Yu Tai Keung Tim v. Billion Town Corporate Consultants Ltd
Read the full judgment text of HCLA 22/2020 on BabelCite. This HCLA judgment was delivered on 29 July 2022.
1. The respondents (“ Mr Yu ” and “ Madam Wong ”, respectively; and “ Respondents ” , collectively) were property agents formerly employed by the appellant (“ Company ”).
Cited by 2 cases · Cites 4 cases
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HCLA 22/2020 and 23/2020 (heard together) HCLA 22/2020 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE LABOUR TRIBUNAL APPEAL NO 22 OF 2020 (On appeal from LBTC 3264/2018) ______________ BETWEEN
______________ AND HCLA 23/2020 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE LABOUR TRIBUNAL APPEAL NO 23 OF 2020 (On appeal from LBTC 3265/2018) ______________ BETWEEN
______________ Before: Hon Au-Yeung in Court Date of Hearing: 26 November 2021 Date of Judgment: 29 July 2022 __________________ J U D G M E N T __________________ A. INTRODUCTION 1.The respondents (“Mr Yu” and “Madam Wong”, respectively; and “Respondents”, collectively) were property agents formerly employed by the appellant (“Company”). 2.The Respondents were involved in a project concerning acquisition of a building in Sai Ying Poon (“the Project”). They were tasked with procuring the owners of the building to sell their units to a third-party buyer, and they would receive commission from the Company. The Respondents brought their claims in the Labour Tribunal contending that they were entitled to a greater amount of commission than what they were actually paid. 3.In their original claim forms and their written opening statement, the Respondents based their claims on a calculation method set out in a document entitled “(附件) 營業員佣金分配制度” (described in the Tribunal’s Decision as “Exhibit C-8”), which computed commission based on the employee’s work performance during 4 stages of the Project (“Stage-Based Method”). 4.After the Respondents had finished giving their evidence, the Deputy Presiding Officer (“DPO”), on his own initiative, invited the Respondents to amend their claim forms to introduce a case based on a different calculation method, namely, by way of equal distribution amongst all employees who had participated in the Project (“Equal Distribution Method”). The amendment will be referred to as the “Disputed Amendment”. 5.The DPO proceeded to rule in favour of the Respondents’ amended case and held that Exhibit C-8 was not binding on them. The DPO gave judgment to the Respondents. The Reasons for Decision were given on 26 January 2021 (“Decision”). 6.This is the Company’s appeal. The Company complains that the DPO should not have allowed (let alone encouraged) the Respondents to change their case, in the middle of the trial. It went beyond the Tribunal’s inquisitorial power. The question as to whether Exhibit C-8 was binding on the Respondents was never in issue prior to the change of case. If the issue which was fact-sensitive was properly raised from the outset, it could have changed the entire course of the evidence. The permission to amend was also procedurally unfair as it caused severe prejudice to the Company. Further, there was no foundation for the DPO to rule that Exhibit C-8 was not binding on the Respondents who had adopted the calculation method therein in their original claim forms. The Company also asserts that Mr Yu who had left employment before completion of the sale and purchase agreements was not entitled to commission because of clause 1H of the Employment Agreement (“Clause 1H”). 7.On 10 February 2021, this Court granted leave to the Company to appeal. By the time of this hearing, the appeal is confined to 3 grounds only:
B. FACTUAL BACKGROUND 8.The factual background as found by the Tribunal has been aptly summarized by Mr Chang SC, leading Mr Eugene Kwan, for the Company, and I gratefully adopt the same. B1. The Employment Agreements and the Project 9.Mr Yu and Madam Wong were property brokers employed by the Company. They were involved in the Project concerning acquisition of Tsui Wah Building, 120-122 High Street, Sai Ying Pun (“Building”). 10.The employment relationship between the Company and the Respondents was governed by Employment Agreements first signed on 1 April 2016, later amended by Supplemental Agreements dated 1 June 2017 (collectively “Employment Agreements”). Under those Employment Agreements, Mr Yu and Madam Wong were entitled to receive a base salary plus commission from the Company. 11.The Project first began in March 2017. The Company’s objective was to procure the owners of the Building to sell their units to a buyer, Pro Shine International Inc. Limited (“Buyer”), so that the requisite threshold for a compulsory sale under s.3(1) of the Land (Compulsory Sale for Redevelopment) Ordinance (Cap 545) could be achieved. 12.A total of 7 property brokers (including Mr Yu and Madam Wong) were involved in the Project:
13.By October 2017, various owners of the Building (including the owners of Flat 2A, 2B, 2C and 2D) had already signed provisional agreements to sell their units to the Buyer. However, the Buyer did not sign the provisional agreements until 8 December 2017. Therefore, as at the time of Mr Yu’s termination of employment with the Company (ie 31 October 2017), no provisional agreement for his responsible flats had yet been executed. 14.The Project was eventually completed on 28 March 2018, whereupon the Company paid (i) HK$125,060.03 to Mr Yu for his work on the Project and (ii) HK$84,241.04 to Madam Wong for her work on the Project (Decision, §§3, 4 & 35). B2. Methods of Calculating the Amount of Commission Payable 15.Clause 1 of the Supplemental Agreement provided that the amount of commission payable to the employees should be calculated using the “Equal Distribution Method”:
16.A different calculation methodology (ie Stage-Based Method) was provided for in Exhibit C-8. It involved taking into account each employee’s involvement in the 4 specified stages of the Project:
17.The Remark (備註) of Exhibit C-8 stated that the commission payable to employees shall be determined based on their “work efficiency”:
18.The DPO accepted the Respondents’ evidence that Exhibit C-8 was placed by the Company on the desks of the employees (including the Respondents) in October or November 2017 (after the Project had started but before Mr Yu was terminated) (Decision, §31). The Respondents had never signed Exhibit C-8 or acknowledged receipt of it. 19.The amount of commission payable to an employee whose employment has been terminated was governed by Clause 1H. C. THE PARTIES’ RESPECTIVE CASE 20.It is the Company’s case that:
21.Mr Chang SC points out that in this case, the Pool (about HK$3.5 million) has not changed under the 2 Methods. Exhibit C-8 just changed the stages of payment and the proportion to be received by each employee involved. 22.As for the Respondents’ case, it has changed significantly in the course of the proceedings. Despite the complaint of repeated amendments in Ground 1, the Company’s main target was on the final, Disputed Amendment. Mr Chang SC describes their cases as based on Exhibit C-8 but changed to the Equal Distribution Method after the Respondents had closed their evidence. The amendment came about as a result of the prompting of the Tribunal. 23.However, in my view, a more accurate description of the Respondents’ case based on their claim forms before the Disputed Amendment was that the Respondents relied on both Exhibit C-8 (for staged payments but without the Remark) and the Equal Distribution Method. Versions 1 and 2 of their claim forms were filed on 1 and 5 November 2018 respectively.
24.In their written opening submissions before the Tribunal, consistent with their stance in the claim forms, both Mr Yu and Madam Wong sought commission based on the Employment Agreement.
25.On Day 2 of the trial, the DPO tried to clarify with both Respondents the bases for calculation of the commission.
26.On Day 11 (ie 13 August 2020), after they had finished giving evidence and during cross-examination of the Company’s first witness,
27.Prompted by the DPO, the Respondents amended their claim to the Disputed Amendment. This formed Version 3 of Mr Yu’s claim and Version 5 of Madam Wong’s claim. D. FINDINGS OF THE TRIBUNAL 28.The DPO ruled in favour of the Respondents. His reasoning can be summarized in the following few paragraphs. 29.The amendments were to “match the testimonies” of the Respondents and clarify their stance. Despite the Respondents having amended their claims more than once, the present amendment had little prejudice or unfairness to the Company. (Decision, §§8-10). 30.It would be “unfair and unreasonable” to base the calculation of commission on the performance of the employees. The Company’s assessment was subjective and there was no proper mechanism (such as appraisal form) setting out the criteria for evaluating the employees’ performance (Decision, §§16 and 41(12)). 31.Exhibit C8 was not binding on the Respondents as it was not signed by them. Its contents were not reflected in the written Employment Agreements (Decision, §26). 32.The Company could have, but did not, incorporate Exhibit C8 into the Employment Agreements. In particular, the DPO pointed out that the Employment Agreement had previously been amended by way of Supplemental Agreement (Decision, §27). 33.There was no indication that the Respondents had accepted the terms set out in Exhibit C-8. Exhibit C-8 was simply placed on the desks of the Respondents. The contents of Exhibit C-8 were never explained to them. (Decision, §31). 34.Properly construed, Clause 1H did not preclude Mr Yu from claiming commission. The fact that the provisional agreements had not been signed by the Buyer at the time of Mr Yu’s termination was irrelevant. What mattered was that the sale of units 2A-2D was eventually completed. (Decision, §§42-45) 35.The commission payable to the Respondents should be calculated based on the Equal Distribution Method (Decision, §§71-75). Consequently, Mr Yu and Madam Wong were entitled to commission in the amounts of HK$495,892.40 and HK$483,153.88 respectively (Decision, §76). E. AMENDMENT GROUND 36.Section 20(1) of the Labour Tribunal Ordinance, Cap 25 (“the Ordinance”) provides that the hearing shall be conducted in an informal manner. 37.Section 20(3) of the Ordinance provides that the Tribunal has a duty to investigate any matter relevant to the claim, whether or not it has been raised by a party. 38.Despite these provisions, there is nothing that prevents the Tribunal from identifying the issues between the parties and properly managing a case. 39.For a claim based on contract, one can accept that a litigant at the Tribunal may not know whether certain documents form part of the employment contract or whether certain variations to the terms are valid. If that is the case, it is all the more important for a party to identify the documents that may constitute or contain terms of the contract and set out (if necessary, with the guidance of the Tribunal) his alternative case(s). There is nothing, of course, to prevent a party from confining his case to one instead of alternative cases, or from abandoning issues. The Tribunal will conduct its inquiry based on the case advanced by the parties. 40.Amendment for the purpose of determining the real question in issue between the parties may be allowed. Any amendment should be done as early as possible. In deciding whether to grant permission to amend, the Tribunal would, of course, need to consider if the amendments would give rise to prejudice to a party and afford that party an appropriate opportunity to prepare his case in answer. Amendment after a party has closed his evidence should be sparingly allowed, save for clerical or arithmetical errors. 41.In the present case, the DPO’s grant of leave to the Respondents to amend their claims was unfair in the light of the procedural history set out in paragraphs 23-26 above. 42.Firstly, the Disputed Amendment arose after the Respondents have closed their evidence out of the need (as stated by the DPO) “to match the oral testimony” of the Respondents. That approach was to put the cart before the horse and should not have been allowed. 43.The Respondents had been given the opportunity to file witness statements, submit evidence and make opening submissions on calculation of commission. On Day 2 of the trial, the methodology of calculation of commission was brought starkly to the attention of the Respondents and they were asked to state their positions. They were given an adjournment to consider. There was no suggestion that the DPO gave them any time pressure. The Respondents voluntarily chose to rely on Exhibit C-8. The DPO himself expressly acknowledged that all along he thought that the Respondents had agreed to Exhibit C-8. The Respondents could not resile from their position. 44.Secondly, the amendments gave rise to a new line of inquiry as to whether Exhibit C-8 formed part of the employment contract. The change in methodology of calculating commission was a fundamental change to the Respondents’ case and was not just clarification. 45.In this appeal, both Respondents submit that they had told the Tribunal that they relied on the Employment Agreements for calculating the commission.
46.With respect, the Respondents’ submission supports Mr Chang SC’s submission as to fundamental change of their case between Day 2 and Day 11. On Day 2, Mr Yu and Madam Wong confirmed their reliance on Exhibit C-8 without reservation or assumption as Madam Wong alleged (paragraph 25(3) above). 47.Thirdly, the amendments in the present case effectively amounted to a withdrawal by the Respondents of their admissions to the binding effect of Exhibit C-8 on them. The Tribunal should not have allowed such withdrawal of admissions at such a late stage of the proceedings: Re Ng Wai Jing [2016] 2 HKLRD 1460 §§19-21, Kwan JA (as she then was). 48.Fourthly, the DPO erred in finding that there was no prejudice to the Company occasioned by the amendments (Decision, §10). The Company had proceeded to cross-examination on the basis that there was no dispute as to the binding effect of Exhibit C-8. Had the binding effect of Exhibit C-8 been in dispute, the Company might have looked for other evidence, eg witnesses who had explained Exhibit C-8 to the Respondents, or searched for documents indicating the Respondents’ agreement to Exhibit C-8. This could have brought substantial changes to the evidence. 49.Fifthly, the DPO has failed to afford a reasonable opportunity for the Company to cross-examine the Respondents following on the amendments. The Company’s representative had requested for re-opening of the cross-examination of the Respondents. The DPO granted the request but insisted that the cross-examination should be done immediately (Transcript, F/1345-1346). The Company’s representative had thus proceeded to conduct cross-examination on the spot without the opportunity to prepare evidence to rebut the amended case. In my view, this insistence on cross-examination there and then had compromised fairness of the trial for the sake of time. 50.For the foregoing reasons, the DPO has erred in law in granting permission to amend. F. CONTRACT/ESTOPPEL GROUND 51.The fact that Exhibit C-8 was not signed, not reflected in the written Employment Agreements was irrelevant because a contract term could be added or varied without formality. That it was not explained to the Respondents was likewise irrelevant because Exhibit C-8 was in plain Chinese language and there was no suggestion that the Respondents had any difficulty understanding it. 52.The issue was whether or not the Respondents had accepted Exhibit C-8 by raising no objection or relying on its terms in the claim forms. 53.A party may accept a proposed variation by word or conduct. Silence and inactivity may constitute sufficient communication of assent depending on the circumstances. Mere mental assent is insufficient to constitute acceptance; and it is not even sufficient that there may be evidence of the offeree’s decision to accept which has not been communicated to the offeror, since in principle the offeror is entitled to know whether the contract has been concluded. It has also been said that the principal problem with silence as a means of acceptance is that it does not constitute a sufficiently unequivocal communication of the offeree’s assent: “silence and inaction are of their nature equivocal, for the simple reason that there can be more than one reason why the person concerned has been silent and inactive. However, this does not exclude all possibility of “silence and inaction” constituting communication of a person’s intention if, in the circumstances, the silence is not in fact unequivocal. Cartwright, Formation and Variation of Contracts, 2nd ed, §§ 3-36 & 3-39. 54.In the present case, the Tribunal has found, as a fact, that Exhibit C-8 was placed on the desks of the Respondents in October or November 2017 (Decision, §31). Whilst there was nothing to show that the Respondents had ever raised objection after reading it, there was equally nothing to show that the Respondents had accepted them before termination of employment or before the claim forms were filed. 55.Mr Chang SC submits that the Respondents’ reliance on Exhibit C-8 for the calculation methodology in their original claim forms was a clear positive act of acceptance of its terms. I am unable to agree because, as stated in paragraph 23 above, the Respondents relied on both the Stage-Based Method and the Equal Distribution Method. That was not unequivocal acceptance of Exhibit C-8. 56.On the evidence, the only positive act of acceptance occurred on Day 2 when the Respondents opted to rely on Exhibit C-8, way after Mr Yu’s employment had terminated. 57.Mr Chang SC further submits that the DPO failed to consider that the Respondents were bound by the terms of Exhibit C-8 by reason of estoppel by representation or convention. 58.The essential elements of estoppel by representation are:
Mo Ying v Brillex Development Ltd [2014] 3 HKRD 224, at §144, Recorder Eugene Fung SC. 59.The essential elements of estoppel by convention are:
See: Unruh v Seeberger (2007) 10 HKCFAR 31, at §§133, 135, 138-9, 150, Ribeiro PJ 60.Mr Chang SC relies on the same failure of the Respondents to object and their reliance of Exhibit C-8 in the original claim forms to show the representation. In addition, he submits that the Company would be deprived of the chance to safeguard its position by pursuing a restitutionary claim against other employees on the basis of mistake, as those employees might have spent part or all of the commission paid to them from the Pool. 61.I only need to deal with the issue of estoppel briefly. As the first positive act of acceptance only occurred on Day 2, the Company could hardly show detrimental reliance on that acceptance when it had already distributed commission to the other employees. In any case, detrimental reliance was not explored at the Tribunal or dealt with in the Decision. 62.However, even though the Respondents’ stance on Day 2 could be regarded as acceptance of Exhibit C-8, that was not the end of the matter. The DPO’s investigations regarding the “fairness or reasonableness” of the terms of Exhibit C-8 were misplaced. 63.If a contract gives one party the power to exercise a discretion or to form an opinion as to relevant facts, it is not for the courts to rewrite the parties’ bargain for them, still less to substitute themselves for the contractually agreed decision-maker. Nevertheless, the party who is charged with making decisions which affect the rights of both parties must exercise the power in good faith and not arbitrarily, capriciously, perversely or irrationally: Braganza v BP Shipping Ltd [2015] 1 WLR 1661 §§18 & 102, applied in Cheung Li Ou v Sun Life Hong Kong Ltd [2021] HKCFI 3784, Au-Yeung J, §111. 64.Accordingly, the DPO applied the wrong test in asking whether the terms of Exhibit C-8 were fair or reasonable. He should have asked whether the Braganza principles have been applied. He did not do so. The absence of appraisal forms, in itself, would not amount to lack of good faith or arbitrariness. 65.What was also troubling was the use of the term 「多勞多得」 by the Respondents and the Company. That term connoted a quantitative approach, ie that commission would be proportionate to efforts. On the other hand, the Remark in Exhibit C-8 connoted a qualitative approach (按實際工作效率而決定)。 It was not clear if any “acceptance” of Exhibit C-8 by the Respondents was the result of some misstatement of the effect of the Remark. 66.Accordingly, whilst the Contract Ground succeeds to the extent of there being binding effect of Exhibit C-8 (on the basis of the Disputed Amendment being disallowed), it was not clear if the Company had relied on the right interpretation of the Remark to decide upon the commission for each employee involved in the Project. The DPO’s investigation had erred in law due to failure to apply the Braganza principles. G. INTERPRETATION GROUND 67.For the purpose of analyses, I break up Clause 1H into different limbs as follows:
68.In §§42-51 of the Decision, the DPO set out his analyses on Clause 1H:
69.I am of the view that the DPO fell into clear error when construing Clause 1H.
70.In the present case, the Buyer of Flats 2A to 2D only signed the provisional sale and purchase agreement after Mr Yu’s employment was terminated. Mr Yu could not be entitled to commission. The interpretation is established. 71.I wish to make one comment on procedure. The Company submitted a counsel’s opinion to the Tribunal on the question of interpretation of Clause 1H. That was inadmissible and not fair play. Under section 23 of the Ordinance, a solicitor or barrister (who is not a party to the proceedings) has no right of audience. The Company could not circumvent section 23 by asking the solicitor or barrister to give his opinion in writing. H. DISPOSAL OF THE APPEAL 72.In respect of the appeal concerning Mr Yu, the Interpretation Ground is sufficient to allow the appeal, regardless of whether Exhibit C-8 was binding on him. Mr Yu was not entitled to commission and the award as regards him must be set aside. 73.In respect of the appeal concerning Madam Wong, the appeal should be allowed on the Amendment Ground and Contract Ground. 74.The Court of First Instance, as a supervisory court over errors of law, should in general remit a case if there was a misdirection of law, except where the error could not have affected the outcome (ie it was immaterial), or where the Tribunal properly directed could have come to only one legitimate conclusion on the evidence and findings (including findings that the Court may make by inference pursuant to section 35(2)(a) of the Ordinance), and then only if one could be practically certain that the relevant evidence could not have been materially affected by the misdirection: Chok King Ming v Equal Opportunities Commission [2017] 2 HKLRD 521 at §70, G Lam J (as he then was). 75.On the evidence, there was a misdirection of the Tribunal on the question of whether acceptance of Exhibit C8 was the result of some misstatement and in failing to consider the Braganza principles. The misdirection may have affected the outcome. In the premises, the claim of Madam Wong (including whether she had accepted the terms of Exhibit C8) should be remitted to the Tribunal for re-trial before a different Presiding Officer. I. COSTS 76.The appellate court has unfettered discretion to award costs in an appeal. The fact that a respondent is an employee would not spare him/her from a costs order where one is justified. 77.The appeal court may order costs to follow the event even though the respondents have not contributed in any way to the mistake of the Adjudicator: Diamond Property Management Co Ltd v First Class Fashion Co Ltd, HCSA 61 of 1996, 25 May 1994. In that case, the Adjudicator made a mistake on the issue of locus standi of the claimant and the case was remitted to the Small Claims Tribunal for trial. The Court ordered costs to follow the event as none of the respondents saw fit to indicate that he was not supporting the determination of the Tribunal. There was thus no justifiable reason for the Court to depart from the well-established principle that costs should follow the event. 78.The Respondents submit that as former employees they were just claiming for commission that they were entitled to and the Court should only make an order for nominal costs against them. 79.The present appeal arose due to the Respondents’ own change of stance which led to the Disputed Amendment, procedural unfairness in allowing late permission of amendment to the claims and wrong construction of Clause 1H by the DPO. However, Mr Yu and Madam Wong did not concede any issue in this appeal but maintained their stance before the Tribunal. I see no reason for departing from the general rule that costs should follow the event and be awarded to the Company. 80.I have considered the costs statement of the Company and the written submission of the parties on costs. Despite the length of trial at the Tribunal and the voluminous transcripts and documents, this appeal does not involve difficult matters of law and procedure. Whilst this Court was greatly assisted by Mr Chang SC, I am of the view that this appeal does not justify the engagement of senior counsel both at the leave stage and the main appeal. 81.I have taken into account the fact that the Respondents themselves claim to have each paid more than $150,000 for their lawyers. 82.Accordingly, for the application for leave to appeal and the appeal itself together with costs of the application for stay of execution, I make an order nisi that costs summarily assessed in the amount of $300,000 should be borne by the Respondents in equal share. Conclusion 83.Accordingly, in respect of HCLA 22/2020 concerning Mr Yu, I order as follows:
84.In respect of HCLA 23/2020 concerning Madam Wong, I order as follows:
83.I thank counsel for their assistance.
Mr Jonathan Chang SC leading Mr Eugene Kwan, instructed by HY Leung & Co LLP, for the Appellant in both cases The Respondent in HCLA 22/2020 was not represented and appeared in person The Respondent in HCLA 23/2020 was not represented and appeared in person |
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