Robert K.K. Yuen v. Waldemar M. Isbrandtsen and Others
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IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 2010 OF 1971 ----------------- BETWEEN
----------------- Coram : Briggs J. in Court ------------------------ J U D G M E N T ------------------------ 1. The Plaintiff at the material time was a salesman in the container business. On August 26, 1970 he made an agreement with the first and seccndDefendants and one Patrick Hung. This agreement was reduced into writing and signed by the four parties. A copy was exhibited in Court. It shows that the parties intended to form a company which was to be registered in Hong Kong. Its name was to be “Nu-Tek Services Inc. Ltd.”. The companywas to carry on the business of cargo containers including the acceptance of agencies for other container companies. 2. The agreement mentions that the capital of the new company was to be $120,000: that there were to be 4 directors namely the first and second Defendants, the Plaintiff and Mr. Patrick Hung: the salary and expenses of the directors being dealt with in some detail. 3. One of the provisions is of considerable importance in this case. It reads as follows:-
4. Mr. Yuen is of course, the Plaintiff. It was also part of the proposed terms of service of the Plaintiff that he should apply and subscribe for shares in the new company to the amount of $1,500 per month for 24months. 5. This agreement was never implemented. No share capital was raised: no directors were appointed. At that time the first Defendant and Mr. Patrick Hung were directors of another company called Orient Expressers Incorporated (Hong Kong) Limited. This was a private company and I will refer to it as “0.E.l” in this judgment. 6. At a directors meeting of O.E.I in September 12, 1970 it was resolved that the capital of O.E.I was to be increased: and that its name was to be changed to New-Tech Services Inc. (Hong Kong) Ltd: this company is the third Defendant. 7. The purpose of this reconstruction was to implement a proposed business proposition involving the renamed company and other interests and also to enable the first Defendant to bid for a desirable price ofland at an auction which was to be held at a very near date. 8. The business proposal was abandoned and the first Defendant failed to secure thepurchaseof the land. But the newly named company, the thirdDefendant continued to operate. 9. At the directors meeting of 0.E.l to which I have already referred it was resolved that the Plaintiff, who was himself present at the meeting,should be appointed manager of the third Defendant “in charge of Containerized and Break Bulk Services”. 10. On October 6 it was resolved at a directors meeting of the third Defendant, that the Plaintiff should be invited to become a director of the third Defendant. Though this appointment does not seem to have been formally made he agrees that he was treated as a director. The Plaintiffsigned a notice to say that he resigned as director and the directors at a meeting on 25th January1971 accepted his resignation as a director. The Plaintiff’s salary was then fixed at $4,350 per month. This resolution was rescinded by another resolution onMarch 1, 1971 when it was resolved that the Plaintiff would be appointed a (not ‘the’) manager as from March 1st 1971 and again his salary was stated to be $4,350 per month. 11. The Plaintiff was dismissed fromhis employment with the third Defendant on June 29th 1971. He brings this action for damages for breach of contract. 12. The Plaintiff’s claim is in the alternative. First he says he was employed under the agreement of August 26, 1970. Secondly, he relies on an oral contract incorporating the terms of service mentioned in the aforesaid agreement. And he makes the further point that in any event hewas employed by the first and second Defendants in their personal capacity as well as by the third Defendant. 13. The agreement of August 26, 1970 was in my view no more than an agreement to make an agreement: It was only an expression of intention. It was not meant to form a legal relationship binding on the parties. The terms mentioned in it depend upon the setting up of a new company whichwas never done. It provided for the employment of the Plaintiff when that was done and of course his employer would have been the newly incorporated company. 14. Itwas suggested on the Plaintiff’s behalf that the reconstruction and renaming of O.E.I was only a variation of the agreement of August 26,1970.This is patentlynotso. For example he was to be theManagingDirector of the new company to be formed under the agreement ofAugust 26, 1970 but only a Sales Manager in charge of Containerized and Break Bulk Services under the oral agreement. This was decided by a resolution of the directors of the third Defendant. What was envisaged by the agreement of August 26th is very different from what was accomplished by the reconstruction of O.E.I. The latter was an emergency measure. The agreement of August 26th was totally abandoned: or put on one side. The reconstruction was made for a specific purpose to enable a bid to be made at an auction at a time when there were high hopes of securing a most important agency for a foreign container business of some magnitude jointly with another business concern. As it happened these hopes were not realised. The agency went to another concern and the land was not bought. 15. But the third Defendant continued to function. The company the subject matter of the agreement ofAugust 26, 1970 was never formed at all. I do not think therefore that the Plaintiff can succeed if he bases his claim on the written agreement of August 1970. 16. His alternative claim is that the terms of service mentioned in the agreement were incorporated in an oral agreement. The first Defendant denied this. His case is that the Plaintiff was employed by the thirdDefendant on very loose terms: that is that the terms altered almost from month to month. The third Defendant company was not a successful venture and the Plaintiff was employed on a monthly basis as a salesman. And moreover that he was no good at his job and towards the end of the material period he was at best a tolerated employee. 17. The Plaintiff was the solewitness called in support of his case: theDefendants relied on the evidenceof the first Defendant. I will say at once that I much prefer the evidence of the latter to that of the former where there is a conflict. 18. I had the impression that the Plaintiff suffers from a sense of grievance. He also has an exaggerated idea of his own importance. For example he said he was a civil engineer but that is hardly the expression to use for the qualifications which he claimed namely that he learned about aircraft maintenance in Chung King in 1952. He frequently contradicted himself in his evidence. And the variations going as they did to the very basis of his case made it necessary for his counsel to amend his pleadings heavily and more than once. First of all the Plaintiff relied on the written agreement alone: later solely on an orlagreement: later again it was apparent that he had gone back to the written agreement: finally the written agreement as varied by the oral agreement was relied upon. 19. The Plaintiff claims that his salary was $5,500 per month with $2,000 expenses. In his original statement of claim he claimed $23,479.40 as due to him. He claimed that his salary was reduced wrongfully to $4,350 as from January 1st 1971. 20. The rest of the sum claimed represents various monthly sums of expenses which he says were wrongly withheld. 21. In the amended statement of claim the Plaintiff states that $6,900 was wrongly deducted from his salary. This is a deduction of $1,150 per month for the months of January - June 1971. 22. There was a final amendment to this statement of claim in which this sum plus $33,000 is claimed as special damages. The latter sum represents 6 months salary in lieu of notice at the rate of $5,500 per month. 23. Certain checks were exhibited which show a different position. They show a total of $37,790 as payment to the Plaintiff from October 1970 until June 1971. The payments were irregularly made and are of irregular amounts andtheycertainlydo not correspond with the list of payments provided by the solicitor for the Plaintiff in his letter before action to the Defendant, which was reproduced in the original statement of claim. They do show that a sum of $500 was paid nearly every month - twice inNovember 1970. And they do show a basic salary figure of $4,350 as from January 1971. However they are not a complete record of payments made. 24. There is no sum giving for September 1970 and only a single payment of $300 for May 1971. I myself asked the Plaintiff about this last payment and he replied that he thought he had been paid in cash. It was obvious from the evidence of both parties that money was very tight by this date, May 1971. 25. In addition to this confusion the Plaintiff’s evidence as to the amount of expenses he received was vague in the extreme. It would appear that he kept no record and no accounts of the third Defendant have been exhibited. 26. The Plaintiff said that it was agreed that he should provide $1,500 per month as a subscription for shares in the company. He said that deductions were made from his monthly salary of $5,500 but he was not registered as a shareholder. He therefore complained to the first Defendant about this and was repaid the amounts which had been deducted, from September 1970 when he joined the third Defendant companyuntil January 1971 when he complained. As from that date the Defendants only paid him $4,350 per month and he claims that this was in breach of the terms of his employment. He was emphatic that his salary was $5,500 and that the payments towards shares were deductions therefrom. 27. The first Defendant gives a different version. He said that the salary of the Plaintiff was $5,500 per month only if he took up shares to the value of $1,500 per month: that his take home salary was always at the rate of $4,350 per month. He said that deductions were made to begin with as had been agreed. However the Plaintiff told him that he was not interested in taking up any shares. So the deductions already made for the months of September - December 1970 inclusive were repaid to him. As from January 1971 the Plaintiff’s salary was reduced to $4,350 per month: and no deductions were made. In effect the Plaintiff, after January, took home the same amount of money as he had been doing previously. The reduction was fixed by a resolution of the directors at the time when the Plaintiff ceased to be a ‘directors’ and expressed an intention not to take up shares. The first Defendant said that the Plaintiff agreed to this. This was denied by the Plaintiff. 28. However on one occasion in his cross-examination, the Plaintiff admitted this his salary was reduced and that thereafter he had accepted the lower rate. And the evidence is that he worked for the third Defendantfor 6 months at the lower rate, namely until he was dismissed. 29. The first Defendant gave a picture of a company which was unsuccessful and going through difficult times. He himself was away from Hong Kong for considerable periods of time during theperiod in question. And could not personally therefore control matters closely. He said that it was agreed that the Plaintiff should have a car allowance of $500 per month. And other reasonable expenses against receipts. The checks show that the $500 was regularly paid. Incidentally the payment of a car allowance does not form part of the terms of service contained in the agreement of August 26, 1970 (see above). 30. The first Defendant denied that the expenses of the Plaintiff were to be paid in accordance with the terms in the written agreement of August 26, 1970. He also denied that the Plaintiff was employed for a fixed period of two years. 31. Of the two versions given of the terms of employment of the Plaintiff I much prefer that given by the first Defendant. I accept his evidence therefore on this issue and reject that of the Plaintiff. I think that the true position was that up till January the Plaintiff’s salary was $5,500 per month. But that this was reduced to $4,350 when he said he would not take up any shares. This reduction was agreed to and the Plaintiffwas thereafter paid at the rate of his original takehomepay. I do not accept that this reduction was made without his knowledge and consent. I can well understand the Plaintiff being unwilling to take up shares in a company which was not in goodworking order. I do not believe that he was employed for a fixed periodfor two years. There would have beenmention of thisin the resolution of the directors had that been the case. Also the circumstances of the third Defendant were such as to make such a term very unlikely. Further, the Plaintiff has not convinced me that his version of the expenses which he was to receive is correct. I accept the version given by the first Defendant which is in some measure corroborated by the evidence of the checks. 32. The Plaintiff made the further point that he was employed by the first and second Defendants in their personal capacity. The second Defendant only plays a shadowy part in the affairs of the company. She is the wife of the first Defendant, who at one time held her power of attorney. There is no evidence that the Plaintiff was employed personally by the first or second Defendant. The evidence in all the other way asis shown by the terms of the resolution of the directors employing him and by the method in which he was paid. The Plaintiff attempted to rely on clause 16 of the agreement of August 26, 1970. One has only to read that clause to see that it cannot bear such a meaning. I do not intend to set out its terms here. It is concerned with the provisions of additional funds for the new company and has nothing to do with the payment of the Plaintiff. The Plaintiff was employed by the third Defendant, as he admitted himself eventually when giving evidence. 33. The Plaintiff was dismissed peremptorily in January 1971. He received his salary up to the date of dismissal. The dismissal was at the instance of Mr. Patrick Hung who was then a director. The reason given for dismissal was the unsatisfactory financial state that the third Defendant company was in at the time. The first Defendant was not a party to this but in effect ratified it. 34. The point was not taken that Mr. Hung had no power to dismiss the Plaintiff, that the Plaintiffwas wrongfully dismissed. The Plaintiff’s claim is that he was employed for a fixed period of two years and he should have been given reasonable notice before he was dismissed, and it is suggested that a reasonable period would be six months. 35. I have already said that I am not satisfied that the Plaintiff was employed for a fixed term of two years. In my view he was employed for an indefinite period as a salesman of the third Defendant company and was entitled to reasonable notice. I have been referred to a passage in Volume 25 of Halsbury at paragraph 945 where a list of different employments is given showing what the courts have held to be reasonable notice in each case. Frankly I do not think that that list helps very much. Many of the cases referred to are old, and none of them refer to Hong Kong. No custom regarding the period of notice to be given was relied upon. But notice must be reasonable. In my view the correct period is a period of three months. 36. The Plaintiff also asked for general damages, but since this is not a case of wrongful dismissal I do not see how he can succeed. 37. There will be judgment against the third Defendant for $14,550 which is three months salary plus the car allowance. The other expenses were only payable against receipts showing actual expenditure. There will be judgment for the first and second Defendants. 38. I have already made an order for costs to the effect that the Plaintiff must pay all the costs of the three Defendants up to the end of the hearing of the case. The third Defendant must pay the Plaintiff’s costs of to-day. The Plaintiff must pay the costs of the first and second Defendants of to-day. 39. Plaintiff’s costs to be taxed under Legal Aid Regulations.
Bokhary (H.H. Lau & W.S. Lo) for Plaintiff Martin Lee (Gunston & Chow) for Defendants |