Chan Chi Ling Elwyn v. Richfield Realty Ltd
Read the full judgment text of HCLA 9/2013 on BabelCite. This HCLA judgment was delivered on 11 July 2014.
1. The defendant is a wholly-owned subsidiary of a listed company (“ Listco ”) that is engaged in inter alia property assembly and brokerage business for redevelopment purposes. The Claimant is a qualified engineer with professional registrations and institute memberships and substantial experience in planning and property development. He has held senior management positions with the Emperor Group and Paul Y Management Limited.
Cited by 11 cases · Cites 10 cases
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HCLA 9/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE LABOUR TRIBUNAL APPEAL NO 9 OF 2013 (ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO 4103 OF 2012) --------------------
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------------------------ J U D G M E N T ------------------------ I. INTRODUCTION 1.The defendant is a wholly-owned subsidiary of a listed company (“Listco”) that is engaged in inter alia property assembly and brokerage business for redevelopment purposes. The Claimant is a qualified engineer with professional registrations and institute memberships and substantial experience in planning and property development. He has held senior management positions with the Emperor Group and Paul Y Management Limited. 2.The claimant commenced employment with the defendant as their project director on 10 November 2008. The following documents had contractual force in relation to the terms of his employment with the defendant (collectively, “Contract Documents”):
3.I note the following in respect of the Contract Documents:
4.From 2010 to 2012, the defendant paid the claimant the following sums (in addition to wages):
5.On 22 September 2012, the claimant resigned from the employ of the defendant. 6.It was the claimant’s case that: [9]
7.It is the defendant’s case that: [10]
8.The crux of the dispute was (a) whether or not there was an oral agreement whereby the defendant agreed with the claimant to pay project bonus of $100,000 per construction project (“Oral Agreement”),[11] and (b) whether oral evidence would be admissible to vary, add to or contradict the Contract Documents. II. PROCEEDINGS 9.On 8 November 2012, the claimant filed a claim at the Labour Tribunal (“Tribunal”). The claimant claimed for a sum of $11,247,600.93 comprising inter alia (a) project bonus of $4,100,000 for completed projects (ie $100,000 x 51 projects less $1,000,000 received) (“Claim B Bonus”), and (b) project bonus of $7,100,000 for 71 “落訂項目” (ie $1,000,000 x 71 projects) (“Claim C Bonus”). 10.On 5 July 2013, after an 8-day trial, the Deputy Presiding Officer (“DPO”) found for the claimant on his claim for the Claim B Bonus, and ordered the defendant to pay to the claimant $4,100,000 with interest and no order as to costs (“Determination”). 11.On 23 August 2013, the DPO handed down written reasons for the Determination (“Reasons”) which held inter alia that apart from the written contract of employment there was an Oral Agreement (which formed part of the employment contract) by which the defendant agreed to pay the claimant project bonus calculated on the basis of $100,000 per construction project.[12] On 29 October 2013, I granted leave for the defendant to appeal against the Determination. The defendant contended that the DPO in finding for the claimant on the basis of the Oral Agreement committed fundamental errors of law and failed to discharge his statutory duty to investigate in a material way. 12.The appeal came before me for hearing on 4 April 2014 (“Appeal”). Mr Chow SC (and Mr Wong with him) appeared for the defendant/appellant, and Mr Hung (and Mr Cheung with him) appeared for the claimant/respondent. Since the Appeal concerned the Oral Agreement and Claim B (but not Claim C) Bonus, the reference to project bonus in this Judgment is to the Claim B Bonus. III. LEGAL PRINCIPLES 13.Hearings at the Tribunal are conducted in an informal manner.[13] The presiding officer may inter alia put to a party or witness such questions as he may think fit,[14] and shall investigate any matter which he may consider relevant to the claim, whether or not it has been raised by a party.[15] 14.A party’s right to appeal against an award, order or determination by the Tribunal is limited to questions involving points of law or excess of jurisdiction.[16] On such appeal, the Court of First Instance may draw any inference of fact, but may not (a) reverse or vary any determination made by the Tribunal on questions of fact or (b) receive further evidence.[17] 15.The applicable principles have been summarised by Au J in Wai Mei Lai Stella v Viya Pramita as follows:[18]
IV. DEFENDANT’S GROUNDS OF APPEAL 16.I gratefully adopt Mr Chow SC’s summary of the defendant’s grounds of appeal (“Grounds”) as follows:
For convenience, I shall refer to the five grounds of appeal as “Grounds 1, 2, 3, 4 and 5”. 17.Mr Chow SC submitted that the Grounds were against errors of law as to (a) how the DPO approached the evidence, (b) how he reached his conclusions, and (c) whether he discharged his statutory duty to investigate. Should the defendant succeed on Grounds 1, 2, 3 and 5, it was said that the present case must be remitted to the Tribunal for retrial. But should the defendant establish that the DPO failed to address the “anterior question” (as explained in Part VIII(a) below) under Ground 4, Mr Chow SC submitted that this court should allow the Appeal without retrial. 18.On the other hand, Mr Hung argued the essential dispute over the existence or otherwise of the Oral Agreement was narrow, fact‑sensitive and without any complexity.[19] The task of the DPO (being a professional tribunal) was to apply common sense to the evaluation of the circumstances of the alleged Oral Agreement and the defendant’s denial as elicited in the evidence (and to investigate, if necessary) to decide which of the two versions of fact put forward by the parties was more likely or less likely. In the end, the DPO rejected the defendant’s version of events, accepted the claimant’s version of events as more likely, and found that the Oral Agreement did exist. Mr Hung submitted there was no error of law and the Appeal should be dismissed with costs. 19.Since the underlying bases for the Grounds overlap, I propose to deal with the relevant legal principles and set out the parties’ respective contentions (dealing with any discrete matter if possible) before I discuss the overall merits of the Appeal. V. BURDEN OF PROOF (GROUND 1) 20.Mr Chow SC submitted the DPO’s approach in determining the existence of the Oral Agreement was wrong in law in that he failed to apply the burden of proof correctly as demonstrated by paragraph 68 of the Reasons when he stated “整體而言，雙方的案情以較高可能性的標準比較下，申索人的案情較為可信，為本席所接受。被告公司的案情則不為本席所接受”. (a) Legal principles 21.“The burden lies upon the party who substantially asserts the affirmative of the issue which he has to prove in order to succeed ……”[20] In an action on a contract, the burden of proving the existence of the contract lies with the claimant.[21] Here, the claimant sued on the Oral Agreement, so he bore the legal and persuasive burden to prove its existence.[22] 22.Mr Hung submitted there was nothing to suggest that the DPO was unaware of such trite principles. He reminded there was no need for the DPO to recite such trite principles in the Reasons.[23] But Mr Chow SC’s complaint was not about this, but about the DPO mis-applying the burden of proof in his evaluation and analysis of the evidence. 23.In most cases, where a judge or tribunal of fact is faced with two conflicting versions of events, he/it will be able to decide which is probable and which is not, and make a finding on the issue accordingly. The elimination of an improbable theory may lead to the acceptance of a competing theory that is not improbable where the available evidence supports this.[24] 24.Even though “[no] judge likes to decide cases on burden of proof if he can legitimately avoid having to do so”, “[there] are cases, however, in which, owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just course for him to take.”[25] This is explained by May LJ in Morris v London Iron and Steel Co Ltd as follows:[26]
25.The principles have been summarised by Poon J in Big Island Construction (HK) Limited v Wu Yi Development Company Limited as follows:[27]
26.Hence, where there are two improbable theories, the elimination of one does not automatically lead to the acceptance of the other equally improbable theory. The judge or tribunal has open to him a third alternative, ie the party on whom the burden of proof lies in relation to any fact has failed to discharge that burden. The judge must be satisfied on the evidence that a particular fact or state of affairs is more likely to have occurred than not.[28] May LJ in Morris said: [29]
27.Mr Hung drew my attention to Kiani (as Personal Representative of the late Abdul Kiani) v Land Rover Limited & ors.[30] In that case, the court was faced with two alternatives as to the cause of death: accidental death or suicide. A cleaner at the defendant’s plant was found dead although relatively uninjured in the sub-floor coolant tank. The defendant unsuccessfully argued he should be held to have committed suicide as he had complained of insomnia and family difficulties and had given a valued ring to a colleague that day, and it was virtually impossible to fall through the tank hatch without sustaining some injury. The English Court of Appeal held on the evidence the trial judge was entitled to find that suicide was “less than probable” and that accident was possible, so it was open to him to find that accident was the cause of death. Waller LJ found there was evidence to demonstrate that an accidental fall was possible and went on to say:[31]
28.I note the court in Kiani considered the totality of the evidence to find that suicide was unlikely. So even when there are only two possibilities, the court must consider the evidence advanced by the parties on the balance of probabilities before reaching its conclusion as to where the probability lies, and it only when the court concludes that the alternative suggestion put forward by a party is on balance improbable on assessment of the evidence that it is likely to fortify its conclusion that it is legitimate to find for the other competing alternative. This is illustrated by the note of caution struck by HHJ Toulmin CMG QC’s judgment in Amsprop Ltd v ITW Ltd (trading as Hobart UK),[32] which concerned a fire at the Hard Rock café in London. The learned judge considered Kiani amongst other authorities, and said “[if] I conclude that if out of only two possible causes of the fire, the flare up of food on the grill seems much less likely, I should discount that possibility and conclude that the fire was caused by a flame on the burner being drawn into the duct”,[33] but he went on to find, however, that:[34]
29.On such basis, given the need to consider the totality of the evidence to determine where the probability lies, I agree with Mr Chow SC that the principles elicited in Kiani cannot be extrapolated to apply to competing evidence of individual witnesses. It does not logically follow that rejection of the evidence of one witness that the evidence of another witness will be accepted. (b) DPO’s approach 30.Before I consider Mr Chow SC’s submissions that the DPO did not address the question as to whether the claimant successfully discharged his burden of proof, it is useful to start with the approach adopted by the DPO:
(c) Claimant’s position 31.Mr Hung submitted that the DPO was faced with two diametrically different alternatives put before him by the parties, ie whether or not the Oral Agreement in respect of the project bonus existed, and there was no other conceivable alternative. He argued the DPO was entitled to compare the parties’ assertions and on balance discount the defendant’s version of events as less likely, which therefore made the claimant’s case being the only other alternative to be more likely. Hence, the DPO was entitled to accept the claimant’s case was proved and to reject the defendant’s case. It was said that the Reasons showed this was what the DPO had done, and he could not be faulted for doing so. (d) Defendant’s position 32.Mr Chow SC submitted the DPO’s approach was wrong as it failed to address the basic question of whether the claimant had adduced sufficiently cogent evidence to discharge his burden of proving the existence of the Oral Agreement. Since rejection of the evidence adduced by one protagonist would not necessarily lead to the acceptance of another protagonist’s evidence, the DPO should have focused on the claimant’s allegations/evidence and considered their credibility rather than to find in his favour by considering and rejecting the veracity of the defendant’s case. Only then would the DPO be in a position to discount the less than probable alternative. 33.Mr Chow SC submitted the DPO erred in focusing on the defendant’s explanations as to why they paid $1,000,000 on 21 January 2010 as consultancy fee to Vic Sword for 10 projects under the label of “site bonus” (地盤紅利) when it was the defendant’s case that all paid bonus was discretionary bonus. To properly understand such argument, it is useful to start with the relevant evidence:
34.Mr Chow SC submitted that on such evidence the rejection of the defendant’s explanation could not be a sufficient reason for the DPO to accept the claimant’s case because:
35.Mr Hung disagreed. He submitted that the defendant’s notice of payment dated 28 January 2011 for the $1,400,000 bonus clearly specified such payment was performance-based year-end bonus. When the claimant entered into email discussions with Roger Poon in March/April 2011 over the documentation for such payment, the caption for the series of emails referred to “Annual Bonus”. Further, a fair reading of such emails would show the claimant was not asking for conversion of the discretionary bonus into project bonus; rather, the parties were discussing the mode and manner of recording the year-end bonus. 36.Mr Chow SC next submitted that the DPO’s evaluation and analysis in paragraphs 37-38 of the Reasons were wrong.[46] To understand Mr Chow SC’s arguments, it is necessary to first turn to the three circulars (“Circulars”). Even though the Circulars were for the defendant’s marketing department staff and not the claimant, nevertheless the DPO drew analogy from the Circulars:
Mr Chow SC submitted that the Circulars would not provide useful analogy for any contractual entitlement to project bonus on the part of the claimant because (i) there was no fixed rate per project, (ii) the bonus calculation was determined on a year-to-year basis, and (iii) the bonus was distributed on a pooled basis. Indeed, the Circulars suggested it was up to the defendant to decide how to award any project bonus to the marketing staff. Mr Chow SC submitted the DPO’s view that “雖然名字不同，這個地盤獎金以地盤計算獎金的方法，與申索人所指的項目紅利的計算方法一致” was suspect. 37.Mr Chow SC submitted the fallacy of the DPO’s approach was further demonstrated by the fact that the Tribunal found in favour of the claimant despite his own observations that the claimant’s evidence on some material issues was “contradictory” and he also had “reservations” on the claimant’s case.[47] The correct approach, Mr Chow SC submitted, would be for the DPO to focus on whether the evidence as a whole supported the claimant’s case, but not just to consider the veracity of the defendant’s case, find it incredible and then go on to find in favour of the claimant by comparison. Had the DPO correctly applied the burden of proof, he should have rejected the claimant’s evidence for the reasons that it was inconsistent with contemporaneous documents, inherently improbable, and materially self-contradictory.[48] VI. TEST FOR ASSESSING ORAL AGREEMENT (GROUND 2) (a) Legal principles 38.Mr Chow SC submitted the DPO also erred in failing to adopt the correct approach in assessing the claimant’s evidence on the Oral Agreement. The correct approach was laid down by the Court of Appeal in Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd as follows:[49]
39.In applying Esquire (Electronics) Ltd, To J in Hung Fung Enterprises Holdings Limited& anor v The Agricultural Bank of China made the following observations as to the proper approach in analysing the evidence:[50]
40.But findings of fact by the Tribunal are generally immune from challenge on appeal unless they involve error of law in the sense explained in Wai Mei Lai Stella citing Kwong Miles Services Ltd v Commissioner of Inland Revenue.[51] Bokhary PJ in Kwong Miles Services Ltd said:
In Kaifull Investments Ltd v Commissioner of Inland Revenue, it was held the fact other inferences might just as plausibly be drawn from the available material was insufficient to establish that the first instance court/ tribunal acted unreasonably and had come to a conclusion that no court/ tribunal acting judicially could reasonably have made.[53] It is only where the lower court decision exceeds the generous ambit within which reasonable disagreement is possible and is in fact plainly wrong that an appellate court is entitled to interfere.[54] (b) Parties’ contentions 41.Mr Chow SC submitted that when assessing the claimant’s evidence relating to the Oral Agreement, the correct approach was to assess it against (a) the contemporaneous documentation, (b) internal conflicts within the evidence, (c) inherent probabilities and improbabilities, and (d) the totality of the evidence. 42.Mr Chow SC argued that whilst the DPO’s analysis was essentially based on his rejection of parts of the defendant’s evidence (ie their explanations regarding the payments made in 2010-2012), he did not examine and assess the claimant’s evidence critically against the totality of the evidence, in particular as to (a) the existence or absence of contemporaneous documents, (b) the inherent improbabilities or improbabilities, and (c) the inherent inconsistencies of his evidence. 43.Mr Chow SC submitted the DPO failed to take into account the fact that : (a) the contemporaneous Contract Documents (as well as the Circulars) coupled with the claimant’s admission that the Handbook constituted part of his employment terms were inconsistent with his assertions regarding the Oral Agreement, and since everything else except the project bonus term had been reduced into writing, the DPO should have challenged that evidence and explained why he rejected that evidence; and (b) the payments received by the claimant from the defendant in 2010‑2012 were entirely consistent with the terms of the Contract Documents, and did not support the existence of the Oral Agreement. Mr Chow SC also repeated the point he made in paragraph 34(b) above. 44.On the other hand, Mr Hung submitted that the DPO was well aware of the issues, and had carefully assessed the relevant evidence before he concluded that the payment of the $1,000,000 bonus on 21 January 2010 was not inconsistent with the terms of the written contract and in fact supported the existence of the Oral Agreement. The correctness of such conclusion was premised on proper inferences drawn from the primary evidence as to the context and manner of payment of the bonus made to the claimant. 45.Mr Chow SC next submitted there was lack of satisfactory explanation for the absence of contractual provision for project bonus in the written contract, which absence was all the more significant when the claimant’s own evidence showed he insisted on signing the Supplemental Employment Contract just to reflect a modest 3% increase of his monthly wages, and when it was the claimant’s own case that project bonus was by far the most important element of his remuneration package. Mr Chow SC submitted it defied common sense to believe the claimant would omit (遺漏咗) the project bonus term from the Employment Contract[55] or would not insist on the same being added to the Employment Contract,[56] and this was especially improbable in view of the claimant’s own experience, education and background, and the defendant being a wholly owned subsidiary of the Listco and the claimant a member of its senior management. 46.On the other hand, Mr Hung submitted the DPO in fact had taken the above matters into account in paragraphs 44 and 61-63 of the Reasons. In any event, the weight of these complaints taken together would not have suggested that the existence of the Oral Agreement was inherently improbable, and they would not be fatal to the Determination since the other matters resolved in the claimant’s favour in the DPO’s evaluation of the evidence sufficiently supported his decision. Mr Hung relied on observations by DHCJ Reyes SC (as he then was) in Kaifull Investments Ltd as follows:
I am not persuaded such observations assist Mr Hung since they concerned “minor points”. Indeed, Mr Chow SC accepted that the relevant evidence that the tribunal of fact should have considered should be material, obviously relevant for fact-finding and one that cried out for analysis. 47.Mr Chow SC next submitted the DPO failed to take into account the internal inconsistencies in the claimant’s evidence in relation to the making of the Oral Agreement. In particular, the claimant had at least twice changed his case regarding the involvement of Mr Au in relation to the making of the Oral Agreement:
48.Mr Chow SC argued the DPO also failed to take into account the internal inconsistencies in the claimant’s evidence in relation to the contents of the Employment Contract that were inconsistent with the alleged Oral Agreement:
49.Mr Hung submitted (a) a fair reading of the documents would not show the inconsistencies as alleged, (b) the attack on the claimant’s credibility was unwarranted, and (c) a study of the Transcript would show it was not the defendant’s case during cross-examination that the claimant was not to be believed because (i) Mr Au had never met the claimant before, on or after 10 November 2008 or (ii) alternatively even if Mr Au had met with the claimant during the relevant period they never negotiated on the claimant’s pay package or (iii) Mr Au and/or Ms Wong never told the claimant that non-inclusion of project bonus was for administrative reasons. Mr Hung reminded that paragraph 7 of the claimant’s statement of claim referred to “they” had informed him the signing of the Employment Contract on 4 December 2008 was for administrative needs, which evidence the DPO did not reject. 50.On the other hand, Mr Hung submitted the adjudication of witness credibility is fact-sensitive, and contemporaneous documents are only one of the matters to be considered. He said it was inherently probable the defendant would encourage better performance by their senior management staff like the claimant by paying him project bonus for a fraction of their profit, and there was no documentation that made the claimant’s case inherently improbable, so the DPO was entitled to assess the parties’ contentions on the basis of the oral evidence of their respective witnesses. Mr Hung further submitted Ground 2 was akin to asking this court to substitute its own evaluation of witness evidence and their credibility in place and stead of that by the DPO, which was not permissible. The Determination and Reasons were well within the general reasonable parameters for decision by the DPO, and the alleged errors did not make the DPO’s decision unreasonable. VII. REJECTING UNCHALLEGED EVIDENCE WITHOUT REASON (GROUND 3) 51.Mr Chow SC submitted that the DPO rejected unchallenged evidence without giving reasons, which constituted an error of law such that the Determination should be set aside. (a) Legal principles 52.The Tribunal has a duty to give adequate reasons for rejecting unchallenged material evidence. In Grabowski v Scott & anor, Jonathan Parker LJ observed as follows:[64]
53.There is in general a requirement that a tribunal of fact must give adequate reasons if it decides to reject unchallenged evidence. Mr Chow SC referred to Markem Corporation & anor v Zipher Ltd in which Jacobs LJ said as follows:[65]
54.Mr Hung accepted there is a general rule if a witness is to be impeached on his credibility he should be given an opportunity of explanation which is open to him, but he said the exception is where notice has been given or where the point is so apparent.[66] The position has been recently summarised by Lam VP in Pacific Electric Wire & Cable Company Limited v Texan Management Limited & ors as follows:[67]
(b) Parties’ contentions 55.Mr Chow SC argued that the DPO erred in law in rejecting the unchallenged evidence of Mr Au and Ms Wong without giving any adequate explanation. Subject to Mr Chow SC’s arguments in paragraph 48 above, the claimant in his statement of claim stated he negotiated with Mr Au and Ms Wong such that both of them were privy to the Oral Agreement. Both Mr Au and Ms Wong gave evidence to deny any Oral Agreement, but the claimant did not put questions to them during cross-examination in any material way. In paragraph 65 of the Reasons, the DPO said “申索人並無法律代表，他又並非律師，即使不在盤問證人時與他們對質並不奇怪。這點不足以影響申索人的可信性”. Mr Chow SC contended that given the claimant’s failure to cross-examine except to put a few immaterial questions to material witnesses giving evidence directly on the disputed issue, it was incumbent upon the DPO to explain why he rejected Mr Au’s and Ms Wong’s evidence in relation to the denial of the Oral Agreement and to investigate further and challenge them on such issue. 56.Mr Chow SC also submitted the DPO erred on the more fundamental point that the evidence of Mr Au and Ms Wong was relevant not only to the claimant’s credibility but also highly relevant to the existence of the Oral Agreement which formed the basis of the claimant’s claim. While the DPO did comment unfavourably on one particular aspect of the evidence of Mr Au and Ms Wong, ie whether they had ever heard of the term “project bonus”, [68] this point was of peripheral relevance and could not be a sufficient reason to reject their evidence on the crucial issue as to whether they made the Oral Agreement. Mr Chow SC argued that upon reading the Reasons as a whole, the DPO simply failed to give any or sufficient reason/analysis as to why the unchallenged evidence of Mr Au and Ms Wong denying any formation of the Oral Agreement was rejected. 57.Mr Hung submitted that the fallacy of this complaint lied in the following: (a) the hearing at the Tribunal was an informal one where parties were not allowed legal representation so the absence of cross‑examination of Mr Au and Ms Wong did not mean their evidence was not challenged; (b) the defendant’s contentions ignored the fact that witness statements and documents already made available to the defendant clearly set out the claimant’s case; (c) the DPO was not bound to accept any particular piece of evidence merely because there was no cross‑examination on it; (d) the DPO had no obligation to advise witnesses or parties of the weight he intended to place on different pieces of evidence, to debate with witnesses on the weight to be attached to a piece of evidence, or to signal the weaknesses of a party’s evidence to such party or his witnesses, and indeed the rule in Browne v Dunne “does not import an obligation on a tribunal to tell a party in what respects documents adduced as evidence support or undermine a witness’ assertions”;[69] (e) the central factual issue was simple and straightforward, and (f) Mr Au and Ms Wong should have known that the DPO was skeptical about their assertions that they had never heard of the term “project bonus”,[70] so Mr Hung submitted there was no unfairness to Mr Au and Ms Wong when the DPO chose not to believe them in this respect. 58.When this court queried how Mr Au and Ms Wong would have known the DPO was skeptical about their assertions that they had never heard of the term “project bonus”, Mr Hung drew my attention to pages 256O-256D and 270F-M of the Transcript. Having reviewed such parts of the Transcript, even though the DPO did request Ms Wong to explain why her witness statement referred to “project bonus” when she said she had not heard of the term before, I am not persuaded the DPO had made known to Mr Au and Ms Wong he was skeptical about their evidence. VIII. PAROL EVIDENCE RULE (GROUND 4) 59.Mr Chow SC submitted that had the DPO properly directed himself to consider all the above matters, he ought to have concluded the parol evidence rule should apply and no extrinsic evidence should be admitted to add to or vary the written terms as contained in the Contract Documents. (a) Parties’ contentions – “anterior question” 60.It is useful to start with a synopsis of the dispute over what Mr Chow SC described as the “anterior question” before I discuss the legal principles. Mr Chow SC submitted the DPO committed error when he decided to consider the question as to the existence of the Oral Agreement together with the question of applicability of the parol evidence rule.[71] In doing so, the DPO started with a prima facie possibility of a partly oral and partly written contract (premised on the flawed basis that not even discretionary bonus was part of the written contractual documents),[72] went on to (a) doubt the defendant’s evidence on the bonus payments in 2010‑2012, (b) criticise the claimant’s evidence, (c) consider three other submissions, and (d) compare the parties’ respective case before he came to the view that the claimant’s case was more believable than that of the defendant.[73] The DPO concluded “雙方確有意圖不全部以書面形式訂立合約，而是部份書面及部份口頭，而這個口頭合約亦是主要僱傭合約的部份約因” because (i) “被告公司雖曾口頭承諾有酌情花紅，但僱傭合約中並無記載，亦無表明納入員工手冊作合約條款” and (ii) “再加上本席裁定雙方確實存在口頭合約”, and held the parol evidence rule was not applicable.[74] 61.Mr Chow SC submitted the DPO should have decided the “anterior question” as to the applicability of the parol evidence rule first before deciding on the existence of the Oral Agreement, and on such “anterior question” he should have enquired whether the employment contract was intended by the parties to be partly oral and partly in writing, which would be different from the enquiry as to whether the Oral Agreement existed. Mr Chow SC submitted that by (a) receiving extrinsic evidence to find the Oral Agreement existed, (b) going on to find that both parties intended the employment contract to be partly oral and partly in writing, and (c) then coming to hold the parol evidence rule did not apply, the DPO had adopted a circular and logically untenable argument that failed to recognise the need to first form a view on the justification for having a partly oral and partly written contract. To deal with the two questions together would put “the cart before the horse” and defeat the very purpose of the parol evidence rule. 62.Mr Chow SC argued the proper approach should be to consider the matter in two stages, ie (a) the DPO should first ask the “anterior question” and determine whether the parol evidence rule would apply, and (b) if he concluded that the parol evidence rule did not apply, the DPO should then determine whether the extrinsic evidence would support the Oral Agreement. At the first stage, the DPO should have looked at the documents objectively to ascertain whether the employment contract was intended to be partly oral and partly in writing. It was only after he had found the parties intended their contract to be partly oral and partly in writing that he should move to the second stage to consider the extrinsic evidence regarding the existence of the Oral Agreement. Such approach would avoid turning the parol evidence rule into a “circular argument” for otherwise the parol evidence rule could be displaced whenever it was asserted there was an oral agreement extraneous to the written document. 63.Mr Chow SC submitted that had the DPO adopted the correct approach, he should have applied the parol evidence rule since the Contract Documents clearly showed the parties intended their agreement to be entirely reduced into writing. First, the parties had carefully reduced their contract into writing, and the Contract Documents were detailed and appeared to be complete. The Employment Contract contained a series of terms on virtually all matters that one would expect to find in an employment contract. It was clear on the face of the Employment Contract (which was duly signed by both parties) it was not a mere note or memorandum but was intended to be the written contract between the parties. There was no basis for the DPO to conclude the claimant had successfully rebutted the presumption that the Contract Documents were intended to include all the terms of their contract. Secondly and more importantly, it was the claimant’s own evidence that he insisted on the execution of the Supplemental Employment Contract to reflect a modest increase of his wages by 3% in April 2010,[75] which clearly showed the parties (especially the claimant) intended to have the terms of employment to be entirely reduced into writing. Otherwise, the claimant would not have bothered to insist on signing the Supplemental Employment Contract to reflect such small increase of his wages. Further, Mr Chow SC argued that by April 2010, he had just received payment of the $1,000,000 and $200,000 bonuses in January and February 2010, which according to the claimant were project bonus and discretionary bonus respectively, and no plausible reason was offered as to why the project bonus term was not included in the Supplemental Employment Contract. 64.Mr Chow SC submitted that if he were right that the DPO had failed to deal with the “anterior question”, then there would be no need to remit the case to the Tribunal for retrial for no purpose would be served. He argued this court could simply look at the documents objectively and would then be able to come to the view that the parties intended to have an exclusively written contract. Mr Chow SC reminded that on the Appeal this court would be able to draw inferences of fact pursuant to section 35(2) of the Ordinance. 65.On the other hand, Mr Hung submitted that in considering the applicability of the parol evidence rule, the court had to objectively ascertain the intention of the parties from all the circumstances and to draw inferences from the primary facts elicited from the oral evidence and documents, which was what the DPO did. He said it is therefore not wrong at all for the DPO to consider the two questions of the applicability of the parol evidence rule and the existence of the Oral Agreement together, and there was no error in his consideration of the evidence for determining the applicability of the parol evidence rule. Mr Hung submitted that even if these two questions were considered separately, the Tribunal would have made similar evaluation and analysis and would have come to same conclusion that the employment contract was partly oral and partly in writing. Hence, the parol evidence rule would not apply because it was not the intention of the parties to confine themselves to the written contract. After all, the DPO in his Reasons considered the defendant’s explanation on the matter of the project bonus against the contextual background, and he noted the important fact that the Employment Contract was signed about a month after the commencement of the claimant’s employment (which led to his view of a prima facie possibility of a partly oral and partly written contract)[76] before proceeding with “證據及案情分析”. There was evidence from Ms Wong that there was discussion of the terms of employment in October/November 2009,[77] so even on the defendant’s own case there must have been an oral agreement (which was in line with the DPO’s view of a prima facie possibility of a partly oral and partly written contract).[78] 66.I am not with Mr Chow SC in his suggestion that the conceptual approach adopted by the DPO (being a matter distinct from his evaluation and analysis of the relevant evidence) in relation to the applicability of the parol evidence rule was faulty. My reasons appear in the analysis of the legal principles in Part VIII(b) below. (b) Legal principles 67.In Bank of Australasia v Palmer, Lord Morris accepted that “…… parol testimony cannot be received to contradict, vary, add to or subtract from the terms of a written contract, or the terms in which the parties have deliberately agreed to record any part of their contract” (my emphasis).[79] 68.The rule so stated (without further explanation) can be quite misleading. The Law Commission of England acknowledges that the parol evidence rule is “a proposition of law which is no more than a circular statement: when it is proved or admitted that the parties to a contract intended that all the express terms of their agreement should be recorded in a particular document or document, evidence will be inadmissible (because irrelevant) if it is intended for the purpose of adding to, varying, subtracting from or contradicting the express terms of that contract”.[80] 69.The Law Commission also notes that some misunderstandings have arisen because of concentration on the effect of the rule rather than when it is to be applied. The effect of the rule is to exclude extrinsic evidence or to cause the judge to ignore such evidence if given. As to the application of the rule, Lord Morris’ statement in paragraph 67 above makes clear that the rule can only be applied where the parties have entered into a “written contract” or, to put it in another way, evidence is extrinsic only where the contract has been “integrated” in the document. Since parties can only be said to have entered into a written contract when the writing is intended by the parties as a contractual document that contains all the terms of their agreement,[81] the effect of such a document is to integrate the bargain in written form. 70.But if the contract is not entirely in writing, it is quite simply not a written contract. There is no room for the parol evidence rule to apply because it only applies when the contract is entirely in writing. Since parties are generally free to state their contractual terms in whatever form they please and a contract can be made partly orally and partly in writing,“[it] cannot therefore be asserted that the mere production of a written agreement, however complete it may look, will as a matter of law render inadmissible evidence of other terms not included expressly or by reference in the document” (my emphasis).[82] 71.If one party alleges that the written document is the final expression of their agreement and the other party denies that it is, the question before the court will be to determine if the written document is or is not the final integrated expression. This is an issue of fact for resolution on the balance of probabilities, and any evidence relevant to this issue must be considered by the court (eg evidence about the transaction and the parties’ agreement, the words used, the background to the transaction and the parties’ common or even subjective intentions, expectations and hope). No agreement, just by existing, even if signed, proves that it is the parties’ final expression: there has to be evidence to show that it is.[83] 72.Then, if it is proved that the written document was not intended to set out all the terms on which the parties had actually agreed or, to put it in another way, if it is proved that the parties intended their contract to be partly oral and partly in writing, then the parol evidence rule does not operate because the court will, be definition, have found that the contractual terms are partly to be found in what was agreed orally as well as in the document in question. This is also recognised by Trietel: The Law of Contract: “…… the admissibility of extrinsic evidence, where it is proved that the document was not in fact intended to contain all the terms of the contract, does not turn the rule into a merely “circular statement” ……”[84] 73.If the court holds the written agreement is the parties’ final expression, it is unnecessary to say extrinsic evidence is excluded because the court will have found that all the terms of the contract have been set out in the document in question. “In this context, the conclusion that the evidence is inadmissible is a kind of retrospective conclusion, made after the effect and relevance of the evidence have been assessed. Used in this way, the statement that the evidence is inadmissible is unobjectionable, though it retains the capacity to confuse”.[85] 74.The above approach to the parol evidence rule has been applied by Roskill LJ in J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd as follows:[86]
75.Locally, Mr Recorder H Wong SC has also adopted this approach in Feco Development Corporation v Bonny Forward Company Limited:[87]
76.Confusion arises because of suggestions (as Mr Chow SC also submitted) that where there is a document that looks to be contractual it should be presumed to be the contract, and the parol evidence rule is applied to exclude evidence to the contrary.[88] Under this suggestion, one must determine that the written agreement appears to be, in some sense, incomplete before one can turn to consider evidence of prior communications of the parties. This does not sit well with the modern version of the parol evidence rule discussed above which places emphasis on the need to demonstrate that the parties actually intended to reduce their agreement into writing as a pre-condition to the application of the rule, and that in determining whether the parties actually did so intend, all evidence of their prior communications relevant to this issue, oral, written or otherwise, is admissible. 77.But even if the approach propounded by Mr Chow SC is accepted, it only raises a presumption (no matter how strong) which may be rebutted. In Gillespie Brothers & Co v Cheney, Eggar & Co, Lord Russell CJ said as follows:
78.Chitty on Contracts also says that “[no] doubt, in practice, where a document is produced which appears to be a complete contract, a party will experience considerable difficulty in proving, on the balance of probabilities, that further contractual terms were agreed outside the written terms of the document …… [but] extrinsic evidence of such terms is not ipso facto excluded”.[89] Likewise, Trietel: The Law of Contract also says that “[when] a contract is reduced to writing, there is a presumption that the writing was intended to include all the terms of the contract; but this presumption is rebuttable” (my emphasis), and goes on to explain that the court will:[90]
79.In my view, the fallacy of Mr Chow SC’s submissions in respect of the “anterior question” as to the applicability of the parol evidence rule lies in his attempt to confine the need (as he accepted) to objectively ascertain whether the parties’ bargain was intended to be partly oral and partly in writing to an exercise of viewing the written document. But as explained above, the court should and will look at the totality of the evidence to see what bargain was struck between the parties, ie what was agreed and intended by the parties. On this matter, I need only add the following salutary words of caution in Grubb and Furmston, The Law of Contract:[91]
(c) Parties’ contentions - approach to the evidence 80.The Reasons showed the DPO was alive to the parol evidence rule, but Mr Chow SC submitted the DPO fell into error in holding that such rule would not apply to the facts of the present case. He drew attention to paragraphs 23-26 and 72 of the Reasons.[92] Mr Chow SC argued that on the indisputable documentary evidence before the DPO, there was no factual basis for saying that prima facie (初步看來) there “exists a possibility” (存在 …… 可能性) that the employment contract between the parties was partly oral and partly in writing (which formed the basis of his dis-application of the parol evidence rule):[93]
81.Mr Chow SC turned to the claimant’s evidence that explained why the oral project bonus term was not included in the Employment Contract. At first, the claimant admitted he did notice the omission of such term in the Employment Contract, but he only asked Ms Wong why it was necessary for him to execute the Employment Contract; Ms Wong replied it was for administrative needs but he did not seek further clarification.[95] Later in his evidence, the claimant claimed he did ask Mr Au why the project bonus term was not included in the Employment Contract, but was told the Employment Contract “係俾嗰啲文職formality，每個月出糧啫”.[96] He went on to say that even though the project bonus was more significant than his basic salary in terms of his remuneration package, he did not insist on including the project bonus term in the Employment Contract because up till 2012 Mr Au assured him the project bonus would be paid.[97] Upon cross-examination by the defendant’s representative, the claimant admitted he omitted to ask for inclusion of the project bonus term in the Employment Contract.[98] 82.In the Reasons, the DPO did not accept the claimant’s aforesaid explanations:
83.Mr Chow SC submitted that the DPO committed two errors:
84.Mr Chow SC submitted the DPO did not explain why the employment contract was partly oral and partly in writing except for the matters set out in paragraph 24 of the Reasons,[101] which had been shown to be flawed, and there was nothing in the evidence to demonstrate the parties intended their contract to be partly oral and partly in writing when they took care to put other terms into writing in the Contract Documents. Mr Chow SC submitted that since the preliminary possibility of the Oral Agreement was grounded on a flawed premise, the DPO’s eventual findings in paragraphs 71-72 of the Reasons and his conclusion that “故此本席認為口頭證據原則在本案並不適用” in paragraph 73 of the Reasons could not be supported.[102] 85.On the other hand, Mr Hung submitted that the only question before the DPO was whether in addition to the Contract Documents (including the Handbook) there was the Oral Agreement, and the DPO carefully evaluated and analysed the evidence in paragraphs 26-76 of the Reasons, and gave valid reasons for rejecting the defendant’s contentions. It was wrong for the defendant to ask this court to explore the surrounding circumstances and substitute its own evaluation of the evidence, and then conclude it would be improbable for the Oral Agreement to exist and to hold the DPO was wrong to dis-apply the parol evidence rule. Mr Hung further suggested that the defendant’s contentions flied in the face of indisputable contemporaneous documents:
86.On the other hand, Mr Hung argued the DPO’s reasons for finding that the Oral Agreement did exist and for dis-applying the parol evidence rule were logical and in line with the approach as explained in J Evans & Son Portsmouth Ltd. Instead, the defendant’s contentions were premised on an erroneous conflation of timeline. There was no dispute the Handbook was given to the claimant on 4 December 2008, and the defendant paid to the claimant a sum of $1,000,000 in January 2010 and a further sum of $200,000 as discretionary bonus in February 2010, but these payments could not be related to the Supplemental Employment Contract (which concerned increase in salary and removal of allowance) signed only on 1 April 2010. Mr Hung submitted the DPO’s reasoning in paragraph 72 of the Reasons, ie “被告公司雖曾口頭承諾有酌情花紅，但僱傭合約中並無記載，亦無表明納入員工手冊作合約條款” and “再加上本席裁定雙方確實存在口頭合約” could not be faulted. (d) Estoppel by convention 87.Mr Hung further submitted that by reason of the doctrine of estoppel by convention, the defendant was estopped from denying the basis assumed by the parties in relation to the project bonus.[104] However, there is no need for me to consider this since the DPO did not canvass or rely on such contention, which is also not a matter of pure law and of mixed fact and law. IX. FAILURE TO DISCHARGE STATUTORY DUTY TO INVESTIGATE (GROUND 5) 88.Mr Chow SC submitted the DPO clearly failed to discharge his statutory duty to investigate highly relevant and material issues. (a) Legal principles 89.The relevant principles that underlie the Tribunal’s statutory duty to investigate have been summarised in Chan Suk Bing Angie v Harbour Phoenix Ltd & anor:[105]
In Chan Yat San v Future Luck (296) Ltd, Mimmie Chan J said as follows:[106]
Mr Chow SC said the omission by the DPO to mention relevant matters in the Reasons might suggest he had not given consideration to relevant matters in accordance with his statutory duty to investigate.[107] 90.But the statutory duty to investigate is not an absolute one. In Chan Suk Bing Angie, it is said that:[108]
91.In 謝林及其他二十位訴陳德偉, Jerome Chan J explained that if the witnesses’ evidence is “清澈明確，明顯可信，或無可爭議”, to investigate further would be waste of resources. Since the lack of investigation has to give rise to injustice, “所缺乏的調查須為對判決有重大影響者，以致任何合理人士皆會對判決不安”. The learned judge also gave the following guidance on the statutory duty to investigate:
(b) Parties’ contentions 92.Mr Chow SC submitted the DPO clearly failed to discharge his statutory duty to investigate highly relevant and material issues in that he failed to take into account the inherent improbabilities and internal inconsistencies in the claimant’s case and/or to discuss, analyse and evaluate those matters, whether adequately or at all, in the Reasons. All he did was to compare the two cases and said one was more believable. What the DPO should have done was to test the oral assertions against the contemporaneous documents and to ask why the project bonus term was not documented and why there had been no payment of project bonus over the years since January 2010. 93.Mr Chow SC submitted the DPO’s failure to discharge its duty to investigate was further demonstrated by the fact that the defendant’s witnesses were not cross-examined on the crucial issue as to whether and how the Oral Agreement was made. The DPO noted the lack of cross-examination in paragraph 65 of the Reasons, but he opined this would not affect the claimant’s credibility. Mr Chow SC argued this demonstrated that the DPO misunderstood his “active inquisitorial role” by reason of the statutory duty to investigate, and that he was in breach of such duty in not seeking to find out the truth by questioning the defendant’s witnesses when the claimant failed to do so. He ought to have made further inquiries and/or investigation, and to seek further elaboration from Mr Au and Ms Wong, so that proper findings of fact as to the existence of the Oral Agreement could be made. 94.Mr Chow SC further submitted the DPO also failed to take into account (a) the existence of contemporaneous documents which contained terms that were inconsistent with the Oral Agreement, eg the Supplemental Employment Contract that made no reference to the Oral Agreement, and (b) the claimant’s lack of explanation as to why the project bonus term was not included in the Supplemental Employment Contract other than an assertion that it was an omission,[109] (c) the inherent improbabilities against the existence of the Oral Agreement (eg the improbabilities of (i) no proper documentation of the remuneration package of the claimant as a member of the senior management of a wholly owned subsidiary of a listed company, (ii) a person of the claimant’s background would leave a substantial part of his remuneration package undocumented, and (iii) an absence of persistent efforts by the claimant to chase for his project bonus), and (d) internal inconsistencies of the claimant’s evidence over the Oral Agreement, eg whether and how the claimant made the Oral Agreement with the defendant and what explanation was given by him on the incomplete form of the written employment contract. 95.Mr Hung submitted Ground 5 had no merits. He argued that the defendant’s complaints ignored the fact that the present case involved one simple issue, ie whether or not there was the Oral Agreement. To discharge his duty to investigate matters which he might consider relevant to the claim, the DPO was entitled to consider the relevant context and approach different issues differently. In any event, the Tribunal is not required to investigate where the testimony of a witness is clear, believable and/or undisputable. The claimant had set out in detail the circumstances how the Oral Agreement was reached in his statement of claim, which was also part of his witness statements and which supported the DPO’s finding in his favour that the Oral Agreement existed. Mr Hung submitted that even if there had been failure to investigate, any such error would not have affected the fair determination of the case. X. DISCUSSION 96.I start with a few notable matters in relation to the Determination and Reasons which may have relevance to a number of the Grounds, and then go on to discuss whether any of the Grounds have been made out. 97.First, in determining whether the Oral Agreement existed, a significant factual issue to be determined on the totality of the evidence and on the balance of probabilities is whether the Contract Documents were made/adopted with the intention of superseding all prior oral communications in relation to the employ of the claimant by the defendant or whether the Contract Documents were not intended to discharge a prior oral agreement. On this issue concerning the parties’ intention, the circumstances of their communications over the draft Employment Contract when it was first produced and discussed, and the reasons why its eventual execution was deferred must be significantly and materially relevant to the aforesaid central issue. Whilst the DPO did note the time gap of about a month between the commencement of the claimant’s employment and the date of the Employment Contract in paragraph 23 of the Reasons, he failed to consider, evaluate and make findings as to the reasons for this. He actually shied away from doing so by saying in the same paragraph of the Reasons that “不管是否如被告公司所說因要修改的關係”. But at the same time he relied on such time gap to say that (a) important contractual terms including the remuneration package had been confirmed by the parties by way of oral agreement and (b) this gave rise to the prima facie possibility that the employment contract between the claimant and the defendant was partly oral and partly in writing, but this still begs the question whether the parties have actually intended to have a partly oral and partly written contract. The reasons for the aforesaid time gap must be a significant and materially relevant consideration, and a simple reference to the time gap without exploring the reasons is an uncertain cornerstone for the DPO’s prima facie view let alone any firm foundation for his further views on the evidence. 98.Secondly, the claimant admitted and Mr Hung accepted that the Handbook was part of the Contract Documents and formed part of the employment terms binding on the claimant. The DPO in coming to his view of a prima facie possibility of a partly oral and partly written contract in paragraphs 24-25 of the Reasons and also to his conclusion that the employment contract between the claimant and the defendant was actually a partly oral and partly written contract in paragraph 72 of the Reasons relied on the ground that the written contract did not record any discretionary bonus or incorporate the terms of the Handbook (that expressly provided for discretionary bonus) and yet the defendant did pay bonus to the claimant in 2010-2012. The Reasons never mentioned that the claimant’s entitlement to discretionary bonus under the Handbook was part of his terms of employment. Whilst it is true the Employment and Supplemental Employment Contracts made no reference to discretionary bonus or the Handbook, what is suggested in the DPO’s analysis in paragraphs 24-25 and 72 of the Reasons is this: since the contract in writing in the present case made no reference or incorporation at all in respect of “bonus” per se but nevertheless the defendant actually paid bonus to the claimant in 2010-2012, it must be an inexorable inference that parties had a prior oral agreement concerning bonus payments. But, in my view, such reasoning may be challenged or neutralised by the undisputed fact that the claimant’s contractual entitlement to discretionary bonus is actually documented in writing. In determining whether the parties intended the Contract Documents to supersede the parties’ prior oral communications, it must be relevant and necessary to evaluate and consider, amongst other evidence, whether the express written provision for (at least) discretionary bonus and the omission in writing for other forms of bonus (eg project bonus) may lead to an inference that (a) there was no other form of bonus and/or (b) the bonus paid in 2010-2012 was in fact discretionary bonus. For the DPO merely to say the documents in writing made no reference to discretionary bonus and did not incorporate the Handbook without going further to acknowledge the written provision for discretionary bonus in the Handbook was part of the claimant’s contractual entitlement and to evaluate and analysis such fact against other evidence does give rise to concern. 99.Thirdly, as explained in paragraph 30(c)(i)-(ii) above, the DPO rejected Mr Au’s explanations that both the $1,000,000 and $200,000 bonuses paid in 2010 were discretionary bonus, and he further rejected Juan Wong’s, Silvia Chan’s and Roger Poon’s explanations for the accounting entries for such bonuses, and took the view in paragraph 34 of the Reasons that “這個酌情花紅以地盤獎金為名，由區先生圈出10個地盤為$1,000,000作紀錄，即每個$100,000。這個計算方法與申索人的項目紅利的要求竟然不謀而合” (or, to put in another way, the payment of the $1,000,000 bonus to Vic Sword as consultancy fee for 10 projects lends probability to the suggestion that such payment was for project bonus). Indeed, in paragraphs 39 and 44 of the Reasons, the DPO expressed his perplexity as to why the $1,000,000 bonus was described as “site bonus” (ie “令人費解” and “本席不明何以可以隨便更換”), but nowhere in the Reasons did he refer to tax avoidance being the reason for this particular mode of payment. Yet it is the claimant’s own case that the arrangement for such mode of payment with identification of 10 projects for the consultancy fee to Vic Sword was for tax avoidance purpose, and the defendant did not disagree save to say that it was for the claimant’s personal tax reasons. Indeed, the DPO shied away from making any finding in this respect because he said in paragraph 46 of the Reasons that “假如被告公司的說法是事實，有實際需要以地盤獎金名義發放$1,000,000 ……” In my view, this must be a relevant and material matter because it may (or may not) offer an explanation why 10 projects were identified (eg to justify the consultancy fee allegedly paid for services rendered by Vic Sword in relation to such projects so as to achieve tax avoidance) and why the “site bonus” label was coined for accounting entries. 100.The aforesaid concern may also colour the analysis in relation to the payment of the $1,400,000 bonus in 2011, and may impact on the DPO’s consideration in paragraph 47 of the Reasons that if there were an accounting need the $1,400,000 bonus should be (but was not) disbursed and labelled in the same manner as for the $1,000,000 bonus, and his concern in paragraph 48 of the Reasons that “被告公司指其實申索人曾同樣要求他的個人公司代收，被告公司認為不妥故此只支付給他本人。不過這一點並不能解釋為何$1,400,000不再以地盤獎金發放”. It is true that in paragraph 66 of the Reasons the DPO noted the claimant’s email request dated 26 March 2011 suggested that “指的安排是以申索人個人還是其公司收取款項的安排而已”, but had there been a proper evaluation of the issue of tax avoidance, question would have been raised as to whether the linkage between the 10 projects and the $1,000,000 bonus together with the label of “site bonus” was merely for the purpose tax avoidance, and whether the proposed linkage between the 14 projects and the $1,400,000 bonus (which is admittedly a discretionary bonus) was for the same reason. If that were the case, and after all there is documentary evidence (ie the emails that passed between the claimant and Roger Poon in March/April 2011) that the eventual de-link between the proposed 14 projects and the $1,400,000 bonus was due to tax and listing concerns, it must be relevant and material to consider whether it is appropriate or not to infer that the $1,000,000 bonus is likewise a discretionary bonus or part of a year-end bonus similar to the $1,400,000 bonus. 101.Fourthly, although the Circulars were for marketing staff and not the claimant, the DPO in paragraph 36 of the Reasons relied on them to demonstrate that “地盤獎金在被告公司內有特定意思，指與地盤完成數目掛鈎的獎金”. In paragraphs 36-37 of the Reasons, he relied on the Circular dated 3 January 2011 to say that “地盤獎金即項目成功獎金，按成功地盤數目計算”, and the other two Circulars to say that “按成功地盤數目計算的獎金在被告公司的一直存在”. Significantly, in paragraph 38 of the Reasons the DPO concluded that “雖然名字不同，這個地盤獎金以地盤計算獎金的方法，與申索人所指的項目紅利的計算方法一致”. But even though the DPO drew such analogy, he did not discuss the differences between the provisions for site bonus in the Circulars and the claimant’s contractual entitlement to project bonus under the Oral Agreement, and why such differences could be discounted in coming to the view that the calculation of “地盤獎金” or “項目成功獎金” under the Circulars and the claimant’s contractual entitlement for project bonus under the Oral Agreement is “計算方法一致”. For convenience, I refer and rely on (and will not repeat here) the differences identified in paragraph 36 above. 102.Turning now to Mr Chow SC’s complaints, I agree with Mr Hung there were two conflicting alternatives before the DPO, ie whether or not the parties made the Oral Agreement. I also agree it cannot be said that either alternative is an improbable theory. But before one can say that the elimination of one conflicting theory would lend probability to the other alternative theory, more fundamental questions need to be answered, firstly whether the elimination of one theory (ie rejection of the defendant’s case that denied the existence of the Oral Agreement) is justified on the overall evidence, and secondly whether on the state of the evidence on the alternative theory is justified and probable. In short, the DPO as the tribunal of fact must be satisfied on the totality of the evidence (and drawing inferences as appropriate) as to where the probability lies and also he must be satisfied that a particular fact or state of affairs is more likely to have occurred than not. It is only then that the DPO again as the tribunal of fact would be in a position to discount the less probable alternative and find for the more probable one. 103.I accept that findings of fact are generally immune from attack unless there is an error of law in that the findings were “perverse or irrational” or made “by reference to irrelevant factors or without regard to relevant factors”. I bear in mind that the first instance decision or finding has to be plainly wrong before this court can interfere and there is a generous ambit within which reasonable disagreement is possible. And it is not for me to prefer a different conclusion, to re-assess the weight of relevant evidence, to weigh witness credibility, or to see whether other inferences can plausibly be drawn. 104.Here, the question is whether the DPO had considered and (if necessary, had investigated) all relevant and material aspects as to the circumstances of the Oral Agreement in carrying out the forensic exercise described in paragraph 102 above. I am persuaded the four matters discussed in paragraphs 97-101 above are highly relevant and significantly material to the issue of the existence or otherwise of the Oral Agreement, and I think the DPO erred in law in failing to fully consider and evaluate the evidence in respect of those four matters before holding the Oral Agreement existed and survived the written contract. I am also satisfied that upon such failure the DPO’s adverse findings against the defendant and his reasons therefore were inadequate, and such conclusion does not fall foul of section 35(2) of the Ordinance. 105.I note the DPO did not reject the evidence of the defendant’s witnesses, especially Mr Au and Ms Wong being the ones engaged in prior communications with the claimant, by reason of their bearing or demeanour, so the DPO’s evaluation of their evidence as well as the claimant’s evidence as against the totality of the evidence (including contemporaneous documents) take on importance in the discharge of his duty to ascertain where the probability lies. 106.In Part VI(b) above, Mr Chow SC raised multiple criticisms with a view to impugn the DPO’s approach in relation to the assessment of the claimant’s evidence relating to the Oral Agreement against the contemporaneous documents, internal inconsistencies, inherent probabilities and improbabilities, and totality of the evidence. However, in light of my conclusions in relation to the aforesaid four matters, it is not necessary for me to go further to discuss all the detailed complaints raised by Mr Chow SC, which may well be matters which a presiding officer on the retrial of the present case may wish or need to consider. 107.Mr Chow SC also raised concern over the DPO’s rejection of the evidence of Mr Au and Ms Wong in respect of their prior communications with the claimant and their denial of the existence of the Oral Agreement, which he claimed was unchallenged since they had not been cross-examined in a material way. I accept the rule in Browne v Dunn does not inflexibly require the claimant (or the DPO) to put every point to the defendant’s witnesses. Here, whilst it would have been more desirable for the claimant to have cross-examined Mr Au and Ms Wong (or for the DPO to test their evidence when the claimant failed to do so) on the circumstances of making the Oral Agreement which is the heart of the dispute between the parties, I am not persuaded such omission to cross-examine is necessarily unfair on Mr Au and Ms Wong. From their witness statements and their access to the claimant’s statement of claim and witness statements, they would have had notice of the substance of the claimant’s case although I am not persuaded they would have been aware the DPO was skeptical about their evidence. 108.I also acknowledge the DPO as the tribunal of fact was not bound to accept any particular piece of evidence simply because there was no cross-examination on it. But what is worrying is how the DPO evaluated their evidence in the Reasons. A review of paragraphs 23-76 of the Reasons shows that apart from a brief mention that Ms Wong rejected the claimant’s request for project bonus at the interview, the DPO essentially focused on the payment of bonuses in 2010-2012 and little (if at all) had been canvassed on how the Oral Agreement came about in the course of the parties’ prior communications and on the events that happened after the making of the Oral Agreement that led up to the execution of the Employment Contract. Bearing in mind the DPO as the tribunal of fact was tasked to objectively ascertain the parties’ intention (ie whether the employment contract was intended to be written or partly oral and partly written) at the material time, his focus on ex post facto matters rather than on the evaluation of the evidence adduced by the parties on their prior oral communications that led up to the alleged oral contract and then up to the execution of the written contract gives pause for concern. In my view, such evidence is highly relevant to the issue of the existence of the Oral Agreement which formed the fundamental basis of the claimant’s claim, and I agree with Mr Chow SC that insufficient reason was given as to why the claimant’s evidence on this crucial aspect was accepted and why Mr Au’s and Ms Wong’s evidence in this was rejected. 109.I accept that not every failure to investigate will give rise to a successful appeal. The question here is whether the subject matter of complaint is not only relevant but material, and more importantly, whether the failure to investigate such matter gives rise to injustice such that the DPO’s conclusion that the Oral Agreement existed cannot be said to be fair or proper. In my view, the four matters discussed in paragraphs 97‑101 above are highly relevant and materially significant matters that ought to be canvassed, clarified or elaborated upon, and lack of investigation into or consideration of these matters and the further matter in paragraph 108 above give rise to concern as to whether a fair and proper determination of the claim has been attained. It is not enough to compare the parties’ respective case and conclude that one was more believable than the other without adequate evaluation of and deliberation over evidence that is significantly material to the crucial dispute. Likewise, when the DPO found the claimant’s dilatory attitude towards chasing for his project bonus after 2010 was a factor unfavourable to his case, it would have been necessary to look at the other side of the coin and investigate and evaluate the claimant’s explanation as to why the defendant ceased making any payment of project bonus to him after January 2010 when they were perfectly willing to pay him substantial discretionary bonuses in 2011-2012 and to pay “地盤獎金”or “項目成功獎金” to marketing staff in 2010-2011, and then go on to either accept or discount such explanation ( if any) with reasons given. 110.I have carefully considered all the circumstances of the case, counsel’s submissions as well as the other findings by the DPO. Even though the question of whether or not the Oral Agreement did exist is a question of fact, the DPO as the tribunal of fact has to sufficiently evaluate and analyse the material and relevant evidence, and to carry out appropriate investigation and to give sufficient reasons. In light of the reservations that I have in respect of the DPO’s approach to the evidence and how he reached his conclusion, I am not satisfied he has sufficiently discharged the aforesaid duties even within the generous ambit allowed to him as the tribunal of fact. XI. CONCLUSION 111.In the circumstances, the Appeal is allowed and the case is remitted to the Tribunal for retrial before another adjudicator. In coming to such conclusion, I have carefully considered the spectre raised by Mr Hung of another 8-day retrial which he said would be disproportionate given the nature of the claim. But the Part B Bonus as claimed is not a small amount, and a fair and just determination requires proper adjudication on a principled basis as discussed above. I also bear in mind that the Part C Bonus is no longer part of the retrial, and I have set out the parties’ respective contentions in some detail (with cross-references to the primary material) in the hope they will assist the Tribunal to identify the relevant disputes and issues for the purpose of the retrial. It is unlikely that the retrial with dedicated focus by both parties and the Tribunal on the relevant issues will require 8 days. 112.There is no reason why costs should not follow event. I therefore grant a costs order nisi that costs of the Appeal (including all costs reserved if any) be paid by the claimant to the defendant to be taxed if not agreed with certificate for two counsel.
Mr Anderson Chow SC and Mr Anson Wong, instructed by Iu, Lai & Li, for the defendant/appellant Mr Andy Hung and Mr Alexander Cheung, instructed by Lau, Chan & Ko, for the claimant/respondent [1] see p 184M-O of the transcript of the trial before the Labour Tribunal (“Transcript”) [2] see p 18Q-U of the Transcript [3] see para 11 of the witness statement of Juan Wong (executive manager of Richfull Consultants Limited) dated 18 February 2013 [4] see the claimant’s evidence at p 156 of the Transcript [5] see para 2 of the witness statement of Roger Poon (finance manager of the defendant’s accounts department) dated 27 December 2012 [6] see point 2 of Roger Poon’s 2nd witness statement dated 18 February 2013 and the caption of the emails that passed between the claimant and Roger Poon from 25 March to 4 April 2013 [7] see the emails that passed between the claimant and Roger Poon from 25 March to 4 April 2013 [8] see para 8 of Roger Poon’s witness statement dated 27 December 2012 [9] see paras 4-9 of the reasons for decision by the Labour Tribunal dated 5 July 2013 (“Reasons”) [10] see paras 11-16 of the Reasons [11] see para 17 of the Reasons [12] see paras 71-76 of the Reasons [13] see section 20(1) of the Labour Tribunal Ordinance Cap 25 (“Ordinance”) [14] see section 20(2) of the Ordinance [15] see section 20(3) of the Ordinance [16] see section32(1) of the Ordinance [17] see section 35(2) of the Ordinance [18] HCLA3/2010, Au J (unreported, 28 June 2011) para 16 [19] the Tribunal’s refused the defendant’s application to transfer the case to the Court of First Instance (see pp 12Q-13C of the Transcript) [20] see Lee Mei Kiu v Hhome Café Ltd CACV122/2011 (unreported, 19 February 2013) para 28 [21] see Phipson on Evidence 18th ed para 6-08 at p 164 [22] see Phipson on Evidence para 6-06 at pp 162-163 [23] see HKSAR v Chiu Kit & anor CACC210/2009 (unreported, 20 May 2010) at para 61 [24] see Phipson on Evidence para 6-07 at p 163 [25] see Rhesa Shipping Co SA v Edmunds [1985] 1 WLR 948, 955-956 [26] [1988] 1 QB 493, 504 cited in Yau Wah Yau v Commissioner of Inland Revenue [2006] 3 HKLRD 586 at pp 604-605 [27]HCA1957/205, HCA714/2007, HCA886/2007 and HCA1364/2008, Poon J (unreported, 28 July 2011) and Phipson on Evidence para 6-07 at p 163 [28] see Phipson on Evidence para 6-07 at p 163 and Rhesa Shipping Co SA at pp 955‑956 followed in Yau Wah Yau at p 602 [29] [1988] 1 QB 493, 504 [30] [2006] EWCA Civ 880 [31] see para 30 of the judgment [32] [2009] EWHC 2689 (TCC), a case not cited by either Mr Chow SC or Mr Hung [33] see para 103 of the judgment [34] see para 105 of the judgment [35] see para 17 of the Reasons [36] see paras 20-22 of the Reasons [37] see paras 53-57 of the Reasons [38] see paras 58-59 of the Reasons [39] see paras 60-62 of the Reasons [40] see para 63 of the Reasons (and Mr Chow SC reminded that even on the claimant’s own case he only received project bonus of $1,000,000 in January 2010 and did not receive any project bonus in 2011 and 2012 even though they would be the lion’s share of his income, hence his failure to diligently chase for the project bonus must be a factor against him) [41] see para 64 of the Reasons [42] see paras 65-67 of the Reasons [43] see p 156K-U of the Transcript and para V(3) of the claimant’s undated 2nd witness statement (“因雙方的稅務安排，公司按我要求公司把派發的“項目紅利”轉發予我的公司; 田生公司當時叫我用這10個項目發出發票向集團的另一間公司當作顧問費收取”) (my emphasis) [44] see para 13 of Roger Poon’s witness statement dated 18 February 2013 [45] see paragraph 4(c) above [46] see paragraph 30(c)(i) above [47] see paragraph 30(e) above [48] see Part VI below [49] [2007] 3 HKLRD 439, 481 [50] HCA16459/1998, To J (unreported, 4 October 2010) para 47 (upheld on appeal in [2012] 3 HKLRD 679) [51] [2004] 3 HKLRD 168, 179-181, Ting Kwok Keung v Tam Dick Yuen & ors (2002) 5 HKCFAR 336, 347-350, Guido Ferrando v Hua Dao Shipping (Far East) Limited HCLA44/2007, DHCJ To (as he then was) (unreported, 31 October 2008) paras 18‑21 and Bank of China (Hong Kong) Ltd v Tsang Sheung Bun [2013] 5 HKLRD 62, 70-71 [52] see also Piglowska v Piglowska [1999] 1 WLR 1360, 1372, Guido Ferrando at paras 29-20 and 謝林及其他二十位與陳德偉 HCLA150/1995, Jerome Chan J (unreported, 5 May 1997) para 18 [53] [2002] 1 HKLRD 858, 865 and 880 [54] see also Chow Sau Hei v Ho Keung Yuen, Smart Creator International Limited CACV112, 113&114/2013 (unreported, 7 July 2014) paras7.1-7.6, which judgment was handed down after the hearing of the Appeal [55] see p 186G-I of the Transcript [56] see p 178K-N of the Transcript [57] see paras 2-6 of the claimant’s undated Statement of Claim [58] see paras IV(2)-(4) of the claimant’s undated witness statement [59] see pp 36B-37F, 37T-U, 153A-H and 174B-E of the Transcript [60] see p 18D-I and p 38O-R of the Transcript [61] see p 177N-V of the Transcript [62] see p 178C-E of the Transcript [63] see p 178L-N of the Transcript [64] [2002] EWCA Civ 1885 [65] [2005] All ER (D) 377 (Mar) (see also Grabowski at para 131 where Jonathan Parker LJ accepted that the judgment was fatally flawed by the absence of any reason for the rejection of unchallenged evidence in that case) [66] see Browne v Dunn (1894) 6 R 67 (HL) and Dr Fong Ka Yeung v The Medical Council of Hong Kong CACV159/207 (unreported, 15 March 2011) paras 30(1)-(2) [67] CACV90-96/2012 (unreported, 17 September 2013) [68] see paras 53-57 of the Reasons and paragraphs 30(e) above [69] see Kaifull Investments Ltd at pp 873, 875-876 and 877 [70] see Kaifull Investments Ltd at pp 873-874 [71] see para 26 of the Reasons and paragraph 30(b) above [72] see para 24 of the Reasons and paragraph 30(b) above [73] see paragraph 30(c)-(g) above [74] see para 73 of the Reasons and paragraph 30(h) above [75] see p 184M-O of the Transcript [76] see para 24 of the Reasons and paragraph 30(b) above [77] see para 10 of the witness statement of Ms Wong dated 27 December 2012 [78] see para 24 of the Reasons and paragraph 30(b) above [79] [1897] AC 540, 545 (see also Chitty on Contracts 31st ed Vol 1 para 12-096 at pp 1960-1961 and Trietel: The Law of Contract 13th ed para 6-013 at pp 211-212) [80] The Law Commission (England), Final Report, No 54, 1986 (“Final Report”), para 2.7 at p 8 (see also Trietel: The Law of Contract para 6-014 at p 212 and Chitty on Contracts para 12-099 at pp 962-963) [81] see Final Report para 2.10 at pp 10-11 [82] see Chitty on Contracts para 12-097 at p 961 [83] see Final Report para 2.12 at p 11, Swan, Canadian Contract Law 2nd ed (2009) paras 8.43 and 8.46-8.47 at pp 597 and 598-599 and Chitty on Contracts paras 12‑097 – 12-098 at pp 961-962 [84] see para 6.014 at p 213 [85] see Swan, Canadian Contract Law paras 8.48-8.49 at pp 599-600 (see also the Final Report para 2.12 at p 11) [86] [1976] 1 WLR 1078, 1083 (see also Carter, Contract Law in Australia 6th ed para 12-07 at pp 259-261) [87] HCA1465/2005, Mr Recorder H Wong SC (unreported, 18 July 2012) [88] Carter, Contract Law in Australia para 12-08 at pp 261-262 [89] see para 12-098 at p 962 [90] see para 6-014 at pp 212-213 [91] 4th ed (2010) para 3.5 at pp 655-656 [92] see paragraphs 30(b) and (h) above [93] see paragraph 30(b) above [94] see p 156I of the Transcript and paragraphs 2(c) and 3(c)-(d) above [95] see p 38D-J and O-Q of the Transcript [96] see p 177N-V of the Transcript [97] see p 178K-Q of the Transcript [98] see p 201H-M of the Transcript [99] see paragraph 2(c) above [100] see paragraph 3(c) above [101] see paragraph 80 above [102] see paragraphs 30(g) and (h) above [103] see paras 1-2 of the undated 3rd witness statement of Ms Wong [104] see Chitty on Contracts para 3-107 at pp 367-369 [105] [1992] 2 HKC 459, 462 and see also Dator, Jimson Matthew C & anor v Sear Rogers International School HK Island O/B St Simon Educational Development Ltd HCLA19/2005, DHCJ Gill (unreported, 9 February 2006) paras 5-6 [106] [2013] 5 HKLRD 311, 315-316 [107] see Dator, Jimson Matthew C & anor at paras 15-18 [108] [1992] 2 HKC 459, 462-463 and see also Wai Mei Lai Stella at para 16(3) (see paragraph 15 above) and Chan Yat Sanat p 314 [109] see para 186G-L of the Transcript | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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