Cmg Asia Life Assurance Ltd. v. Luk Pauline
Read the full judgment text of HCA 102/2001 on BabelCite. This High Court CFI judgment was delivered on 27 September 2002 before Deputy High Court Judge Carlson.
Insurance – employment – district manager – summary dismissal – Order 14 summary judgment – signing-on fee and interest-free loan – repayment on termination – triable issues – waiver of dismissal ground by demotion – change of name of plaintiff – Civil procedure – whether unconditional leave to defend should be granted – the plaintiff insurance company engaged the defendant as a district manager and later branch manager under an offer letter dated 19 October 1998, a District Manager's Agreement dated 19 December 1998, and a Guaranteed Income Agreement dated 21 December 1998 – whether the plaintiffs are entitled to summary judgment for repayment of 50 per cent of a $582,000 signing-on fee and outstanding instalments of a $291,000 interest-free loan following the defendant's summary dismissal on 8 October 1999 – held, appeal allowed and defendant granted unconditional leave to defend – whether the plaintiffs can rely on a December 1998 self-purchasing bonus incident as a dismissal ground where they earlier elected to demote rather than dismiss – held, no – genuine factual dispute over whether express verbal instructions were given and a highly arguable construction that the right to invoke it as a ground for summary dismissal was waived by election to demote – whether summary judgment is appropriate where the defendant attributes her failure to meet validation and recruitment targets to her demotion and the loss of agents transferred to another team – held, no – serious triable issues of fact going to the justification for summary dismissal cannot be resolved on paper – whether the plaintiffs may sue under their original contracting name after a change of name – held, yes – at most an amendment is required and the same entity is involved, distinguishing IBSSL v Mineral Trading Corporation Limited [1996] 1 All ER 1017 – costs in the cause here and below.
Legal issues: Whether the plaintiffs can rely on a December 1998 incident as a ground for summary dismissal after electing to demote rather than dismiss · Whether summary judgment is appropriate for claim of repayment following summary dismissal for alleged underperformance · Whether the plaintiffs may sue in their original name despite a subsequent change of name
Outcome: Appeal allowed; defendant granted unconditional leave to defend; the Order 14 judgment of Master Rimsky Yuen in favour of the plaintiff is set aside.
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HCA000102/2001 HCA102/2001 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. HCA102 OF 2001 _______________________
_______________________ Coram: Deputy High Court Judge Carlson in Chambers Date of Hearing: 27 September 2002 Date of Judgment: 27 September 2002 __________________ J U D G M E N T __________________ 1.These are Order 14 proceedings. On 14 May this year, Master Rimsky Yuen gave judgment in favour of the plaintiffs in the sum of $767,542.62, together with interest. This is an appeal by the defendant from that order. 2.The plaintiffs, as their name suggests, are an insurance company. The defendant was engaged by them as a district manager and subsequently as a branch manager. She was summarily dismissed by them on the grounds of sub-standard performance, and this action was then brought for recovery of certain amounts which are alleged to be repayable by her following her dismissal. This is what the case is about. 3.I am now required to consider some of the detail of it. The terms of the defendant's employment are to be found in an offer letter dated 19 October 1998 (page 23); a District Manager's Agreement dated 19 December 1998 (page 27); and a Guaranteed Income Agreement for Agency Managers dated 21 December 1998 (page 35). I will refer to the material terms in a moment. 4.She was dismissed on 8 October 1999 by a letter of that date (page 66). Her dismissal was with immediate effect. The reason given in the letter is as follows: "....due to your unsatisfactory performance standard and unco-operative working attitude". The letter contains no further elaboration. 5.Upon appointment, the defendant was paid a signing-on fee of $582,000. 50 per cent of this amount was repayable by her if she left the plaintiff's employment within the first two years. She was paid a monthly income, as it is described (see page 23) of $48,500. Further, at her request, she was provided with an interest-free loan (page 23) of $291,000 repayable by 24 monthly instalments, which was to be deducted from her guaranteed monthly income. 6.I will need to make reference to further provisions presently, but it is convenient to now refer to the termination provisions under the contract. These are found at page 41, clause 10. Under 10.1, either party may terminate at any time and without giving any reason for doing so by giving 7 days' notice in writing. Under clause 10.2, and this is the operative provision in this case, immediate dismissal may be visited on the manager (the defendant) if any one of the 10 grounds (a) to (j) become applicable. The District Manager's Agreement also contains provisions as to termination at clause 9 (page 28), which also provides for mutual termination by 7 days' notice, as well as for summary dismissal on more serious grounds relating to fraud, breach of trust and so forth. 7.The plaintiff's case is that the defendant's engagement was terminated on the basis of the serious misconduct grounds, if I may so describe them, in clause 9 and under clause 10.2, specifically (e) and (g), which are in the following terms. (e):
8.Before the Master, and now on appeal, the plaintiffs rely on three matters, any of which are said to justify instant dismissal and to therefore trigger repayment of the amounts claimed in the writ. Firstly, that she acted against the express verbal instructions of her supervisor, Mr Alex Wong, in November 1998, to the effect that the plaintiffs' agents were not entitled to a monthly bonus for selling to themselves a life insurance policy. There is no dispute that what happened here is that on 23 December 1998, through her daughter, Miss Wendy Tso, who was one of her own "downline agents", the defendant applied for a life insurance policy for herself which enabled her daughter to obtain the plaintiffs' monthly incentive bonus, whilst at the same time, the defendant's daughter obtained life insurance for herself, giving the defendant as the selling agent, which provided the defendant with a monthly incentive bonus. Whilst this practice is not prohibited in the three agreements to which I referred, the plaintiffs' case is that in November 1998, Mr Alex Wong specifically drew to the defendant's attention and to other agents who were present at a weekly meeting that this practice was not allowed. The defendant's answer to this is that Mr Wong never said such a thing. As to that, the plaintiffs have filed evidence from other district managers who were present at this meeting to say that Mr Wong had made himself very clear on this matter. 9.Given the conflicting affirmations on this issue, Mr Cheung, who appears for the defendant, submits that such a conflict cannot be resolved on this basis and that sheer weight of numbers which favours the plaintiffs cannot be conclusive; this issue would require resolution by oral evidence. The defendant also says that this is a common practice in the insurance industry, and that as she had not been told otherwise, she issued the policies through her daughter. 10.Once this was discovered, the plaintiffs disallowed the transactions and, more significantly, proceeded to reduce the defendant in rank from district manager to branch manager, more of which presently. This took effect on 1 January 1999, therefore relatively soon after she had started with the plaintiffs until her dismissal in October that year. 11.Given those circumstances, Mr Cheung submits that it is now hardly open to the plaintiffs to rely on this matter as justifying instant dismissal. Firstly, there is the factual dispute, but even more significantly, if the plaintiffs had the right to dismiss her for this in December 1998 when they discovered her breach of this rule, they chose not to and elected merely to demote her. They cannot now re-visit this matter; it was dealt with by them then. 12.In my judgment, Mr Cheung is right on both bases. Firstly, on fact, the issue has been shown to be sufficiently in dispute to make it only amenable to resolution by live evidence; and secondly, he has demonstrated that his construction as to whether they had deprived themselves of the right to use this as a ground for summary dismissal went once they elected to deal with the breach by demotion is also highly arguable. This ground must therefore go. 13.That then leaves over the remaining two grounds which are linked and which relate to her performance prior to her dismissal. I should observe, before I attend to the detail, that there is no evidence that the plaintiff was given any oral or written warnings about the quality of her work, and the letter of dismissal is of a most general kind, with no attempt to provide particulars. 14.By virtue of clause 2 of the agency agreement, the defendant was required to achieve validation requirements of $1,134,900, and under-performed to the extent that she produced $985,489.52. That in itself resulted in a reduction on 16 August 1999 of her guaranteed income down to $42,000 from $48,500. 15.The other related matter is that she failed to recruit and maintain 40 agency members operating under her. As a matter of mathematics, both matters have been proved, and indeed this is accepted by the defendant, but her response to that is that none of this is at all surprising given the unjust way that she had been treated by the plaintiffs. Firstly, it is submitted on her behalf that she was wrongly demoted, although she appears to have accepted that demotion and to have continued her engagement on this basis, with the result that as a branch manager she was not given a fair crack at achieving the required turnover; and in addition, that she lost the services of Mr Ferdinand Cheng, an able agent who, with his sub-agents, were transferred to work as part of Mr Alex Wong's team. All of this appears in the affirmations that she has filed. 16.Mr William Wong, on behalf of the plaintiffs, has submitted that this simply cannot amount to an answer to these charges. Her target was in fact adjusted downwards to have regard to her demoted position. The defendant has presented a case to the effect that she was effectively undermined by her superiors and it was only as a result of that that she was unable to meet the required level of turnover and to retain 40 agents to work under her. She points to the fact that notwithstanding all of this, she was able to get 85 per cent of what was required of her. 17.I am bound to say that the plaintiffs have taken on a very considerable burden for Order 14 to seek to justify summary dismissal and, as a result, repayment of the amounts which they say are due to them. When one looks at the nature of these factual disputes which, in my judgment, are of substance, I am not prepared to conclude that the defendant should be shut out on paper and that judgment should be entered against her. She has, in my view, raised serious triable issues of fact which go to the heart of the matter, which is whether the plaintiffs were justified in summarily dismissing her. 18.All of this will require that the witnesses should be subjected to cross-examination before any necessary findings of fact can be made. This is not a case for summary judgment. The defendant must have unconditional leave to defend. The appeal must therefore be allowed. 19.Mr Cheung has also submitted there is an additional ground for allowing the appeal, which is that the plaintiffs have changed their name and that they cannot now sue in their original name, which is of course the name that they contracted in with the defendant. 20.In my judgment, there is nothing in that point. There may have to be an amendment in due course, but clearly, one is dealing with the same entity. This is unlike the case of IBSSL v Mineral Trading Corporation Limited [1996] 1 All ER 1017 which Mr Cheung relies on, where the company had gone into liquidation and therefore no longer existed. (Discussion re costs) 21.Costs in the cause here and below.
Representation: Mr William Wong, instructed by Messrs Johnson, Stokes & Master,for the Plaintiff Mr Victor Cheung, instructed by Messrs Li, Wong & Lam,for the Defendant |