Mak Chi Sing Alias Danny Mak v. A & A Continental Commodities Ltd

HCA007237/1983

Employee, through no fault of his own is detained by a court order in another jurisdiction as a result of a dispute between the Employer and a Third Party. - Duty of employer to endeavour to resolve problems. Failure to resolve dispute in such circumstances constitutes breach of contract of employment. Employee entitled to a mandatory injunction requiring Employer to take effective measures to safeguard interests of Employee. Injunction granted in this case.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: The Hon. Mr. Justice Mayo in Chambers.

Date: 5th July 1983.

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JUDGMENT

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1. This is a most unfortunate case. The plaintiff claims to be an employee of the defendant company. He represented them as a manager at Doha in Qatar. It is common ground that the defendants have had various business transactions in Qatar and in particular dealings with a company known as Khalid Corporation. Unfortunately differences have arisen between Khalid Corporation and the defendants. Khalid Corporation commenced legal proceedings against the defendants in the civil court of Qatar and claimed US$242,212. In addition to these civil proceedings Khalid Corporation took action in the courts in Qatar and obtained an order to the effect that unless the defendants entered into an acceptable form of guarantee with Khalid Corporation guaranteering the due payment of the monies due and owing to them the plaintiff as their manager would not be allowed to leave Qatar.

2. This order has occasioned the plaintiff considerable distress. He accepts that the defendants did provide him with some monies for his support while he was trying to resolve the difficulties which had arisen but his funds were now running short and unless something could be done he would run out of money. There was also the problem of his having to support his wife and two young children who are presently living in New York and supporting his mother who is living in Hong Kong.

3. Exhibited to the papers in support of the application is a copy of the judgment of the Qatar Court. The plaintiff was not a party to the dispute between Khalid Corporation and the defendants and it is surprising to say the least of it that the Court should have seen fit to make the order it did. The problem which arises is what should be done in consequence of this order. The plaintiff has issued a generally endorsed writ in which damages are claimed for breach of the plaintiff’s contract of employment made on or about the 7th September 1981. He then goes on to claim that the defendants should provide a fund of US$242,212 and pay the monies into Court which shall be held pending the outcome of the litigation in Qatar. Based upon this generally endorsed writ the plaintiff initially issued an ex-parte application for a mandatory injunction. This was heard by Bewley J. and refused. An application was then made inter partes to Mr. Commissioner Clough but this was adjourned as a result of an application which was made by the plaintiff to amend the relief sought in the application. Put simply the amendment was to the effect that the relief sought was that an alternative claim was made for an injunction to be granted that the defendants should provide a bankers guarantee to secure the said monies in Qatar rather than a requirement that they should effect payment of the said monies.

4. It is important to bear in mind the frame work of the litigation in Hong Kong as this has an important bearing upon the most unusual relief which is being sought. As can be seen the plaintiff is founding his claim upon the alleged contract of employment he has with the defendants. He is claiming that the defendants are in breach of this contract. The breach he complains of is that after their attention has been drawn to the predicament he finds himself in they have refused to conduct their affairs in such a manner that the Courts in Qatar are prepared to allow him to leave the country. He is further claiming that the only way in which he can obtain the relief he is seeking is if I grant a mandatory injunction requiring the defendants to provide a guarantee in a form which is acceptable to the Courts in Qatar so that he can be released.

5. As I have already indicated there are a number of disputed facts. The defendants have denied that the plaintiff was employed by them. From the documents exhibited to the plaintiff's affidavits he has clearly demonstrated sufficient evidence on the test adopted in American Cyanamid Corporation v. Ethicon ⁽¹⁾ that he has an arguable case. There is also a dispute concerning the status of the litigation in Qatar. Again it would be premature for me to attempt to formulate any conclusions upon the basis of the evidence deduced. However the plaintiff did exhibit to one of his affidavits a copy of the power of attorney given by the defendants to the lawyers they were instructing in Qatar which contained an authority authorising them to conclude a settlement with Khalid Corporation of up to 70% of the amount which was being claimed. The defendants filed an affidavit with supporting exhibits which tended to show that the plaintiff had of late been less than diligent in representing the defendants interests in their litigation with Khalid Corporation and suggested that he had been more concerned with his own personal predicament than the interests of the defendants. While being fully aware of the issues which have been raised in connection with the evidence I am satisfied that the plaintiff has made out a sufficient case as required in American Cyanamid Corporation v. Ethicon ⁽¹⁾ to enable me to go on to consider the balance of convenience in this case. I will consider the balance of convenience later in this judgment.

6. Mr. S. Lee who was representing the plaintiff outlined to me the general principles governing a contract of employment in this connection. He referred me to paragraph 3473 of the 25th Edition of Volume II of Chitty on Contract which reads as follows:-

"Duty to indemnify the employee. The relationship of employment imposes a duty on the employer to indemnify or reimburse the employee against all expenses, losses and liabilities incurred by the employee in the execution of his employer's instructions, or within the authority granted to him by the employer, or during the reasonable performance of his employment ....."

One of the authorities cited in support of this proposition is the case of In re Famatina Development Corporation. Limited ⁽²⁾. It would appear from this case that the principle above referred to is a broad one. It can also encompass a situation where there is a relationship of principal and agent. This can be seen from the short judgment of the Master of the Rolls Lord Cozens-Hardy at page 282:-

"Mr. O'Driscoll was much more than a servant of the company and the duties imposed upon him were far wider than those of a consulting engineer. He was undoubtedly appointed to be the agent of the company for many purposes and all he had done was in pursuance of his duties as agent. Therefore he came within the well settled rule that an agent had a right against his principal, founded upon an implied contract, to be indemnified against all losses and liabilities, and to be reimbursed all expenses incurred by him in the execution of his authority."

The plaintiff, both as an employee and as an agent of the defendants had been working for the defendants and clearly came within the principles above propounded.

7. Mr. Lee further argued that it was immaterial that the plaintiff had not expended monies for and on behalf of the defendants. In support of this contention he referred to part of the judgment of Sir G. Jessel M.R. appearing at page 191 of Lacey v. Hill ⁽³⁾ :-

"Last of all it is said this is a liability as distinguished from an actual payment, and that the agent or person entitled to be indemnified has no remedy. Whatever may be the case at law (as to which I say nothing, because it is not necessary,) it is quite plain that in this Court any one having a right to be indemnified has a right to have a sufficient sum set apart for that indemnity. It is not very material to consider whether he is entitled to have that sum paid to him, or whether it must be paid direct over to the creditor. If the creditor is not a party, I believe that it has been decided that the party seeking indemnity may be entitled to have the money paid over to him."

Mr. Lee also referred to another case Liberian Insurance Agency Inc. v. Mosse ⁽⁴⁾. In that case a similar situation arose in London to the present proceedings. The main difference between the two cases was that in the London  case the employer had paid the money to the authorities in Liberia and was seeking to obtain reimbursement. This case established that there could be reimbursement even outside the four corners of the law of Contract of Employment or Agency if certain conditions were complied with. In the main the conditions would have been complied with in the present case.

8. I am satisfied that Mr. Lee has established an arguable case that the defendants do owe a duty towards the plaintiff and that their failure to take necessary action to extricate him from the dilemma he finds himself in constitutes a breach of the alleged contract of employment.

9. I will now consider whether the litigation as presently constituted justifies me in granting the mandatory injunction which is being sought by the plaintiff. I accept that the plaintiff must make out a strong case for such relief as he wishes me to make an order which is most burdensome upon the defendants. Mr. Stone who is representing the defendants argued strenuously that it would not be appropriate for me to grant an injunction in this case. In particular he submitted that it would be inappropriate to grant a mandatory injunction where the issues were hotly contested as is presently the case. I do not see much merit. it in this submission. Each case has to be judged on its own particular merits. I do not regard the circumstances of this case as precluding me from issuing a mandatory injunction should this appear to be appropriate and desirable. I am much more concerned with the problems which arise relating to the balance of convenience. There is a great deal to be said in favour of the contentions which have been advanced by both parties. Mr. Stone has submitted that if I grant the injunction there would be no reason to suppose that the plaintiff would return to the colony to prosecute his claim against the defendants. In reality the granting of the injunction may be the only effective step taken in the litigation. He also pointed out that it was highly probable that the moment the guarantee was given to the authorities in Qatar the defendants would be called upon to honour it. In this connection he referred to one of the plaintiff's affidavits where he claimed that the situation was such in Qatar that he might be arrested at any time by the police and incarcerated. This indicated that little reliance could be placed upon the judicial authorities to ensure that their dispute with Khalid Corporation would be adequately or properly ventilated. The result of all of this would be that the defendants would effectively be prevented from having any satisfactory means of resolving their dispute with Khalid Corporation. Mr. Stone was also concerned that any undertaking given by the plaintiff in the usual form on an injunction may provide insufficient protection for the defendants as the plaintiff appears to have insufficient financial resources available to him to implement the terms thereof. Accordingly even if the defendants succeeded at the trial of the present action they may be left without any redress.

10. On the other side of the balance it is necessary to consider the position of the plaintiff. On his evidence he finds himself in a most invidious position through no fault of his own. He is in an intolerable situation. He is running out of funds and faced a prospect of possibly being in prison due to the unwillingness of the defendants to resolve its dispute with Khalid Corporation. Mr. Lee urged upon me the importance of the liberty of a subject. Although at the present time fortunately the plaintiff is not in prison there is a very real prospect that the position could change for the worse. Even if he was not in prison he was still leading a very unsatisfactory existence  and was unable to leave Qatar. There was also a possibility that if I do not grant an injunction the plaintiff may have to remain in Qatar for an indefinite period and he may then be unable to proceed with his case against the defendants.

11. Having considered the balance of convenience carefully I have come to the conclusion that I should grant the mandatory injunction which is being sought. I accordingly make an order in terms of paragraph 2 of the summons. It is possible that difficulty may be encountered in drafting an appropriate form of guarantee which may be acceptable to the civil court of Doha Qatar. In this connection I order that the plaintiff will ascertain a satisfactory form of draft and submit this to the defendants. Equally it will be necessary to agree a banker witch will be acceptable. Again it will be the responsibility of the plaintiff to resolve this in consultation with the defendants. In case difficulties should arise in this or any other connection there will be liberty to apply. I will hear the parties as to costs.

Representation:

Mr. Sammy Lee (Deacons) for Plaintiff.

Mr. William Stone (P.H. Sin & Co.) for Defendants.

(1)    (1975) A.C. 396.

(2)    (1914) 2 Ch. 271.

(3)    (1874) L.R.E.Q. 182.

(4)    (1977) 2 L.L.K. 560.