Leung Suen Fong v. Gp Industries (Hong Kong) Ltd t/a Health and Relax Centre
|
DCCJ2910/2004 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 2910 OF 2004 --------------------- BETWEEN
-------------------- Coram : H. H. Judge Chow Dates of Hearing : 12th and 13th March, and 2nd April 2007 Date of handing down Judgment : 27th June 2007 ______________________ JUDGMENT ______________________ 1.This is the Plaintiff’s claim for wages in lieu of notice, allowance, annual leave pay, holiday pay and over-time pay. The Defendant counterclaims against the Plaintiff for various amounts of debts in the total sum of $103,601.00. The Plaintiff’s evidence 2.Between July 2002 and July 2003, he was working with Healthy Foot Massage which was situated at 1st Floor, No. 33, Yi Pei Square, Tsuen Wan, N.T. In or about November 2003 he came to know a Mr. Lee Byung Keun (“Lee”), a customer of Healthy Foot Massage. From time to time during the period from March 2003 to June 2003, when he was giving massage to Lee, Lee said that he would like to operate a massage business, similar to that of Healthy Foot Massage and invited him to work for him. One day in June 2003, he met Lee at Tsui Wah Restaurant at Chung On Street, Tsuen Wan. Lee asked him to estimate the costs for setting up a massage foot business. He told him his estimation which were as follows:-
3.At the meeting, the Plaintiff and Lee made the following agreement:-
4.In July 2003, at the request of the Defendant he reduced into writing his estimation of the operating costs on a price of paper (Exh. D1). 5.The Plaintiff resigned from Healthy Foot Massage soon possible after the said meeting. He started to engage estate agents to search for a suitable location for the massage business. 6.Finally the Defendant agreed to take up a lease at M/F, 98 Heung Wo Street, Tsuen Wan, N.T. (“the Premises”). The lease of the Premises was signed by the Defendant as the tenant. Thereafter the Plaintiff engaged contractors to carry out decoration to the Premises and purchased all the necessary materials and equipment to use by the massage business. 7.The Defendant gave him a total sum of about $110,000 on several occasions for setting up the massage business. The massage business started to operate on 1 August 2003 under the name of “Health and Relax Centre”. Each day he recorded the cash generated from the business. On the subsequent day, a Madam Yeung of Lee collected the record and the cash generated from the business of the previous day. The books and accounts of Health and Relax Centre were kept by the Defendant. From 1 August 2003 to 30 September 2003 he was paid the basic monthly salary of $5,000 and the employee’s share, but he was not paid any overtime pay. From 1st October 2003 he was paid the employee’s share, but not paid the basic salary and the overtime pay. On 16th March, the Defendant terminated his employment contract, without notice or wages in lieu of notice. The Defendant’s evidence 8.On a certain day in June 2003, the Plaintiff called him and invited him to go to Tsui Wah Restaurant to have a discussion on the setting up of a massage business. During the meeting the Plaintiff proposed to cooperate with him to set up a massage business similar to that carried on by the Health Foot Massage by way of partnership when he would invest 70% capital and the Plaintiff would invest 30% capital, and put forward a draft memorandum in Chinese (Exh. D1) for the massage business for his consideration, under which it was proposed that he would similarly share 70% and the Plaintiff would share 30% profit of the business. In addition, for massage services provided by the Plaintiff the receivables would be shared between him and the Plaintiff in accordance with the terms in the said draft memorandum. 9.Lee expressly told the Plaintiff that although in principle be accepted the business proposal made by him, he would need more time to consider his proposal more thoroughly and to work out the detail terms of the operation and business arrangement between the parties. 10.On or about 15 July 2003, the Plaintiff suddenly came to see him and told him that he had found a shop situated at Shop 2 & 3, Cockloft, On Fung Building, No. 98 Heung Wo Street, Tsuen Wan, N.T. where he intended to set up and carry on the new massage business, and a preliminary agreement for the lease of the Premises had already been entered into by him. He also provided with him various receipts showing that he had already paid in advance the water, electricity utilities, tenancy and decoration deposits of the Premises, which he had never been informed of, for the purpose of claiming reimbursement of the same from him. Taking into account the fact that the Plaintiff had already incurred considerable expenses in setting up the massage business, he felt it normally and/or legally difficult for him to refuse to honour his words and provide financial support to the Plaintiff previously and so he duly paid for the expenses allegedly incurred by the Plaintiff. Analysis of the case 11.Lee’s case is that the Plaintiff was not engaged as an employee but as an independent contractor at the early stage of the business and thereafter as a partner of the business, once he had duly made his investment, and that he never agreed to pay a monthly salary of $5,000 and other overtime payment and allowance to employ him to work in the business, and no control was ever imposed on the Plaintiff in relation to the management of the business and the rendering of massage service by him. 12.Lee said that for the massage business he would invest 70% capital and the Plaintiff would invest 30% capital, and it was proposed in the profit sharing memorandum (Exh. D1) of the massage business that he would similarly share 70% and the Plaintiff would share 30% profit of the business. But this allegation cannot be true. This memorandum deals with the monthly income of the massage business by deducting its daily expenses of $600 from its total income of $1,575. The sum of $600 is made up of the daily expenses of the shop, namely, rental, electricity and water. The average income per hour of the company is $63. The daily average business is 25 hours (5 customers). The daily income is $975 ($1,575 - $600). The monthly income is therefore $29,250 ($975 x 30). The memorandum does not deal with any element of partnership. It simply does not deal with any sharing of profit at the ratio of 70% and 30% between the Plaintiff and Lee. Lee’s evidence in this respect is simply untrue. 13.According to Lee, in order to retain control and to protect his investment he directed the Plaintiff that the lease of the shop had to be executed and taken up by his company GP Industries (Hong Kong) Limited. In his witness statement, Lee said,
14.It is clear that the Plaintiff was not working as an independent contractor. As shown at paragraph 10 of Lee’s witness statement, the Plaintiff must have purchased materials and equipments to be used by the business and he must have recruited employees for the business. An independent contractor would not purchase materials and equipments for his employer company; he would not recruit employees for his employer company. Further he would not be responsible and would not take care of the employees for his employer company. If he had done all these things, it would have been inconsistent with the role of an independent contractor. According to paragraph 15 of his witness statement, Lee demanded the Plaintiff to dismiss two of the masseurs employed by the Plaintiff who were holding faked identity cards and he demanded the Plaintiff to dismiss them, and the Plaintiff eventually dismissed them as required by him. This shows that the Plaintiff had the authority to employ and did employ masseurs for the Defendant; he also had the authority to dismiss and did dismiss the Defendant’s employees. This is inconsistent with his role as an alleged independent contractor. It also shows that Lee did have control of the Plaintiff, because he directed the Plaintiff to dismiss the two masseurs. 15.The evidence reveals that the Plaintiff was in charge of the daily operation of the massage business. The evidence is consistent with the Plaintiff’s evidence of the case, and inconsistent with that of Lee. I find that at all the material times the Plaintiff was an employee of the Defendant, and that he was dismissed by the Defendant. I found that he did not leave the employment on his own accord. 16.Upon the wrongful termination of the Plaintiff’s employment contract, the Defendant owed the Plaintiff the total sum of $97,014.50 particularized as follows:-
17.In respect of the tenancy agreement, it is the Plaintiff’s evidence that with the approval of Lee, he engaged an estate agent to look for a shop for the business, and finally Lee decided to take up a lease of the Premises. An appointment was made with the landlord for Lee to sign the preliminary tenancy agreement for the Premises, but on that day Lee was unable to come and he told the Plaintiff to sign the preliminary tenancy agreement on his behalf. He also told the Plaintiff to pay the initial deposit and he would reimburse the Plaintiff later on. I accept his evidence. 18.Lee expressly told the Plaintiff that he would need more time to consider his business proposal more thoroughly and to work out the detail terms of cooperation and business arrangement among the parties. It is simply incredible that the Plaintiff would enter into a preliminary agreement for lease of the Premises without making enquiries with the Defendant first. In any event it would be very simple to make a telephone call to the Defendant to ascertain if he agreed to the arrangement. It is also inherently incredible that the Plaintiff would enter into the said lease when Lee was still considering his proposal and still working out the detail terms of the operation and business arrangement between the parties, without having made a final decision on the matter. The counterclaim The alleged loan of $40,500 19.This represents 30% of the Plaintiff’s share of capital of the massage business. But I find that there was never any agreement to form a partnership between the Plaintiff and Lee. Therefore the Plaintiff is not liable to pay this sum of $40,500 to the Defendant. The loan of $15,000 20.The Plaintiff’s case is that he never borrowed any money from the Defendant. The Defendant did not set out in the defence and counterclaim or in his witness statement as to when and how the alleged loan of $15,000 was made to the Plaintiff. In his testimony Lee said that the loans were paid as follows:-
21.Lee admitted that (ii), (iv) and (v) were not made by him, but by the Plaintiff. He simply treated the amounts as loans. But there is no mention of the word “loan” in these documents. There is no evidence relating to (i) and (iii) which shows that these sums were loans, apart from the evidence of Lee. But there is no evidence from him that he asked the Plaintiff to sign any receipt, or to write anything to prove that these sums were loans made by him to the Plaintiff. 22.It is the Plaintiff’s evidence that the amounts referred to in the documents under (ii), (iv) and (v) represented his salary and other allowances. His case is that the Defendant failed to pay his salary and/or other allowances in full, and upon the advice of Miss Yeung that on occasions he deducted his salary and/or other allowances from the daily turnover of the business and he would record the deductions by writing in Chinese “薪給收據”or “雜支憑單”. I accept his evidence. This evidence is consistent with his case. Lee’s evidence is inherently incredible. The renovation works 23.It is the Plaintiff’s case that the decoration fee of the Premises is in 2 parts; the first part was for water and electricity related items at the sum of $15,000, whereas the second part was for other items, which included the fixing of 3 rooms, building a front desk, fixing wall paper, painting and demolition of previous decoration, at the total sum of $20,000. The first part of the decoration work was done by a Mr. Chan Man Yeung, whilst the second part was undertaken by a Mr. Lam Chung Chan. 24.The Defendant’s counterclaim was that the Plaintiff had failed to produce valid and formal receipt in respect of the entire decoration fees of $35,000. Lee said that there was basic decoration in the Premises. Therefore only minor modification was required. 25.Regarding the first part of the decoration works, Lee admitted that he had paid for it direct when the workers called at his office all in a sudden. That being the case, it is not correct for him to say that the Plaintiff failed to produce valid receipt for the sum of $15,000. He could have ascertained from these workers whether the decoration work had in fact been done. If it had not been done he could have refused to pay. He could also have refused to pay if these workers had not been able to produce valid receipts to him. 26.In respect of the second part of the decoration works, there is a receipt issued by Lam Chung Chan. The Plaintiff said that in order to save money, Lee had asked him to employ individual workers, instead of construction companies, to undertake the work. 27.It is for the Defendant to prove that the two parts of the decoration work had not been done. He has failed to do so. It is insufficient for him simply to say that it is doubtful whether the decoration services had ever been provided for at all. Cash coupons at the sum of $4,320 28.Lee admitted that the Plaintiff did discuss with him about the issue of cash coupons, but he did not agree to the issue of such coupons. After the Plaintiff had left the business, when customers intended to enjoy preferential charges for massage by presenting coupons issued by the Defendant company, with the unauthorized company chop thereon, he found that the Plaintiff had issued such cash coupons without his prior authorization and consent, and had not accounted for the sum of $4,320 received from the customers. 29.On the contrary the Plaintiff said that he had obtained prior approval from Lee before issuing the cash coupons. When being cross-examined Lee said that the figure of $4,320 was given to him by his employee, and he did not check it personally. This is in conflict with what he said in paragraph 16 of his witness statement in which he said, “…… after the Plaintiff had left the business in about mid March 2004 I had reviewed and checked the business accounts and records compiled and submitted by the Plaintiff in more detail, and further discovered that ……” This statement reveals that Lee personally reviewed and checked the business records and accounts. It is in conflict with what he said in his testimony. He is not a man of truth. I reject what he said. I accept the Plaintiff’s version of evidence in this regard. The unsupported miscellaneous expenses 30.It is the Defendant’s case that the following expenses in the total sum of $6,781 are not supported by receipts:-
31.The Defendant’s case is that the Plaintiff should provide receipts in support of the above expenses save that there were no actual transactions thereunder. Lee did attend the Premises from time to time. If he had not seen any refrigerator in the shop premises, he should have testified to that effect. Lee should also have testified that no signage had ever been installed. 32.It is logically wrong for the Defendant to say that because there are no receipts for the above expenses, then the various expense items had not been done or purchased. It is plain and obvious that one would not ask for a receipt for giving out a laisee. There is no proof from the Defendant that the various items or things had not been purchased or done. I accept the Plaintiff’s evidence in this regard. The petty cash of $2,000 33.The Defendant’s case is that the Plaintiff failed to provide receipts for the petty cash of $2,000 received by the Plaintiff on 19 August 2003. It is the Defendant’s case that this sum of money had not been spent on business. It is the Plaintiff’s case that all the relevant receipts of the petty cash had been given to the Defendant. The burden is on the Defendant that the Plaintiff did not spend all the petty cash on the massage business. It simply has failed to do so. 34.By reasons of the matter said, I dismiss all the Defendant’s counterclaim and enter judgment in favour of the Plaintiff as claimed. 35.I order that the Defendant do pay within 14 days from today, the sum of $97,014.50, with interests thereon, at judgment rate, commencing from 24 April 2004 until satisfaction. Costs 36.I make an order nisi, to be made absolute in 14 days’ time, that the Defendant do pay costs of this action (including the costs incurred in the Small Claims Tribunal) to the Plaintiff, to be taxed, if not agreed. The Plaintiff’s own costs be taxed in accordance with Legal Aid Regulations.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||