Ulrich Haldemann v. Panalpina (Hong Kong) Ltd

HCA001658/1984

1982, No. 9664

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

1984, No. 1658

AND BETWEEN

(Actions consolidated by Order dated 11th January 1985)

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Coram: Hon. Rhind, J. in Court.

Date of Hearing: 6 to 10, and 13 to 15 May 1985

Date of delivery of Judgment: 13 June 1985

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JUDGMENT

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HIGH COURT ACTION NO. 9664 OF 1982:
MR. HALDEMANN'S CLAIM FOR WRONGFUL DISMISSAL

1. Panalpina (Hong Kong) Limited ("Panalpina Hong Kong'') is the wholly owned Hong Kong subsidiary of the Swiss-based air freight company, Panalpina Welt Transport A.G., which has 150 branch offices around the world.

2. Mr. Ulrich Haldemann ("Mr. Haldemann") is a Swiss national with a degree in Business Administration. He joined the Panalpina Organization in Switzerland in the 1970's, and spent some time working in his own country, as well as having a spell in the organization's branch office in Teheran.

3. In June 1979, Panalpina Hong Kong was looking for someone to manage its accounts. Mr. Frischknecht, Panalpina Hong Kong's General Manager happened to be in Switzerland at that time. Mr. Haldemann was working in the Zurich office then. Panalpina Welt Transport A.G. arranged for Mr. Frischknecht to interview Mr. Haldemanne. Mr. Frischknecht decided that he wanted Mr. Haldemann for his staff. However, the decision about Panalpina Hong Kong employing Mr. Haldemann did not rest with Mr. Frischknecht, but with Mr. Ruoff, the director in charge of personnel for Panalpina Welt Transport A.G.. Panalpina Welt Transport A.G. had a sizeable personnel unit, looking after the expatriate staff employed by the various branches around the world.

4. After Mr. Frischknecht communicated to Mr. Ruoff that he considered Mr. Haldemann to be suitable for employment by Panalpina Hong Kong, Mr. Ruoff decided what would be appropriate terms of employment, including salary, to offer Mr. Haldemann. That offer was embodied in a letter of appointment dated the 18th June 1979 from Mr. Ruoff on behalf of Panalpina Welt Transport A.G. to Mr. Haldemann.

5. Only the first six paragraphs and paragraph 8 of that letter of appointment are relevant for present purposes. I now set out those paragraphs :-

6. Mr. Haldemann signified his acceptance of the terms of the letter of appointment by signing that letter at its foot on the 20th June 1979. Meanwhile, on 16th June 1979 Mr. Haldemann signed a contract with Panalpina Hong Kong, Mr. Frischknecht signing on behalf of the company. The only parts of that which need to be set out for present purposes are the following :-

7. A peculiar feature of these contracts is that only part of Mr. Haldemann's overall remuneration was paid to him by Panalpina Hong Kong. When he first arrived in Hong Kong, which was towards the end of June 1979, Panalpina Hong Kong paid him HK$4,500. That was the amount on which he paid Hong Kong Income Tax. The balance of his salary, being the difference between Swiss Francs 3,750 and HK$4,500 was paid into a bank account for him in Switzerland. It was not Panalpina Hong Kong which paid that Swiss Franc portion of his salary, but a company known as International Sales Promotion Company Limited Hong Kong which was the agent of Panalpina Welt Transport A.G..

8. Mr. Haldemann's contract with Panalpina Hong Kong was for a 26-month period, which included two months' leave, such contract being perpetually renewable. During the first 26-month period, his Hong Kong salary went up to HK$5,000 at the end of 1979, and had increased to HK$5,500 when the 26-month period expired in August 1981. There was a further increase to HK$7,000 in 1982. By that stage his overall remuneration was Swiss Francs 55,000 per annum.

9. Panalpina Hong Kong's operations were conducted by a team consisting of three expatriates, and a large body of locally recruited staff. The three expatriates were Mr. Frischknecht, who was transformed from General Manager to Managing Director in 1981, Mr. Haldemann, and a Mr. Rohrer who had been taken on as a Sales Executive in 1980. Like Mr. Haldemann, Mr. Rohrer had worked for the Panalpina organization in Switzerland, and had been recruited from there to join Panalpina Hong Kong as an expatriate. For all material purposes, his terms of employment were identical to those of Mr. Haldemann, except that his salary was somewhat lower.

10. In terms of seniority within the company, Mr. Frischknecht was the top man in Panalpina Hong Kong, Mr. Haldemann came next, and then Mr. Rohrer.

11. There was a problem over punctuality within Panalpina Hong Kong. From about 1979 onwards, Mr. Frischknecht became dissatisfied with the time being kept by the locally employed staff. In 1979, Panalpina Hong Kong's salesmen were supposed to commence work at 9 a.m. but some of them were turning up an hour or two late. At regular intervals, Mr. Frischknecht issued memoranda directed towards the local staff, informing them that work started at 9 a.m. and they were expected to be there then. Why Mr. Frischknecht thought time was so important was because his company was offering a service. Customers trying to contact the company or deliver goods to it after working hours officially began would obviously be highly displeased if the company staff were not there.

12. In 1979, Mr. Frischknecht advanced the starting time of the work day to 8.45 a.m.. This was in part a punishment for continuing dilatoriness on the part of the staff, and in part an endeavour to try to ensure that the staff would at least be there by 9 a.m.. The problem persisted throughout 1980 and 1981. The efforts by Mr. Frischknecht to see that proper hours were kept can be discerned from the copy memoranda in the Agreed Bundle from pp. 231 to 235.

13. It is against this background of the local staff having bad time-keeping habits that the events I am about to describe involving the expatriates, Mr. Haldemann and Mr. Rohrer, have to be considered.

14. By mid 1982, Mr. Haldemann and Mr. Rohrer were obviously close personal friends, besides being colleagues at work. From April 1982, each of them occupied a flat in the same block in Aberdeen. An indication of how close their friendship was can be gathered from the fact that they had installed an inter-com between their flats. They travelled to work together almost everyday, their work place being Hopewell Centre, Wanchai.

15. The first intimation of the trouble which has climaxed in the present proceedings occurred on Saturday, 3rd July 1982.

16. Panalpina Hong Kong worked Saturday mornings, the working hours being from 8.45 a.m. till noon. That particular Saturday morning, Mr. Haldemann and Mr. Rohrer rolled up at the office together at 10. a.m.. The following Saturday, 10th of July 1982, the same pair arrived together at 10.30 a.m..

17. This was too much for Mr. Frischknecht. He told them it would be better not to turn up at all, rather than arrive so late. He expressed his grave displeasure at the poor example this was setting to the local staff.

18. The following Saturday, 17th July 1982, the pair made their appearance in the office at 11.10 a.m.. Before they showed their faces, Mr. Frischknecht had got word from some of the local staff that Mr. Haldemann and Mr. Rohrer could be seen in the coffee shop in Hopewell Centre, taking their breakfast. When they actually put in their appearance in the office, Mr. Frischknecht was beside himself with rage. He would have liked to shout at them when he called them into his office but he could only whisper the one cord : "Out!".

19. Events now took a somewhat curious term. Both Mr. Haldemann and Mr. Rohrer affected to behave as if they had been sacked by Mr. Frischknecht. Either that day or the next - I am not sure which - they packed their things in the office and took them home. Certainly, the next day, being Sunday 18th July, they went into the office and each of them left a letter in almost identical terms on Mr. Frischknecht's desk. I set out the letter Mr. Haldemann left :-

20. I do not for one moment believe that either Mr. Haldemann or Mr. Rohrer really thought he had been sacked by Mr. Frischknecht. I am satisfied from the evidence as a whole in this case that their motive in leaving those letters on Mr. Frischknecht's desk was to stir up trouble and challenge Mr. Frischknecht's authority over them.

21. At the foot of the letter will be seen "c.c. :P.A.C./A.P.D.". That signifies, in effect, "Copy to Head Office". Sure enough, an envelope addressed to Head Office, and containing copies of Mr. Haldemann's and Mr. Rohrer's letters was left on Mr. Frischknecht's desk that Sunday. I have no doubt that Mr. Haldemann and Mr. Rohrer were hoping either that Mr. Frischknecht Would eat humble pie to them by apologising for sending them home, or else he would send off the copies to Head Office, and in due course he censured for not treating senior staff with sufficient sensitivity. Mr. Haldemann and Mr. Rohrer were obviously out to make mischief together, and to see how far they could twist Mr. Frischknecht's tail.

22. Monday morning, Mr. Frischknecht arrived at the office at 8.45 a.m. to find the letters and the copies for Head Office, awaiting him on his desk. By 9 a.m., there was no sign of Mr. Haldemann or Mr. Rohrer in the office. He rang them at home, telling them they had not been sacked, anti directing them to come to the office by 10 a.m. Any delusion they might have had about being sacked must clearly have been dispelled by that telephone conversation. They both told him, in effect, that they would not obey his command. He told them that unless they arrived in the office by 2 o'clock that afternoon, he would have no choice but to despatch the copies of their letters of 18th July to Head Office, which would mean, so he explained, that the control of the matter would no longer lie in his hands.

23. 2 p.m. came and went without any sign of either Mr. Haldemann or Mr. Rohrer. At 3 p.m., Mr. Frischknecht duly sent the copy letters by express air mail to the Head Office in Switzerland. At 4 p.m., which is 9 a.m. in Switzerland, he got on the phone to Mr. Ruoff it Switzerland, explaining the mutiny which had broken out.

24. Mr. Ruoff directed Mr. Frischknecht to send a letter to each of Mr. Haldemann and Mr. Rohrer, telling them either to send Panalpina a proper letter of resignation or report back to the office by a deadline, failing which they would be dismissed. Mr. Frischknecht immediately sent Mr. Haldemann and Mr. Rohrer such a letter, setting the deadline as not later than Thursday morning, July 22nd. I now set out the text of the letter to Mr. Haldemann :-

That letter (and a similar one to Mr. Rohrer) was sent out by ordinary post on the evening of July 19th, and next day, an identical letter was sent to the same people registered.

25. Although Mr. Frischknetcht's letter of the 19th July referred to reporting "to the office not later than Thursday morning" without specifying any particular time, I am satisfied, nonetheless, that, in context, it could only be interpreted as meaning not later than the beginning of office hours on Thursday morning, namely 8,45 a.m. or at the latest 9 a.m..

26. There was no sign of either Mr. Haldemann or Mr. Rohrer in the office by 9 a.m. on that Thursday, 22nd July. Nor had either of them made any attempt to contact Mr. Frischknecht in the interval between the 19th July and 9 a.m. on that Thursday morning. In fact, they had no intention of turning up for work on the 22nd July.

27. In the hope of bringing about a reconciliation amongst the expatriates, the local staff, with characteristic good sense, sought to facilitate a meeting between the disputing parties. During the course of the morning of 22nd July, some of the local staff enticed Mr. Haldemann, Mr. Rohrer and Mr. Frischknecht to the coffee shop in Hopewell Centre. That was some time between about 10 a.m. and 11 a.m.. Having no intention of putting in any appearance at the office, Mr. Haldemann and Mr. Rohrer turned up wearing T-shirts and jeans, a form of dress which they well knew was not permitted in the office.

28. Once Mr. Haldemann and Mr. Rohrer were settled in the coffee shop, the local staff told them that Mr. Frischknecht would like to speak to them. Mr. Haldemann and Mr. Rohrer were agreeable to this. Meanwhile, the local staff told Mr. Frischknecht up in his office that Mr. Haldemann and Mr. Rohrer wanted to speak to him. He agreed. Each side believing that the other was initiating a dialogue, the antagonists duly met in the coffee shop that morning. By then, the deadline contained in Mr. Frischknecht's letter of July 19th was past. At that stage, in my opinion, Mr. Haldemann's and Mr. Rohrer's conduct had rendered them liable to instant dismissal. In so far as their employment was concerned, they were now totally at their employer's mercy.

29. According to Mr. Haldemann's evidence, he thought that the power to dismiss him lay with Mr. Frischknecht, and that Mr. Frischknecht had the power to extend the deadline. I do not believe Mr. Haldemann for one moment on this, but, even assuming what he said was correct, it makes no difference to the legal result.

30. It is common ground that, at same stage of the meeting between Mr. Haldemann, Mr. Rohrer and Mr. Frischknecht in the coffee shop that morning, Mr. Haldemann said words to Mr. Frischknecht to the effect, "Is it alright with you if we report back for work tomorrow morning?" and Mr. Frischknecht replied, "It is alright with me".

31. Assuming that Mr. Haldemann really did believe that the power of deciding his dismissal rested with Mr. Frischknecht, that exchange of conversation between himself and Mr. Frischknecht did not give rise to an enforceable agreement, because no consideration moved from Mr. Haldemann. Mr. Haldemann was not paying any price for the bargain he alleges he then struck with Mr. Frischknecht. It is only where both parties pay a price for any bargain that it gives rise to contractual rights. That is elementary contract law.

32. Mr. Haldemann conceded before me in Court that, at the time of that exchange of conversation with Mr. Frischknecht, he still had not made up his mind to return to work next morning. He wanted, in effect, to keep his options open, but what was the advantage in this to Panalpina Hong Kong?

33. For Mr. Haldemann, the consideration was pleaded as "the oral agreement made by Panalpina Hong Kong ..... in consideration of which Mr. Haldemann had not exercised his right to report back to work pursuant to Panalpina Hong Kong's letter dated 19th July ....." . That supposed consideration is illusory, in my opinion.

34. What happened next was that Mr. Ruoff got on the phone from Switzerland at 4 p.m. Hong Kong time that Thursday, and, learning from Mr. Frischknecht that neither Mr. Haldemann nor Mr. Rohrer had attended for work at 9 a.m. that day, he ordered the instant dismissal of both of them. The bad tidings were duly conveyed by Mr. Frischknecht to Mr. Haldemann and Mr. Rohrer at about 5.30 p.m. that evening

35. Mr. Haldemann now contends that dismissal was wrongful in view of the extension of time apparently granted by Mr. Frischknecht. As I have already indicated, I do not consider that extension as binding on Panalpina Hong Kong because of the absence of consideration. The continuing conduct of Mr. Haldemann and Mr. Frischknecht by not making their labour available to their employer meant that the employer could dismiss them at the moment of the employer's choosing.

36. Even on the version of events most favourable to Mr. Haldemann, his dismissal was not wrongful at all, in my view. In fact, though, the version of the events and surrounding circumstances which I accept, is not so favourable to Mr. Haldemann.

37. Mr. Rohrer knew full well that the decision about dismissing himself and Mr. Haldemann rested not with Mr. Frischknecht but with Mr. Ruoff. Mr. Haldemann knew that too, I am sure, despite his protestations to the contrary.

38. Mr. Haldemann knew that a copy of his letter of the 13th July had been sent forward to Mr. Ruoff, and he must have known that Mr. Ruoff alone would decide whether Mr. Haldemann should be dismissed once the deadline of the beginning of office hours on 22nd July had passed. As a matter of common sense, the dismissal of the number-two man in the Hong Kong branch was clearly a matter which Head Office alone would decide upon. I have no doubt, too, that Mr. Frischknecht made it clear during the course of conversation with Mr. Haldemann on the morning of 22nd July that he had previously discussed the problem of the strikers with Mr. Ruoff, and he was expecting a further call to settle their fate at 4 o'clock that afternoon. He asked them both to be in the office by the time Mr. Ruoff was expected to call so that he could truthfully say they were there, but neither Mr. Haldemann nor Mr. Rohrer saw fit to follow his suggestion. That Mr. Frischknecht wanted them to attend the office for this purpose is again indicative of the limit of Mr. Frischknecht's power and authority.

39. The reality of the matter is that when Mr.Frischknecht said it would be alright with him if Mr. Haldemann and Mr. Rohrer came to work on Friday morning, he was not engaging in making any bargain with them, but was saying, in effect, "Suit Yourself". He described how he said the words "It's alright with me" in an off-hand manner because, by that stage, he was thoroughly fed up with both of them. What might look superficially to have some of the characteristics of an offer and an acceptance, on closer scrutiny reveals itself as not contractual at all.

40. On credibility generally I rank the witnesses in the following order of merit (i) Mr. Frischknecht (ii) Mr. Rohrer (iii) Mr. Haldemann. I regarded Mr. Frischknecht as a wholly truthful witness with good powers of recollection. Mr. Rohrer was truthful most of the time, but I did not believe him when he said that he thought he was dismissed on being told to get out of Mr. Frischknecht's office on the 17th July and I thought he was less than truthful on some of his answers about whether he knew on 22nd July that Mr. Ruoff was expected to phone Mr. Frischknecht later that day. Perhaps Mr. Rohrer's inaccuracies were due more to faulty recollection rather than any unwillingness to tell the truth. Mr. Haldemann, I thought, was capable of saying whatever he thought would help his case. His attitude towards the truth could be discerned from his drafting a reference letter which said that he had left Panalpina Hong Kong voluntarily and his claiming in a job advertisement that he could speak Chinese, when the fact of the matter is he knows is about three words. In particular, I did not believe his evidence about his understanding that he was dismissed on the 17th July, nor did I believe his contentions that he thought it was Mr. Frischknecht rather than Mr. Ruoff Who would make the decision about dismissing him. Wherever there was a conflict between the evidence of Mr. Frischknecht and either of the other two, I prefer Mr. Frischknecht's evidence.

41. In view of the foregoing, I reject Mr. Haldemann's claim for wrongful dismissal. Nonetheless, I uphold two of the heads of damage under which he claims. I consider that he had acquired a vested right to two months' leave-pay in respect of his first tour of duty. Although he deferred taking that leave to suit his own convenience, nonetheless, he is still entitled to his salary in respect of that period. Panalpina Hong Kong contends that his rate of earnings for this purpose should be the one obtaining as at August 1981 when his first tour of duty expired. Then, he was earning HK$5,500 plus Swiss Francs 2950 per month. At the date of his dismissal, the Hong Kong element of his salary had gone up to HK$7,000.

42. Where an employee defers his leave, he is invariably, in my experience, paid at his rate of earnings at the time he actually takes the leave. I regard Panalpina Hong Kong's contention as unreasonable on this aspect, and am going to award damages in lieu of two months' leave at his rate of earnings when he was actually dismissed, namely HK$7,000 per month plus Swiss Francs 2950 per month. Doing a calculation based on the agreed Swiss Franc exchange rate of Swiss Franc one equals HK$2.85, Mr. Haldemann is entitled to HK$30,815 under this head.

43. Without too much zeal, Mr. Yu, or behalf of Panalpina Hong Kong, put forward the contention that Mr. Haldemann's damages in lieu of leave should be based on the Hong Kong dollar element of his salary only. That, in my opinion, would ignore the economic reality that Mr. Haldemann received all his remuneration for work performed in Hong Kong for Panalpina Hong Kong. I would regard it as most unjust to require Mr. Haldemann to have to join in International Sales Promotion Company Limited Hong Kong and maybe also Panalpina Welt Transport A.G. to get his full remuneration. I consider that he is entitled to look to Panalpina Hong Kong for his full remuneration, and it is unrealistic to require him to seek redress from any other entity.

44. The other head of entitlement on which I find in Mr. Haldemann's favour is for a tourist class return air fare between Switzerland and Hong Kong. I consider he has a vested right to that under his contract in respect of his first tour of duty. Evidence indicated that the cost of such a return ticket to Mr. Haldemann would be HK$13,000, and that is the amount I award him under this head. The fact Panalpina Hong Kong might have been able to buy a ticket for a quarter of that amount by virtue of its status in relation to I.A.T.A. is irrelevant, in my opinion.

45. It was agreed that a fixed sum of HK$30,000 in respect of tax was to be deducted from any damages awarded to Mr. Haldemann by virtue of his employment. Thus, from the total damages of HK$ 43,815 (made up of two months' leave pay and the cost of a return flight) I deduct that $30,000, so that Mr. Haldemann gets judgment for $13,815.

46. In case I have erred in my conclusion that Mr. Haldemann was lawfully dismissed, I will make findings on the damages I would have awarded if my decision had gone the other way.

47. His total earnings had he been allowed to complete the current 26-month tour would have been $250,783 made up as follows :-

All of those figures are agreed, except the 50% contribution to Company's Pension Scheme. From that figure of $250,783 I would have deducted $143,360 made up of Mr. Haldemann's earnings from Luscher and Leber, Fabromont, and from Texafan.

48. The result is a figure of $107,423. That is what I would have awarded him as damages, plus, of course, the amount I am awarding in any event in respect of the vested right to two months leave pay and a return ticket between Hong Kong and Switzerland.

49. I accepted Mr. Haldemann's evidence about his attempts to mitigate his loss by finding alternative employment, and I was satisfied that he took all reasonable steps. I accepted the figures that he gave for his earnings from Luscher and Leber and from Fabromont. The total, including pension contribution, from those two sources was $118,360. His evidence about his earnings from Texafan was rather vague. It amounted to saying that he had drawn between HK$40,000 and HK$50,000 from that company, but treated some $20,000 or $25,000 of that as a loan. Doing the best I can on such vague material, I treat him as having earned HK$25,000 from Texafan.

50. Besides remuneration, Mr. Haldemann was entitled to accommodation and free utilities under his contract. I am not awarding anything under either of those heads because, after being dismissed by Panalpina Hong Kong, he lived rent free with either his friends or his family, and did not have to spend anything on utilities. In effect, he mitigated those heads of loss to the point of extinction. The Court has to look at the loss to him, rather than the gain to Panalpina Hong Kong, and the fact is he lost nothing.

51. There was a claim for a loss of Mr. Haldemann's reputation, but that was quietly dropped curing the course of the proceedings.

MR. HALDEMANN'S CLAIM FOR LOSS OF RENT AND RELATED ITEMS IN RESPECT OF LETTING HIS FLAT TO PANALPINA HONG KONG                                                                

52. Part of Mr. Haldemann's entitlement under his employment contract was a rent-free furnished flat. To fulfill that obligation to Mr. Haldemann, Panalpina Hong Kong rented a flat for Mr. Haldemann in Lockhart House, Lockhart Road for a three- year period, commencing June 1979 at a rent of $5,000 per month.

53. During his second tour, Mr. Haldemann decided to buy a flat for himself in Hong Kong. The flat he selected was on the 22nd floor of Kong Fu Court, Aberdeen Centre. The mortgage instalments on this flat were approximately $5,770 per month. However, the evidence shows that the market rental value of this flat, unfurnished, was no more than $3,500, and furnished, $3,900.

54. Mr. Haldemann was always short of money. He could not afford to furnish the flat.

55. To help Mr. Haldemann in his difficulties, Mr. Frischknecht agreed on behalf of Panalpina Hong Kong that the company would rent the flat from Mr. Haldemann at $4,500, despite its skimpy furnishing, and let Mr. Haldemann live there in fulfillment of the company's obligation to provide him with accommodation.

56. In about February or March 1982, the company terminated its tenancy of the Lockhart Road flat. There was still a 3-month period to run on that lease, but the landlord was, no doubt quite happy to have the lease determined prematurely as there was a rising market for rents. In early March 1982, Mr. Haldemann entered into occupation of his own flat at Kong Fu Court under this slightly bizarre arrangement with Panalpina Hong Kong. He was both a landlord, and tenant (or licensee) at one and the same time - a not impossible arrangement, but certainly a rather unusual one.

57. A striking feature of this arrangement between Panalpina Hong Kong and Mr. Haldemann in respect of his flat was that the company was paying well over the odds for rent. If this had been a normal arm's length relationship, I do not think for one moment that the company would have agreed to pay more than $3,500 for what it was getting. That the flat had a fair market rent of $3,500 p.m. at the time of the letting is a conclusion I draw from the evidence as a whole. However, at the time of entering into this arrangement, Panalpina Hong Kong was perfectly happy with it, as it was helping out its employee Mr. Haldemann, while also, at the same time, saving itself some money by renting accommodation cheaper than the Lockhart House premises.

58. For some time previous to Mr. Haldemann's purchase of the flat at Aberdeen Centre, Mr. Frischknecht had owned a flat at Chi Fu Estate. He let that to Panalpina Hong Kong under a two-year written tenancy agreement drawn up by Mr. Ronald Wong, Panalpina Hong Kong's solicitor, who was also a director of the company. Panalpina Hong Kong made Mr. Frischknecht's flat available to Mr. Rohrer as the latter's accommodation pursuant to his contract entitlement.

59. With the blessing of Mr. Frischknecht as Managing Director of Panalpina Hong Kong, Mr. Haldemann instructed Mr. Ronald Wong to draw up a tenancy of Mr. Haldemann's flat in terms identical to those in the tenancy agreement between Panalpina Hong Kong and Mr. Frischknecht in respect of the latter's Chi Fu flat, apart from the amount of rent and commencement date. Mr. Ronald Wong duly complied with those instructions and draw up a tenancy agreement between Mr. Haldemann and Panalpina Hong Kong in respect of Mr. Haldemann's flat at Aberdeen Centre for a period of two years, commencing 1st March 1982 at a monthly rental of $4,500. That tenancy agreement was signed on behalf of Panalpina Hong Kong by Mr. Frischknecht, and Mr. Haldemann, as landlord, signed too.

60. There was no provision in this tenancy agreement that it was to determine in the event of Mr. Haldemann ceasing his employment with Panalpina Hong Kong, and this topic was never ventilated in any discussion between Mr. Haldemann and Mr. Frischknecht or between Mr. Haluemann and Mr. Ronald Wong.

61. It will be noticed that the period of the tenancy agreement was not made coterminous with the duration of Mr. Haldemann's employment contract. If the tenancy agreement survived for the full term, it would end on 28th February 1984, whereas Mr. Haldemann's second tour would run its course in October 1983.

62. When Mr. Haldemann's Contract of Employment was terminated, he was sent a letter by Panalpina Hong Kong on July 28th 1982, one paragraph of which read:-

"By the terms of your Employment Contract, you are no longer entitled to occupy the Company flat and you are hereby further advised to vacate the Company flat and return the keys to me by July 31, 1982. Entirely without prejudice, I have no objection that you may remain for a further period of not more than 30 days from July 31, 1982 so as to enable you to organise your removal. I am advised by my Company's Legal Advisers that should you, however, fail to vacate the Company flat latest by August 30, 1982, my Company will no longer consider being liable to you on the tenancy of the Company flat which it holds from you as the Tenant and my Company will deem it that you have repossessed the flat and terminated the tenancy."

63. Mr. Haldemann replied on 9th August 1982 that he would hand over the keys of the flat to Panalpina Hong Kong on the 30th August 1982.

64. Thus, it can be seen that despite Mr. Haldemann's dismissal, Panalpina Hong Kong still at first treated the tenancy agreement as if it would continue to remain on foot.

65. However, when Mr. Haldemann attended upon Mr. Frischknecht at Mr. Ronald Wong's office on the 31st August 1982 for the purpose of handing over the key, Mr. Frischknecht and Mr. Ronald Wong made it clear that they now wanted to treat the tenancy agreement as at an end.

66. No rent was paid to Mr. Haldemann by Panalpina Hong Kong from September 1982 onwards, and Panalpina Hong Kong consistently acted from 31st August 1982 onwards as if the tenancy agreement had been determined.

67. The flat was left vacant till September 1983 when Mr. Haldemann re-let it to a Mr. Bishop at a rental of $3,500 per month. By, then the fiat was fully furnished.

68. Mr. Haldemann now claims rent for the period from September 1982 till September 1983 while the flat remained vacant, and he claims damages of $1,000 per month, being the difference between the rental Panalpina Hong Kong was paying and what Mr. Bishop paid, for the period from September 1983 till February 1984.

69. Somewhat half-heartedly, Panalpina had sought to impugn the tenancy agreement on the basis of misrepresentation. This was a hopeless defence. Mr. Frischknecht, the Managing Director of Panalpina Hong Kong knew exactly what was happening and was in no way misled by Mr. Haldemann.

70. There was an alternative defence of breach of fiduciary relationship. This attempt to scrape the bottom of the barrel was sensibly abandoned.

71. There was another defence, variously described as a collateral contract or an implied term. If there was a collateral contract, it certainly was a highly fictitious one. I could not see any collateral contract on the material before me. Panalpina Hong Kong's defence lay, if anywhere, in an implied term along Moorcock lines ^(1).

72. Militating against the implication of any term in the tenancy agreement to the effect that it was to determine at the same time as the contract of employment were the following factors :-

73. Despite the presence of those factors, I, nonetheless, consider that this is one of those rare cases where a term should be implied. The test usually adopted is that of ''the officious bystander". If, at the time Mr. Frischknecht and Mr. Haldemann signed the tenancy agreement an officious bystander had been present, I expect he would probably have said, if asked, that Panalpina Hong Kong would only be agreeable to paying this inflated rent so long as Mr. Haldemann remained its employee.

74. In cross-examination, it was put to Mr. Frischknecht "You never had in mind a provision for determining the tenancy if Mr. Haldemann left the company. You did not think of that till after Mr. Haldemann was fired." I think Mr. Frischknecht hit the nail on the head when he replied "It was a mutual understanding which was not spelt out. It war so natural it did not need to be spelt out.". I regard that answer of Mr. Frischknecht's as a fair summary of the position. It also, in essence, encapsulates the Moorcock test. I regard it as inconceivable that either of the parties would have contemplated that they would remain bound by the tenancy agreement once the employment contract came to end. As Mr. Yu put it, the substratum of fact to which the tenancy agreement was inextricably linked was that Mr. Haldemann would remain an employee of Panalpina Hong Kong. That was what gave the whole arrangement business efficacy.

75. In view of the foregoing, I hold that Panalpina Hong Kong was entitled to terminate the tenancy agreement when it purported to do so on 31st August 1982. Mr. Haldemann's claim for unpaid rent and damages therefore fails.

76. On the other hand, Panalpina Hong Kong is entitled to the return of its deposit of $9,000 from Mr. Haldemann.

77. If I am wrong in implying a term, bringing the tenancy to a premature end, then I would award Mr. Haldemann damages calculated as follows : -

78. That sum of $63,759 is what I would award Mr. Haldemann for damages. However, from it would have to be deducted the $9,000 deposit so the net amount he would receive by way of damages would be $54,759.

79. Various other items were claimed by Mr. Haldemann but I would reject all of those. The most unreasonable of all was the cost of repairing damage to the flat which he himself had caused. Needless to say, the court's eye-brows went up rather at that one, and Counsel for Mr. Haldemann wisely decided to abandon it.

80. All the utilities to the flat had been in Mr. Haldemann's own name. When he vacated the flat at the end of August 1982, he told the utility companies he was vacating, so naturally they disconnected the services. The view I take is that Mr. Haldemann caused those services to be disconnected, and I do not think it reasonable to expect Panalpina Hong Kong to pay for any of them to be re-connected.

81. Related to the disconnection of the services is a claim by Mr. Haldemann to put his new tenant Mr. Bishop up in a hotel while the services were being re-connected. This alleged damage is clearly too remote.

82. Mr. Rohrer acted as Mr. Haldemann's agent in the re-letting of the flat. In an outburst of generosity, Mr. Haldemann chose to make a present to Mr. Rohrer of $3,500 being the first month's rent paid by Mr. Bishop. Mr. Rohrer said that he regarded Mr. Haldemann as his friend, and was not expecting anything for his services. Clearly, this amount is irrecoverable from Panalpina Hong Kong.

83. Mr. Haldemann also wishes to claim the cost of drawing up Mr. Bishop's tenancy agreement from Panalpina Hong Kong. That head of damage is also too remote. In any event, Mr. Haidemann would have needed to draw up such a tenancy agreement in March 1984. The most he could have lost was the use of the money required for drawing up the tenancy agreement between September 1983 and March 1984.

(1) The Moorcock (1889) 14 P.D. 64

Representation:

Mr. Jerome Chan (instructed by S. P. Ma & Co.) for the Defendant in HCA 9664/82 and the Plaintiff in HCA 1658/84.

Mr. Benjamin Yu (instructed by Stevenson, Wong & Co.) for the Plaintiff in HCA 9664/82 and the Defendant in HCA 1658/84.