provisions of the contract (save and except those which should not be regarded as enforceable) stands and would not be affected by the severance.
161.For the reasons set out in [195] and [196] below, I am of the view that the provision saying that the Statements shall serve as conclusive evidence of the accounts between P and D1 in Clause 5(a) of the Contract (“the Conclusiveness Provision” - 其內容屬結論性及對藝人有約束力) should not be enforceable. At the same time, I am also of the view that the Conclusiveness Provision can be severed from the Contract. Removing the Conclusiveness Provision from the Contract would not affect the other enforceable provisions of the Contract, and would not affect the character of the Contract.
162.The reasonableness of §9.2 of the Terms and Conditions has also been argued by the parties. In my view, that clause is unreasonable and is a provision in restraint of trade. According to that clause, if P accepts D1’s request to terminate the Contract at an earlier time, D1 would still be forbidden to provide service within the ambit of §1.1 of the Terms and Conditions to any person or any company for a period of 7 years after the termination of the Contract. The prohibition is very wide and the duration of the prohibition is extremely long. I do not see any justification in support of such a wide prohibition which would last for an extremely long period. I hold that §9.2 of the Terms and Conditions is unenforceable. However, that clause can be severed from the Contract and would not affect the remaining provisions in the Contract.
163.Notwithstanding that the parties have agreed to include the provisions mentioned in [153] to [162] in the Contract, for the reasons set out in the above, these provisions should not be regarded as enforceable. While an express agreement cannot make these provisions as enforceable provisions, the waiver, estoppel, acquiescence, and/or laches raised by P would not have the effect of saving these provisions. What cannot be done expressly cannot be done impliedly.[38] Save and except these provisions, I am of the view that the Contract is valid and enforceable. As to the terms remain in the Contract after the severance, it would not be necessary for me to consider the waiver, estoppel, acquiescence, and/or laches raised by P.
G3. Issue 3 – Whether P has breached the 2004 Agreement, the 2005 Agreement and the 2008 Agreement?
164.I have already ruled that:
(1) Under the contract, the Promotion and Production Costs should be borne by D1.
(2) Save and except (a) §2.2(p) of the Terms and Conditions, (b) the Option, (c) the Conclusiveness Provision, and (d) §9.2 of the Terms of Conditions, the Contract is valid and enforceable.
165.These would have answered many questions listed under issue 3. Under Clause 3 of the Contract, P is entitled to have 65% of D1’s gross income as commission in the first 5-year period, and 55% of D1’s gross income in the second 5-year period. All the costs and expenses would be borne by D1. After deducting all these, the remaining balance would be D1’s entitlement. For the reason set out in [184] below, D1 should also be entitled to have all the incomes from her music products after deducting all the relevant expenses therefrom. Provided that D1’s entitlements have been credited to D1, D1 cannot have any complaint. This is the contractual bargain between the parties. As to whether all D1’s entitlements have been credited to D1, this would be a matter to be investigated in Part II of these proceedings. It would only be necessary to consider whether P is holding any sum on trust for D1, if it is found that P has not given D1 all her entitlements in accordance with the Contract. This question should be considered in Part II of these proceedings if necessary.
166.If D1 has already obtained all her entitlements under the Contract, whether P has given part of D1’ gross income to P’s associated companies is neither here nor there. The sums paid by P to P’s association companies would either be the Promotion and Production Costs which have to be borne by D1, or part of P’s commission in respect of which P is entitled to have under the Contract. D1 would have a legitimate complaint only if P has not given her all her entitlements under the Contract. As said in the above, this should be an issue investigated in Part II of these proceedings.
167.In respect of the 2008 Incident, it is a fact that P did not allow D1 to hold a press conference to clarify the matter. However, P had advised D1 how to say to the press. D1 might not agree with the approach adopted by P. However, it could not be said that P had entirely did nothing to handle the 2008 Incident. As to which approach would be a better approach in handling the matter, that would be a matter of opinion. In my view, the approach adopted by P, ie not to say too much to the press other than stating that D1 is innocent, is not outside the generous ambit within which a reasonable disagreement is possible.
168.D1 was required by P to issue the album “Shining” after the 2008 Incident. I would not say that P had breached the Contract by doing so. Being an artiste, it would be necessary for D1 to have some appearances in the public from time to time. P considered that it would be necessary and proper for D1 to issue the album “Shining” after the 2008 Incident. In my view, this move cannot be said as a breach of the Contract.
169.It is my finding that in the 2011 Dinner, DL did say to D1 that D1 would have a positive income in the following year. The 2011 Promise did not materialize. However, it cannot be said that P has breached the Contract because of this. In my view, the 2011 Promise is a mere expectation or estimation uttered by DL in the 2011 Dinner. Nothing would be actionable by reason of the fact that the 2011 Promise did not materialize.
170.In respect of the discussions concerning D1’s entitlement in the Extended Term, these are discussions between the parties at the negotiation stage. The fact is that no new contract has been signed at the end. No one can base upon these discussions to say that P has breached the Contract.
171.As to the Up-skirt Photo Incident, Yeung said that he had talked to a person known as “Lo Mei” from Apple Daily and requested that person not to publish the photos. This point is not challenged by Ds. I accept that this has been done by P. Ds suggest that P should do more but has failed to do so, ie to take legal action to prohibit the publication of the photos. However, there is inherent risk in litigation and the one starting a litigation cannot definitely say that he would be the ultimate winner. Further, litigation would attract further publicity on the matter. Choosing not to go into litigation cannot be criticized as being an unreasonable decision.
172.It is Ds’ case that since around 16 April 2014, DL, with the actual or apparent authority of P, spoke derogatory words of D1 to members of the press on multiple occasions, expressly or impliedly meaning that:
(1) D1 exaggerated and twisted facts when speaking to the media;
(2) The financial problem which D1 is facing is attributable to her own excessive expenditure;
(3) D1 is acting unreasonably and without integrity in declining to continue to work for P;
(4) D1 acted selfishly and without consideration for P in declining to continue to work for P;
(5) D1 is ungrateful for the efforts that P had put in to boost D1’s career; and
(6) D1 is pretending to be pitiful to elicit sympathy from the public.
173.It is clear that the disputes between P and D1 herein are contractual dispute, and defamation has not been pleaded by D1 as a cause of action against P. Counsel for Ds submit that the matters set out in the paragraph above are matters relied upon by Ds to show that P has breached the implied term of the Contract that P would not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between D1 and P. Although I agree that there should be such an implied term in the Contract (see [176] below), I would not say by reason of the matters set out in the paragraph above, P has breached this implied term. It is an indisputable fact that after the Feb 2014 Incident, the relationship between P and D1 became most unsatisfactory. As stated in the Agreed Chronology, it is an agreed fact that in March 2014, D1 refused to take phone calls or accept delivery of correspondence from P, and D1 also failed to be contactable by P. D1 also declined to take up a role in the film “Girls Police Academy”. In that context, DL made some comments concerning D1 to the press. Looking the matter in the context, I would not say that the comments made by DL to the press in April 2014 constitute a breach of the Contract by P.
174.As to whether P has adversely affected D1’s career by often quoting fees which are unreasonably high to potential customers, I am of the view that proposing a fee is an art, and different persons may handle the matter in different ways. I would not say the approach adopted by P constitutes a breach of the Contract. After all, while P was in charge of D1’s affairs, D1’s gross income was increasing over the years.
175.As to whether P has failed to give a proper and complete account of D1’s income to D1, this is a matter relating to the Conclusiveness Provision in the Contract. I will deal with this issue in [195] and [196] below.
176.I now come to the Feb 2014 Incident. In my view, P has committed a repudiatory breach of the Contract in this incident.
(1) Ds’ case is that there is an implied term in the contract that P would not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between D1 and P. Given that the contract is an artiste-management contract, by which D1 has appointed P as her sole agent for a 10-year period and has placed herself in P’s hands for such a long period, I am of the view that this term ought to be implied into the contract as a matter of business efficacy and as an obvious intention of the parties.
(2) At the end of the Birthday Party, after the other people left, DL, AL and Yeung became furious towards Dong and D1. They accused D1 of telling people about her dissatisfactions with P. Yeung became violent and threw some glass receptacles towards Dong and D1. The glass receptacles did not hit them. D1 felt very frightened and her feet were all wet. As evidenced by the Messages to CHN, the situation was chaotic at the time. By throwing glass receptacles towards D1, Yeung has attempted to use violence against D1. Yeung was P’s senior manager and was the one in charge of matters concerning D1. The complaint made by DL, AL and Yeung after the Birthday Party is something relating to D1’s works. I hold that Yeung’s violent behaviours at the end of the Birthday Party are acts attributable to P, and P should be responsible for these acts. By these violent acts, P has breached the implied term of the Contract as set out in the above. The breach is a serious one and constitutes a repudiatory breach of the Contract.
177.Notwithstanding the fact that the Contract has been repudiated by P by Yeung’s acts in the 2014 Feb Incident, unless the repudiation has been accepted by Ds, the contract would still remain on foot and Ds would still be bound to continue to perform the contract. Merely being entitled to accept a repudiation to bring the contract to an end, without actually accepting the repudiation, would not have the effect of terminating the contract. Acceptance of repudiation must be clear and unequivocally. As said by Ma JA (as he then was) in Chao Keh Lung v Don Xia[39]:
“73. …… All I would add in relation to the aspect of acceptance of breach is that the facts of the present case starkly demonstrate the application of the principle that where a repudiatory breach takes place, in order to terminate the contract, the so-called innocent party must clearly and unequivocally accept the repudiation. If he does not do so, he will run the risk of being in breach himself were he not to perform his side of the bargain and thereby allow the original wrongdoer to ‘turn the tables’ on him: see Frost v. Knight (1872) LR 7 Exch. 111; Avery v. Bowden (1855) 5 E&B 714, (1856) 6 E&B 953. The basis for this conclusion (often ignored in the business world) is that unless a contract is terminated, it remains in existence for the benefit of the wrongdoer as well as the innocent party.
74. I would also take the opportunity again to reiterate the point that there is no halfway situation whereby the innocent party is able to keep the contract alive and yet not perform his obligations arising thereunder. Any misconceptions in this regard arising from the case of Braithwaite v. Foreign Hardwood Co. Ltd. [1905] 2 KB 543 (and the numerous cases that followed this decision) have now been swept away by the decision of the House of Lords in Fercometal SARL v. Mediterranean Shipping Co. SA [1988] AC 788.”
178.The conduct relied on as constituting acceptance of repudiation must not merely unequivocally convey to the repudiating party that the aggrieved party is treating the contract as at an end, but must also unequivocally convey to the repudiating party that the aggrieved party is treating the contract as at an end because of the repudiating party’s repudiatory breach of the contract.[40]
179.In my judgment, it is untenable for Ds to say that they have terminated the Contract by D1 refusing to take phone calls or accept delivery of correspondence from P and otherwise failing to be contactable by P and by declining to take up a role in the film “Girls Police Academy”, or alternatively by refusing to enter into a new contract for the Extended Term. None of these acts has the effect of unequivocally convey to P that Ds are treating the contract as at an end because of P’s repudiatory breach of the contract committed in the Feb 2014 Incident.
180.In my judgment, the Contract has not been terminated at any time during the 10-year period stipulated therein.
181.Counsel for Ds has tried to argue that apart from self-help rescission at common law, Ds are also relying upon judicial rescission in equity. Counsel has drawn my attention to Achieve Goal Holdings Ltd v Zhong Xin Ore-Material Holding Co Ltd[41], in which Au-Yeung J said:
“415. A distinction should be drawn between self-help rescission at common law and judicial rescission in equity. In the former case, the contract is brought to an end by the claimant’s announcement of his election to rescind and the consequences take effect automatically. The role of the Court is only to pronounce upon the efficacy of that election and give effect to its consequences; there is no scope for the exercise of judicial discretion in deciding whether to rescind or what the consequences should be. However, this can only be invoked in a limited class of cases such as fraud or duress. In the latter case, the contract remains in force until the order takes effect; and it can be invoked for all or almost all grounds of rescission, such as fiduciary misdealing, undue influence and innocent misrepresentation. In equity, a contract or other transaction is only rescinded in accordance with the terms of a court order. The innocent party’s equity to rescind is an entitlement to apply to the court for such an order. The contract remains in force until the order takes effect. See Snell’s Equity, 33rd ed, §§15-011 – 15-012.” (Emphasis added)
182.With respect, I am of the view that Ds cannot derive any assistance from judicial rescission in equity. It has not been raised in Ds’ pleadings, and it has not been set out in the ALAI that Ds are seeking judicial rescission in equity. In any event, when a party is seeking judicial rescission in equity, the contract would remain in force until the order made by the court takes effect. The Contract has already come to the end at the expiration of the 10-year period stipulated therein, ie on 2 May 2014. To talk about judicial rescission in equity now would not serve any meaningful purpose.
183.As to whether D1 should be entitled to have income from her sound recordings notwithstanding §1.2(d) of the Terms and Conditions, P in fact does not dispute that D1 could have income from her sound recordings. §1.2(d) of the Terms and Conditions, on the face of it, has the effect of excluding those incomes from D1’s gross income. However, counsel for P has made it clear that P has never contended that D1 is not entitled to have incomes from her sound recordings.
184.I should mention that based upon the evidence accepted by this court, D1 would be entitled to have all the incomes from her music products. See [107(15)] in the above. However, it has not been pleaded on what basis D1 would be entitled to have all those incomes. Further, no such basis is mentioned in the ALAI. However, counsel for P has agreed that if I am not with P on the 2006 Oral Agreement and the 2009 Oral Agreement pleaded in P’s case, P would accept that as to the incomes from D1’ music products received by P, ie “經理人於合約期內所發行含有藝人演藝事業之一切音像產品所得之一切收益” as stipulated in §1.2(d) of the Terms and Conditions[42], D1 should receive all these incomes after deducting all the relevant expenses. In view of this concession, I hold that D1 should be entitled to have all the incomes from her music products after deducting all the relevant expenses therefrom.
G4. Issue 4 – the Option
185.In my view, the Option is not enforceable. Alternatively, P is not entitled to exercise the Option. In the further alternative, the Option has not been validly exercised.
186.First, I am of the view that the terms of the Renewed Contract as contemplated in the Option are subject to negotiation between the parties and are matters to be agreed. In the absence of a further agreement between the parties, the terms of the Renewed Contract are uncertain and there cannot be a new enforceable contract between the parties. Alternatively, the Renewed Contract as contemplated in the Option is unconscionable. Either way, there cannot be a new enforceable contract pursuant to the Option without any further agreement between the parties.
(1) The Contract contains the following:
(a) Clause 9(a) - the Option, pursuant to which there would be a new contract between P and Ds for a term of further 5 years at P’s options, and “the terms and conditions will be at least the same as the conditions of the original contract”;
(b) Clause 9(b) – the First Right of Renewal in respect of a further 5 years after the 5-year period stipulated in Clause 9(a).
(2) Both the Option and the First Right of Renewal are benefits given to P under the Contract.
(3) The terms and conditions of the Renewed Contract shall be at least the same as the terms and conditions of the Contract. That being the case, the Renewal Contract should also contain the Option and the First Right of Renewal. With the Option being repeated in the Renewed Contract, that would mean that P would be entitled to have a further renewed contract pursuant to the Option in the Renewed Contract as of right. The Further Renewed Contract would also contain the Option. Such a mechanism would have the effect of allowing P to keep to have a contract with Ds forever. That cannot be reasonable.
(4) If there is a Renewed Contract, whether §2.2(p) of the Terms and Conditions should be kept in the Renewed Contract should naturally be a matter subject to discussion. If P is reasonable, P should have no intention to unilaterally enjoin D1 from being pregnant for a further period of 5 years after the 10-year term of the original contract.
(5) Further, as time passes, the artiste would become more valuable in the market. As a result, the artiste would be entitled to have more benefits under the contract. This is in fact a matter contemplated in the Contract. In the first 5-year period, P would get 65% of D1’s gross income as commission. However, in the second 5-year period, P would only get 55% of D1’s income as commission. The share given to D1 in the second 5-year period would be larger than the share given to her in the first 5-year period. If there would be a Renewed Contract after the 10-year period, naturally D1 would be entitled to ask for more benefits in the Renewed Contract.
(6) With the aforesaid in mind, I am of the view that the terms of the Renewed Contract would be a matter to be discussed by the parties. In the absence of any further agreement between the parties, the terms of the Renewed Contract are uncertain and there cannot be a new enforceable contract.
(7) P has tried to argue that there could not be any issue on the terms of the Renewed Contract on a proper construction of the 2004 Agreement. The terms of the Renewed Contract would be same as those of the 2004 Agreement, save that there would be no option to renew as contained in Clause 9(a) and with other necessary modifications to take into account the fact that the contract was a renewed or extended contract for 5 years as from 3 May 2014.
(8) With respect, I am unable to accept this submission.
(a) Clause 9(a) expressly provides that the terms of the Renewed Contract would be at least the same as the terms of the Contract. With this stipulation, it is difficult to say that the Renewed Contract would not contain the Option. The Option is an important benefit conferred on P under the Contract. Without including the Option, the terms of the Renewed Contract cannot be said as at least same as the terms of the Contract.
(b) As to what are the other necessary modifications which should be taken into account in order to have a new contract for the Extended Term, the matter is entirely unclear. For example, whether deletion of §2.2(p) of the Terms and Conditions in the Renewed Contract could be considered as a necessary modification, given the age of D1 at the end of the 10-year period provided in the Contract. Whether there should be other necessary modifications, given the experience, the fame and the popularity gained by D1 at the end of the 10-year period. All these matters are unclear unless there is a further agreement on all these reached by the parties.
(c) In fact, Clause 9(c) expressly mentions that there should be negotiation concerning the renewal of the Contract as provided in Clause 9(a). Reading the Contract as a whole, in my view, the parties have clearly agreed that the terms of the Renewed Contract would be a matter to be discussed and to be agreed by the parties.
(9) If the terms of the Renewed Contract are not modified by a further agreement between the parties and same as the terms of the Contract, by reason of the matter set out in subparagraph (3) above, I am of the view that the Renewed Contract is unconscionable. Following Clause 9(a), the Renewed Contract would also contain the Option. That would mean that P could be able to tie D1 forever. That would be so unreasonable and unconscionable, and the court must intervene in the circumstances.
187.Second, if I were wrong and the Option is in fact enforceable, I am of the view that P would not be entitled to exercise the Option as a result of the violent acts done by Yeung against D1 in the Feb 2014 Incident. In Clause 9(a), it is expressly stipulated that the artiste cannot by any excuse delay or refuse to comply with that contractual clause. However, “any excuse” provided in Clause 9(a) must mean any unreasonable excuse. Clause 9(a) could not have the effect of preventing D1 from refusing to have a further contract with P on a reasonable ground. This construction is not disputed by counsel for P.
188.The senior manager of P has attempted to use violence against D1 in February 2014, and D1 has suffered PTSD as a result. D1 needed to see a psychiatrist and to receive treatment after the Feb 2014 Incident. In these circumstances, it would be most unreasonable to say that P could tie D1 and to place her under Yeung’s supervision for 5 more years by exercising the Option. I accept that after the Feb 2014 Incident, D1 has lost trust and confidence on P. In my judgment, by reason of the wrongful acts committed by Yeung in the Feb 2014 Incident, D1 has a reasonable ground not to comply with Clause 9(a), and P is not entitled to exercise the Option.
189.Third, in any event, I am of the view that no valid notice has been served on Ds for the purpose of exercising the Option. Ds contend that in accordance with Clause 9(a), in order to exercise the Option, the written notice stipulated in the clause (“the Option Notice”) must be served by P on D1 on the 30th day prior to the expiration of the term of the Contract (於本合約期終止日前三十天以書面形式通知藝人), which should be 2 April 2014. However, no such notice was served on D1 on that date. P submits that the true meaning of Clause 9(a) is that the Option Notice could be served on D1 at any time before the 30th day prior to the expiration of the term of the Contract, and P has given the Option Notice to D1 in accordance with Clause 9(a). I respectfully agree with Ds and disagree with P.
(1) The plain meaning of Clause 9(a) supports Ds’ contention. So by the literal approach, the true meaning of Clause 9(a) is the one suggested by Ds.
(2) By the purposive approach, I am of the view that Ds’ construction is also a reasonable interpretation of Clause 9(a).
(a) As time passes, an artiste may have some development in his or her career. He or she may gain fame and popularity. The artiste’s status in the entertainment industry at the end of the 10-year period may be different from the status at the very beginning of the 10-year period. Naturally, P would need to examine the market value of an artiste first, and then proceed to consider whether P should exercise the Option. Similarly, the artiste would need to find out his or her market position, so that he or she would know what terms he or she may request in the negotiation leading to the Renewed Contract. For all these purposes, the most suitable time of examining the artiste’s market value would be at a time close to the end of the 10-year period.
(b) If P’s construction of Clause 9(a) is correct, that would mean that immediately after the signing of the 2004 Agreement, P may serve the Option Notice on D1 to extend the term of the Contract for 5 years. For the sake of discussion, if P’s contention is correct, the Option Notice can be served on D1 even just a few minutes after the signing of the 2004 Agreement. In my view, this construction is contrary to common and commercial sense. With respect, counsel for P has unable to explain such an interpretation would serve what meaningful purpose.
190.As a matter of completeness, I would also briefly set out my view on whether there can be any estoppel against P by reason of the Promise regarding Renewal made by AC on behalf of P to D1 in the Conference.
(1) The requirements of promissory estoppel have been set out by Ribeiro PJ in Luo Xing Juan v Estate of Hui Shui See[43], in which the learned judge said (footnote omitted):
“55. A promissory estoppel may be said to arise where (i) the parties are in a relationship involving enforceable or exercisable rights, duties or powers; (ii) one party (“the promisor”), by words or conduct, conveys or is reasonably understood to convey a clear and unequivocal promise or assurance to the other (“the promisee”) that the promisor will not enforce or exercise some of those rights, duties or powers; and (iii) the promisee reasonably relies upon that promise and is induced to alter his or her position on the faith of it, so that it would be inequitable or unconscionable for the promisor to act inconsistently with the promise.”
(2) At the time of the Conference, there was not yet any contract between P and D1. At that time, P and D1 were not in a relationship involving enforceable or exercisable rights, duties or powers. That being the case, the Promise regarding Renewal cannot be the basis or a promissory estoppel operating against P.
(3) The point has been made clear by the learned author in Chitty on Contracts:[44]
“It has, indeed, been suggested that the doctrine can apply where, before the making of the promise or representation, there is no legal relationship giving rise to rights and duties between the parties …… But it is submitted that these suggestions mistake the nature of the doctrine, which is to restrict the enforcement by the promisor of previously existing rights against the promise. Such rights can arise only out of a legal relationship existing between these parties before the making of the promise or representation. To apply the doctrine where there was no such relationship would contravene the rule … that the doctrine creates no new rights.”
(4) There is no evidence showing that at the time of the 2005 Agreement, the Promise regarding Renewal was repeated by P and relied upon by D1. Similarly, there is no evidence showing that at the time of the 2008 Agreement, the Promise regarding Renewal was repeated by P and relied upon by D1. Hence, the Promise regarding Renewal could not affect the 2005 Agreement and the 2008 Agreement.
(5) At the final submissions, Counsel for Ds has said that Ds would not rely upon the Promise regarding Renewal as a ground to resist the Option.
191.In my judgment, P is not entitled to rely on estoppel by convention to contend that Ds are estopped from denying that P had validly exercised the Option. The pleaded detriment in support of the estoppel is “[P] acted to its detriment by making advancement of the aforesaid sum of HK$500,000 to [D1] and continued to look for and arrange jobs for [D1] as to be undertaken after the expiration of the 2008 Agreement”.[45] However, according to D1’s evidence (which is accepted by this court), the HK$500,000 was a loan provided by P to D1 in March 2013 for the purpose of easing Chau’s worry. The advancement is not related to the extension of the Contract at all. While DL was giving evidence, DL agreed to this. So the HK$500,000 is unrelated to the renewal of the Contract. There is also no reliable evidence showing that P continues to look for jobs for D1 because of the extension of the Contract. There is no evidential basis in support of the estoppel by convention pleaded by P.
192.There is also an estoppel by representations pleaded by P, but the estoppel by representations is not an issue set out in the ALAI. For the sake of completeness, I would briefly deal with this issue. In P’s pleadings, the alleged detriment in support of this estoppel is also those set out in the paragraph above[46]. For the same reason, there is no evidential basis in support of this estoppel.
G5. Issue 5 – Whether there should be repayment from one party to another party?
193.I have ruled that the Promotion and Production Costs should be borne by D1 under the Contract. Accordingly, Ds would not be entitled to any repayment of the Promotion and Production Costs from P.
194.In my judgment, the 2006 Oral Agreement and the 2009 Oral Agreement as alleged by P do not exist. Subject to the matter discussed in [184] in the above, the parties’ respective entitlements should be determined by reference to the Contract only.
195.I am of the view that the Conclusiveness Provision in Clause 5(a) of the Contract should not be regarded as enforceable. In accordance with the plain meaning of Clause 5(a), by merely producing the Statements to D1, D1 would be bound by all the calculations set out in the Statements, and the Statements would be conclusive. P would have no obligation to provide any supporting document to D1, and D1 would have no right to inspect the supporting documents and to make any enquiry. This cannot be a fair and unreasonable arrangement by whatever standard.
196.In my view, D1 is entitled to see all the supporting documents and to do her own checking. D1 has asked to see the supporting documents concerning her incomes, but she has been denied to have such an opportunity. Although she has signed many Statements, she signed the Statements under the protest that she has been deprived of the opportunity of seeing the supporting documents concerning her incomes. In the circumstances, to say that D1 would be bound by the calculations set out in the Statements would not be fair and equitable.
197.As to whether Ds are time barred from taking issue with the Statements, in my view, this is a red herring. The real issue is who was owing what sum to whom at the end of the 10-year contract period. P is claiming that D1 is owing HK$1,101,906.70 to P, but at the same time D1 would be entitled to have a credit of HK$151,239.79 and such further incomes and earnings of D1 as may be received by P. My ruling is that the Statements cannot be conclusive evidence on this issue. D1 is entitled to see all the supporting documents for the purpose of meeting this claim put forward by P.
198.In my judgment, as to whether any payment is due from one party to another party, this is the exercise to be conducted in Part II of these proceedings. The assessment would be conducted in accordance with my ruling made in this judgment, namely:
(1) Subject to subparagraph (2) below, the parties’ respective entitlements should be determined by reference to the Contract only.
(2) D1 is entitled to have all the incomes from her music products after deducting all the relevant expenses therefrom.
(3) The term of the Contract is from 3 May 2004 to 2 May 2014. There is no extension after this period. From 3 May 2014 onwards, there is no contract between P and Ds.
(4) Under the Contract, the Promotion and Production Costs are to be borne by D1.
(5) The Statements cannot be regarded as conclusive evidence. D1 is entitled to see all the supporting documents concerning the Statements.
199.If it is found that any net sum is due from P to D1 after conducting the aforesaid assessment, as to whether D1 may have a proprietary claim in respect of that sum, and whether D1 should be entitled to have compound interest on that sum, these would also be determined in Part II of these proceedings.
G6. Issue 6 - Remedies
200.Most of the questions listed under issue 6 have been answered in the above. The remaining question is whether D1 should be entitled to have any damages as a result of P’s breach of the Contract. In my judgment, the only breach of the Contract committed by P is the one set out in [176] in the above. Whether D1 should be entitled to have any damages as a result of this breach would be investigated in Part II of these proceedings.
201.I have set out my ruling on the contested issues in Part I of these proceedings in this judgment. As to what remedies this court should give as a result of my judgment, I direct the parties to have discussion on this and to prepare an agreed draft order in accordance with this judgment and to submit the agreed draft to the court within 21 days. If an agreement cannot be reached, each side shall lodge their own draft order (together with written reasons in support of the proposed draft) by the end of the said 21-day period.
H. DEPOSITION
202.Each party’s claim is allowed to the extent as set out in the above. The ruling made by me in this judgment shall form the basis of the assessment exercise, which would be Part II of these proceedings. I direct that the parties do submit agreed directions concerning Part II of these proceedings to the court for my approval within 35 days. In the absence of an agreement between the parties, each side shall lodge their own proposed directions together with reasons in support thereof to the court by the end of the said 35-day period.
203.As to costs, the general rule is that costs should follow the event. In this trial, each party is partially successful. In my view, the extent of success of each party is more or less the same. Taking a broad brush approach, as to costs up to the date of this judgment, I would make no order on a nisi basis. Any application for an order varying this costs order nisi shall be taken out within 28 days, otherwise the costs order nisi will become absolute.
204.Lastly, it remains for me to thank counsel for the assistance rendered to the court.
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( MK Liu ) |
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Deputy High Court Judg |
Mr Raymond Lau & Mr Stephen Ma, instructed by Y K Lau & Chu, for the plaintiff (Remarks : Mr Stephen Ma was excused in the afternoon on 21 January 2022)
Ms Bianca S W Yu, instructed by Tony Kan & Co, for the 1st and 2nd defendants
[1] Both the original terms in Chinese and the agreed translation of these clauses are set out for reference.
[2] “條款與條件” annexed to the 2004 Agreement. It is not in dispute that the terms and conditions are part of the 2004 Agreement.
[3] At the material times, DL was the chairman and the management director of the holding company of the Universe Group. He was also a director of P. DL was also a director of Universe Entertainment Ltd (“UEL”), Universe laser & Video Co Ltd (“ULV”), Universe Music Ltd (“UML”), Universe Digital Entertainment Ltd (“UDE”), Universe Films Distribution Co Ltd (“UFD”), and Universe International Technology Ltd (“UITL”). All these companies are members in the Universe Group.
[4] At the material times, Yeung was the Head of the Artiste Management Department of P. Yeung was also the artiste manager of D1 during D1’ later days in P.
[5] By the said personal guarantee, D1 has guaranteed that D2 would comply with the terms of and would perform the 2008 Agreement. In the event that D2 has failed to perform the 2008 Agreement, D1 would bear the contractual obligations.
[6] Al is the younger brother of DL. At the material times, AL was the Chief Operating Officer of UIFH, overseeing contractual matters of UIFH.
[7] (2006) 9 HKCFAR 334
[8] HCA 1734/2009, 8 April 2014
[9] [2009] 5 HKLRD 513
[10] [2019] EWHC 26 (Ch), cited and applied by DHCJ Paul Lam SC in Taishin International Bank Co Ltd v QFI Ltd [2020] HKCFI 2116, [13]
[11] [2011] 2 All ER 65
[12] [2007] 3 HKLRD 439, 480-481
[13] [2003] 3 HKLRD 296, [34]
[14] [1998] PIQR 324, 340
[15] [2004] 1 HKC 434, 443E-444C
[16] [2012] 5 HKLRD 524
[17] [2014] 6 HKC 155
[18] Trial Bundle 16, pages 3332, 3333
[19] DL’s evidence on 6 October 2021: See Transcript, 205C-206I
[20] Trial Core Bundle 1, page 284
[21] Trial Bundle 8, page 1557
[22] Trial Core Bundle 2, page 397
[23] P has not disclosed that document, if the document really exists.
[24] The matter concerning D1’s music incomes would be further discussed in [183] and [184] below.
[25] Trial Bundle 10, page 2025
[26] Dr Chan is a specialist in psychiatry.
[27] Trial Bundle 10, pages 2022 to 2026
[28] Trial Bundle 11, page 2220
[29] Trial Bundle 4, page 730; Trial Bundle 7, pages 1502-1505
[30] Chitty on Contracts (33rd Edition), Volume 1, §7-006
[31] (1999) 2 HKCFAR 279, 296D-I
[32] [2000] 2 HKLRD 833, 841D-H
[33] See Chitty on Contracts (33rd edition), Volume 1, §9-007
[34] See Chitty on Contracts (33rd edition), Volume 1, §9-049
[35] (2004) 7 HKCFAR 579
[36] [2010] 1 HKLRD 587
[37] [2011] 1 HKLRD 470
[38] The Incorporated Owners of Hoi Luen Industrial Centre and Another v Ohashi Chemical Industries (Hong Kong) Ltd (CACV 3/1995, 2 March 1995), per Godfrey JA (as he then was) at [6]
[39] [2004] 2 HKLRD 11
[40] Kar Ho Development Co Ltd v Axis Investment [2001] 1 HKC 86, per Keith JA at 97D-F
[41] [2018] HKCFI 2718
[42] By §1.2 of the Terms and Conditions, incomes from D1’s music products are not part of the “artiste’s income” as defined in the Contract.
[43] (2009) 12 HKCFAR 1
[44] (33rd Edition), Volume 1, §4-089
[45] Re-Amended Reply and Defence to Counterclaim, [68B(c)]
[46] Re-Amended Reply and Defence to Counterclaim, [68C(c)]
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