MONEY CONCEPTS (ASIA) LTD v. YEUNG CHUNG WING

HCSA 16/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO. 16 OF 2007

(On appeal from Small Claims Tribunal Claim No. SCTC 75184 of 2005)

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J U D G M E N T

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Background

1.  This is the Defendant’s appeal against Adjudicator Ronald Cheung’s order made on 7 December 2006 entering judgment in favour of the Claimant against the Defendant and dismissing the Defendant’s counterclaim against the Claimant.

2.  The Claimant is an authorised insurance broker dealing in investment and insurance products.  It is a statutory requirement that any person marketing investment products is required to obtain a licence from the Securities and Futures Commission (“SFC”).  Similarly, in order to be able to market insurance products, a sales representative has to be an insurance broker who is either authorized by the Insurance Authority under section 69 of the Insurance Companies Ordinance or be a member of a body of insurance brokers approved by the Insurance Authority.  The Professional Insurance Brokers Association Limited (“PIBA”) is one such professional body.

3.  The Claimant has its own in-house team of sales representatives, but as is common with many insurance agencies in Hong Kong, it also carries on business through non-in-house branches.  Those non-in-house branches are characteristic of the operation of insurance agencies in Hong Kong.  The branches are like companies within the insurance agency.  They are autonomous from the insurance agency they represent and have their own organisation structure, offices and team leaders.  But they market the insurance agency’s products.  The Defendant is a member and second in command of the branch under the branch leadership of Stanley Ng.  In May 2004, Stanley Ng and the Defendant negotiated with the Claimant for setting up a branch within the Claimant’s operation.  On 6 July 2004, Stanley Ng and the Defendant as well as another three members of the branch entered into individual registered representative agreements (“Agreement”) with the Claimant to work as non-in-house sales representatives of the Claimant. 

4.  As can be seen from the e-mail between Stanley Ng and Simon Luk, the Claimant’s regional general manager, the incorporation of Stanley Ng’s branch into the Claimant’s operation had not been entirely smooth.  In mid December 2004, there were incessant quibbles between the parties and Stanley Ng’s branch members refused to attend the Claimant’s Monday meetings.  On 11 March 2005, the Claimant’s solicitors issued a warning letter to the Defendant complaining, inter alia, the branch’s failure in introducing business to the Claimant for the past eight months and failure in having one of its members accredited to the Claimant’s company.

5.  It was stated in the preamble of the Agreement that the Defendant was duly registered with and licensed by the SFC and the PIBA to solicit for the purchase and sale of investment products and insurance products.  But in fact, the Defendant only obtained his PIBA licence on 10 September 2004 and his SFC licence on 12 November 2004.  To ensure an insurance technical representative continues to possess professional competence and standard in providing advice and service to policy holders and potential policy holders, the Insurance Authority requires insurance representatives to comply with the requirements of the Continuing Professional Development (“CPD”) Programme and earn at least five core credits and ten non-core CPD credits each year before their PIBA licences would be renewed.

6.  Despite the Defendant’s PIBA licence would expire on 30 June 2005, PIBA required its members to submit evidence of core and non-core CPD credits obtained for the period from 1 January 2002 to 31 December 2004 on or before 31 March 2005.  PIBA sent correspondences regarding the above to the Defendant care of the Claimant.  For some unknown reasons, which the Adjudicator attributed to poor management on the part of the Claimant, those correspondences were not directed to the Defendant.  As the Defendant failed to inform PIBA of his CPD credits obtained during the relevant period, PIBA wrote to the Defendant at his home address on 4 May 2005 informing him that his membership with PIBA was suspended until he completed the requisite CPD record form, offered a satisfactory explanation for his default and an administration fee of $800.  Upon receipt of that letter from PIBA, the Defendant wrote to the Claimant on 27 May 2005 accusing the Claimant of withholding correspondence addressed to him from PIBA leading to the suspension of his PIBA membership.  On the following day, i.e. 28 May 2005, the Defendant terminated his Agreement with effect from 10 June 2005 by giving fourteen days’ written notice.

7.  The Claimant then filed a claim in the Small Claims Tribunal against the Defendant claiming $50,000 pursuant to clause 6c(v) of the Agreement which is in the following terms:

“

After the termination of registered representative agreement on your own behalf, the registered representative is required to pay back in a lump sum license fee of US$10,000 any collection related costs immediately to the company.  The license fee will be waived if your team accumulation gross commission is more than HK$720,000.  The license fee of US$10,000 is calculated on pro-rate basis on the accumulation gross commission.”

This claim was brought within the jurisdiction of the Small Claims Tribunal by the Claimant waiving any excess over the jurisdictional limit of $50,000.  The Defendant counterclaimed against the Claimant for (1) his PIBA registration fee in the sum of $450; (2) his SFC licence fee in the sum of $1,790; (3) the administration fee $800 to restore his PIBA registration; and (4) printing cost for his name cards in the sum of $260.

8.  The Adjudicator was at pains looking for possible defences which could relieve the Defendant of his liability under clause 6c(v) of the Agreement, but could find none.  Hence, he entered judgment in favour of the Claimant in the sum of $50,000 as claimed.  He dismissed items (1), (2) and (4) of the Defendant’s counterclaim for the reason that it was the Defendant’s obligation under clause 2b of the Agreement to pay for those expenses.  While holding that the Claimant failed to forward the PIBA correspondences to the Defendant, the Adjudicator found that there was no evidence that such failure caused the suspension of the Defendant’s registration with PIBA.

9.  The Defendant’s ground of appeal was amateurish.  But I can understand that the thrust of his appeal is that the Adjudicator erred in law in dismissing his reasons for termination of the Agreement and in construing the Agreement with the result that the Adjudicator found that Claimant was under no obligation to provide training to the Defendant to facilitate his qualification for the PIBA licence.  The appeal is aimed at the Adjudicator’s judgment for the Claimant’s claim and dismissal of item (3) of the Defendant’s counterclaim.  Leave was granted to the Defendant to file perfected grounds of appeal.  Despite that, it does not appear that the perfected grounds have significantly improved the Defendant’s appeal.  I now turn to consider the Defendant’s perfected grounds of appeal.

Ground (1) - The Adjudicator erred in not finding that PIBA was obliged only to communicate directly with the Claimant and not with the Defendant

10.  The part of the Adjudicator’s Reasons for Decision complained of by the Defendant is paragraph 38, in which the Adjudicator held:

“

38.

In gist, the Defendant’s case is that PIBA could only communicate and had in fact only communicated with the Claimant regarding CPD compliance requirement matters.  I accept that during the material times PIBA had in fact been issuing notices pertaining to CPD compliance requirements to the Claimant in the expectation that the Claimant would in turn send them to its sales representatives (i.e. authorized insurance brokers).  It would appear to be a matter of practice only.  I do not accept that PIBA was obliged only to communicate directly with the Claimant and not with the Defendant.  I do not accept that PIBA’s communication with the Defendant had to be done indirectly through the Claimant.  On the contrary, I find it more likely than not that PIBA was willing and able to communicate directly with the Defendant and advise him on CPD compliance requirement matters should the Defendant make such enquiries with PIBA or had he requested PIBA to do so.”

11.  The Defendant’s submission is that there was no evidence whatsoever during the hearing that PIBA was willing to communicate directly with the Defendant and to advise him on CPD compliance requirement.  The Defendant relied on paragraph 21 of the CPD Information Sheet issued by the Commissioner of Insurance which states that the insurance brokers (the Claimant) are responsible for certifying the compliance of their respective technical representatives.  He also referred to the evidence of his meeting with the Administrative Executive of PIBA during which he was told that it was the Claimant’s responsibility to liaise with the technical representatives on the completion of the CPD declaration form, that the Claimant had to sign, chop and return the form to PIBA.

12.  It is the Defendant who raised the issue that PIBA would only communicate with him via the Claimant and hence the Claimant was in breach of duty in not forwarding the PIBA correspondences to him.  Naturally, he bears the burden of proof.  No evidence from PIBA has been called by the Defendant.  The Defendant only sought to rely on paragraph 21 of the CPD Information Sheet and his conversation with the Administrative Executive of PIBA.  While the Adjudicator may receive hearsay evidence, I do not think that evidence, which I have summarised above, is sufficient proof that PIBA would only communicate with the Defendant via the Claimant.  In fact, the correspondences show that PIBA was not consistent in its practice.  It sometimes wrote to the Defendant care of the Claimant’s address, and sometimes wrote to the Defendant at his home address.  PIBA’s letter of suspension of the Defendant’s membership dated 4 May 2005 which was a correspondence at the material time was written to the Defendant at his home address.  Apart from the Defendant’s failure to discharge the burden of proof, the evidence is such that the contrary inference could readily be drawn from PIBA’s inconsistent practice that it would communicate with the Defendant directly or indirectly through the Claimant but not only through the Claimant.  In my view, the Defendant’s failure to discharge his burden of proof and the reasonable inference which could be drawn from the circumstances justify the conclusion in the last few sentences of paragraph 38 of the Adjudicator’s Reasons for Decision.

Ground (2) - The Adjudicator erred in not being able to find what was contained in the PIBA correspondences

13.  This ground of appeal is framed in the following terms:

“

In finding that the Claimant had failed to forward to the Defendant certain notices issued by PIBA which relate to CPD compliance requirements, the Adjudicator held that neither the Claimant nor the Defendant had made available to him copies of such notice and therefore he was not in a position to make any precise finding of fact.”

14.  This ground of appeal is directed at paragraph 39 of the Adjudicator’s Reasons for Decision, in which the Adjudicator said:

“

39.

I accept that the Claimant had failed to forward to the Defendant certain notices issued by PIBA which relate to CPD compliance requirements.  Neither the Claimant nor the Defendant has made available to me copies of such notices and I am not in a position to make any precise findings of fact as to what was said in such notices.”

15.  The Adjudicator accepted the Defendant’s evidence of his meeting with PIBA in which he was told that certain notices about CPD compliance had been sent to him care of the Claimant’s address.  Those were the PIBA notices referred to in the dicta above.  Those notices were lost and could not have been produced unless by way of discovery from PIBA.  The Adjudicator accepted that the notices were about CPD compliance.  That finding was in favour of the Defendant.  That was all that was needed.  The precise contents of the notices are irrelevant.  The Adjudicator clearly appreciated that the Claimant’s failure to forward those correspondences to the Defendant could (not necessarily would) lead to the suspension of the Defendant’s PIBA registration, which the Adjudicator dealt with in the later part of his Reasons for Decision.  In my view, the Adjudicator has not erred in his finding of fact and in not investigating the contents of those notices as they were irrelevant. I am at a loss as to what was intended to be achieved by this ground of appeal. 

Ground (3) - The Adjudicator erred in finding that at the time of termination of the Agreement, the Defendant was holding a valid SFC licence and could have lawfully continued to carry on promoting the sale of securities related products for the Claimant

16.  This ground of appeal is directed at paragraph 48 of the Adjudicator’s Reasons for Decision, in which the Adjudicator said:

“

48.

Clause 6c(v) is not void for illegality.  It is not a wagering contract. … Upon the suspension of the Defendant’s registration as a Technical Representative, it would be illegal for him to continue to act as an insurance broker.  However, the mechanism existed for the Defendant to resume his registration status in just a couple of days if he were able to meet the CPD compliance requirements.  Once his registration status as a Technical Representative was resumed, the Defendant could lawfully continue his work as an insurance broker afterwards.  Further, at the time of the termination of the Registered Representative Agreement, the Defendant was still holding a valid licence under the Securities and Futures Ordinance and he could have lawfully continued to carry on promoting the sale of securities related investment products for the Claimant.”

17.  The Defendant’s submission is that he was engaged as an independent contractor to solicit for the purchase and sale of investment funds and insurance products and that according to the Claimant, 95% of the income of an insurance agency came from the sale of saving plans under the purview of PIBA while only 5% came from the sale of unit trust under the purview of SFC.  Hence, he argues that he must have both licences from the SFC and PIBA to make a living, in particular, the PIBA licence which would account for 95% of his income.  But it should be noted that for eight months since signing the Agreement to the issue of warning letter, the Defendant and his entire branch had not transacted any business for the Claimant.  Such argument is very shadowy, in my view.

18.  The Claimant argues that its evidence was that income from saving plans accounted for 95% of the income of an insurance agency in the trade, but the business platform of the Claimant is the other way round and that the Defendant could comfortably make a living with his SFC licence.  I would refrain from making any finding of fact as to whether what the Claimant said was true.  It is not necessary for I think this ground of appeal is a non-point.  As the very first sentence in paragraph 48 of the Reasons for Decision shows, the Adjudicator was directing his mind to finding a way out for the Defendant.  He was considering whether clause 6c(v) which obliged the Defendant to pay US$10,000 upon termination was void for illegality.  For the reasons as he stated, the Adjudicator was clearly right in law that the Agreement was not void for illegality.  There is no argument that the Adjudicator was wrong in finding that the Agreement was not void for illegality.  Thus, even if the Adjudicator had erred in that finding complained of, which he had not, the issue raised by this ground of appeal is a non-issue.

Ground (4) - The Adjudicator erred in holding it was primarily the Defendant’s obligation to ascertain with PIBA the CPD requirements and to comply with them

19.  This ground of appeal is directed at paragraph 61 of the Adjudicator’s Reasons for Decision.  This ground is related to the dismissal of item (3) of the Defendant’s counterclaim.  The Adjudicator said:

“

61.

I find that the Claimant has not provided the Defendant with reasonable administrative support.  As noted earlier, the Claimant had failed to send to the Defendant notices issued by PIBA pertaining to CPD compliance requirements.  However, it is primarily the Defendant’s own obligation to ascertain with PIBA what the CPD requirements were and comply with them.  Further, it is not shown that the Claimant’s failure to send such notices to the Defendant had caused the suspension of the Defendant’s registration.  There is no evidence that the Defendant at the time of such suspension had already earned sufficient CPD credits to maintain his registration as a Technical Representative with PIBA.”

20.  The Defendant submits that the Adjudicator erred in holding that it was primarily the Defendant’s own obligation to ascertain with PIBA what the CPD requirements were and to comply with them.  He attacked the Adjudicator’s finding on the basis of paragraph 20 of the CPD Information Sheet issued by the Commissioner of Insurance.  That paragraph stated that insurance brokers are responsible for certifying the CPD compliance of their respective chief executives and technical representatives.  He also referred to the booklet on Minimum Requirements specified under section 69(2) and section 70(2) of the Insurance Companies Ordinance issued by the Insurance Authority.  At pages 31 to 32 of the booklet, it is stated that in considering whether the appointment of a technical representative can be confirmed by the Insurance Authority or an approved body insurance brokers, such as PIBA, the insurance broker should take into consideration whether the technical representative has attended CPD Programme in such manner and form as specified by the Insurance Authority.  I am quite unable to equate an insurance broker’s responsibility in certifying CPD compliance of its technical representatives as an obligation to ascertain CPD requirements for its representatives and to ensure their compliance.  Similarly, the need to consider whether a potential representative has attended CPD Programme before engaging him is not an obligation to procure that person’s CPD compliance. 

21.  The Defendant also referred to an e-mail between Stanley Ng and the Claimant, in which Stanley Ng requested the Claimant to provide CPD training courses, but the Claimant neglected to so provide.  The parties’ evidence was inconsistent with the parties’ respective case.  The Claimant’s case is that it was not obliged to provide training leading to core CPD credits.  But according to the Claimant’s e-mail, it informed the Defendant that “core CPD is upon available”, suggesting that it would provide training leading to core CPD credits.  On the other hand, in his defence, the Defendant averred that he was not obliged to attend the Claimant’s Monday briefing meetings leading to non-core CPD credits and Stanley Ng’s e-mails show that his branch members would not attend the meetings pending the resolution of their dispute with the Claimant.  The Adjudicator found at paragraph 66 of his Reasons for Decision that the Defendant could earn non-core CPD credits through the training provided by the Claimant or others but had to earn the core CPD credits through training provided by other institutions.  That is a finding of fact which I cannot overturn.  But, even if the Claimant had agreed to provide training leading to core CPD credits, that was not an obligation to ensure the Defendant’s compliance with PIBA’s CPD requirements.

22.  In fact, as between the Claimant and the Defendant, the obligation of ensuring CPD compliance is clearly specified in clauses 3a and 3b of the Agreement which provide as follows:

“	3.	Compliance:
		a.	As part of the proper performance of his or her duties hereunder Representative shall familiarize himself or herself with, and all times during the term of this Agreement shall comply with, the rules of the SFC and PIBA, the statutes, laws, regulations, rules and statements of policy promulgated by the government of HKSAR which may now or hereafter apply to Representative’s activities hereunder.  The Representative shall submit to the direction of a designated supervisory principal of the Company and should abide by the written supervisory procedures of the Company to the extent that they do not contradict laws or rules of the SFC and PIBA.
		b.	Representative shall timely apply for, obtain and maintain all necessary licenses, permits and registrations as shall be required by any statute, law, rule or regulation in connection with Representative’s activities hereunder.”

23.  Furthermore, the Claimant had provided the Defendant with a document called Requirements and Procedure for License Renewal.  The following extracts from that document are pertinent:

“	B.	Internal Activities
		All below meeting are mandatory to join and non-core   credits (non-accredited) will only counted if your total attendance for whole year not less than 90%
		…
		Everyone should sing in/out time for attendance record
		You will entitle for 10 non-core CPD credits (for PIBA) if you attend all those meeting/training
		Any late attend or early leave may not qualify for the   credits
	C.	Remarks
		All team members should keep the CPD/CPT record for 3 years.
		Certificate/Proof of Attendance will be provided to attendant after finished each training course for record.
		Supporting evidence of earned credits (i.e. course which not organized by MCA [Claimant]) must provide with license renewal application
		…
		Consultant should check frequently for news update and is responsible to ensure that you are qualify for license registration and renewal under relevant regulations.
		…”

This document was produced by the Defendant as evidence.  So he must have had knowledge of the requirements and procedures for licence renewal.

24.  Clauses 3a and 3b of the Agreement makes it amply clear that the Defendant was under a contractual duty to ensure his own compliance with the law in order to facilitate his engagement as a representative of the Claimant, including compliance with SFC and PIBA requirements.  The Requirements and Procedure for License Renewal also gave clear instructions to the Defendant as to how to obtain non-core CPD credits from the Claimant’s training courses and the need to keep record of attendance which were issued by the Claimant at the end of the course.  From those provisions, I find that the Adjudicator’s findings in paragraph 61 of the Reasons for Decision that it was primarily the Defendant’s own obligation to ascertain with PIBA what the CPD requirements were and to comply with them well justified.

25.  The Defendant argues that there was no evidence in support of the Adjudicator’s finding that at the time of suspension of the Defendant’s membership, the Defendant had not earned sufficient CPD credits to maintain his registration as a insurance representative.  This complaint is aimed at the Adjudicator’s secondary finding which was not necessary for his decision.  Here, the Adjudicator was assuming in favour of the Defendant that the Claimant was in breach of contractual duty for failing to redirect the PIBA correspondences to the Defendant.   He then held that the Defendant was unable to prove causation because the Defendant had not shown that he had already earned the required CPD credits.  Had the Defendant earned enough CPD credits, he could have his membership restored after three days, but he did not take that course, suggesting that he had not earned enough CPD credits.  In other words, the Adjudicator found that it was the Defendant’s own failure to maintain enough CPD credits and not the Claimant’s failure to forward the PIBA correspondences which led to the suspension of his membership.  Of course, the party claiming damages bears the burden of proving the damages.  The Defendant indeed offered no evidence that he had obtained the necessary core and non-core CPD credits and hence but for the Claimant’s failure to forward the PIBA correspondence to him his PIBA registration would not have been suspended.  The Defendant argues that the Claimant had possession of the training record but refused to disclose them.  That does not relieve him of the very minimal duty of adducing some evidence as to what courses he had attended which qualified for the CPD credits.  He cannot assert in vacuo that because the Claimant refused to disclose the records, he is deemed to have acquired the necessary CPD credits, especially bearing in mind that in accordance with the Requirements and Procedure for License Renewal, he would have been given some certification or record of attendance had he attended the courses.  I think the Adjudicator’s finding in this respect could not be criticised.

Ground (5) - The Adjudicator erred in misconstruing the evidence

26.  This ground of appeal is phrased in the following terms:

“	In finding that the Claimant had in fact kept records of attendance of the non-core CPD credits training that it had organized for its sales representatives, the Adjudicator has misconstrued the evidence in that:
	(a)	There was no evidence whatsoever that the Claimant has submitted any such training records to the tribunal during the hearing.
	(b)	It was the duty of the Claimant to certify records of attendance of the core and non-core CPD credits and then send to PIBA as part of CPD requirements.  There was no such evidence that the Claimant had ever submitted any such record to PIBA during the hearing.”

27.  It is not entirely clear against which finding of the Adjudicator is this ground of appeal directed.  It appears from the transcript that the Adjudicator was of the view that the Claimant had possession of attendance records of its training sessions and directed disclosure or filing of a witness statement to confirm that there was no such record.  However, this matter was not pursued at the adjourned hearing and not alluded to in his Reasons for Decision.  Probably the Adjudicator considered it unnecessary to pursue that line of inquiry.  If that was what was in the mind of the Adjudicator, I think he was right.  By the terms of the Agreement, it was the Defendant’s obligation to obtain and maintain the SFC and PIBA licences and to comply with the relevant statutes.  The Requirements and Procedure for License Renewal issued by the Claimant to the Defendant also instructed the Defendant to keep his training session attendance records and to produce them to the Claimant for certifying CPD compliance.  It would have made no difference whether the Claimant had those records and whether those records would show that the Defendant had obtained all the requisite non-core CPD credits.  The issue was whether there was such a breach of the obligation under the Agreement on the part of the Claimant that the Defendant was entitled to consider himself as having been discharged from further performing the Agreement.  On this issue, the Adjudicator found there was no such express obligation under the Agreement, but there was an implied obligation to provide the Defendant with reasonable administrative support and reasonable professional training.  Whether the Claimant had the attendance records and whether the Defendant had obtained all the non-core CPD credits are neither here nor there.  This ground of appeal is a non-issue.

Ground (6) - The Adjudicator erred in construing the Agreement

28.  This ground of appeal is as follows: 

“	The Adjudicator has erred in law in not construing the Agreement against the factual matrix of the case.  Had the Adjudicator done so, he should have found that the Claimant had
	(a)	failed in its obligations to provide proper training and facilities to the Defendant.
	(b)	failed in its obligations to assist the Defendant to fulfil CPD/training requirements.
	(c)	failed to forward the correspondence/notices/memo from PIBA in connection with compliance of CPD requirements to the Defendant.
	(d)	failed in the compliance of the minimum requirements under the Insurance Companies Ordinance.
	(e)	acted inequitably in reliance on the alleged breach of clause 6(c)(v) of the Agreement by the Defendant whereas under the section 70 of Insurance Companies Ordinance (Cap 41) and the guidelines issued by Insurance Authority on December 2001 the Claimant shall not employ the Defendant once he was suspended by PIBA with effect from 4 May 2005.  Alternatively, the Defendant was compelled under Section 77(2) of the Insurance Companies Ordinance to terminate the Agreement.  In the premises, clause 6(c)(v) of the Agreement was rendered inoperable.
	(f)	the Claimant had acted inequitably in relying on Clause 6(c)(v) of the Agreement to withhold the release of the Defendant’s TR Registration with PIBA when in law the Claimant was compelled to cancel the Defendant’s TR registration within 7 days of cessation to be the TR of the Claimant with effect by 11 May 2005.
	(g)	in breach of the implied terms of the Agreement.”

29.  Though this ground of appeal is phrased as a ground of appeal on point of law, in substance it is an appeal against finding of fact of the Adjudicator.  No argument has been advanced on how the Adjudicator has erred in his construction of the Agreement or on how the Agreement should have been construed.  It is not even clear which part of the Agreement the Defendant alleges as having been misconstrued.  To succeed on Ground (6)(a) to (c), the Defendant must at least prove that on a proper construction of the Agreement, the Claimant is obliged to provide proper training and facilities to the Defendant, to assist the Defendant in fulfilling CPD requirements and to forward the PIBA correspondence to the Defendant.  I also fail to see how the question of construction of the Agreement could be raised under Ground (6)(d) to (f).  The issues raised by this ground are factual disputes.

30.  In respect of Ground (6)(a) to (c), doing the best I can, I can only speculate that the Defendant intended to attack on the construction of clauses 3a and 3b and clause 6c(v) of the Agreement.  Clauses 3a and 3b provide that the Defendant shall comply with the rules of the SFC and PIBA and shall timely apply for, obtain and maintain all necessary licences, permits and registrations.  The Adjudicator did not specifically construe clause 3, but it is plainly obvious that clause 3 does not impose on the Claimant any obligation to provide training to enable the Defendant to comply with SFC and PIBA licensing requirements, which was the Defendant’s own obligation to fulfil under clause 3 of the Agreement. 

31.  As for clause 6c(v) of the Agreement, it forms the basis of the Claimant’s claim for licence fee: see paragraph 7 above.  The Adjudicator said at paragraphs 58 and 59 of his Reasons for Decision:

“	58.	I do not consider that Clause 6c(v) of the Registered Representative Agreement standing alone has imposed any obligation on the part of the Claimant to provide the Defendant with professional training or administrative support.  Clause 6c(v) does not expressly provide for such.  I am not prepared to find Clause 6c(v) standing alone has supplied such an implied term.
	59.	However, in all the circumstances and considering the Registered Representative Agreement as a whole, I find that it is an implied term of the Registered Representative Agreement that the Claimant was obliged to provide the Defendant with reasonable administrative support and reasonable professional training.  I have noted what is said in the preamble of the Registered Representative Agreement and the absence of express provisions in the body of the Registered Representative Agreement setting out precisely what kind of “back office and other services” support that the Claimant is obliged to provide to the Defendant.”

I am unable to find any express terms in the Agreement imposing on the Claimant any obligation to provide training facilities to the Defendant or to assist him in fulfilling the CPD requirements.  In fact, the Adjudicator was unable to find any such express provision and he found it necessary to imply into the Agreement a term that the Claimant would provide the Defendant with reasonable administrative support and reasonable professional training.  I have some doubt about the appropriateness of implying such a term into the Agreement under the Moorcock principle (1889) 14 PD 64 and also in view of clause 8 of the Agreement which is an entire agreement clause.  As clause 3 imposes on the Defendant an obligation to comply with SFC and PIBA compliance, it can hardly be said that it goes without saying that the Claimant will provide such training as would enable the Defendant to meet the CPD requirements.  There is no business efficacy in implying such a term.  The parties were just too lazy to make such provision in the Agreement.  But, suffice it is to say that insofar as the Defendant’s appeal is concerned, the point of construction simply does not arise.

32.  As for Ground (6)(d), it is not a point of construction.  And in any event, the Defendant has not argued how the Claimant’s failure in complying with the minimum requirements under the Insurance Companies Ordinance would offer a defence to his liability under clause 6c(v).

33.  As for Ground (6)(e), it is also not a point of construction.  The Defendant argues that it was inequitable for the Claimant to rely on the alleged breach of clause 6c(v) in view of the suspension of his PIBA licence and that he was compelled to terminate the Agreement under section 77(2) of the Insurance Companies Ordinance. 

34.  Section 77(2) makes it an offence for anyone to hold himself out as an insurance broker when he is not an authorized insurance broker.  The section only prohibits the Defendant from holding himself out as an insurance broker during the period of suspension of his licence.  It does not compel him to terminate his Agreement with the Claimant.  Termination of the Agreement was not the only option.  PIBA’s letter of 4 May 2005 informed the Defendant that he could obtain his PIBA registration by completing the CPD record form, giving an explanation and paying $800 administrative fee. If he had the requisite CPD credits, he could have his registration restored after three days and continue to work as a representative promoting both insurance and investment products.  In fact PIBA did not require the Defendant to terminate his Agreement with the Claimant.  PIBA only forbade him from accepting new and renewal businesses.  PIBA even required him to continue serving his existing clients but without remuneration.  The suspension does not have the effect of mutually discharging the parties from the Agreement as if it were a frustrating event.  If this were raised as a ground of appeal, I would have dismissed it as well.

35.  As for Ground (6)(f), the Defendant alleges the Claimant of failing to cancel his registration with the Claimant’s company within seven days of his termination of the Agreement thereby preventing him from working for other insurance brokers.  This is neither a point of construction nor a relevant issue.  The Defendant has made no counterclaim for the Claimant’s conduct.

36.  Ground (6)(g) does not raise any issue of construction of the Agreement.  It alleges that the Claimant was in breach of implied terms of the Agreement.  I have indicated my reservation about implying any terms into the Agreement in view of the entire agreement clause.  I have also indicated my doubts about the propriety of implying any terms under the Moorcock principle imposing on the Claimant an obligation of providing training for the Defendant.  Insofar as reliance on the term implied by the Adjudicator, it is a finding of fact that there was no breach of implied term.

37.  On the whole, Ground (6) is repetitive, badly drafted and embarrassing.  This ground of appeal must be dismissed.

Conclusion

38.  For the above reasons, none of the grounds of appeal is substantiated.  Accordingly, this appeal must be dismissed with costs.  The Respondent is represent by its director.  There is no substantial legal costs involve.  I assess the Respondent’s costs of this appeal to be $500.