Prosper Entertainment Ltd. v. Ng Yiu Kuen t/a Andy Production House
Read the full judgment text of HCA 1280/2000 on BabelCite. This High Court CFI judgment was delivered on 20 December 2002.
1. In this action, the Plaintiff, a cinematography film production company and investor in the entertainment business, sues the Defendant under 2 contracts.
Cites 5 cases
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HCA001280/2000 HCA 1280/2000 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1280 OF 2000 ____________
____________ Coram: Deputy High Court Judge A Cheung in Court Dates of Hearing: 16-19 September and 18-20 November 2002 Date of Judgment: 20 December 2002 _______________ J U D G M E N T _______________ 1.In this action, the Plaintiff, a cinematography film production company and investor in the entertainment business, sues the Defendant under 2 contracts. Chan Yung's evidence 2.The Plaintiff's case and evidence given by the Plaintiff's director and main witness, Mr Chan Yung, may be summarised as follows. In 1999, a Guangzhou based company owned by Mr Chan, Guangzhou Dong Fang Ming Zhu Wen Hua Chuan Bo You Xina Gongsi ("Dong Fang Ming Zhu"), entered into a joint venture agreement with the Peking Television Broadcast, a television station in Beijing ("Peking Television"), to shoot a 40-epidsode TV series. Under the contract, production of the TV series was the responsibility of Dong Fang Ming Zhu, which in turn entered into a contract with the Plaintiff for that purpose. 3.Under the contract between the Plaintiff and Dong Fang Ming Zhu, the Plaintiff was responsible for writing the script, the provision of 50% of the shooting capital, and the hiring and the provision of the executive producer, director, scriptwriter, actors and personnel from Hong Kong. 4.Pursuant to this contract, Mr Chan, a board director of the Plaintiff with much experience in the film industry, was to act as the executive producer. However, as he was from time to time engaged in other matters, he needed a deputy executive producer to be present at the shooting locations and studio at all times to assist him. Moreover, he needed directors to direct the shooting of the TV series. 5.Under those circumstances, the Plaintiff entered into 2 contracts with the Defendant, the sole proprietor of Andy Production House, who was experienced in directing TV series and had some experience in directing movies, and who was eager to gain some experience as an executive producer. By 2 contracts of similar terms both dated 22 September 1999, the Plaintiff engaged the Defendant to work as the deputy executive producer of the whole TV series to be shot, as well as the director of 25 out of 40 episodes comprising the TV series respectively. The 2 contracts were signed sometime in late September or early October and the engagement was to commence on 1 October 1999. Payment of remuneration was to be by instalments. 6.Amongst other things, the deputy executive producer contract contained the following terms:
7.The director contract contained similar terms, mutatis mutandis. 8.Shooting was originally scheduled to commence on 1 November 1999. The 40 episodes were divided into 8 sub-series of 5 episodes per sub-series, each comprising an independent story by itself. Apart from the Defendant, there was engaged another director, Mr Wu Ming Hoi ("Mr Wu"). Mr Wu was responsible for directing 15 of the 40 episodes, or in other words, 3 sub-series. 9.Sometime in October 1999, the Defendant told Mr Chan that as he was inexperienced in the job of a deputy executive producer, he would like to spend more time on this job, and suggested the hiring of a Mr Sek ("Mr Sek") as an additional director for shooting sub-series 3 on his behalf. Mr Chan agreed with the suggestion, and Mr Sek was hired by the Defendant personally. 10.However, according to Mr Chan's evidence, in late October 1999, the Defendant told him that the preparatory work, such as the final selection of actors and shooting sites, the shooting schedules as well as the costumes were "not so ready", and suggested the postponement of the shooting to 15 November 1999. This met with the approval of Mr Chan, although he personally thought that the preparatory work was basically satisfactory. Mr Chan was of the view that it was indeed good to have good preparation before the commencement of shooting, and apparently the intended shooting schedule at that time could accommodate the suggested postponement. 11.Mr Chan said in evidence that up to that stage he was satisfied with the Defendant's work and had no reason not to trust him. 12.The Plaintiff's case against the Defendant and Mr Chan's subsequent dissatisfaction with the performance of the Defendant centred on two matters. First, Mr Chan said in evidence that on 10 November 1999, he discovered for the first time that the Defendant had been absent from the Mainland studio and intended shooting sites for several days. He telephoned the Defendant and found out to his great surprise that the Defendant was in fact directing a movie in Hong Kong at the time ("the Movie"). He said he had absolutely no prior knowledge or information about it, and considered this to be a breach of the 2 contracts in question. The Defendant told him that he still needed a few days to complete the shooting, and he would be back in time for the commencement of shooting on 15 November 1999. Mr Chan said he was very upset, yet the Plaintiff had no choice but to accept the Defendant's promise, as the alternative of finding a replacement director at such short notice was simply quite infeasible. 13.However, the Defendant did not turn up at the shooting scene or studio on 15 November 1999. So on that day, only Mr Wu commenced shooting sub-series 2 for which he was responsible, in the absence of the Defendant who was the deputy executive producer of the whole TV series including sub-series 2 for which Mr Wu was the director. 14.As for the shooting of sub-series 1 for which the Defendant was the director as well as the deputy executive producer, it only commenced on 20 November 1999 when the Defendant eventually returned to the studio. 15.Naturally the Plaintiff was very unhappy about all this, but according to Mr Chan, it had to put up with the Defendant's irresponsible behaviour, in order to avoid causing the Plaintiff even bigger loss. 16.The second complaint against the Defendant relates to the Defendant's allegedly unauthorised absence from duty between 1 and 6 December 1999. According to Mr Chan, on a visit to the shooting site on 4 and 5 December 1999, he learnt for the first time the unauthorised absence of the Defendant. He found to his surprise that Mr Sek had already commenced directing the shooting of sub-series 3, and the shooting of sub-series 1 which only commenced belatedly on 20 November 1999 had stopped in the meantime. Mr Chan found out on 5 or 6 December 1999 that the Defendant had left the shooting site during those few days in order to shoot a television advertisement relating to a residential development in the Mainland for another company ("the Advertisement"). 17.Mr Chan was most upset by the Defendant's behaviour; he made up his mind to dismiss the Defendant and started looking for a replacement. He ceased talking to the Defendant directly as from 6 December 1999. 18.In the meantime, neither Mr Chan nor the Defendant was satisfied with the quality of work of Mr Sek who was therefore fired by the Defendant sometime in December. Mr Chan was also dissatisfied with the work of a Mr Ma Wah Gon ("Mr Ma"), the production coordinator of the series. Amongst other things, Mr Chan was unhappy that Mr Ma failed to report to him the Defendant's absence from duty during early December 1999, and indeed helped to conceal his absence from work. Wilson Cheung's involvement 19.According to Mr Chan's evidence, Dong Fang Ming Zhu had planned and agreed with the Plaintiff and Peking Television that each sub-series would be shot and completed within one month. As the Defendant/Mr Sek and Mr Wu were to shoot their respective sub-series concurrently, two sub-series should have been completed each month. However, according to the evidence of Mr Chan and Mr Wilson Cheung ("Mr Cheung") - the Defendant's replacement as the new deputy executive director who started working on the production on 20 December 1999, by early January 2000, the Defendant had only completed 3 (or 3.5) episodes in total of sub-series 1. According to Mr Chan, due to the general delay and the 2 incidents of irresponsible behaviour on the part of the Defendant, the Plaintiff decided to formally terminate the engagement of the Defendant under the 2 contracts by a notice dated 3 January 2000, even though by then the Plaintiff had not been able to find any replacement director. According to the evidence of Mr Chan and Mr Cheung, originally the Plaintiff had wanted to relieve the Defendant of his post as deputy executive director first (following the arrival of Mr Cheung on 20 December 1999) and keep him as the director of sub-series 1 until its completion; but following the breakdown of negotiations between Mr Cheung (on behalf of the Plaintiff) and the Defendant on the terms of the Defendant's refund of overpaid money to the Plaintiff under those circumstances, the Defendant was dismissed on 3 January 2000 under both contracts without the parties' having reached any agreement on the Defendant's departure. Plaintiff's loss and damage 20.According to the evidence of Mr Chan, the Defendant's breach of the 2 contracts and the consequential delay caused the Plaintiff loss and damage. First, there was an overpayment of money to the Defendant under the 2 contracts. By the time of termination of contracts, the Defendant had been paid a total of HK$184,000. By then, 8 episodes in total had been completed (3 by the Defendant, 1 by Mr Sek and 4 by Mr Wu) and therefore the Defendant as the deputy executive producer was entitled to a sum of HK$48,000 as remuneration (at HK$6,000 per episode). Moreover, the Defendant (and Mr Sek hired by him) had completed 4 episodes in total which entitled him to HK$64,000 as director (at HK$16,000 per episode). In the circumstances, he has been overpaid HK$72,000. (As to the Plaintiff's eventual claim, see below.) 21.Secondly, Mr Chan said that the delay led to additional production costs in terms of extra remuneration of the acting cast, remuneration of the shooting crew, motor vehicle rentals, hairdressing rentals, shooting equipment rentals, accommodation expenses, shooting site rentals, and decoration charges, in the total sum of RMB￥487,510.25. 22.Moreover, it is the Plaintiff's case and the evidence of Mr Chan that because of the general delay, Peking Television held Dong Fang Ming Zhu responsible and withheld a sum of RMB￥500,000 from the amount payable to Dong Fang Ming Zhu as compensation. In turn, Dong Fang Ming Zhu held the Plaintiff responsible for the money withheld. Ma Wah Gon's evidence 23.Mr Ma gave evidence on behalf of the Defendant. He was the production coordinator of the series. Amongst other things, his main duty was to coordinate and arrange the shooting schedules of all concerned in the production of the series. He was responsible for preparing a shooting schedules that would cover the intended shooting agenda of the following 10 days or so, which would of course have to be updated according to progress and subsequent changes in circumstances. He was also responsible for preparing a daily shooting notice of the following day which informed all concerned the precise shooting schedule, the personnel involved and the equipment required and so forth in a much more detailed manner. 24.According to Mr Ma, originally shooting was scheduled to commence on 1 November 1999. But it was delayed until mid-November 1999 because the costume was not ready. This was in turn caused by the failure of Mr Chan to pay the costume designer (a Madam Ng) in time. As a result, the required costumes were not ready for shooting sub-series 2 (to be directed by Mr Wu) until 13 November 1999, and thus shooting only commenced on 15 November 1999. As for the Defendant's sub-series 1, because of the costume problem, shooting could not start until 17 November 1999. 25.As for the Defendant's absence from work from 1 to 5 December 1999, according to Mr Ma, on 22 November 1999, the Defendant told him that he had to return to Hong Kong on 1 and 2 December 1999 to discuss the script, and as for 3 to 5 December 1999, for personal reasons he had to take causal leave. Mr Ma was asked to see if he could arrange the schedule accordingly. Mr Ma said he managed to arrange the schedule to fit the Defendant's request, and the same was reflected in a schedule covering the material period in question, which he issued on 28 November 1999. A copy of the schedule was sent to Mr Chan. On 29 November 1999, Mr Chan had a discussion with him about the schedule, including the Defendant's absence from 1 to 5 December. Mr Chan asked him whether his absence would affect the shooting progress, to which Mr Ma answered "No". According to Mr Ma's schedule, Mr Sek would carry out shooting of sub-series 3 during the time when the Defendant would be absent. Mr Chan therefore raised no objection. Mr Ma related this to the Defendant. 26.According to Mr Ma, he had divided the daily shootings to 2 groups, and as there were 3 directors (i.e. the Defendant, Mr Sek and Mr Wu shooting 3 different sub-series), what he did was to fit the 3 of them into the 2 daily production groups in his schedule by some sort of rotation, the purpose of which was to allow each of them to take turn to have some rest during the production period. But of course as the Defendant and Mr Wu were responsible for the 1st and 2nd sub-series, which were the most important sub-series in the whole series, priority was given to the shooting of those 2 sub-series. He said in evidence that the scheduling of Mr Sek to shoot sub-series 3 during the Defendant's absence was perfectly normal and in accordance with his own scheduling strategy, which also suited the Defendant's need. 27.According to Mr Ma, the Defendant returned on 6 December, but on that day no shooting assignment was scheduled for the Defendant because Mr Wu needed to continue shooting a scene which he failed to finish the day before. The Defendant continued his shooting work after the 6th in accordance with the program scheduled by him. 28.Mr Ma confirmed that he was asked to leave by Mr Chan on 21 December 1999. Mr Chan simply told him that somebody in the production team was not happy with him, and therefore he could not carry on working at the site. He was paid his salary up to that date. He was willing to leave as he felt he would have no problem in getting a new assignment. 29.According to him, by the time of his departure, the Defendant had directed 3 to 4 episodes with about 1 episode left. Mr Wu had shot about half an episode more than the Defendant, whereas Mr Sek had directed more than 1 episode by then. 30.According to Mr Ma, the directors were not behind schedule. This was because it was throughout the plan that the 1st and 2nd sub-series, which were the most important sub-series in the whole series, would take 2 months each to shoot, whereas the remaining sub-series would take 1 month each to shoot. Defendant's evidence 31.The Defendant gave evidence at trial. In relation to the Movie, he said that he was first approached to direct the Movie in August 1999. Originally, it was scheduled to be shot in mid-September and be finished within 1 month, i.e. mid-October. He said he was agreeable to take up the assignment provided that it did not conflict with the TV series which he was preparing together with Mr Chan for production at that time, although the actual contracts were not signed until September. He said he had informed the Movie employer that he would not be available after October, as the subject TV series was then scheduled to commence shooting in early November 1999. 32.The Defendant maintained in evidence that he had informed Mr Chan about it, and Mr Chan was agreeable to his taking up this Movie assignment provided that there was no conflict in schedules between the two jobs. 33.The Defendant also maintained in evidence that on 22 September 1999 when he signed the two subject contracts with Mr Chan, he noted that the contract period stated in the two contracts was to commence on 1 October 1999 (clause 2), and he specifically reminded Mr Chan that he had to direct the Movie which would require him working in October for the Movie company. Mr Chan said he was aware of that, and he did not object. In those circumstances, the Defendant said he signed the two contracts, his understanding being that he had already obtained the Plaintiff's consent to his taking up the directorship of the Movie. 34.The Defendant also said in evidence that the shooting of the Movie was delayed until 1 October 1999. As a result, although he managed to finish directing the shooting of the Movie by the end of October, he could not take part in the post shooting production work. However as he had already agreed with the Movie company that he would not work for it beyond October, he was not required to take part in the post shooting production work. He said that in fact the shooting work of the Movie only took 12 working days, and since both the Movie company and the Plaintiff were aware of his involvement in the Movie as well as the TV series, his schedules in both work were coordinated in such a way that he managed to complete his Movie shooting assignment within 12 working days as scheduled, without compromising his preparatory work for the commencement of shooting of the TV series in question. Thus the Defendant said that he managed to accompany Mr Chan on a trip to Beijing in early October 1999 as part of the preparatory work, and he took part in the selection of shooting locations in the Mainland for the TV series. 35.Like Mr Ma, the Defendant also said that the real reason for the delay of commencement of shooting from 1 November to 15 November for sub-series 2 and 17 November for sub-series 1 was the late payment by the Plaintiff in relation to the necessary costumes. In fact, according to the Defendant, he was available for directing the TV series as from November 1999, but he could not commence work until 17 November after the required costumes had arrived. The Defendant pointed out that an instalment payment of $120,000 was only paid to him by the Plaintiff on 17 November when he commenced shooting sub-series 1, which instalment payment was payable on the first day of commencement of shooting which was originally scheduled to take place on 1 November. 36.In relation to the Advertisement, the Defendant said he took up the job in November after finding that his duty in relation to the TV series could cope with his absence for 3 days to shoot the Advertisement. His evidence in this regard was the same as that of Mr Ma's. He said that his absence was clearly shown in the schedule prepared by Mr Ma pursuant to his request on 28 November, and he was told on 29 November by Mr Ma that Mr Chan had no objection to the schedule. He said he saw no necessity to inform either the Plaintiff or Mr Ma of the reason for his taking causal leave from 3 to 5 December. He said his understanding of the two contracts in question, particularly clause 13 of the director contract, was that they did not prohibit him from working as a director during the contract period for the shooting of an advertisement. He drew a distinction between directing and shooting an advertisement on the one hand, and directing and shooting a TV program or movie on the other. 37.He said that after completion of the shooting of the Advertisement on those 3 days, he returned on 6 December to continue his work with the Plaintiff. 38.The Defendant also explained that on 1 and 2 December, he had to return to Hong Kong to discuss the script with the scriptwriter who was stationed in Hong Kong. He gave reasons why the discussion had to take place at that particular time. 39.In relation to his eventual dismissal by the Plaintiff on 3 January 2000, the Defendant had a very different story to tell. He said according to his understanding, his dismissal had nothing to do with the shooting of the Movie which Mr Chan had full knowledge about or the shooting of the Advertisement which even according to the story of Mr Chan was found out in early December. He said that in mid-December, Mr Cheung arrived as a deputy executive producer newly retained by the Plaintiff. He had discussions with Mr Cheung relating to the demarcation of roles and responsibilities between him and Mr Cheung, as both of them had the same title. Mr Cheung told him, apparently on behalf of Mr Chan, that Mr Chan would very much want him to stay and continue working in the series. The Defendant said he also took the occasion to remind Mr Chan through Mr Cheung that as he had almost finished with his work as deputy executive producer for 10 episodes (counting those that had been directed by him, Mr Sek and Mr Wu by then), further payment under his contract with the Plaintiff was due to him. The Defendant said that, however, subsequently Mr Cheung related to him Mr Chan's message that as the two parties were not cooperating happily, he had to go, and he was asked to refund part of the money that he had received from the Plaintiff. He refused, the talk broke down, and in early January he was dismissed. Soon thereafter, he received a solicitor's letter and the action was commenced. 40.The Defendant said that in fact by mid-December 1999, the Plaintiff was apparently experiencing serious financial difficulties; various people involved in the production of the TV series were owed money by the Plaintiff, which threatened the continued shooting of the TV series. He personally got complaints from many people involved in the production, including costume, studio, film production, and so forth. The relationship between the lead actor and the Plaintiff was bad. The lead actor was very concerned that the shooting of the TV series could not be continued. He told the Defendant that he had made a complaint or report to Peking Television which was involved as an investor in the TV series. According to the Defendant, this resulted in Mr Chan flying to Beijing to report the matter and returning together with a Beijing representative to the studio in Guangzhou to check the accounts and the over-budgeting situation. The Defendant said that although he had no direct evidence, his own guess, based on the known surrounding circumstances, was that he was used as a scapegoat for the over-budgeting and thus the financial difficulties faced by the Plaintiff. So almost one month after the alleged unauthorized shooting of the Advertisement was (allegedly) discovered by Mr Chan, he was summarily dismissed on the ground that he had directed the Advertisement without authorization, thereby affecting the progress of production of the TV series. It may be noted here that his dismissal notice made no mention whatsoever about his earlier shooting of the Movie done allegedly without authorization by the Plaintiff. 41.The Defendant said that by late December, he had finished directing about 41/2 episodes, and Mr Wu had also completed more or less the same amount of work. Delay 42.Although both the pleadings and the dismissal notice referred to the serious delay caused by the Defendant to the shooting progress because of his alleged breaches, the Plaintiff confirmed with the Court through counsel during final submission that the Plaintiff is no longer relying on delay as a ground for terminating the two contracts in question. In other words, the Plaintiff is only relying on the two alleged breaches relating to the shooting of the Movie and the Advertisement respectively as justifying the termination of the two contracts. Of course, in relation to the quantum of loss and damage, the Plaintiff complains about the general delay resulting from the termination of the two contracts brought about by the Defendant's breaches. But that is quite another matter. Indeed, in the latest amendment to the Statement of Claim, the Plaintiff accepts, notwithstanding the evidence given by its witnesses, that by the time of termination of the two contracts, the Defendant and Mr Sek have completed 4.5 episodes and 1 episode respectively as directors of sub-series 1 and sub-series 3, whereas Mr Wu has also completed 4.5 episodes of sub-series 2. In other words, the Defendant was not particularly late in relation to the performance of his work as a director, as compared with Mr Wu. In the light of this latest amendment, the Plaintiff's claim for over-payment of money to the Defendant is reduced further to a sum of HK$36,000.00 only. 43.Turning to the two breaches relied on by the Plaintiff, to a great extent, the Plaintiff's case would depend on the Court's findings of fact. However, even if the Plaintiff could overcome the factual difficulties, the Plaintiff's claim is beset with problems, as will be discussed in some detail later on in this judgment. First breach the Movie 44.So far as the first alleged breach relating to the Defendant's directing the Movie is concerned, on the facts, on balance, I am not with the Plaintiff. I have had the opportunity of closely observing the demeanour of the two crucial witnesses both generally and specifically in relation to the alleged breach concerning the Movie, namely, Mr Chan and the Defendant respectively. I prefer the Defendant's evidence. 45.I fully bear in mind the undeniable fact that there was no mention of the Defendant's intended involvement in the Movie in the two contracts in question, particularly the director contract. Nor was there any mention of any agreement by the Plaintiff or Mr Chan to the Defendant's taking up the job. On the other hand, I bear in mind that in the dismissal notice, the alleged unauthorized work of the Defendant concerning the Movie was not mentioned at all, let alone being relied on as one of the reasons for the alleged delay in the shooting program or as a ground for terminating the Defendant's job. 46.In my judgment, this is of some significance because according to the Plaintiff's story, the Movie incident involved not only the Defendant's taking up an outside job when he had agreed to devote exclusively his service to the Plaintiff, it actually caused a delay of 15 days, it being the evidence of Mr Chan that the Defendant misled him into agreeing to delay the commencement of shooting from 1 to 15 November so as to suit the Defendant's secret agenda. According to the Plaintiff's story, it was indeed a very serious breach by itself, resulting in very serious delay. Yet not a single word was mentioned about it in the dismissal notice. 47.Moreover, according to the Defendant's evidence, which was not successfully challenged during cross-examination, the shooting of the Movie only took 12 working days; with careful planning, this was satisfactorily accommodated within the work schedule of the Defendant with the Plaintiff. Indeed according to Mr Chan's evidence, he was quite satisfied with the Defendant's preparatory work prior to his alleged discovery of this secret shooting of the Movie on 10 November. Moreover, according to Mr Ma who was responsible for coordinating the preparation and production work, the Defendant took part in the pre-shooting preparatory work without any apparent difficulty. All this would suggest that there should not have been much need for the Defendant to lie to Mr Chan or the Plaintiff about his involvement in the Movie, or to conceal his involvement in the Movie from the Plaintiff. 48.I also take into account that given the peculiar nature of the film industry and the public's interest in learning about what is going on in the industry through newspapers and magazines, it may not have been easy or realistic at all for a director like the Defendant to conceal his involvement in the shooting of a movie from somebody like Mr Chan or a company like the Plaintiff, who and which were well connected and well established in the industry. This would tend to suggest that the possibility of the Defendant's taking a risk to conceal his involvement in a movie from the Plaintiff and Mr Chan was low. 49.In this regard, I cannot simply look at the Movie incident in isolation. I should take into account the problem with costume, which was maintained both by the Defendant and Mr Ma as the true reason for the delay of commencement of shooting from 1 to 15/17 November. Both the Defendant and Mr Ma maintained that the Plaintiff's financial difficulty in paying the costume supplier was the true reason for the delay. This was denied by Mr Chan. Unless Mr Ma, who was in a very good position to know the truth, had told a deliberate lie, his evidence should carry a lot of weight. Both the Defendant and Mr Ma maintained in evidence that they were ordinary friends and ex-colleagues. This part of their evidence was not successfully or seriously challenged. This being so, the chances of Mr Ma telling a deliberate lie in this regard are not high, although I fully bear in mind the possibility of Mr Ma bearing grudges against the Plaintiff or Mr Chan relating to his summary dismissal in December 1999 and seeking an opportunity to revenge. 50.But returning to the allegation of the costume problem as being the true reason for the delay, as was very persuasively argued by Ms Ma, counsel for the Defendant, if this allegation was simply made up by Mr Ma and the Defendant, it could have been easily rebutted by the Plaintiff by the production of documentary evidence of payment, such as copy cheques, receipts, or a short statement from the costume supplier, setting out the true position. This would not only refute the allegation of any costume problem, it would also show quite decidedly that both Mr Ma and the Defendant were not credible or reliable persons. Yet I do not have a single piece of documentary evidence relating to the payment to the costume supplier. 51.Having carefully considered the surrounding circumstances, the available documentary evidence as well as the respective demeanour of the witnesses, I find that the true reason for the delay in commencement of shooting was the costume problem. In other words, I do not believe Mr Chan's evidence in this regard. This also forms a reason for my preferring the Defendant's evidence to his evidence in relation to whether the Plaintiff was aware of the Defendant's involvement in the Movie beforehand. 52.Given my finding, I reject the Plaintiff's allegation of breach against the Defendant in relation to the Defendant's involvement in the Movie. What was written in the director contract was decidedly overriden by what had been agreed orally between the Defendant and Mr Chan beforehand, as per the Defendant's evidence which I accept. No point on the parol evidence rule was taken as such. In any event, I find that the true agreement between the parties was made partly in writing (the director contract) and partly orally (as found by me). An alternative way of looking at the matter is that there was a waiver of clauses 3 and 13 in the director contract and/or consent was given to the shooting of the Movie. 53.In any event, even if I were to find in favour of the Plaintiff and conclude that there was such a breach, it is common ground at the trial that this breach would not have entitled the Plaintiff to terminate the two contracts on 3 January 2000. This is because the Plaintiff had made a deliberate and conscious choice to continue with the 2 contracts. In other words, notwithstanding the breach, the contracts had been affirmed. 54.Secondly, even if I had made a finding in favour of the Plaintiff and concluded that the Defendant had concealed his involvement in the Movie from the Plaintiff, and therefore he had breached clauses 3 and 13 of the director contract, it would still be debatable as to whether this would have justified the termination of the deputy executive producer contract. It is not the Plaintiff's case that the 2 contracts together formed a composite arrangement between the parties, so that repudiation of 1 contract would automatically amount to repudiation of the whole arrangement (i.e. both contracts). Indeed on the evidence, this was not the case. Even according to Mr Chan's and Mr Wilson Cheung's evidence, in late December, the Plaintiff wanted to relieve the Defendant from his duty as deputy executive producer only but keep him as director for the time being until sub-series 1 was completed. The two jobs were obviously quite separate and severable. Moreover, until the alleged discovery of the Defendant's involvement in the Movie, Mr Chan had been generally satisfied with the Defendant's pre-shooting preparatory work. However, given the Defendant's seniority in the production team, I am prepared for the purpose of the present discussion to assume that his unauthorised absence from work for such a substantial period of time also constituted a wrongful repudiation of the deputy executive producer contract even though he had not breached clause 3 or 13 of that contract. 55.Thirdly, given my finding in relation to the true cause for the delay in commencement of shooting, i.e. the costume problem, any such breach did not cause any loss to the Plaintiff which, according to my finding, was unable to commence shooting on 1 November as scheduled in any event because of the costume problem. Put another way, the Defendant's breach of the director contract/deputy executive producer contract was over-shadowed and over-taken by a subsequent intervening event, namely, the Plaintiff's costume problem which alone would and did, regardless of whether there was any breach by the Defendant, prevent the commencement of shooting until 15/17 November. 56.So for all these reasons, even if I had come to a different finding of fact in relation to the Defendant's involvement in the Movie, it would not have assisted the Plaintiff in terms of liability or causation of loss. Second breach the Advertisement 57.I now move on to consider the second alleged breach relating to the Defendant's involvement in the Advertisement. So far as the conflict of evidence is concerned, again I prefer the evidence of the Defendant, as well as the evidence of Mr Ma, to the evidence of Mr Chan. In other words, I find as a fact that the Defendant did tell Mr Ma about his intention to be away for 5 days from the 1 to 5 December 1999, 2 days for script discussion in Hong Kong and 3 days for undisclosed personal reasons. Mr Ma duly took this all into account in preparing his schedule for the relevant period, which he produced on or about 28 November. It was sent to everyone concerned including Mr Chan, who raised no objection after being assured by Mr Ma that the Defendant's absence would not affect the progress of work. 58.As I said, I have borne in mind any possible motive on the part of Mr Ma to lie in Court, such as the possibility of his wanting to take revenge on Mr Chan or the Plaintiff. But in my judgment, given the evidence relating to the industry practice in the preparation of schedules and daily shooting notices, I find it more probable than not that schedules were indeed produced by Mr Ma in relation to the series at the material times. I find Mr Chan's evidence relating to schedules and daily shooting notices in this particular TV series to be very confusing. I find his suggestion at one stage of his evidence that there was no schedule produced by Mr Ma to be rather odd. I do not believe his evidence. 59.I should specifically mention that I have considered each of the witnesses' evidence, both as a whole and in isolation relating to the specific issues in question. I have also considered a signed statement by a Mr Yan Chun Shu, a Mainland resident, and given the content of the statement its due weight. As I said, I have come to my above views. 60.But this is not the end of the matter. Clause 13 of the director contract specifically prohibited the Defendant from undertaking any outside director's work without the consent of the Plaintiff. In my judgment, on a proper construction of the clause and the contract as a whole, the consent of the Plaintiff had to be an informed one. According to the evidence of the Defendant and Mr Ma which I accept, the Defendant did not tell Mr Ma the true reason for his absence for 3 days from 3 to 5 December. In other words, although the Plaintiff did not object to the schedule which referred to the Defendant's absence from work for 3 days for personal reasons, it was not told the true reason for the Defendant's absence. In those circumstances, one cannot regard what had happened as constituting the giving of consent by the Plaintiff to the Defendant's involvement in the Advertisement as director. In other words, the Plaintiff never gave any consent to the Defendant acting as the director in the Advertisement. 61.Put another way, my acceptance of the Defendant's evidence in preference to the evidence of Mr Chan in relation to the schedule does not really assist the Defendant. 62.But then the Defendant through counsel further argued that clause 13 (which must be construed together with clause 3 - so it was argued) only catches the shooting of a movie or a TV program. It does not prohibit the shooting of an advertisement. It was argued that a TV program is for entertainment or information, whereas an advertisement is for the promotion of products and, in this case, the property development in the Mainland. 63.I reject this argument. In my judgment, the essence of clause 13, like that of clause 3, was to ensure that the Plaintiff had the exclusive service, devotion and commitment of the Defendant to the television series during the shooting and production period. It was not so much there for the prevention of competition. In other words, the nature of the outside work was of secondary importance. What was of real importance was that the Defendant must not be involved in any outside work which by definition would affect his focus and attention relating to the TV series in question. Thus analysed, the difference in nature between a TV advertisement and a TV program is a distinction without any material difference in the present context. In my judgment, clause 13 applied to any program that was to be shown on TV. Although there was not much direct evidence at trial that the advertisement was a TV advertisement, to be shown on TV, I draw the inference from the subject matter of the advertisement and its cast that it was a TV advertisement. From common experience, such property development advertisements are very commonly shown on TV. Moreover, the dismissal notice, which is in evidence, did say that the Defendant had wrongfully gone to direct a TV advertisement. The Defendant, who is in the best position to know, never suggested otherwise in evidence. In those circumstances, in my judgment, the advertisement in question was caught by clause 13. 64.I therefore conclude that notwithstanding my acceptance of the Defendant's and Mr Ma's evidence, there was a breach of clause 13 of the director contract. Breach of director contract only 65.But the Plaintiff's case is not straightforward. First, this breach was a breach of the director contract. As mentioned above, it is not the Plaintiff's case, as pleaded or as run, that the 2 contracts together formed a composite arrangement between the parties, so that repudiation of 1 contract would automatically amount to repudiation of the whole arrangement (i.e. both contracts). Although the 2 contracts in question were inter-connected, they remained, in my judgment, separate contracts. A breach, even a serious breach, of one contract, may not necessarily constitute a breach of the other contract, or provide a reason for terminating both contracts. In my judgment, the breach in question was a serious one, although the period of absence was only 3 days, given the specific prohibition in clause 13 and the position of the Defendant in the production team. But his breach of the director contract, in my judgment, did not amount to a repudiatory breach of the deputy executive producer contract, given that there was no corresponding breach of clause 13 (or clause 3) of that contract, and his absence from work as deputy executive producer (as opposed to his directing the Advertisement) had in fact been approved (as per my findings of fact). Therefore, at most, his breach of the director contract could only justify the Plaintiff's determination of that contract, but not also the deputy executive producer contract. Affirmation 66.Secondly, there is the question of affirmation. Affirmation was in substance, although not in so many words, pleaded in paragraph 8(c) of the Amended Defence and Counterclaim. In any event, all the facts were in evidence, and both counsel fully argued on this issue during final submission. No pleading objection was taken by Mr Lau, counsel for the Plaintiff. I allow this point to be run, and where necessary I would give leave to amend pleadings. 67.According to the evidence of Mr Chan, he found out the truth on 6 December. Yet the dismissal notice was not posted up until almost one month later on 3 January the following year. However, Mr Cheung arrived at the scene as a new deputy executive producer on 20 December, and soon entered into negotiations with the Defendant on replacing him as deputy executive producer and on releasing him from his duty as director (after the completion of sub-series 1). In my judgment, on the facts, the arrival of Mr Cheung at the scene in his title and the discussions that he had with the Defendant may be regarded as equivalent to an express reservation of right to dismiss the Defendant, if not a "dismissal notice" in kind. Therefore the material period for considering whether there was affirmation is the 2 weeks after the discovery of the breach (6-20 December 1999). 68.Chitty on Contracts (28th ed) Vol. 1 para. 25-002 says:
69.Although strictly speaking, this is not an employment case, but general principles stated in that area of the law are helpful in the context of the present case. In Wyldbore v Bayubay [1987] 2 HKC 304, an employer took 22 days after the incident giving rise allegedly to the right to summary dismissal to dismiss the employee. Barnett J rejected the argument of waiver (at p. 309A-C) thus:
70.In Gloria Weaving and Knitting Factory v Lam Hau Yee [1992] 2 HKC 497, an employer unsuccessfully argued that its piece-rated employees had affirmed the contracts of employment from which the employees were constructively dismissed due to the lack of work from early to mid September by resuming work from late September to early October. Jerome Chan DJ (as he then was) said (at p.507E-508B):
71.Affirmation is a fact. As I said, the Plaintiff through Mr Chan found out the true position on 6 December. According to his evidence, he immediately made up his mind to fire the Defendant. But he needed time to find a replacement, and thus the delay. He stopped talking to the Defendant since 6 December. All this I accept. One cannot down-play the difficulty faced by the Plaintiff at the time. It requires little imagination to picture the practical difficulty that the Plaintiff was facing in seeking to find a replacement director in the middle of the shooting, or for that matter, in deciding whether to terminate the contract. Obviously and reasonably, a reasonable period of time was required and expected to be required for the Plaintiff to make up its mind whether to continue with the contract or terminate it. All this is relevant in considering whether objectively speaking the Plaintiff had unequivocally represented to the Defendant that it had decided to affirm the director contract. Mere inactivity in a reasonably short period of time after the breach is insufficient to constitute affirmation. 72.On the evidence as a whole, I find that there was no affirmation of the director contract between 6 and 20 December 1999 and as from 20 December 1999 there was a reservation of right by conduct negativing any possible affirmation of contract following the appearance of Mr Cheung and the discussion he had with the Defendant. In my judgment, a finding that there was affirmation between 6 and 20 December would not only be wrong on the evidence, but would also be commercially unrealistic and impractical, and unduly harsh on the Plaintiff. Conclusion on the Advertisement breach 73.In conclusion, I find that the Defendant was in wrongful repudiation of the director contract, which repudiation has been duly accepted by the Plaintiff. On the other hand, the Plaintiff had no right to terminate the deputy executive producer contract, and its unilateral termination of it amounted in itself to a wrongful repudiation of the same. Quantum re the Advertisement breach 74.The evidence before me relating to the claim of compensation of RMB￥500,000 is scanty. No oral evidence was adduced from Peking Television to substantiate the claim. The documentary evidence relating to it is meagre. I have not been impressed by Mr Chan's oral evidence in this regard. The Plaintiff bears the burden of proof. I reject this item of claim. 75.As for the additional costs in the total sum of RMB￥487,510.25, Mr Lau accepted in final submission that this figure represents the Plaintiff's total additional costs due to various reasons including the Defendant's wrongful repudiation of the director contract. He suggested a discount of 50%. In my judgment, the cause and effect here is incapable of exact quantification and apportionment. But this does not mean that the Plaintiff has suffered no loss or failed to prove any loss. I reject the Defendant's argument in this regard. I find that the Plaintiff has suffered loss under the present head of claim as a result of the Defendant's wrongful repudiation of contract. On the totality of evidence before me, and bearing in mind the various unsatisfactory aspects of the Plaintiff's proof in relation to some of the items of additional costs involved, a discount of two-thirds of the Plaintiff's claimed figure would be nearer the mark. Without pretending that this is scientifically accurate, I would give judgment to the Plaintiff on this head of claim in the round figure of RMB￥162,500.00. 76.As regards overpayment, given my findings, there is an overpayment of HK$36,000.00. 77.All this is subject to and to be set-off against the Defendant's counterclaim. Counterclaim and mitigation 78.It must follow from the above that the Defendant succeeds on liability in his counterclaim regarding the deputy executive producer contract. The Defendant has through counsel agreed to restrict his counterclaim to the balance of the contract sum payable under the contract that was prematurely terminated by the Plaintiff, in the sum of HK$180,000.00. This represents the total amount of money which the Defendant would have been able to earn during the remainder of the deputy executive producer contract had it not been prematurely terminated (HK$6,000.00 per episode x 30 remaining episodes). The contract contained no provisions for early termination by notice or payment in lieu thereof. In principle, the Defendant's computation of loss must therefore be correct. Of course, the Defendant must give credit to any alternative income that he has earned during the remainder of the estimated contractual period after the wrongful termination of the deputy executive producer contract, as well as any alternative remuneration which he ought reasonably to have earned during that remaining period of time, which I assess to be 4 months. C.f. McGregor on Damages (16th ed) para. 1230 (by analogy with employment cases). 79.But the state of evidence before me is such that it is not known at all whether after the wrongful termination of the deputy executive producer contract on 3 January 2000, the Defendant did any work with remuneration within the remainder of the estimated contractual period (i.e. 4 months from 3 January), or whether he ought reasonably to have earned remuneration during that period of time. Nobody asked him any question about that whether in chief or in cross-examination. There is a lacuna in the evidence. 80.In those unusual circumstances, the matter can only be resolved by reference to the burden of proof and rules of pleading. In substance, what is at issue here is a question of mitigation. In this regard, I note that Order 18 rule 12(1)(c), the Rules of the High Court (Cap. 4) actually requires a defendant against whom damages are sought to supply the necessary particulars "of any facts on which [the defendant] relies in mitigation of, or otherwise in relation to, the amount of damages". This squarely places the burden on the Defendant to plead mitigation. See The Supreme Court Practice 1999 (Vol. 1) para. 18/12/13. This is fully in accordance with the English position relating to the burden of proof, namely, that a defendant bears the burden of proof: See McGregor at para. 299. 81.In relation to the onus of proof (as distinct from pleading), as I said, the English position is that the defendant bears the burden of proof. But the above passage in McGregor also says that in Selvanayagam v University of the West Indies [1983] 1 WLR 585, a personal injury case involving a plaintiff who refused to undergo medical treatment to alleviate his injury, the Privy Council seems to have suggested that the burden was on the plaintiff to prove that he had acted reasonably, and on the facts, the Privy Council concluded that the plaintiff there had discharged the burden. McGregor points out that this decision was "against the entire weight of authority" and was arrived at "per incuriam". 82.I note that in Law Hing v Leung Tin Kan [1989] 1 HKC 572, Master Jerome Chan (as he then was) refused to follow the Privy Council case. Instead, he followed the English authorities, including two House of Lords cases1 which arrived at the English position that I have already alluded to. On the other hand, I also note that in the recent unreported case of Chan Yam Nam v Hui Ka Ming HCPI 1169/2000 (8 July 2002), Muttrie DJ cited the Privy Council case and the principle contained in it as still representing good law in this jurisdiction (paragraph 49). 83.I further note that in the analogous situation of a breach of employment contract by an employer, the local Court of Appeal in Lee Yip-kun v Chius Manufacturing Company Limited [1976] HKLR 195 has held that if it is disputed that the plaintiff has failed to take reasonable steps to mitigate his loss, then the burden of proof is on the defendant to prove such failure, following two English decisions in Roper v Johnson (1873) LR 8 CP167 and Finlay v Kwik Hoo Tong [1929] 1 KB 400. Lee Yip-kun was of course a case decided before the Privy Council case. 84.For my present purpose, I would content myself with resting my decision on a pleading point. In other words, I rule that the issue of mitigation is not open to the Plaintiff to run, as the Plaintiff has failed to plead the necessary particulars in support of the argument of mitigation as is required by Order 18 rule 12(1)(c). This is particularly serious when paragraph 15 of the Amended Defence and Counterclaim has specifically pleaded that after the wrongful termination of the 2 contracts, the Defendant was unable to and did not find any alternative contract with any production company. Unlike the "affirmation" issue, the substance of which has been pleaded and the relevant facts in relation to which are fully before the Court, there is a total absence of pleading (from the Plaintiff) and a lacuna in evidence relating to the mitigation point. Whilst it would have been wholly unjust to disallow the running of the affirmation point, exactly the reverse situation is true here: it would be wholly unfair to allow the Plaintiff to run this mitigation point without having first pleaded it. Moreover, the pleading objection was indeed mentioned during final submission. 85.But if I were wrong, and insofar as it is free for me to choose, I would, with respect, prefer the English position as is stated in McGregor, to that stated in the Privy Council decision, and conclude that the Plaintiff has failed to discharge the burden of proof. 86.In the circumstances, I would give judgment to the Defendant in respect of his counterclaim in the sum of HK$180,000.00. This is subject to set-off against the judgment in favour of the Plaintiff. Outcome 87.I make the following order:
88.As for costs, given the results, and the judgment amounts in the action and counterclaim respectively, I consider it fair and reasonable to order each party to bear its/his own costs of the action and counterclaim. And I make an order nisi accordingly. Unless either party applies to vary it within 14 days after this judgment is handed down, the same shall become absolute upon the expiry of the 14-day period. 89.Lastly, I would like to thank counsel for their assistance.
Representation: Mr Raymond Lau, instructed by Messrs Kitty So & Tong, for the Plaintiff Ms Anita Ma, instructed by Messrs Wong & Chan, for the Defendant 1 Steale v Robert George & Co. (1937) Ltd [1942] AC 497; Richardson v Redpath Brown & Co. Ltd [1944] AC 62 2 i.e. 2 months after the termination of contract, and the approximate mean date of the Plaintiff's loss which started from the date of termination and continued for several months until the completion of production. 3 2 February 2000. 4 i.e. the approximate time when the production ought to have been completed and the remuneration of the Defendant paid had the deputy executive producer contract not been prematurely terminated. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCA 1280/2000