Ogilvy & Mather (Hong Kong) Pte Ltd v. Francis St Clair Mackenzie

HCA000749/1975

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

ACTION NO. 699 OF 1975

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ACTION NO. 749 OF 1975

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Coram: Cons, J.

Date of Judgment: 17 December 1975

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JUDGMENT

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1. Mr. St. Clair Mackenzie, (I shall call him "the plaintiff"), is a commercial artist. He has been so now for 25 years. He is an Australian and until last year had spent his whole life in that continent. In the course of his career he has worked both on his own as a freelance artist and also in regular employment with various agencies. By all accounts he is a very skilful and talented artist. Just before he left Australia last year he was considering setting up business with a colleague who could have been expected to augment the plaintiff's imagination with technical skill.

2. Some 10 to 12 years ago the plaintiff and a Mr. Hales worked together in an agency in Sydney. They became friends. However, Mr. Hales was more advanturous than the plaintiff and left Australia to seek his fortune in wider fields. He did well, so well that by the end of 1973 he was appointed managing director of Ogilvy & Mather Ltd., (whom I shall call "the company"), which is the Hong Kong branch of a large and widely established international agency.

3. One of Mr. Hales' first needs as the new managing director of the company was someone to be head of the creative side. He had kept in touch with the plaintiff over the intervening years and decided to try and get him for the job. Indeed some years before he had suggested that the plaintiff join him in Hong Kong with another agency with whom Mr. Hales was then working, but although the plaintiff was keen the matter eventually came to nothing. This time matters did not come to nothing. Mr. Hales had occasion to visit Sydney and took the opportunity to put the offer to the plaintiff. It was eagerly accepted. Mr. Hales wanted the plaintiff in Hong Kong as soon as could be arranged but naturally these things take time. In particular a working visa had to be obtained. It is apparently not easy to predict how long that will take. Sometimes it comes through within a few days but at others takes much longer. Mr. Hales tried in the mean time to persuade the Sydney branch of the parent organisation to employ the plaintiff but that branch was unwilling to do so because of the uncertainty as to the period for which the plaintiff would be available. By the same token the plaintiff could not take on more freelance work but had to content himself with completing what he already had on hand. For one reason or another the plaintiff did not leave for several months. During that time his work and of course his income had dwindled to nothing.

4. The plaintiff arrived in Hong Kong on 7th May together with his wife and daughter, who was 18 years of age. They stayed for some six weeks with Mr. Hales and his family. Then they moved into a flat in Tin Hau Temple Road. The lease of that flat was signed on behalf of the company. However, although the wife and the daughter are said to have liked Hong Kong they did not remain here for long and in September they flew back to Australia. After that the plaintiff retained the flat alone.

5. It is difficult to avoid the impression that the world of advertising is a world in constant turmoil. Fortunes of various agencies rise and fall as customers transfer their accounts from one to another; agencies find themselves forced to engage or dismiss staff accordingly; and the staff any how tend to move frequently from one agency to another in order to improve their positions or better their salaries. It is not a settled world. And in 1974 it was not a kind world for the company. In August the company lost one of its largest clients. This was a severe blow although the force of it was not felt until later. For a while the company was hoping to obtain new accounts to balance its loss. But it did not. Staff reductions eventually had to be made and one of them had to be at about the same level in the company as the plaintiff. The choice fell between two persons. It could not have been a pleasant choice for Mr. Hales. He decided for good practical reasons against the plaintiff, and gave him what later became one month's notice. It took effect as from 15th January this year.

6. This is the history behind the two actions with which I have to deal. The first is a claim by the plaintiff based principally upon a wrongful dismissal the second is brought by the company in respect of the flat at Tin Hau Temple Road. Originally it included a claim for possession in that the plaintiff remained there after his dismissal. However he did move out sometime after the writ was issued and the claim is now limited to certain particular sums of money arising from the lease.

7. In the plaintiff's claim it is alleged that he was wrongfully dismissed in that his contract of employment was for a term certain for at least two years. This he says was agreed with Mr. Hales at their meeting in Sydney. Mr. Hales does not agree. He admits that a period of two years was mentioned but says it was in the context that he would not be interested in the plaintiff unless the plaintiff intended to stay for that length of time; he felt that it would be at least six months before the plaintiff could become accustomed to the peculiar conditions of Hong Kong and be able to produce good work. I have carefully considered both men's evidence of that conversation in Sydney and I have come to the conclusion that no settled term was agreed. I am satisfied that both men confidently assumed that the employment would be for at least two years but I am not satisfied that they made a definite agreement to this effect.

8. The position is somewhat similar with regard to the return air passages. If the question had been broached I think it very probable that Mr. Hales would have agreed to pay return air fares. But in their enthusiasm at the time I do not think either man looked that far ahead.

9. Another term of the employment in dispute is the question of accommodation. The plaintiff says that in Sydney he was promised that this would be supplied by the company as an additional benefit; Mr. Hales says that it was for Mr. Mackenzie to provide his own accommodation ...(illegible) by taking the lease in its own name, adjusting the salary according to the rent paid and pretending to the Inland Revenue Department that it was part of the plaintiff's emoluments. Thus would ...(illegible) a reduction in tax liability.

10. There are certain matters in this connection which may indicate one way or the other. To begin with it is said that it is not the company's practice to provide accommodation for any of its staff, not even for Mr. Hales himself. But there is some inconsistency in the defence evidence and also Mr. Hales might not have been quite as certain of the company's practice in January last year as he is now. Then, more importantly, each of the plaintiff's salary slips from the end of June onwards shows clearly an adjustment in the way I have just mentioned. The plaintiff claims to have protested strongly about this, first to the accountant as he then was, a Mr. P.S. Wong, and then to Mr. Hales; he says that he was told that this was only a way of expressing matters, and would ultimately be to his own advantage; it was to be looked upon as a form of savings or insurance. Mr. Hales denies any such protests and says that the first he heard of this particular objection was the solicitor's letter earlier this year. Perhaps this is not such a complete contradiction of evidence as would at first appear. Although they were good friends the characters of the two men are markedly different. The plaintiff, I would think, is a man of little ambition, principally absorbed in the artistic side of life; its practical aspects would take second place and he would be happy to leave them to others. I do not find it hard to accept that having made his protest at what he thought was a crazy way to deal with the situation he would be content to dismiss it as a curiosity of business and let things go on as they were for the time being, particularly as he knew that the company was going through a difficult stage. Mr. Hales on the other hand although he started on a creative side of advertising is clearly very gifted on the business side. I would think he is dynamic and determined, a person who could be described in colloquial term as a "go-getter". What to the plaintiff would rank as a protest, would to him be a passing complaint that could easily be ironed out with a financial variation later on and promptly forgotten. He appeared to be allowed wide financial discretion by his parent company provided he kept within certain overall limits. I appreciate there is also the evidence of Mr. P.S. Wong. However I think this was to some extent coloured by loyalty to a firm which has given him good and rapid promotion.

11. Criticism can also be made of the plaintiff's evidence. His statement of claim alleges, and he has supported it, that it was due to financial difficulties that his wife and daughter returned to Australia in September. It is suggested that this would be incredible if the company were holding money on his behalf; he would certainly have asked the company for that money, whatever its financial situation, rather than let his own family be broken up. It was also suggested that the true reason for the decision were matrimonial troubles already existing in Australia and which he and his wife hoped would be forgotten in a new life in Hong Kong. I think there may be some element of truth in that suggestion. I think it probable that the plaintiff was not unduly concerned that his wife intended to leave and that he made no effort to remedy what was at least one of the causes of her unhappiness. I do not say this as a criticism of his conduct but merely to explain why I see no inconsistency.

12. The plaintiff's statement of claim concedes that some deduction of his salary in respect of rates on the flat was correctly made although the plaintiff himself does not agree. This may of course indicate that flat was indeed his responsibility. But the company had fixed a financial limit of $1,900 which was enough only to cover the rent. And it may be for this reason that those acting for the plaintiff thought fit to make this particular concession.

13. Then there is document 37 of the agreed bundle. This is a certificate by the company given to the plaintiff with the intention of supporting his application to the bank for an overdraft. It shows a reduced salary with a housing allowance. In this it gives support to the defence contention. But it was not given until the 2nd December and it was drafted by Mr. Wong, who at that time was aware of the plaintiff's probable dismissal. I think perhaps he took the opportunity to put on record and emphasise the company's stand in this matter. I am aware that the plaintiff did not object to this document. I would not have expected him to. He had already made his point as I mentioned earlier and the document as such was quite sufficient for his purposes.

14. Finally there is document 16 of the agreed bundle. This is as follows:

It is hard to imagine a more clearly worded document. It is said in defence that this was drafted in error and was only a copy of similar documents given to other employees in the past. Yet this is difficult to reconcile with the evidence that the company has never provided accommodation for its staff.

15. These are the matters I have looked at upon this issue and the conclusion to which I have come is that it was a term of the agreement that accommodation should be provided in addition to the basic salary of $8,000 per month. Therefore the monthly deductions of $1,900 and the deductions in respect of the deposit paid to the landlord and the solicitors charges should not have been made.

16. This brings me to other deductions. From the December salary the sum of $2,250 was taken. This was said to be for food and accommodation during the six weeks that the plaintiff and his family stayed with Mr. Hales after their arrival. Legally it was based on an agreement between the respective wives. This matter can be easily disposed of. Whatever the wives may have said to each other - and neither gave evidence before me - it is clear that they did not between themselves agree any exact figure. The figure sued upon was unilaterally and arbitrarily fixed by the company. There is no enforceable agreement.

17. The next deduction is rather sad. It was $4,900 taken from the November pay to represent the cost of the air tickets by which the plaintiff's wife and daughter travelled to Hong Kong. Now it is not disputed that it was a term of the employment that the company would pay for these passages. But the early return of the wife and daughter caused some embarrassment to Mr. Hales. It appeared that his superior in the parent company was not at all pleased by such an early return and accused Mr. Hales of flying his friends all over the Pacific at the company's expense; the money had to be recovered immediately. Mr. Hales says he brought the matter up with the plaintiff, that the plaintiff was very understanding and eventually agreed that the cost should be deducted from his salary. The plaintiff denies this but I do not think that Mr. Hales has deliberately made up the whole story. He may not have related the circumstances of the interview with strict accuracy but I am satisfied that the plaintiff did eventually give his consent. No point has been taken as to why the company should not now enforce that consent.

18. Another matter that may be treated as a deduction is the unpaid salary for the first half of January during which the plaintiff was still employed. No submission was made to this end but it would seem from the evidence that the company may be relying upon a possible claim by the Inland Revenue. Now claim has apparently yet been made and in these circumstances there seems to be no reason why the company should still retain that money.

19. I have now to turn back to the agreement itself. If it was not an agreement for two years certain then for what period was it? Counsel has suggested it may have been a contract for one year, which is the old presumption. But looking at all the circumstances I do not think this was so. I am satisfied that it was an agreement for an indefinite period subject to reasonable notice on either side. What then was a reasonable period of notice? I think it should have been three months. The matters I have taken into account in coming to this conclusion are on the one hand the volatile nature of staff relations in the advertising world and on the other the fact that the plaintiff occupied a senior position in the company, that he is a mature man and that he was brought with his wife and family from Australia. From this it follows that the plaintiff was wrongfully dismissed and is entitled to damages.

20. The plaintiff has been unable to obtain regular employment in Hong Kong and is not likely to do so. Some freelance work has come his way but not much. It was suggested that he could have done better in this respect, particularly in relation to an offer made by the Fortune Agency. However, I am not satisfied that this was so. I think it highly likely in the circumstances as I see them that that offer was nothing more than an expression to soften the blow that that agency had already dealt him and that in actual fact there was little to expect from that quarter. The proper course, from an economic point of view, that the plaintiff should have then followed was to return to Australia and seek employment there. This would of course have taken some time. I would estimate about three months. And it is with regard to what would have been his salary for that period that I base my award of damages. I have made allowance for money actually earned in March and half of what has earned in April. The damages thus arrived at are $20,645.

21. In the second action that I have to deal with the company claims repayment in respect of rent paid for the flat in Tin Hau Temple Road. The plaintiff did not vacate the flat until the end of April. There are further claims for a lump sum equal to the amount paid by the company to the landlord in order to be free of the lease, for the legal fees attendant upon that settlement and for rates and other matters. The sum due for rates and other matters is conceded by the plaintiff i.e. $700.95. The claims for the amount of the settlement and legal fees must fail. The lease was not the responsibility of the plaintiff. The action in respect of continued occupation succeeds. I am not aware of any authority on the point but in principle it seems to me that the right of the plaintiff to occupy those premises ceased with the termination of his employment, whether that termination was lawful or otherwise, although of course he must be allowed a reasonable time in which to vacate. However against that his damages for wrongful dismissal should take into account that accommodation had been provided as part of his emoluments. I have not done so in the present instance. I have preferred to deal with the occupation of the premises as a whole and set off against the $6,650 that represents their value from mid-January to the end of April the sum of $3,800, that I would have included in the plaintiff's damages, leaving a balance in favour of the company of $2,850.

22. For these reasons judgment is entered in action No. 699 for the plaintiff in the sum of $44,463, and in action No. 749 for the company in the sum of $3,550.95.

23. Costs for the plaintiff in Action 699; no order as to cost in Action 749.

Representation:

R. Mills-Owens (C. Griffiths & Co.) for Francis St. Clair Mackenzie (Plaintiff (O.J. 699/75), Defendant (O.J. 749/75)).

M. Asome (Johnson, Stokes & Master) for Ogilvy & Mather (H.K.) Pte. Ltd. (Plaintiff (O.J. 749/75), Defendant (O.J. 699/75)).