Helskens, Jan Bert Julia v. Axa International Ltd
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HCA 1348/2005 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1348 OF 2005 ----------------------
-------------------------- Before: Deputy High Court Judge Carlson in Court Date of Hearing: 7 -11, 13-14, 19 August 2008 Date of Judgment (Handed Down): 29 August 2008 ---------------------- J U D G M E N T ---------------------- INTRODUCTION 1.In this case the Plaintiff, who is Belgian, is suing the Defendant for US$447,373.57 arising out of his engagement with it as its Chief Executive Officer (“CEO”) from 2000 to 2005. The Defendant denies that it owes him any money and counterclaims in the sum of EUR 500,000 being the amount of a loan extended to him in August 2004 so that he might carry out substantial building works on his house in Belgium. 2.The Defendant is concerned in the manufacture and sale of cookware. It is owned and controlled by two families, that of Mr Filip Delmulle, who is also Belgian and in a substantial way of business in cookware and associated products in Europe and the family of Mr Gavin Lam who are from Hong Kong. Each family holds 50% of the shares in the Defendant. 3.The Plaintiff, who is expert in management and who holds a MBA degree had been employed in Europe by Mr Delmulle who introduced him to Mr Lam as a suitably qualified and experienced person to expand and develop the Defendant’s business with a view to perhaps having it listed on the Hong Kong Stock Exchange. 4.The Plaintiff was engaged by the Defendant under the terms of an agreement in writing dated 28 April 2000 [Bundle E/238]. It was signed by the Plaintiff and by Mr Lam on behalf of the Defendant. The terms of this agreement will need to be scrutinised carefully together with all the other relevant evidence to decide whether this created a relationship of employer/employee between the parties or whether it amounts to a contract for services with the Plaintiff being an independent contractor. The Defendant’s case is that the Plaintiff was its employee and that therefore this court has no jurisdiction over what is an employment dispute which falls to be decided only by the Labour Tribunal. The Plaintiff says that he was not an employee but an independent contractor. If the Plaintiff is right about that then the court will have jurisdiction. Given the nature of the issue, I will need to decide its first. If I hold for the Defendant, I can put the rest of the case aside save for the counterclaim which stands alone as a separate issue and is not dependent on the nature of the legal relationship between the parties. If the Plaintiff is correct in asserting that he was an independent contractor then I will need to proceed and try the whole case which raises a number of issues. 5.For the purposes of introducing the matters raised in the pleadings, I can briefly summarise those issues, other than the fundamental issue of whether the Plaintiff was an employee. The cause of the termination of the Plaintiff’s engagement was the discovery by the Defendant that he had decided to establish and did set up a rival cookware business to that of the Defendant and that he was soliciting business from the Defendant’s clients, added to which he was poaching the Defendant’s senior staff to join his new business. Faced with this threat to its commercial interests, the Defendant summarily terminated the Plaintiff’s contract. The Plaintiff says that there was nothing in his contract to prevent him from setting up a company of his own because the contract did not give the Defendant an exclusive right to his services. As to soliciting companies with whom the Defendant already dealt the Plaintiff says that the products that he intended to manufacture and sell were different to those of the Defendant and so there was no element of competition between them. As to poaching of staff, such staff that came over to join him did so of their own free will. Finally, he says that the parting of the ways was open and friendly. He had become very disenchanted with Mr Delmulle’s attitude to the running and direction of the Defendant, he being negative to his ambitions for it and that Mr Delmulle had treated him badly. As a result, this had given him reason to start a separate company which he hoped would involve a co-operation with Mr Gavin Lam with whom he had in the previous five years worked very well and with whom he had an excellent personal relationship. In the event, Mr Lam decided not to join with him and so they went their separate ways. 6.The Plaintiff’s claims, principally the one for US$300,000, are all based on his rights of remuneration under the contract. The Defendant having terminated the contract summarily seeks to justify that on the basis of the Plaintiff’s behaviour in setting up a rival business and poaching staff and clients. He says, that where under the contract he was entitled to behave in the way that he did, he should have been given 12 months’ notice or alternatively, paid out based on what he would have earned during the notice period. There are also smaller claims for unpaid expenses and a dispute as to the basis of remuneration based on the way his income fell to be calculated on a Return on Investment (“ROI”) assessment, over which the parties are unable to agree the elements of that calculation. 7.Finally, the counterclaim is disputed by the Plaintiff on a most fundamental basis. The Defendant pleads that the EUR 500,000 loan was extended to him by it and that now that his engagement has been determined this needs to be repaid forthwith. The Plaintiff says that the loan was made to him by Mr Gavin Lam personally and is evidenced by an agreement signed by them under which the loan is repayable over 25 years. Mr Lam says that this agreement is a sham and that he only signed because the Plaintiff asked him to do so in case he needed to show it to the Belgian tax authorities in case they wished to ask him questions as to where this money had come from. He did not wish to reveal to them that it came from the Defendant because that would had meant revealing that he was in a commercial relationship with the Defendant by which he was paid something in the order of US$300,000 per annum. He admits to not declaring this income to the Belgian tax authorities whose reach is world-wide for all its nationals and at rates of approximately 50%. It is also right to say that the Plaintiff has not paid any tax in Hong Kong notwithstanding his undoubted liability to do so over the five years that he has received income from the Defendant. 8.These therefore are the issues which I am required to work through in determining the outcome to this action. I need to take what is an issue of jurisdiction first which relates to the basis of the Plaintiff’s contract with the Defendant. EMPLOYEE OR INDEPENDENT CONTRACTOR? 9.The starting point to a resolution of this matter is the agreement itself [E238]. Nowhere does it describe the nature of the relationship. Accordingly, I need to decide this by looking at all the relevant evidence. It is helpful to recite here the material parts of the agreement:
10.At this stage, it becomes necessary to set out the court’s approach in determining whether a person is an employee or an independent contractor. The principles are well settled, the difficulty arises in correctly applying the evidence to those principles particularly where there are some indicators which support an employer/employee relationship and others indicative of client and independent contractor. The leading modern case is Market Investigations Ltd v Ministry of Social Security [1969] 2 QB 173 a decision of Cooke J which was approved in the Privy Council in the Hong Kong appeal in the case of Lee Ting Sang v Chung Chi Keung [1990] 2 AC 374, where the basic test was said to be whether or not the worker is performing services as a person in business on his own account. If the answer to that question is ‘Yes’ then the contract is a contract for services. If the answer is ‘No’ then the contract is a contract of service. The conclusion of the Privy Council, echoing Cooke J supra, was that no exhaustive list has been compiled and no exhaustive list can be compiled of the considerations which are relevant in determining this question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. Relevant factors include control, integration, provision of equipment, hiring of own helpers, profit and loss and the freedom to attend other work. If I may say so, a most helpful analysis was provided by Mummery J (as he then was) in Hall v Lorimer [1992] 1 WLR 939, approved by the Final Court of Appeal in Poon Chau Nam v Yim Siu Cheung [2007] 10 HKCFAR. Mummery J said this:
In Poon Chau Nam (supra) Ribeiro PJ described the exercise as a need to:
11.The Plaintiff’s case is that he was engaged as a free agent to run the Defendant and to enlarge it and make it sufficiently substantial to qualify for listing on the Stock Exchange. He had a completely free-hand as to how he should do that subject only to control from the Board of which he was not a member. This freedom of operation is of course very typical of a CEO’s remit in running a company of which he may be an employee. This point therefore is not decisive although it is right to say that there was very little in terms of control exercised over the Plaintiff by the Board. I believe Mr Lam and the other members of the Board saw the Plaintiff as a person of great ability and well qualified to be left alone to get on with the business which he was very successful at over the five years with which I am concerned. 12.There are indicators which unquestionably point away from a relationship of employer and employee. Firstly, the Defendant paid no MPF contributions on his behalf, which the law required them to pay for all its employees. In other words, he was left to make his own pension provision as all self-employed people have to. Secondly, he was not described as an employee in the Defendant’s return to the Revenue which is very indicative of how each viewed their relationship and, this feature was also reflected in how the Defendant’s auditors, Deloittes, described him. They refer to him as an agent. The other, I believe, weighty factor is that the Plaintiff actually entered into a personal guarantee together with some of the directors to guarantee banking obligations of the Defendant to its bankers HSBC. Whilst everything is possible within any given relationship, it strikes me as very rare for an employee, albeit a very senior one, to assume personal liability on behalf of his employer. Mr Leung, who appears for the Defendant, has sought to diminish the significance of this because in the Plaintiff’s case, the bank did not require him to enter into any charge on his property. All it wanted was a list of his assets including the address of his home in Belgium. If the bank ever needed to look to the guarantors, Mr Leung says that it would have turned to the Hong Kong-based directors’ guarantees whose assets were more easily available to it if it needed to sell any of these to satisfy the Defendant’s indebtedness. He describes the Plaintiff’s potential liability as no more than theoretical. 13.Whilst that may well be so, the fact remains that the Plaintiff was prepared to put himself in the frame as a guarantor which, I am bound to say, I have never encountered before in an employee/employer relationship. 14.And so the fact is that the Plaintiff did assume a risk which is a factor to be weighed in deciding whether he was an independent contractor rather than an employee. 15.Another feature relied on by the Plaintiff is that he was free to do other outside work which, if true, would also indicate an independent relationship, where an employee would be expected to enter into an exclusive relationship with his employer. In this regard, the Plaintiff has referred to his work for Alva in Belgium which was part of Mr Delmulle’s group of companies. It is right to say that in Bundle E241-242 there is a contract dated 1 March 2000, a month prior to the contract with the Defendant, by which the Plaintiff was appointed CEO of Alva for a “standard wage” of 130,000 Belgian francs a month. Mr Leung submits that one should view the Delmulle group of companies as part of a larger group which included the Defendant as its Asian arm and that when looked at in this way, I ought not to be unduly influenced by the fact that the Plaintiff was also CEO of Alva and also worked on behalf of other Delmulle companies. 16.Reminding myself of Mummery J’s remarks in Hall v Lorimer supra about standing back from the detailed picture and viewing it from a distance, making an informed, considered, qualitative appreciation of the whole, the clear message that I get from the evidence is of the Plaintiff being an independent contractor brought in to grow the Defendant. I believe that is the overall effect of the evidence. This was an outside expert or consultant being paid his remuneration based entirely on performance and not a fixed salary plus performance bonus. The truth of the matter is that this is how the Defendant itself viewed him and that is why it never paid MPF contributions for him and that is why it never declared him to the Revenue as one of its employees, which is the same signal that it gave to its auditors Deloittes. 17.On my finding therefore that no employer/employee relationship existed, the court does therefore have jurisdiction over the subject matter of the claim and I must now determine the outcome of the claim on its merits. Was the Defendant Entitled to Summarily Determine the Agreement? 18.There is provision in the written agreement for the Defendant to terminate the Plaintiff’s engagement immediately for “Sincere failure and mistakes …”. The contract had been drafted in Flemish and translated in this way into English. It is agreed that a “sincere failure” means a serious or grave failure. I have already indicated the nature of the Defendant’s justification as being the result of poaching senior staff and setting up a rival company and taking away some of the Defendant’s business in doing so. 19.It is important from the Plaintiff’s point of view to understand the history of the parties’ relationship. It is accepted by Mr Lam that he developed a bond of friendship and trust with the Plaintiff who over the five years of his work on behalf of the Defendant had increased the company’s volume of business and profitability. There is no doubt that, certainly until mid-2004, the relationship had been mutually profitable and successful. The Board had been content to allow the Plaintiff a free-hand in running the business of the Defendant which he did with considerable success. It seems to me that the downturn in the relationship was the result of a deterioration of the Plaintiff’s relationship with Mr Delmulle who he felt had not treated him with the respect that his general performance merited and that over time it had become clear that Mr Delmulle’s aspirations for the future and development of the Defendant was quite different from that of the Plaintiff. Whilst Mr Delmulle’s approach was conservative and probably against the eventual listing of the Defendant on the Stock Exchange, the Plaintiff and to a great extent Mr Lam was very ambitious about going public and in that way getting in more capital to expand the business. Although I have not had the advantage of hearing Mr Delmulle’s side of the matter, it seems highly probable that it was this which caused an ambitious and now frustrated Plaintiff to try and do his own thing and strike out by forming his own company which in the event he has done with, so far, considerable success. 20.And account of how the parties eventually came to a parting of the ways can to a large measure be followed from the e-mail exchanges between the Plaintiff and Mr Lam. The facts, as I find them to be, are that by late 2004 the Plaintiff had decided that he had become sufficiently expert in the China market as a result of his association with and management of the Defendant. He had made his contacts, he knew how things operated and he knew the difficulties and the advantages of this business in this part of the world. What he needed was to assemble key staff with the requisite expertise in terms of technical knowledge and business and language skills. The technical knowledge was available in the form of Mr Vim De Veirman, whose services the Plaintiff had engaged on a consultancy basis to help out the Defendant and, if he wished he could also call on Mr Kurt Blondeel who had also helped out the Defendant as an outside consultant. 21.As to management and local skills in terms of language and know how in the region he turned to Madam Mildred Lau who was the Defendant’s Chief Operating Officer (“COO”). I am satisfied that he was able to persuade her to join him in his new business venture. She left the Defendant and is now COO of the Plaintiff’s company Anotech International Hong Kong Limited. He also attempted to persuade Mr David Wong the Defendant’s general manager to join him but Mr Wong who is a very loyal and trusted employee of the Lam family declined although, it is right to say, he had been prepared to listen to the Plaintiff’s proposals before deciding to remain with the Defendant. Mr Wong’s evidence is that in February 2005, the Plaintiff had approached him and told him that he wished to establish a joint venture with Ningbo Well Aluminum Company Limited (“Ningbo”) which had been producing cookware for the Defendant. He told him that he wished to recruit Madam Lau, Mr Harry Yeung, the Defendant’s chief innovation officer and himself as his key partners. Mr Wong says that he was surprised by what the Plaintiff had told him and that he had listened as the Plaintiff discussed plans with a Mr Hu, the head of Ningbo about future co-operation between them. In the event, he and Mr Yeung remained loyal to the Defendant and he reported the matter to Mr Lam. 22.The Plaintiff makes no secret of his dissatisfaction with the direction of the Defendant and his frustration in not being able to take it forward as he would have liked. The e-mails, and so much is admitted by Mr Lam, show that the Plaintiff had been open with Mr Lam in what he was trying to do by striking out on his own and he had also tried to persuade Mr Lam to join him in his new venture, leaving Mr Delmulle behind. Once he had developed his future plans sufficiently, he told Mr Lam that he would be prepared to stay on with the Defendant and continue to guide it until 31 December 2005 after which he would have no further part to play in its management. 23.Faced with this situation, Mr Lam discussed the matter with the Board which decided that it could no longer retain the Plaintiff’s services, which it terminated on 23 April 2005. The way this is justified, is pleaded at paragraph 13 of the Amended-Defence and Counterclaim [A/36]. Essentially, doing what the Plaintiff did, which I have already summarised, is said to amount to a massive breach of loyalty resulting in a complete loss of confidence in him. In such circumstances the relationship could not be allowed to continue. 24.The Plaintiff says that it was always known by the Defendant that it did not enjoy an exclusive relationship with him because he worked for other Delmulle companies. Secondly, in taking the services of Mr De Viermin and Mr Blondeel, they were not employed by the Defendant. They were free agents who shared his own aspirations and free to go with him if they wished. Madam Lau came of her own free will, as was her right. As to competition with the Defendant, he was interested in differently manufactured cookware and so if the there was any element of competition it was negligible and falls to be ignored. Further, he had been very open with Mr Lam as to why and what he was proposing to do. 25.For my part I am entirely satisfied that the Defendant was justified in immediately terminating the Plaintiff’s contract with it. What the Plaintiff was doing amounted to a fundamental breach of his duty to the Defendant. Even whilst serving as its CEO he had set up his own rival organisation with its own website. It is difficult to imagine conduct more inconsistent with his duty to the Defendant. By doing what he did, he put himself in an impossible position vis-à-vis the Defendant. This he compounded by trying and succeeding, in Madam Lau’s case, in poaching a senior member of its staff. Whilst he may have had the freedom to work for other companies such as Alva and Allinox, these companies were part of Mr Delmulle’s group and so they were part of the same stable as the Defendant. He was being well-rewarded by the Defendant, his emoluments were in the order of US$300,000 per annum. Whilst he had performed creditably for it, he had also been handsomely rewarded for his efforts. The fact of the matter is that he left the Defendant with no choice but to terminate him in the way that it did. This was disloyalty by the Plaintiff on a grand scale. I go so far as to say that this was dishonourable conduct, even if the Plaintiff may have seen it differently at the time. He had abused the Defendant’s trust. 26.In these circumstances, where the Defendant had been entitled to dismiss the Plaintiff in the way that it did, there was no need to give him 12 months’ notice nor to pay him out in lieu of such notice. It must follow therefore that his claim for loss of remuneration under paragraph 11 of the statement of claim must stand dismissed. THE PLAINTIFF’S CLAIMS PRECEDING HIS DISMISSAL ON 23 APRIL 2005 (a) Outstanding Remuneration and Expenses 27.Two issues arise here. Firstly, the Defendant’s contention that on the evidence the Plaintiff has failed to prove that there is any outstanding remuneration owing to him. Secondly, if he has established that there is outstanding remuneration, then this has to be discounted to take into account a calculation on ROI of under 20% which is in accordance with the parties’ agreement. 28.The pleaded cases are these: The Plaintiff says that for the year ended 31 December 2004 he was still owed US$110,359.00 and expenses of US$6,517.00. For the period 1 January 2005 to 23 April 2005 he claims outstanding remuneration of US$37,497.00 and expenses of US$30,790.57. 29.The Defendant, the detail of its evidence on this being provided by Miss Grace Wong, pleads the outstanding remuneration for the year-end 2004 as only US$15,834.00 and for the period to 23 April 2005 as US$2,633.00. As to the repayment of expenses, the Defendant’s case is that because the Plaintiff failed to provide vouchers for his expenses there can be no basis for his claim which requires him to produce these. The Plaintiff says that the Defendant had waived that requirement and must therefore pay him what he has claimed. 30.As to remuneration, the Defendant’s far smaller figures are based on a ROI of under 20%. The Plaintiff has calculated the Defendant’s ROI for 2004 at 48.7%, whilst conceding a figure of only 5.7% for the first four months of 2005 [D193]. Grace Wong’s evidence, contained in her witness statement starting at D176, the relevant part being at paragraph 6 on page 178, is that based on the Defendant’s audited accounts [audited by Deloitte] for the year 2004, the ROI was only 12.5% and not 48.7%. If she is correct about that, taking 20% as the bench mark, the Plaintiff’s remuneration would have to be reduced by 7.5% to reflect the 12.5% ROI, which gives a net income of US$81,641.00. As to the four months of 2005, Miss Wong says that the ROI needs to be calculated on a pro-rata basis which would give a net income owing to him in the sum of US$2,633.00. 31.The parties are agreed as to how ROI is calculated. The Defendant accepts the methodology which appears as exhibit JH-01 of the Plaintiff’s witness statement of 27 July 2007. This appears as an extract from the textbook, Managerial Accounting by Garrison and Noreen. The definition of ROI is arrived at by dividing net operating income by the average operating assets. The difficulty I have in this regard is that I have not had any independent expert help on this aspect. Whilst the Plaintiff and Mr Lam both have MBA degrees and have had a lot to say on the matter, they have expressed no more than private partisan opinions. The Plaintiff supports his 48.7 percentage and Mr Lam, who has reviewed Miss Wong’s calculation supports her assessment. That being said Miss Wong, although experienced in accounting is not qualified. Nevertheless, she has been able to produce tables which demonstrate that on any view of the matter, the Plaintiff cannot get himself up to 20% ROI. 32.The Plaintiff has complained that items that the Defendant has put into the formula should not have gone in and that these items have served to skew the result and produce a low ROI. Miss Wong, who has done the calculations, says that this is the way the Board has always calculated its ROI and she has merely followed its directions as she has done every year, with the result that she has arrived at this much lower percentage than the Plaintiff. 33.I can only do my best on an issue where I would have felt more confident had I been given independent expert opinion. During my best, I have come to the inclusion that, on the state of the evidence, Miss Wong’s calculations and the reasons that she has given for them are to be preferred to the Plaintiff’s with the result that the Plaintiff must have judgment in the much lower amount put forward by the defendant being US$15,834 for 2004 and US$2,633 for 2005, these being the amounts that remain owing to him. (b) Expenses 34.In this regard, the Plaintiff is on far stronger grand. The fact of the matter is that the Board and the Defendant’s auditors have approved the Plaintiff’s expenses on the sparsest production of vouchers by him. It is only now that the matter has come to be litigated that the Defendant has decided to adopt this uncompromising stance. The fact is that at the time, the expenses claims had been accepted and the outstanding amounts should be paid to the Plaintiff. The Defendant cannot be seen to blow hot and cold over this especially where its own auditors have approved the amounts. These are for US$6,517.00 for 2004 and US$30,790.57 for 2005. The Loan of EUR 500,000 35.The Defendant has been good to the Plaintiff in the past. In October 2002, it lent him US$300,000 to enable him to buy his house in Belgium. This he acknowledges. He accepts that this was a loan from the Defendant which he has repaid. Unusually, he asked for the Euro equivalent to the US$300,000 (being EUR 307,240) to be drawn in cash so that he might take it in banknotes to Belgium. He says that this was because he could get more on the exchange rate when compared to a telegraphic transfer. The Defendant says that this was because he did not wish to alert the Belgian tax authorities as to the source of the funds which would in turn have alerted them to his income from the Defendant on which he had not and has not paid income tax. I will return to this aspect presently. 36.On this occasion, he borrowed EUR 500,000. Now that he has been dismissed and the Defendant wishes to be repaid, he says the loan was a personal one to him from Mr Lam. He owes the defendant nothing. For this he relies on a document at E254 drafted by his lawyer in Belgium. Given its importance, I will set it out here:
37.Mr Lam says that the only reason that he was prepared to sign this agreement was because the Plaintiff had told him that he would like to have it with him in case the Belgian tax authorities asked any questions. He could show it to them to prove that the money came as a loan from a private individual. On this occasion, the funds were remitted by telegraphic transfer to his bank in Belgium and he did not wish to have this money being traced to the Defendant with the income tax implications that would then have to be confronted by him. 38.Mr Lam says that he trusted the Defendant and he saw nothing wrong about doing this in order to help him out. 39.The contemporaneous evidence shows that the Plaintiff arranged for HSBC to lend the EUR 500,000 to the Defendant and that this amount was then remitted by the Defendant to the Plaintiff’s bank in Belgium. At no stage is there any indication to support the view that Mr Lam was lending this amount to the Plaintiff. There is a Board resolution approving the loan by the Defendant to the Plaintiff. If confirmation is required, then one need only turn to the e-mail correspondence in 2005 at about the time when the Plaintiff and the Defendant came to a parting of the ways. This all supports the conclusion that the Plaintiff saw his obligation to repay the debt to the Defendant and not to Mr Lam. 40.One only need consider the terms of the written agreement itself to realise how fanciful the notion is that Mr Lam, as a private individual, would have extended to the Plaintiff a 25-year loan with a 5-year holiday on repayments, that is to say from September 2004 until September 2009 and at a fixed interest rate of 6% over the whole life of the loan. None of this makes any sense other than Mr Lam’s explanation that he signed this document so that the Plaintiff had something to show the tax authority in Belgium if he was ever asked about the source of these funds. 41.This all fits in convincingly with the Plaintiff’s conduct as somebody who chooses not to pay his taxes in his home country, which levies tax on Belgian citizens on a world-wide basis. Incidentally, he also admits to not having paid tax in Hong Kong which gives some indication as to his sense of probity. I find as a fact that once faced with this counterclaim, the Plaintiff has decided to make use of this written “agreement”, which is a complete sham, thought up by him, to avoid his lawful obligations to the Belgian tax authorities and now made use of in an attempt to avoid his obligations to the Defendant. The simple truth is that he owes this money to the Defendant. He having been dismissed by it is now liable to repay this amount upon termination of his engagement, this loan being dependent on his continuing to work with the Defendant or, at the latest, within a reasonable time thereafter which, given that more than three years have elapsed since his termination, is now payable to the Defendant. Accordingly, there must now be judgment to the Defendant on the counterclaim. THE ORDERS 42.Under the prayer of the Statement of Claim, paragraph (a) there will be judgment to the Plaintiff in the sum of US$15,834. Under paragraph (b) he must have judgment in the sum of US$6,517. Under paragraph (c) the Plaintiff will have judgment in the sum of US$2,633.00. Under paragraph (d) he will have judgment for US$30,790.57. His claim under paragraph (e) will stand dismissed and judgment must therefore be entered in the Defendant’s favour under this paragraph. 43.On the amounts due which relate to outstanding remuneration and expenses, I will order interest from the date of the writ to the date of judgment at the best lending rate of HSBC and thereafter at the judgment rate from the date of judgment until payment. 44.As to the counterclaim, there will be judgment to the Defendant in the sum of EUR 500,000. There will be interest on the loan on the overdraft rate charged by HSBC to the Defendant for the Euro overdraft facility which reflects the agreement between the parties as to the payment of interest by the Plaintiff to reimburse the Defendant on its primary obligation to HSBC, it having obtained the loan for him. These rates are as follows:
As from the date of judgment, the rate of interest will be at the judgment rate until payment. The Plaintiff has not pursued its claim for an account for profit lost as a result of the Plaintiff having set up on his own during the currency of his contract with the Defendant and accordingly I make no order on that aspect of the counterclaim as I propose to make no order in respect of the claim for $28,000 which relates to the Defendant’s computer which it has supplied to the Plaintiff who took it with him when he left. There has not been much evidence in this regard and for my part I am left in the position where the precise situation remains unclear as to whether this was intended to be given to him or not. Accordingly, this element of the counterclaim must stand dismissed. COSTS 45.When viewed overall, the Defendant has been distinctly more successful. Nevertheless, it should suffer a reduction on its costs entitlement it having raised the issue of whether the Plaintiff was an employee or an independent contractor which has been resolved against it. This was an important issue, the outcome of which would have had a very substantial impact on the trial. I will therefore make an order nisi that the Plaintiff should pay 75% of the Defendant’s overall costs of the action. I do not believe it would be appropriate to make two separate orders on the claim and another on the counterclaim. I have decided that an overall appreciation of the outcome of the action is the best guide as to how costs should be decided. If either party wishes to contend for a different order on costs let it do so in writing within 21 days of the date of this judgment.
Kevin Hon, instructed by Messrs Beiten Burkhardt, for the Plaintiff Paul H M Leung, instructed by Messrs Yeong & Co., for the Defendant |
Cases cited in this judgment