PET LINE CO LTD v. WONG WAI HEI

DCCJ 5515/2015

[2019] HKDC 227

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5515 OF 2015

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JUDGMENT

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INTRODUCTION

1.  The plaintiff is a retailer of pet products.  It operates a chain of about 18 shops in Hong Kong under the trade name of “Pet Line” and employs about 46 people.

2.  The defendant was its employee from December 2007 to August 2013.  Initially she worked as a salesperson at the Causeway Bay shop.  She was eventually promoted to the position of store supervisor in October 2009.  From November 2010 and until her last day of employment, she worked as the store supervisor at the plaintiff’s shop in Mongkok.

3.  In mid-July 2013, the plaintiff received an enquiry from its bank concerning a customer’s credit card being double charged at the Mongkok shop.  In the same month, a customer made a complaint to the plaintiff against the defendant.  The customer said the defendant had made use of the former’s VIP membership to purchase products.  Her receipt included two items which she had not purchased.  Further, although she made payment by EPS, the receipt showed that the payment was partly settled by gift vouchers.  The customer demanded an explanation from the plaintiff. 

4.  The incidents prompted the plaintiff to conduct an investigation, including a review of its invoice records and CCTV recordings of the Mongkok shop.  The investigation, the plaintiff says, revealed a series of wrongdoing committed by the defendant while she worked there.  The plaintiff suffered losses as a result.

5.  The plaintiff terminated the defendant’s employment contract on 7 August 2013 with immediate effect.

6.  In this action, the plaintiff claims against the defendant for her wrongdoing which took place between June 2011 and August 2013.  The plaintiff’s initial claim amount, as confirmed in opening, was in the total sum of $444,843.86.  In the course of cross-examination, the claims of some of the items were adjusted downwards as it became clear that those claims would not be unsustainable on the plaintiff’s own evidence.  The amount originally claimed can be broken down into the following six heads of claims:-

The 24 transactions	$4,699.20
Unwarranted discounts	$36,747.00
Cash vouchers	$12,106.50
Unnecessary credit card charges	$248.49
Unaccounted for goods	$100,321.00
Unwarranted discretionary bonus	$290,721.67
Total	$444,843.86

7.  In closing submissions, Mr Matthew Ngai, appearing for the plaintiff, summarised its causes of actions as follows: “negligence and/or breach of duties, further or in the alternative, for unlawful means, money had and received and/or tort of conversion”.  

8.  At trial, the plaintiff called three witnesses. They are employees of the plaintiff, all working in administrative roles at the plaintiff’s office (ie not at the retail shops).  They were involved in the investigation of the defendant’s alleged wrongdoing.  Their evidence is, in essence, a report of what they had found in the investigation, having gone through the internal records and the CCTV recordings.  They also gave an account of the plaintiff’s internal policies and practices insofar as they relate, or provide the background, to the alleged wrongdoing.  The plaintiff’s three witnesses are:-

(i)   Leung Ho Yan – Her title is executive assistant and she reports directly to a director of the plaintiff.  She is in charge of handling human resources matters.

(ii)   Kwong Ngan Yuk (Connie) (“Kwong”) – She is a senior accounts clerk.  She is in charge of handling expenses records, cheque payments, salary payments, sales records and accounting records for the plaintiff.

(iii)   Leung Hoi Yuen (“Leung”) – She joined the plaintiff as a clerk in 2003.  Her responsibility includes overseeing the operation of the retail shops, conducting stocktaking, managing inventories and reviewing from time to time the CCTV recordings taken at the shops.

9.  The defendant gave evidence at trial.  She called no other witness.  She denies the alleged wrongdoing.

BACKGROUND

10.  In order to gain a proper understanding of the parties’ cases, it is necessary for me to lay out some background information. It relates to the Mongkok shop, the CCTV recordings disclosed by the plaintiff, its internal records, the routine of how customer payments are processed at the shop, the plaintiff’s policies and practices regarding cash coupons, gift vouchers, VIP membership, deposits and refunds and, lastly, the communication between the shop and the office.  The facts set out in this section can be objectively deduced from the evidence.  They are either agreed or not in serious dispute, save for areas on which I indicate that the parties disagree.

The Mongkok shop

11.  The defendant was the store supervisor of the Mongkok shop.  During that time, there were about four other staff members, some full-time and some part-time, all working under her supervision. 

12.  The shop was open from 10:30 to 22:30 every day.  The staff worked on three shifts.

13.  A large collection of pet products is displayed on shelves.  The shop carries many different types and brands of products.  In support of its claim for unaccounted for goods, the plaintiff has prepared excel tables of the shop inventory as of 3 September 2011 and 9 August 2013 (“the 2011 inventory table” and “the 2013 inventory table”).  They reveal a wide and varied assortment of pet products.  In the evidence, it was suggested that the shop carries thousands of goods. 

14.  At the back of the shop is a counter where customers make payment.  Behind the counter is a small space where two persons can just about stand next to each other at the same time.  There are two cashier registers, which were referred to as “Cashier 01” and “Cashier 02” at the trial.  They are in fact two computers each comprising a monitor screen and a keyboard sitting on the counter table and a drawer, where cash is kept, under the table.  The drawer would automatically pop open upon the staff pressing “Enter” to complete a purchase transaction.  Between the two cashier registers sit two small printing devices from which customers’ receipts would be printed.  Below the table are some compartments which store, for instance, the credit card swiping device.  Next to Cashier 01, there is what appeared to be a side cabinet with drawers, in which plastic bags and other things are stored.

15.  I have sought to describe the setting in detail as the details feature prominently in the plaintiff’s case.  For instance, the plaintiff says that in some instances which are captured by the CCTV, the defendant can be seen putting cash received from customers not inside the register drawer but instead slipping it into some gap between the table and the drawer.  In other instances (also captured on the CCTV), the plaintiff says that after the defendant received payment from the customer and the customer left the shop, no receipt can be seen being printed out when there should have been one. 

16.  Lastly, on the layout of the shop, there is a store room behind the counter.  In the CCTV footage, the defendant can be seen on some occasions going through a door leading to the store room and coming out with some papers held in her hands. 

The CCTV recordings

17.  CCTV cameras are set up to monitor the shop. For obvious reasons, one of them is placed pointing towards the small space behind the counter where the staff would be handling customers’ payment.

18.  Due to problems with its system setting, the recording time as shown on the CCTV footage is different from the actual time of the scene captured.  The actual time of the recordings relied on by the plaintiff have been worked out and is not in dispute between the parties.  The cross-examination was conducted with reference to the actual time.  The authenticity of the footage is also not in dispute, although Mr Poon Siu Bunn, counsel for the defendant, highlighted in cross-examination and submissions that the footage did not cover the full duration of some of the transactions complained of.

19.  The recordings, as is common with CCTV recordings of this kind, are not of very high resolution.  But the quality is good enough to see what was going on generally at the shop.  There is no dispute as to the identification of the defendant.  One can generally tell, for instance, if the defendant was holding something in her hands but it is sometimes difficult to tell with confidence what exactly she was holding.  For example, one may not easily tell how many bank notes or items of products she was holding in her hands. 

The internal records

20.  The plaintiff’s documentary evidence comprises transaction records relating to the alleged problem transactions.  They were referred to as invoices at the trial, although in the retail context we would more often call them receipts issued to customers.  There is no issue taken that these invoices, which are printouts from the plaintiff’s internal records, reproduce the information of the transactions in question. 

21.  The invoices show, amongst other things, the date and time of the transactions, whether the payment was made at Cashier 01 or Cashier 02, the code numbers, names and quantities of the products purchased and their prices and discounts (if any).  They also set out how the products were paid for – by cash, credit card, EPS, cash coupons or gift vouchers.  If the customer is a VIP member, his name and VIP number would also be shown. There is also a space marked “營業員” showing the name of the staff handling the transaction.  But in some of the invoices, that space was left blank.  It is not in dispute that the defendant was identified by her English name “Cabia” or simply as “C” in the invoices.

The payment routine at the shop

22.  Leung was familiar with the plaintiff’s sales operation and procedures at the retail shops as well as inventory matters.  In her oral evidence, she explained the operation of the cashier system, the content of the invoices and the plaintiff’s policies and practices on VIP membership, discounts, cash coupons, gift vouchers, deposits and refunds.

23.  I set out below the routine sales process carried out at the shop, which is largely taken from Mr Ngai’s closing submissions.  Mr Poon confirmed that the defendant does not take issue with the following matters:-

(i)   Similar to our daily shopping experiences, the staff would process a customer’s purchase by first scanning the bar codes of the products into the cashier system.  The system would recognise the products and automatically generate the amounts payable, taking into consideration any promotional and VIP discounts (if applicable), and also the total sum payable.  The staff would then take payment from the customer.

(ii)   The staff would record her identity manually on the system to show that she was the handling staff for the purchase.  However, the purchase could still be completed on the system even if the staff, for whatever reason, did not enter her identity.  

(iii)   Where the customer is a VIP member, his membership number would be manually entered into the system. The staff can retrieve the customer’s membership number from the system by using the member’s phone number to check against the record.

(iv)   The corner of the monitor screen would blink when the staff records on the system that the customer is a VIP member or a customer collecting stamps on a stamp card.

(v)   Upon choosing a payment method on the system, the staff would complete a customer’s purchase by pressing “Enter” and the drawer of the cashier register would automatically open, regardless of which payment method has been chosen.

(vi)   A receipt would be printed out at about the same time when the drawer opens.

(vii)   Alternatively, instead of completing the purchase, the staff is able to put the transaction on hold. In the meantime, the staff can handle other transactions on the system but would be able to bring the on-hold transaction back up and continue to complete it.  (On the plaintiff’s case, it would appear that it was due to this “put on hold” function that the defendant was able to carry out many of the alleged problem transactions.)

24.  Leung gave an account of how the content of the invoices should be interpreted.  The following matters are largely common ground unless I indicate otherwise:-

(i)   The time shown at the top of an invoice is the time when the staff first inputs the purchase into the system, as opposed to the time the purchase is completed.  (Mr Poon’s cross-examination was conducted on this basis.  However, the defendant, in her oral testimony, disagreed.  The defendant’s position on this point is on the whole inconsistent and hence not clear.)

(ii)   If the staff does not enter her identity on the system, the space marked “營業員” would be shown blank.

(iii)   The type of payment would be seen near the bottom of an invoice.  If only one payment is made by the customer for a transaction, the time and date of the payment would not be shown.  However, if the customer made more than one payment for a transaction, the time, date and amount of each payment would be shown on the invoice.

(iv)   As an example, there is an invoice recording a transaction which took place on 7 April 2012.  On its face, the customer paid by cash coupon, cash and visa card at different times. The relevant part of the invoice read:-

“COUPON尊貴 $20 $60.00 2012/04/07 13:46

Cash $140.00 2012/04/07 13:46

VISA $420.00 2012/04/20 19:37”

The plaintiff’s VIP membership, discounts and other policies

25.  Leung also explained the plaintiff’s practices on VIP membership, discounts, cash coupons, gift vouchers and policies concerning deposits and refunds.  The defendant does not fully agree with Leung’s account.  The following account is largely not disputed unless I indicate otherwise.  

26.  On VIP membership and benefits:-

(i)   If a customer purchases goods amounting to $1,000 or more in one single transaction, he is immediately eligible to become a VIP member and is entitled to the VIP discount on that transaction and future purchases.

(ii)   Alternatively, the plaintiff runs a “stamp card” (積分卡) system for any customer to collect stamps upon each purchase.  When a customer has collected sufficient stamps, he becomes eligible to join as a VIP member.  Upon joining, he would be given a set of five $20 cash coupons (優惠劵).  The plaintiff no longer has any record of the stamp cards given out to customers.  These cards were made of paper with a bar code printed on it and they were either in half size or full size of a credit card.

(iii)   As a VIP member, the customer enjoys either discounts of 5% or 10% off, depending on the products, or may collect points upon each purchase. 

(iv)   The VIP member can redeem the points and in exchange receive $50 cash coupons.  The VIP member needs to redeem the points before 1 April of each year. Any unredeemed points by that date are cancelled.

(v)   Each VIP member is given a membership card, which is a plastic card about the size of a credit card, either in dark green or a combination of orange on one side and beige on another.

27.  On cash coupons, gift vouchers and other discounts:-

(i)   When a customer uses a $20 cash coupon for payment, in the payment section of the invoice, it would show the words “Coupon 尊貴 $20” or “Coupon 新春 $20”.  The latter was a promotional coupon given to customers during Chinese New Year.  The cash coupons, when redeemed, do not have to be read or scanned into the system.

(ii)   When a customer uses a $50 cash coupon for payment, in the payment section of the invoice, it would show the words “$50 Cash Coupon”.  These coupons are marked with individual numbering, with each number beginning with a “CC” prefix.  The cash coupons have to be scanned and read into the system upon redemption.

(iii)   Any customer may purchase gift vouchers (現金劵) in the value of $100 each.  Gift vouchers should be distinguished from cash coupons, whether in the value of $20 or $50.  The latter are not available for purchase but only given to customers as gifts.  When a customer uses $100 gift vouchers for payment, in the payment section of the invoice, it would show the words “$100 Gift Voucher”.  The gift vouchers are marked with individual numbering, with each number beginning with a “GV” prefix.  The gift vouchers, when used, have to be scanned and read into the system.  They are effectively treated as cash (save that no change is given for purchase of less than $100) and may be used by anyone presenting the physical vouchers to the shop.  When a staff member accepts a $100 voucher, the normal procedure would be for her to staple the voucher to the invoice and return it to the office.

(iv)   From time to time, as part of its promotional efforts, the plaintiff would offer free gifts to customers upon making purchases meeting certain pre-set amounts.  A free gift would be shown as an item bought but in the payment section of the invoice, the same free gift would appear as “Coupon” so as to balance out the value of the gift.

(v)   The plaintiff offers a special staff discount of about 30 to 40% off to its employees which are substantially better than the promotional discounts or VIP discounts.

28.  On deposit arrangement:-

(i)   The plaintiff says that deposit arrangement is not common.  There would be occasions where a customer wishes to purchase a new product which is not yet in stock and to which no bar code has yet been assigned.  Only in such circumstances would the staff accept a deposit payment from the customer for the purchase of the new product.

(ii)   On the defendant’s case, deposit transactions would appear to be quite common.

29.  On refund arrangement:-

(i)   When a customer demands refund of a product bought, the staff does not need to scan the product into the system.  She can simply bring up the original purchase invoice on the system.

(ii)   A refund transaction must be approved by the store supervisor.

(iii)   The plaintiff says that products can only be refunded by exchange of other goods.  The refund cannot be by way of cash or gift vouchers.  The defendant disagrees.  She says that the plaintiff allows refund by other goods and gift vouchers, but not cash.

30.  On other practices:-

(i)   It will be seen that there are transactions in which the defendant used her own credit card to make payment on behalf of customers.  The plaintiff contends that such conduct was highly irregular and strongly suggests wrongdoing on the part of the defendant.

(ii)   The defendant says that in the internal circulars issued by the plaintiff, there was no express policy prohibiting staff from doing so. 

(iii)   The plaintiff’s position is that it has never allowed such conduct.  It is not practised by other staff.  Further, as an experienced salesperson, the defendant should have reasonable and adequate knowledge of what type of conduct would be permitted and what should not be done by a staff member at a retail store.

31.  I shall have to go through the transactions which the plaintiff says are problematic in detail below.  As a general introduction, the basis of the plaintiff’s allegation of wrongdoing lies in some peculiar features found in transactions which, according to the records, were handled by the defendant.  The peculiar features comprise:-

(i)   A customer was recorded to have paid for a purchase by split payment, ie by using more than one payment method.  It is readily understandable why a customer may pay by cash and by cash coupons in one transaction.  But it is not immediately apparent why the customer would choose to pay partly by cash and partly by credit card (or EPS) in one single transaction.

(ii)   A customer was recorded to have made payment under one invoice on two separate dates.  This is peculiar given the amounts involved in the retail sales are often not so high as to justify part payment.  In cross-examination, Kwong remarked that from her own experience working for the plaintiff, she rarely came across payments for one transaction being split over two days.

(iii)   As noted above, the defendant from time to time made payment on behalf of customers using her own credit card.  In examination-in-chief, Leung said that the plaintiff knew of no instance where the plaintiff’s staff would use his or her own credit cards to settle payments for customers.

32.  In reply to the above, a general theme running through the defendant’s response is that the plaintiff is a sales oriented company and that it would allow, tolerate or consent to by silence certain sales conduct if it could boost the sales.  In any event, some of the sales conduct now complained of were not expressly prohibited by the plaintiff.  Another general theme is that the Mongkok shop was often understaffed, and where there were many customers, the staff might make mistakes.  The defendant says she was always busy and often had to serve more than one customer at the same time.  She gave an example in which a customer simply placed cash on the counter, did not wait to be served and took the goods away since he did not want to wait in the queue. 

The communication between the office and the shop

33.  It would appear from the evidence that there is regular communication between the plaintiff’s staff at the office and the sales staff at the shop.  From time to time, the office staff, such as Leung, would conduct random inventory counts of specific products at the shop.  It is common ground that where shortfall of goods is found, deductions would be made from the salaries of the shop staff to compensate the plaintiff for the lost goods.  The staff at the shop would share such losses equally.

THE EVIDENCE

34.  In assessing credibility of witnesses where dishonesty is alleged, Mr Ngai referred me to the remarks of Robert Goff LJ in The Ocean Frost [1985] 1 Lloyd’s Rep 1 at 57:-

“Speaking from my experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth.”

35.  The plaintiff’s case against the defendant is primarily built on its internal records and the CCTV recordings and is the end-product of the investigation conducted by the plaintiff’s office staff. The plaintiff’s witnesses testified to their participations in the investigation (most notably, Leung in respect of the 24 transactions) and to the general operation of the shop and the plaintiff’s policies and practices. Based on their investigation, the plaintiff invites the court to draw the inference that the defendant was engaged in various wrongdoings as alleged.

36.  I shall have to go through the problem transactions in detail below.  Having considered the extensive materials before me, I find that the testimony of the plaintiff’s witnesses is on the whole in line with the contemporaneous documents.  This is not surprising as a large part of their evidence is effectively a recitation of what is shown in the invoice and the CCTV recordings.  The value of their evidence lies in their interpretation of the materials against the backdrop of usual retail sales practices and the relevant company policies and practices adopted by the plaintiff.  Their testimony also accords with common sense and is in line with our everyday shopping experience at a retail shop of the plaintiff’s nature, ie a chain of shops targeting the mass market segment, as opposed to the luxurious or high-end market.  This means that even for an enthusiastic sales staff, one would not normally expect her to go out of her way or do something out of the ordinary in order to generate more sales. 

37.  There is no apparent motive why any of the plaintiff’s witnesses would choose not to tell the truth when testifying.  They are after all only staff members of the plaintiff, not its owners. Furthermore, they all gave evidence in a straightforward and matter-of-fact manner. 

38.  Amongst the three, Leung can be described as the key witness.  She was cross-examined at length over the 24 transactions.  It is clear from her answers and the manner in which they were delivered that she is very familiar with the plaintiff’s practices and operations.  Her oral testimony was balanced and convincing.  She was able to highlight the peculiar features which she could see in the problem transactions with consistency.  But at the same time she was not hesitant to admit what she could not see or deduce from the materials.  She also readily admitted that there were errors in some of the plaintiff’s tables and calculations when those were pointed out to her.   Mr Poon’s cross-examination was skilful, thorough and incisive.  He had a masterly grasp of the minute details of the materials, including the voluminous invoices, excel spreadsheets and CCTV recordings.  His questions were however comfortably matched by Leung’s answers which were generally straightforward, consistent and coherent.

39.  On the whole, I find that all the three witnesses of the plaintiff are credible and reliable witnesses.  Their evidence should be accepted save for those errors or inaccuracies which are manifest on the face of the materials and which they have in fact admitted to in cross-examination.  I consider that the errors are genuine and honest mistakes.  When one considers the wide range of assorted products which are being sold at the shop, there is clearly room for mistakes.

40.  By contrast, the defendant’s evidence is far from satisfactory.  This sheds a very poor light on her credibility as a witness. 

41.  I accept that the plaintiff’s investigation has revealed some very unusual and highly suspicious conduct on the defendant’s part. Apart from the peculiar features identified in para 31 above, on a number of occasions, the CCTV footage shows that after receiving cash from the customer, the defendant put the cash inside some gap between the counter table and the cashier drawer when she was supposed to put it inside the cashier drawer. Such conduct is highly irregular and immediately calls for an explanation.  In the absence of one, the conduct points to some dishonest intention or ulterior motive on her part.  As we shall see, in many cases, the defendant is not able to give any explanation for such conduct.  In other cases, her explanation is simply far-fetched and incredible. 

42.  Mr Poon submitted that the court should take into account the fact that the vast array of isolated incidents (particularly the 24 transactions) took place a few years ago.  It would be impossible for the defendant to fully recall whether and how she had handled the transactions.  While I accept that memories would fade over time, the problem with the defendant’s testimony is however that in respect of some of the transactions, when the CCTV footage was played (and re-played) to her, she simply refused to agree to what was plainly shown in the footage.

43.  To sum up, where the plaintiff’s evidence and the defendant’s come into conflict, I prefer the former to the latter.  This would mostly concern the general operation at the shop and the practices and policies of the plaintiff.  I also find that the plaintiff has sought to disclose and produce all the relevant materials relating to the problem transactions.  I reject any suggestion (if any) that the plaintiff might be withholding any materials which are relevant but which may be adverse to its case.

44.  It must however be borne in mind at this juncture that notwithstanding these findings, the issue of liability in each transaction ultimately turns on the cogency of the plaintiff’s evidence, on its own as well as when viewed against the defendant’s case, if there is one.  Where fraudulent behaviour is alleged, the cogency of the evidence must be assessed applying the standard enunciated in Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563, that is to say, the civil standard of proof on a balance of probabilities but flexibly taking into account that “the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability” (at 586); see also Nina Kung v Wang Din Shin (2005) 8 HKCFAR 387 at paras 182-184. 

45.  As regards the scope of her duties as an employee to the plaintiff, the defendant accepts that:-

(i)   She owed a duty to exercise reasonable care and skill in the course of carrying out her work and discharging her job responsibilities;

(ii)   She should serve the plaintiff with good faith and fidelity.  What the duty of fidelity required of her was honesty and the standard to be applied is that of the man of ordinary honesty and intelligence; if he would regard the employee’s acts as dishonest towards her employer, the implied duty of fidelity would prohibit those acts: Brearley and Bloch QC, Employment Covenants and Confidential Information (3^rd ed) at paras 3.1 and 3.14.

46.  I shall deal with the plaintiff’s heads of claim in turn, in each case setting out the plaintiff’s case, the evidence it relies on and the inference it invites the court to draw, followed by the defendant’s rival position.

THE 24 TRANSACTIONS

47.  The plaintiff says that the defendant had concocted and carried out 24 sham transactions in dishonest or negligent manners and had derived benefits from them.  The transactions are revealed in CCTV recordings and reflected in the paper trails.  These transactions took place during the period between January and July 2013.  At opening, the plaintiff stated that it has suffered loss in the total sum of $4,699.20 under this head.  (As mentioned above, however, some items of claims transpired to be unsustainable even on the plaintiff’s own evidence.)  It is worth mentioning that although the total amount claimed under this head is very small, this head took up a large part of the time spent on cross-examination at the trial.

Transaction No 1

48.  The transaction took place on 22 and 23 June 2013.  It relates to invoice no 55064.

49.  On the face of the invoice, a VIP customer called Tracy Yip purchased various products in the total sum of $2,134.  For most of the items, she enjoyed discounts of 5% or 10% off.  She also received a free gift worth $100.  The payment was however settled by two different visa cards on two consecutive days – the first payment was for $506 and processed at 18:15 on 22 June whereas the second one was for $1,628 processed at 22:44 on 23 June.

50.  The visa card payment slips show that the first payment was made by a cardholder called Ping Kwan Leung whereas the other cardholder was the defendant.

51.  The CCTV footage shows:-

(i)   Customer A made payment with credit card at 17:58 but was not given a receipt.

(ii)   Customer B paid cash but was not given a receipt.  The defendant put the cash inside a gap near the cashier drawer and underneath the counter table.  The cashier drawer did not pop open at any time.  The defendant then retrieved some cash from another drawer (not the cashier drawers) and gave the change to Customer B.  This happened at 18:06.

(iii)   Customer C also paid cash.  She was not given a receipt either.  The drawer did not pop open.  This happened at 18:15.

(iv)   Customer D also paid cash at 18:18.  Customer D appeared to be filling out a form to register as a VIP member. 

(v)   Then on the following day, at 22:47, the defendant took out a card from her wallet and another staff inserted the card into the credit card machine.  When that happened, there were no customers at the shop.  This corresponds with the time of 22:48 shown on the visa card payment slip in respect of the payment of $1,628 made by the defendant.

52.  Based on the invoice, the visa card payment slips and the CCTV footage, the plaintiff says that contrary to the invoice showing a single transaction by a VIP member, the products shown on the invoice were in fact sold in four unrelated transactions to four separate customers. The defendant had made use of the ‘put on hold’ function of the cashier system and did not complete the purchases made by Customers A, B, C and D immediately after the respective payments were made.  She only caused the purchases to be completed on the system when she made the second payment with her own credit card at about 22:48 on the following day.  The result was one single invoice. By combining the purchases made separately by four customers, only one of whom was a VIP member, into one single transaction, she pocketed the VIP discount of $194 and a free gift of $100.  This is because while the VIP discounts were applied to the purchases of Customers A, B and C according to the invoice, the three customers had in fact paid for their purchases at full prices without any VIP discount. 

53.  At the trial, Mr Ngai referred to this type of sham transaction as a “combined transaction”.

54.  Accordingly, the plaintiff claims a total sum of $294. 

55.  The defendant denies that it was a combined transaction. In fact, her case is that Tracy Yip was the customer buying all the products shown in the invoice.

(i)   Tracy Yip was at the shop on 22 June.  She wanted to purchase a cage product called “飛機籠”, which was one of the items shown in the invoice.  But there was no stock at the Mongkok shop. 

(ii)   Upon checking, it turned out that it was in stock at the Ma On Shan shop, which was near Tracy Yip’s home.  Hence the defendant asked the Ma On Shan shop to keep the product for Tracy Yip so that she could collect it there later. 

(iii)   On that day, Tracy Yip only made a partial payment of the invoice.  She took away those products for which she had paid. 

(iv)   According to the records now available, the defendant believes that on the following day, Tracy Yip collected the cage product and the other products at the Ma On Shan shop.  The defendant paid the balance of the invoice for her by credit card at the same time because only then would the sales be recorded in the books of the Mongkok shop, and not the Ma On Shan shop.

(v)   The defendant does not understand why there was a visa card payment slip connected with this invoice showing the name “Ping Kwan Leung”.  She cannot now remember if Tracy Yip was accompanied by someone else on the day.

56.  This is the defendant’s primary position.  But if the court finds that it was indeed a combined transaction, she argues that the combination has not caused any loss to the plaintiff for the following reasons.

57.  First, Customers A and C were both VIP members and would have been entitled to VIP discounts in their own rights.  The CCTV footage shows that when Customer A made payment, he handed over two cards to the defendant.  The defendant says that they would have been a credit card and a VIP membership card.  The CCTV footage also shows that Customer C passed a card to the defendant who then scanned it at the register and Customer C also handed cash for the purchase of one green bag of diapers.  Customer C, the defendant says, must also have been a VIP member entitled to discount in any event.

58.  Secondly, the CCTV footage shows that Customer B had purchased 10 cans of “MONPETIT” pet food with a total value of $80.  And the invoice shows that no VIP discount was in fact given for those products. Therefore, the plaintiff again sustained no loss arising out of Customer B’s purchase.

59.  Lastly, for Customer D, as she was eligible to register as a VIP member, she would have been entitled to VIP discount in any event.

60.  As regards the free gift, Mr Poon submitted that:-

(i)   The plaintiff’s policy and practice on giving out free gifts is not clear on the evidence.  For example, it is not known precisely how much a customer must spend in a transaction in order to receive a free gift.  Leung said that she cannot now recall the details. 

(ii)   Here, it might well be the case that Customer D might have spent enough to earn the free gift in question.

(iii)   Furthermore, the CCTV footage does not show exactly what Customer D took away with her when she left the shop.  She was holding some bags containing unknown products as the footage does not show how those bags were packed.  Mr Poon submitted there is no way to ascertain whether the products inside the bags had included the free gift or not. 

(iv)   In any event, there is no evidence showing the actual act of the defendant taking the free gift away.  Mr Poon therefore submitted that the claim for free gift must fail in view of the lack of evidence.

61.  I am of the view that the CCTV footage, the invoice itself and the two visa card payment slips relied on by the plaintiff show clearly that the defendant was deliberately combining four separate transactions of Customers A, B, C and D into a single one.  The act of combination is highly irregular and questionable and gives rise to a strong inference of a dishonest motive on the defendant’s part to benefit from the combination. 

62.  I reject the defendant’s factual case that all the products shown were in fact sold to Tracy Yip.  First, it is simply inconsistent with the contemporaneous CCTV footage.  Secondly, based on our everyday shopping experience in Hong Kong, it seems far-fetched to suggest that a sales staff of a retail shop would pay for goods using her money, even on a temporary basis, on behalf of a customer.  In this case, the defendant is not even alleging that Tracy Yip was a regular customer, with whom she had a very close relationship.  In fact, Tracy Yip was only joining as a VIP customer. The defendant has not tried to explain how she eventually got reimbursed by Tracy Yip.  On the whole, I find the defendant’s version of events incredible.

63.  Based on the prices shown on the invoice, the CCTV footage and Leung’s confirmation in cross-examination, I find that Customer A paid for his purchases without any VIP discount.  The payment by credit card in the sum of $506 matches the sum of the prices of five items shown in the invoice, namely:-

(i)   One item of “NY NutriDent Extra Fresh 125支 (Mini)” – the original price was $268;

(ii)   One item of “Asuku海鮮魚絲200g” – the original price was $128; and

(iii)   Three items of “Asuku Nature Deli營養條150g” – the promotional price was $110 for three items.

64.  The plaintiff therefore suffered loss in respect of the transaction with Customer A in the sum of $25.3, ie the difference between the sum actually paid by Customer A ($506) and the sum of the prices shown on the invoice after VIP discount ($480.7). 

65.  As regards Customer B, Mr Poon’s submission is correct.  The plaintiff suffered no loss. 

66.  As regards Customer C:-

(i)   I accept Mr Poon’s submission that it is for the plaintiff to substantiate its factual case that Customer C was not a VIP member. 

(ii)   The resolution of the CCTV footage is simply not high enough for one to tell whether the card which Customer C handed over to the defendant was a VIP membership card or, as suggested by Leung in cross-examination, a stamp card.  Hence the handing over of a card is evidentially equivocal on this issue.

(iii)   However, even though there is no direct evidence on this point, I consider that when the defendant’s motive is taken into account, an inference can be drawn that Customer C was not a VIP member. 

(iv)   As remarked above, the act of combination in itself is capable of giving rise to an inference of a dishonest motive. The defendant has never sought to explain why she combined the unrelated purchases into one single transaction.  She must have done so for a reason.  The obvious reason here was that there was money to be made by combining because Customer C was not a VIP member.

(v)   The plaintiff therefore suffered loss in respect of the transaction with Customer C in the sum of $11.9, ie the difference between the sum actually paid ($239) and the sum shown on the invoice after VIP discount ($227.1)

67.  On the other hand, I accept Mr Poon’s submissions on the free gift.  There is no evidence before me how much a customer would need to purchase in order to receive a free gift.  Customer D, who was eligible to register as a VIP member, could well have purchased enough products to receive one.  She might have taken the free gift away with her in those plastic bags shown on the CCTV.  There is insufficient evidence to show that the defendant took the free gift herself.  I reject the claim for the value of the free gift.

68.  Accordingly, I allow the sum of $37.2 in respect of Transaction No 1.

Transaction No 2

69.  The transaction took place on 22 June 2013.  It relates to invoice no 55076.

70.  On the face of the invoice, the purchase was made by a VIP customer called Peggy for various items in the total sum of $1,684.  For a number of the items, the customer enjoyed either 5% or 10% off. A free gift worth $80 was given to her.  The payment was however made by cash in the sum of $187 and visa card in the sum of $1,497. 

71.  The plaintiff produces two visa card payment slips, which it says relates to this invoice, showing one payment by Peggy Lee in the sum of $1,067 at 12:22 and another payment by an unknown person in the sum of $430 at 20:41.  The material point here is that the latter amount exactly matches the original price of one of the items in the invoice, namely “IN (牛肉味) 6.75lb”.  On the invoice, however, this item was sold with a discount of $21.5.  Also, the time of the credit card payment is very close to the time appearing in the invoice, namely 20:47.

72.  The CCTV footage shows that Customer E purchased one bulky item, paid for it by credit card and left the store.  No receipt was issued to the customer.  Shortly afterwards, the defendant took the visa card payment slip to the other cashier register, Cashier 01, and worked on it for a while. 

73.  The plaintiff’s case is that it was a combined transaction.  What happened was that Customer E paid with visa card for the product “IN (牛肉味) 6.75lb” at the original price of $430.  The defendant then combined this transaction with an earlier transaction made by Customer F, ie Peggy Lee, who was a VIP customer.  By doing so, the records would show that the product “IN (牛肉味) 6.75lb” was sold at a discount when Customer E in fact paid the full price.  The defendant therefore pocketed the sum of $21.5 from the combination.  The plaintiff says that the defendant also took the free gift.

74.  The plaintiff is not however able to produce the CCTV footage showing Peggy Lee’s purchase.  The plaintiff has not offered any possible explanation why the invoice showed a cash payment in the sum of $187. The visa card payment of $1,067 by Peggy Lee is clearly not enough to settle the balance of the invoice.

75.  The defendant does not have a positive factual case in respect of this transaction.  In submissions, Mr Poon made the following points:-

(i)   There is no explanation why the plaintiff chose not to disclose the CCTV footage showing Peggy Lee’s purchase, which would shed light on what she had bought.  There is therefore no precise evidence showing the nature of her purchase.

(ii)   The cash payment of $187 remains inexplicable.

(iii)   There was a handwritten number “55033” found on Peggy Lee’s visa card payment slip, which is different from the invoice number of 55076 of the present transaction.

(iv)   Customer E might have been a VIP customer and would have been entitled to the VIP discount.

(v)   The defendant repeats the submissions on free gift as set out in para 60 above.

76.  I am of the view that, notwithstanding the inexplicable features highlighted above, the evidence is clear enough to show that Customer E’s transaction was for a single item and in the sum of $430.  As noted above, the settlement of one invoice by two payment methods is in itself a suspicious circumstance which should call for close scrutiny.  There must have been a reason for such an unusual settlement method.  In this case, what stand out are (a) the exact match of the original price of the product “IN (牛肉味) 6.75lb” with the amount settled by visa card and (b) the close proximity in time shown on the invoice and the visa card payment slip.  I find that the defendant had wrongfully combined this transaction with at least another purchase made by Peggy Lee and in doing so pocketed the unwarranted VIP discount.

77.  However, on the evidence before me, I am not able to find that the defendant also took away the free gift.  The submissions made by Mr Poon on free gift in respect of Transaction No 1 applies generally to the plaintiff’s claim for free gifts in all the other transactions.  I accept those submissions.  Peggy Lee could have purchased enough products to be eligible for the free gift herself.  She might have taken the free gift away with her.  There is no CCTV footage showing her purchase.  I reject the claim for the free gift.

78.  Accordingly, I allow the sum of $21.5 in respect of Transaction No 2.

Transaction No 3

79.  The transaction took place on 22 June 2013.  It relates to invoice no 55081.

80.  On the face of the invoice, the purchase was made by a VIP customer called Cheuk Mong Ka for various products in the total sum of $578.  The customer paid by visa card. The products included two packs of “日本PT尿片60件”, which were sold together for $450 under a promotional offer.  A further 5% VIP discount applied and the VIP customer therefore paid $427.6 for them.  The time of the invoice was 22:05.

81.  The plaintiff produces two visa card payment slips, which it says relate to this invoice, showing one payment by Iu Ka Po in the sum of $128 at 20:17 and another payment by Yau Kwan Mario/Ho in the sum of $450 at 21:16. 

82.  The CCTV footage shows that:-

(i)   Customer G made payment with a credit card.  The time period captured by the CCTV was from 21:26 to 21:31.  No receipt was issued to him. 

(ii)   The defendant returned to the shop from outside at 22:03.  (The attendance records for the day show that she left duty at 21:00.)  Upon returning, she worked on Cashier 01 for a while.  She was not serving any customer at that time.

83.  Based on the above, the plaintiff says that it was a combined transaction.  What happened was that Customer G paid for two packs of “日本PT尿片60件” at the original promotional price of $450. That amount matches exactly with the amount of one of the visa card payment slips.  The time shown on the CCTV and the payment slip is also very close although there is a slight discrepancy.  But the transaction with Customer G was put on hold on the system.  It was only completed in combination with another customer’s purchase when the defendant returned to the shop at about 22:00.  That was when she produced the invoice in this transaction.  In doing so, the defendant pocketed an unwarranted VIP discount in respect of the two packs of “日本PT尿片60件”.  The plaintiff has not produced any CCTV footage relating to the other customer.

84.  The defendant does not have a positive factual case in respect of this transaction.  Mr Poon’s main challenges to the claim were that there was no CCTV footage produced by the plaintiff showing the circumstances in which the other customer allegedly made the purchase and that there is a discrepancy between the time shown on the CCTV footage and the visa card payment slip as identified above.

85.  In my view, the defendant’s return to the shop at about 22:00 after she had left for the day and her producing an invoice at that late hour without any customer being present is highly suspicious.  The defendant has not sought to explain why she returned to the shop that day and what she was doing at that night.  On balance, in view of the matching figure of $450 in the invoice and the payment slip and in the absence of any explanation from the defendant, I accept the plaintiff’s factual case, notwithstanding the slight discrepancy in the time captured on the CCTV and the time shown on the visa card payment slip.  It should be noted that Leung said in oral evidence (which I accept) that the cashier system was not linked to the credit card machine and that may explain the slight time difference shown on the two systems.

86.  Accordingly, I allow the sum of $22.4 (ie $450 - $427.6) in respect of Transaction No 3.

Transaction No 4

87.  The transaction took place on 23 June 2013.  It relates to invoice no 55153.

88.  On the face of the invoice, the purchase was made by a VIP customer in the total sum of $256.  The sum was settled by visa card payment of $254 and cash payment of $2.  The customer enjoyed a 10% discount on the items bought.  The discount amounted to $28 in total.  The time shown on the invoice was 22:40.  The visa card payment slip however shows a much earlier transaction time of 13:44.  According to the records, there was in fact another invoice with no 25927 created at 13:29 on the same day for $254.  That invoice showed that it was a purchase made by another VIP customer.

89.  The plaintiff says that the invoice no 55153 was not a genuine transaction for the following reasons:-

(i)   The invoice was created at 22:40 when the Mongkok shop would have already been closed for the day. There would be no reason why the defendant would issue an invoice when there was no customer in the shop.

(ii)   The invoice no 25927 clearly matches with the visa card payment slip in terms of the payment amount and the transaction time.

(iii)   Leung confirmed in cross-examination that according to the plaintiff’s investigation, there was only one visa card payment slip for the sum of $254 for that day.

(iv)   It can be inferred that after the shop closed on that day, the defendant fabricated the invoice no 55153 and pocketed the VIP discount of $28.

90.  The defendant has no positive factual case in respect of this transaction.  Her complaints about this claim are that:-

(i)   There is no CCTV footage showing how the invoice no 55153 was allegedly fabricated after the shop was closed.

(ii)   It was Leung’s own evidence that all of the transaction records and sums received on that day were in order.

91.  I have to say that I do not understand the basis of the claim.  The issuance of an invoice at a time when the shop would normally be closed is a suspicious circumstance in itself and may give rise to the inference that the invoice was indeed a fabrication and did not relate to any genuine transaction.  However, even if I make that finding, the plaintiff has not explained clearly how the defendant in fact benefited from the fabrication.  In a combined transaction, the customer actually paid the full price while the plaintiff only received the discounted price.  And that is how the defendant made a gain by pocketing the difference. Contrast that with the present transaction.  There is no evidence of an actual second payment of $254 and it is therefore not understood how the defendant could possibly pocket any difference.

92.  For that reason, I reject the claim in Transaction No 4.

Transaction No 5

93.  The transaction took place on 28 June and 3 July 2013.  It relates to invoice no 55366.

94.  On the face of the invoice, the purchase was made by a VIP customer called Cheung Chi Ming for various products in the total sum of $2,204.  He enjoyed a total discount of $182.  A free gift worth $100 was given to him.  The payment method was peculiar in two respects.  First, the sum was settled by cash in the sum of $204 on 28 June at 18:59 and that was followed by a second payment by visa card in the sum of $2,000 a few days later on 3 July at 22:24.  Second, it was the defendant who made the visa card payment, as shown in the payment slip.

95.  There is no CCTV footage produced by the plaintiff for 28 June.  Leung explained in cross-examination that the recording for that day could not be found.  The CCTV footage for 3 July shows that at about 22:29, in the absence of any paying customer but in the presence of a colleague, the defendant appeared to have made a payment by a credit card taken out of her wallet.

96.  Based on the invoice, the visa card payment slip and the CCTV footage, the plaintiff says that:-

(i)   This transaction was a combined transaction.

(ii)   The plaintiff had made use of the ‘put on hold’ function on the cashier system to combine purchases made by various customers and eventually completed these purchases on 3 July.  In so doing, she pocketed an unwarranted discount of $182 and a free gift of $100. 

97.  The defendant puts forward a positive factual case to rebut the plaintiff’s.  According to the defendant’s recollection, Cheung Chi Ming was a regular customer and he lived in Hunghom.  His girlfriend, Ms Tsang, was also a regular customer.  Cheung often made purchases at the Mongkok shop but collected the products from the Hunghom shop.  It would appear from the invoice that that was what happened.  Cheung first paid $204 on the day of purchase.  He must have collected the products from the Hunghom shop in the evening of 3 July and that was when the defendant used her own credit card to settle the balance of the invoice for Cheung.  By doing it this way, the sales could be recorded in the books of the Mongkok shop.

98.  Alternatively, the defendant argues that there is no CCTV footage showing what happened on 28 June 2013 and, indeed, Leung was not able to tell how many alleged smaller transactions there were and how each of them was carried out.  It was submitted that the plaintiff has simply failed to make out its case.  The defendant repeats its earlier submissions on the free gift.

99.  In my view, the split payment of one single invoice by two methods and on two different days strongly suggest that this transaction was a combined transaction and the purpose was to enable the defendant to pocket those VIP discounts which appeared on the face of the invoice but which were not in fact tendered to the customers.  For the same reasons set out in para 62 above, I reject the defendant’s version of events as incredible.  Having so ruled, however, I am unable to assess the loss suffered by the plaintiff.  Unlike Transaction No 1, the plaintiff has offered no evidence to pinpoint the products bought by the non-VIP customers and the VIP customer (Cheung Chi Ming) respectively in the present transaction.  It is therefore not known which portion of the discounts is unwarranted and which portion unwarranted.  This has rendered the task of assessing the quantum of loss impossible.

100.  For that reason, I reject the claim in Transaction No 5.

Transaction No 6

101.  The transaction took place on 9 July 2013.  It relates to invoice no 26350.

102.  On the face of the invoice, the purchase was made by a VIP customer for five items in the total sum of $1,254, after VIP discounts.  The purchases included four items of “Frontline Plus大狗滴頸殺虱FPL” and one item of “Daiwa日本潔齒棒300g”.  A free gift worth $60 was given.  What is in question is the Daiwa product.  Its original price was $88 and a discount of $4.4 was shown on the invoice.  The purchases were settled by two payment methods – by visa card for $1,171 and by cash for $83. 

103.  The figure of $1,171 was in fact the sum of the total discounted price of the four items of the Frontline Plus products. 

104.  The CCTV footage shows:-

(i)   Customer J paid for the Frontline Plus products with credit card.

(ii)   At around the same time, Customer I paid for the Daiwa product by cash.  The defendant then gave Customer I change from a side drawer, not from the cashier drawer.

105.  Both parties accept that the defendant was combining two transactions with two different customers.  However, they disagree on the reason for the combination.

106.  The plaintiff says that Customer J was a VIP member whereas Customer I was not.  Therefore, in combining the two transactions, the defendant benefited from the discount of $4.4 and also took the free gift.

107.  The defendant suggests two possibilities for the combination.  First, Customer J might have voluntarily suggested to Customer I that the latter’s purchase be combined with his so that Customer J could earn more points or be entitled to more offers.  Second, the defendant was handling two transactions at the same time and might have combined the two invoices by mistake.

108.  As for the free gift, the CCTV footage shows that after the defendant helped pack the Frontline Plus products into a bag, she at one point left the counter area to assist Customer J and walk around the shelves for a while before Customer J departed from the shop.  It is therefore possible that Customer J had indeed taken the gift away with him.

109.  I find the two possibilities suggested by the defendant far-fetched and incredible.  The first possibility of Customer J inviting Customer I to combine the two transactions is not supported by the CCTV footage.  The second possibility must also be rejected as it is apparent that the act of combining the two transactions was clearly deliberate and was not the result of an innocent mistake.  Neither possibility explains why the defendant took out the change for Customer I from the side drawer.

110.  I therefore allow the claim of $4.4 in respect of Transaction No 6.  But I reject the claim for the free gift for the same reasons set out in para 67 above. 

Transaction No 7

111.  The transaction took place on 9 and 12 July 2013.  It relates to invoice no 55950.

112.  On the face of the invoice, the purchase was made by a VIP customer for ten items of goods in the total sum of $1,420. Three items of the product called “First Class Dog chicken 100g” were given as gift.  The point to note here is that, as recorded, the customer paid by cash on two different dates – first on 9 July at 17:58 and then three days later on 12 July at 22:15.  At the top of the invoice, the date and time shown was 9 July and 17:58.

113.  There are two CCTV recordings relied on by the plaintiff:-

(i)   The footage at 17:56 on 9 July shows that Customer K paid at the counter by cash.  Some products were packed into a shopping bag by the defendant.  Towards the end of that footage, the defendant can be seen to have followed Customer K out and away from the cashier area. But the footage stopped before Customer K can be seen leaving the shop.

(ii)   The footage at 22:17 on 12 July shows that a staff, after speaking over the phone, completed a transaction on the cashier system.  When she did that, there was no customer at the counter.

114.  Based on the invoice and the CCTV footage, which record matching transaction times on both days, the plaintiff says that:-

(i)   On 9 July, Customer K had settled the purchase price in full with cash.  However, the defendant wrongfully entered into the system that the customer had only paid $420 as a deposit.  On the system, the transaction was incomplete as there was an outstanding sum of $1,000.

(ii)   On 12 July, the defendant instructed another staff to complete the transaction.  This explains why the invoice shows that there was a second payment of $1,000 on that day.  But no customer was present at the shop at that time.

(iii)   Leung said in oral evidence that it was a risky thing to withhold the entry of $1,000 into the system when the cash was actually received from the customer.

(iv)   In this transaction, the plaintiff claims that the defendant did not give the free gifts to the customer.  The plaintiff suffered loss in the sum of $60.

115.  The defendant does not have a positive factual case in respect of this transaction.  She has no recollection of the incident. Instead Mr Poon mounted the following challenges:-

(i)   There is simply no evidence that the defendant had taken away the free gifts for herself.  The claim is speculative as even Leung only said in her witness statement that the defendant might have kept the gifts for herself (“有可能自己據為己有”). 

(ii)   Furthermore, the first CCTV footage was not complete in that it does not show Customer K leaving the shop.  It therefore remains possible that Customer K might have taken the free gifts at a time after the CCTV footage was cut off.

116.  I am satisfied that Customer K had in fact paid the full price but the defendant entered receipt of $400 only into the system on purpose.  While her conduct is highly suspicious and strongly suggests some ulterior motive, the plaintiff did not apparently suffer any loss as a result. In any event, as Leung accepted in cross-examination, the defendant’s conduct and the free gifts are two separate matters.  As regards the free gifts, I accept Mr Poon’s submission that there is inadequate evidence before the court to conclude that Customer K did not take the free gifts.  It is not clear from the footage why the defendant accompanied him to the other area of the shop.

117.  For these reasons, I reject the claim in Transaction No 7.

Transaction No 8

118.  The transaction took place on 11 July 2013.  It relates to a transaction which the plaintiff says was captured on the CCTV but for which no invoice can be found in its records.

119.  The CCTV footage shows the following:-

(i)   Customer L paid for two items at the counter – “Regal 幼犬糧15lb” and Forthglade canned food.  He can be seen paying cash but he left the shop without the goods.  Shortly afterwards, he came back and paid further cash.  The defendant then packed the goods and gave them to him.  On both occasions, the defendant did not put the cash inside the cashier drawer. Instead she inserted the cash into a gap underneath the counter table.

(ii)   No receipt was issued from the system. 

120.  The plaintiff had no sales record of the two items on 11 July 2013. 

121.  Based on the above, the plaintiff says that the defendant had not entered the transaction into the system at all and had misappropriated the cash.  In cross-examination, Leung accepted that the claim for the purchase price of the Forthglade can was double counted under this transaction and the head of claim for unaccounted for goods.  The plaintiff therefore no longer pursues the claim for $15.

122.  In cross-examination, Leung also accepted that the plaintiff’s records show two difference prices for the Regal product.  In the one-page isolated inventory record produced under this transaction and the 2013 inventory table, the price for the same product as of the same date of 9 August 2013 was shown to be $318 and $348 respectively.  Leung could not confirm which was the correct price.  She explained that the prices of the plaintiff’s goods would generally vary from time to time.

123.  The plaintiff now claims for loss at the lower figure of $318.

124.  The defendant does not have a positive factual case in respect of this transaction.  She has no recollection of the incident. Instead Mr Poon raised the following points in defence:-

(i)   The CCTV footage does not show what eventually happened to the cash received from Customer L.  There is no direct evidence that the defendant had subsequently taken it herself.  There is no evidence showing whether it was the defendant or someone else who tallied the cash earnings of the shop for that day.  It could have been another staff who took away or mishandled the cash.

(ii)   Leung conceded that she had not checked the sales records of the shop for the days immediately preceding or following 11 July 2013 and could not be sure if there might have been a transaction record regarding the products in question created or concluded on another day.

(iii)   The fact that the plaintiff’s documents show two different prices for the same product undermines the accuracy of its claim for unaccounted for goods.  It also makes it difficult for the court to ascertain precisely how much cash was misappropriated by the defendant.

125.  In my view, the evidence is clear and strong enough to support the plaintiff’s claim of misappropriation.  There is no dispute that the transaction took place, as captured on the CCTV.  The defendant had engaged in highly suspicious conduct, namely putting the cash received from the customer in a gap underneath the counter table as well as failing to enter the transaction into the system at the time.  It can readily be inferred that she was doing all these with a dishonest motive.  On balance, I find that she had taken the cash herself.  On the amount, the plaintiff’s internal records clearly contain inaccuracies.  I would assess the claim at the lower figure of $318 in respect of Transaction No 8.

Transaction No 9

126.  The transaction took place on 13 July 2013.  It relates to invoice no 56148.

127.  On the face of the invoice, a VIP customer called Juniana Yaw purchased three packs of “Clean One紙尿褲 (M) 6件” for the total sum of $160.  She paid by tendering two $50 cash coupons numbered CC050005625 and CC05005626 and by cash of $60. 

128.  On the plaintiff’s records, the two cash coupons can be traced back to another invoice no 50872 which, on its face, records that Juniana Yaw obtained four $50 cash coupons on 30 March 2013, which included the above two coupons.  Although not shown on the invoice, it is common ground that $50 cash coupons are generally acquired by a VIP customer by redeeming his VIP points.  It would also be recalled that the cut-off date for redemption of points for each year falls on 1 April.

129.  Hence, strictly according to the records, what happened was that Juniana Yaw received four $50 cash coupons in March 2013 and in a transaction in July 2013, she paid for her purchases by using two of those cash coupons and paid the balance in cash.

130.  However, the CCTV footage on 13 July 2013 shows:-

(i)   The defendant stood at Cashier 01 and received cash from Customer M.  The defendant then went inside the store room at the back of the shop.  When she emerged from there, she was holding two pieces of paper resembling coupons in her hand.  She then ran a barcode scanner over them.

(ii)   The cashier drawer popped open.  The defendant took cash from the drawer and gave it to the customer.  After the customer left, the defendant took what appeared to be a $100 note from the drawer and put them into a gap underneath the counter table. 

131.  In cross-examination, Leung could not confirm whether Customer M was or was not Juniana Yaw.  The plaintiff has not produced any CCTV footage for 30 March 2013.

132.  The plaintiff classifies this transaction as a “voucher transaction”.  The defendant made use of two $50 cash coupons improperly obtained in another problem transaction and exchanged them for cash received from the customer.  The plaintiff therefore suffered loss in the sum of $100.

133.  The defendant does not really recall the incident but insists that the transaction was a normal transaction.  Having reviewed the two invoices and the CCTV footage, she believes that what might have happened was this:-

(i)   There would be times when the shop ran out of cash coupons, especially when near the annual cut-off date.

(ii)   The defendant explained for the first time in oral testimony that on those occasions when a VIP customer visited the shop to redeem VIP points in exchange for cash coupons, the office would fax the codes of the cash coupons to the shop.  She would then keep a record of those physical coupons owed to individual VIP customers.  The customers would come and collect them later on.  But the defendant admitted that she would not invite the customers to sign off these records upon receiving the physical cash coupons.

(iii)   In the present transaction, the defendant retrieved the physical cash coupons from the store room which were owed to the VIP customer seen on the CCTV footage.  The coupons were then immediately used to partially pay for the purchases.  Hence there was nothing improper about the transaction.

(iv)   The defendant claims that Juniana Yaw was a frequent customer at the shop so there was no need to see her identity document before giving her the physical cash coupons.

(v)   The defendant admitted that the CCTV footage did not show any notebook or invoice taken out by the defendant to confirm that physical cash coupons were owed to this customer.

134.  Under cross-examination on this transaction, the defendant explained, again, for the first time that she had kept four notebooks to keep records:-

(i)   One notebook was for customers’ contact information for reserved items;

(ii)   One notebook was for communication between staff, especially reminders for staff on the next day;

(iii)   One notebook was a personal notebook for monthly inventory orders and purchases made by frequent customers; and

(iv)   The last one was a spare notebook which was not used.

135.  The defendant explained that the second notebook was used to keep record of the number of physical cash coupons owed to individual VIP customers, but without recording any specific bar code.

136.  I find the defendant’s suggested version of events incredible. 

137.  She was cross-examined at length in respect of the transaction.  The CCTV footage was played to her a few times.  It showed clearly that she took what appeared to be a $100 note from the drawer of Cashier 01 and moved it to a gap underneath the counter table where Cashier 02 stood.  Even when confronted with this clear footage, the defendant denied that that was what happened.  She even claimed that there was in fact a gap in the Cashier 02 drawer and whatever she was inserting into that gap would go into the drawer itself.  This is simply incredible.

138.  In the course of cross-examination, she gave totally incoherent or incredible answers.  Here are some notable examples:-

(i)   Mr Ngai asked her whether the shop would not normally keep physical cash coupons for VIP customers temporarily.  Initially she agreed but later said that she would help keep the coupons for the customers.  When asked whether she was giving opposite answers, she said that sometimes the staff would simply leave the cash coupons at the counter by mistake and would call back the customers to pick them up. The answer is of course totally irrelevant and simply not understood.

(ii)   When Mr Ngai asked the defendant whether she gave back change in cash only to the customer, the defendant agreed.  It was then put to her that according to the invoice in March 2013, the VIP customer was entitled to four, as opposed to two, cash coupons.  At that juncture, the defendant suggested that in the transaction in July 2013, she should have also given the customer two further cash coupons. The inconsistency in her answers was immediately pointed out to her.  There was a long pause.  The inconsistency was not explained.

(iii)   Anyone seeing and hearing the defendant testifying would form a distinct impression that she was making up incredible explanations for contradicting and inconsistent answers which she had given.

(iv)   It was further put to the defendant that the customer seen on the CCTV footage was not Juniana Yaw. The defendant in reply said she was not sure.  This is clearly inconsistent with her witness statement in which she stated that Juniana Yaw was a frequent customer too well known to require any identity check.

139.  Furthermore, the new and detailed revelations regarding the notebooks are also highly suspicious. They are clearly relevant to the defendant’s version of events which is premised on the suggestion that some customers would only collect the cash coupons later on but not at the time when they redeemed their VIP points.  One must wonder why the defendant only chose to disclose such details to support her case in cross-examination but not earlier.

140.  On the whole, I reject the defendant’s version of events.  In any event, it must be recognised that even if her version was true, that still did not account for the objective fact that in the transaction, she moved some cash from Cashier 01 to a gap near Cashier 02. 

141.  That act strongly points to some dishonest motive on the defendant’s part.

142.  I find that on the day of the transaction, the customer paid cash for her purchases and the defendant gave her back the change in cash.  Then the defendant transferred a $100 note to a gap near Cashier 02.  In order to tally the records, she entered into the system the two $50 cash coupons retrieved from the store room and the $60 received from the customer to settle the purchase.  There is no reason why the cash coupons which should belong to Juniana Yaw would be in the hands of the defendant.  I have rejected the defendant’s version of events.  In the absence of any explanation, I find that the two $50 cash coupons were obtained improperly by the defendant in March 2013.

143.  On this factual basis, I am satisfied that the plaintiff suffered the loss of $100 as the cash coupons should not have been used to settle the purchases in the first place.  I allow the claim for $100 in Transaction No 9.

Transaction No 10

144.  The transaction took place on 16 July 2013.  It relates to invoice no 56321.

145.  Based on the invoice, at 22:41, a VIP customer called Michelle Yu made purchases of seven items of dog outfits of the “Touchdog” brand in the total sum of $1,242.  The customer enjoyed a VIP discount of $138 and received free gifts worth $60.  She paid by cash.

146.  However, the CCTV shows that at 22:44:-

(i)   There was no customer at the shop.

(ii)   The defendant was standing at Cashier 01 with another staff.

(iii)   The defendant worked on Cashier 01 for a while. After that, a receipt was printed out.

147.  Based on the invoice and the CCTV footage, the plaintiff says that it was a combined transaction.  The defendant put the transactions of some of the customers on hold in the system and after the shop closed combined these transactions into one single invoice and put it under a VIP account by random.  In doing so, the plaintiff says that the defendant benefited from an unwarranted discount of $138 and free gifts of $60. 

148.  The defendant denies the allegation.  She said she does not understand why after the customer paid by cash, no receipt was printed out.  In any event, there is no evidence that she was the staff who put the earlier transaction on hold.  She was only handling the completion of the transaction.

149.  Mr Poon made the following submissions:-

(i)   There are no CCTV records of the earlier “smaller” transactions (unlike, eg, Transaction No 1).

(ii)   There is simply no evidence of combination as it is unknown how many customers were allegedly involved in this allegedly combined transaction, whether they were VIP members (whether some or all of them), and who paid the full prices and who paid the discounted prices.

(iii)   More importantly, the items purchased under this transaction were all dog outfits and of “L” size.  This would suggest that they were indeed purchased by one single customer. 

(iv)   The defendant’s submission with regard to free gifts is repeated.

150.  In my view, the fact that the defendant was completing a transaction late at night after the shop was closed and in the absence of any customer is suspicious in itself.  However, I accept the defendant’s submission that the plaintiff has failed to substantiate the claim with adequate proof.  In fact, the similarity of the items purchased would seem to point to the conclusion that the transaction was indeed a genuine single one, although it is unknown why it had been put on hold.  I therefore reject the claim in Transaction No 10.

Transaction Nos 11, 13 to 17

151.  The plaintiff says that Transaction No 11 is a sham refund transaction in which seven $100 gift vouchers were improperly obtained by the defendant.  She then used these vouchers on five occasions, namely in Transaction Nos 13 to 17.  I shall therefore deal with these six transactions together.

152.  Transaction No 11 took place on 19 July 2013. It relates to invoice nos 56438, 56439 and 56442.

153.  On the face of invoice no 56438, a customer purchased six items, which comprised one item of “Kimlaube寵物雙咀飲水頭L-H525” and five items of “Kimlaube寵物飲水頭L-H520”, at full price in the total sum of $475.  The payment was by cash.  The time shown at the top of the invoice was 20:38.

154.  The invoice no 56439 records a transaction which took place about five minutes later.  The same products were purchased but this time the VIP discount applied such that the total purchase price was $452 only.  The payment was also by cash.  The invoice records that $1,000 was paid and change of $548 was given.  The VIP member was shown to be the defendant herself.

155.  The invoice no 56442 records a transaction at 22:43, which comprised three parts.  First, one item of “Kimlaube寵物雙咀飲水頭L-H525” and three items of “Kimlaube寵物飲水頭L-H520” purchased under invoice no 56438 were returned.  The total price of the returned goods was $319.  Second, a sum of $381 was paid by cash.  Third, in exchange, seven $100 gift vouchers were purchased by the customer, who was a VIP member named Wong Yuk Ying.  These vouchers were sequentially numbered from GV10009938 to GV10009944.

156.  The CCTV footage at 20:36 shows the following:-

(i)   Customer N purchased some Kimlaube products. Six items were placed inside a shopping bag, which the customer took away with him.

(ii)   When making payment, Customer N handed over a bank note to the defendant.  It appeared to be a $1,000 note.  (The defendant’s position is that she is prepared to assume that to be the case.)

(iii)   The customer can also be seen handing what appeared to be a coin to the defendant.  The defendant says that it could have been a $2 coin.

(iv)   The defendant then gave back some bank note as change to the customer.  The plaintiff’s position is that it was a $50 bank note whereas the defendant says that there were a $500 note and a $50 note.

157.  The CCTV footage at about 22:44, which corresponds with the time shown on the invoice no 56442, shows:-

(i)   There was no customer at the shop.

(ii)   The defendant was holding a receipt in her hand whilst working on Cashier 01.

158.  Transaction Nos 13 to 17 all took place on 20 July 2013.  There is no dispute that the seven gift vouchers featured in Transaction No 11, which are identifiable by their unique bar codes, were used.  The five transactions relate to five invoices which, when read in conjunction with the CCTV footage recorded at the relevant transaction times, show:-

(i)   Invoice no 56470 records that a customer made a purchase of $114 and made payment by tendering the $100 gift voucher no GV10009939 and cash of $14.  However, the CCTV footage shows that Customer O paid by cash only.  The defendant can be seen, after taking the cash, squatting down and taking out some paper from somewhere near the floor, which she then scanned.

(ii)   Invoice no 26570 shows that a customer made a purchase of $100 and tendered the gift voucher no GV10009938 as payment.  However, the CCTV footage shows that Customer P paid what appeared to be a $500 bank note to the defendant, who then squatted down and took out some paper from somewhere near the floor.  She then took cash from the register drawer and gave change of $400 to the customer.  At the same time, she transferred one $100 bank note to somewhere near Cashier 02.

(iii)   Invoice no 56478 records that a customer made a purchase of $228 and made payment by tendering two gift vouchers nos GV10009940 and GV10009941 and cash of $500, with change of $472 given.  However, the CCTV footage shows that Customer Q paid by cash only.  The defendant can be seen taking out some paper from near the floor which she then scanned.

(iv)   Invoice no 56481 records that a customer made a purchase of $108 and made payment by tendering a gift voucher no GV10009944and cash of $8.  However, the CCTV footage shows that Customer R paid by cash only.  The defendant can be seen taking out some paper from near the floor which she then scanned.

(v)   Invoice no 26594 records that the VIP customer, Wong Yuk Ying, made a purchase of $803 and made payment by tendering two gift vouchers nos GV10009942 and GV10009943and cash of $603.  However, the CCTV footage shows that Customer S paid by cash only.  The defendant can be seen taking out two pieces of paper from near the floor which she then scanned.

159.  Based on the above invoices and the CCTV recordings, the plaintiff’s case is that:-

(i)   Customer N purchased 12 items in total on 19 July 2013 and paid for them by a $1,000 note.  The defendant then gave him change of $50.  In other words, the customer paid in total $950 for the 12 items.

(ii)   But the customer only took away some of the purchased items.

(iii)   Although invoice no 56439 shows that six of the purchased items were sold at VIP discounts, the customer in fact paid full price for them.  The defendant had made use of her own VIP membership to obtain the discounts.

(iv)   The defendant has therefore pocketed the unwarranted VIP discount of $23.

(v)   After the shop closed for the day, the defendant fabricated a return invoice in the form of invoice no 56442.  By doing so, the defendant improperly obtained the seven $100 gift vouchers which she later “cashed in” in Transaction Nos 13 to 17.

(vi)   Leung confirmed in cross-examination that the plaintiff’s policy for return of products is that the customer would only be allowed to receive other goods in exchange but not cash or gift vouchers.  Gift vouchers are as good as cash.

(vii)   As the products were in fact not returned, the plaintiff says that it suffered a loss of $319, which was the total value of those products.

(viii)   In Transaction No 11, the plaintiff therefore suffered a total loss of $342 ($23 + $319).

(ix)   In Transaction Nos 13 to 17, the plaintiff suffered a total loss of $381 ($700 - $319).  It does not make a claim for that amount under this head but instead claims $319 under the head of claim of cash vouchers. (It would seem that the claim under that head should be for $381 and the figure of $319 is a mistake – see para 261 below.)

(x)   However, the plaintiff’s position on the alleged loss of $381 is problematic.  Leung gave conflicting statements in cross-examination as to whether the defendant in fact paid cash of $381 when she allegedly fabricated the sham refund invoice.  Initially Leung said that the defendant had in fact so paid.  In that case, the plaintiff suffered no loss.  Later on, however, Leung retracted the earlier statement and said that the defendant had not paid $381.  In that case, the plaintiff suffered loss in the same amount. But it is plain that the plaintiff is simply unable to confirm definitively whether the defendant did pay $381 or not.  As such, the plaintiff has failed to make out a loss of $381.

160.  The defendant puts forward a positive factual case:-

(i)   The invoice no 56438 was not handled by her, but by another part-time staff. 

(ii)   Customer N only purchased six items.  After the issuance of invoice no 56438, it transpired that the customer should have been entitled to VIP discounts because he had earlier made purchases at another shop.  After liaising with the other shop and the office on the telephone, the defendant issued another invoice for the same products with the VIP discounts applied, ie invoice no 56439, and the price was adjusted from $475 to $452.

(iii)   As revealed by the CCTV footage, Customer N gave D a $1,000 note and a $2 coin.  The defendant then gave him change of $550. This is consistent with the adjusted purchase price of $452.

(iv)   It was only after the shop was closed that it was discovered that the first invoice no 56438 had not yet been cancelled. Since it was quite troublesome to cancel an invoice, the defendant came up with the idea of a refund transaction to effectively “cancel out” the invoice.

(v)   She contacted Wong Yuk Ying, a regular customer, by phone and sought her assistance to purchase at least five $100 gift vouchers in order to put in place the refund transaction.  Wong Yuk Ying agreed to the defendant’s suggestion and purchased seven gift vouchers over the phone, which was recorded in invoice no 56442.

(vi)   In cross-examination, the defendant insisted that a refund transaction in exchange for gift vouchers was allowed by the plaintiff.

(vii)   According to her witness statement, the defendant then created invoice no 56442 to document the refund transaction.  It shows that the price of the seven vouchers was partly paid for by the returned goods ($319) and the part-time staff who mistakenly issued the first invoice (no 56438) had to pay cash in advance to settle the balance ($381).

(viii)   In the witness statement, the defendant did not state when Wong Yuk Ying paid for the gift vouchers.

(ix)   She was cross-examined at length on two points. First, whether she could confirm that the part-time staff in fact paid $381 by cash.  Her initial reply was that the part-time staff did so.  This was consistent with her witness statement.  But the defendant retracted from this reply subsequently and said that she could not remember whether the staff did pay or not.  Secondly, the defendant was also cross-examined on when Wong Yuk Ying paid for the vouchers.  Her reply was that Wong came to the shop the following day to collect the gift vouchers and the defendant handled it herself.  She was asked if Wong Yuk Ying paid $700 by cash and took seven gift vouchers.  At this point, the defendant’s reply became completely incoherent. She later said that she could not remember whether it was she who received $700 in cash from Wong.  Shortly afterwards, the defendant confirmed however that she had indeed received the money. 

(x)   The defendant said that some of the gift vouchers were used by Wong immediately and the rest should be in Wong’s hands.

(xi)   As regards Transaction Nos 13 to 16, the defendant accepts that they were purchases made by different customers but suggests that since the shop often owed physical gift vouchers to customers, it could be the case that these different customers were owed the physical vouchers and on these occasions, the defendant made use of Wong Yuk Ying’s gift vouchers by mistake.

(xii)   The defendant therefore denies that the refund transaction was a sham, as alleged by the plaintiff.

161.  I have difficulty in accepting the plaintiff’s case in full:-

(i)   As submitted by Mr Poon, the CCTV footage shows that Customer N took away six items of goods only.  The plaintiff’s suggestion that the customer purchased another six items of identical goods under invoice no 56439 but chose not to take them with him at the same time seems to be purely speculative. 

(ii)   The plaintiff’s case is that Customer N made a payment of $950.  But that case cannot explain why the customer would hand over what appeared to be a coin when making payment to the defendant. 

(iii)   The fact that Customer N took away six items of goods and at one point handed over a coin to the defendant would instead go to corroborate the defendant’s case that Customer N only purchased six items and he paid $452 for them.

162.  But at the same time, I must reject the defendant’s factual case concerning the refund invoice as it does not accord with common sense, is inconsistent with the contemporaneous documents and cannot be explained by what is shown on the CCTV footage:-

(i)   The defendant’s intention was allegedly to put in place a refund transaction, which would effectively “cancel out” the invoice no 56438.  That invoice covered six items.  But the refund invoice no 56442 only covered four items.  This does not accord with the defendant’s original reason for executing the refund transaction.  In that sense, the defendant’ case is inconsistent with the contemporaneous document.

(ii)   I also find it against common sense and inherent probabilities that instead of simply cancelling the first invoice (no 56438) which was created by mistake, the defendant would make a call to a customer late in the evening at about 22:43 and seek her help to rectify a problem which had nothing to do with the customer.  In fact, when queried about this in cross-examination, the defendant added that she had called a few customers that night but only Wong agreed to help her.  The allegation is incredible.

(iii)   Worse still, the gift vouchers which were sold to Wong Yuk Ying under the refund invoice were used by the defendant in other transactions with different customers on the following day.  This clearly contradicts her allegation that Wong came to collect them on that day.

163.  In respect of Transaction No 11, I reject the plaintiff’s claim for the unwarranted VIP discount as the evidence relied upon does not support the plaintiff’s factual case that the customer had paid $950 in total.  Notwithstanding that, I uphold the claim for $319.  Even on the basis that Customer N only purchased six items and paid $452 for them, the refund transaction is clearly highly suspect.  On the basis of the materials before me, I am satisfied that at the close of business on 19 July 2013, the defendant fabricated the refund invoice no 56442 in which she obtained the seven $100 gift vouchers, partly on the false premise that goods worth $319 were returned when they were not.  In that regard, the plaintiff suffered a loss of $319 and I allow that sum in respect of Transaction No 11.

Transaction No 12

164.  The transaction took place on 19 July 2013.  It relates to invoice no 56444.

165.  The time shown at the top of the invoice was 23:38.  The invoice shows that a VIP customer purchased various items for the total sum of $2,018 and paid by cash at 23:38.  The customer enjoyed discounts amounting to $116 and received free gifts worth $100.

166.  However, the CCTV footage at 23:39 shows:-

(i)   The defendant was standing at Cashier 01. 

(ii)   She was consulting a notebook and was working on the cashier computer.  After a while, a receipt was printed out.

167.  Based on the invoice and the CCTV footage, the plaintiff says that this was a combined transaction.  The defendant put the earlier transactions of some of the customers on hold in the system and after the shop closed combined these transactions into one single invoice and put it under a VIP account.  In doing so, the plaintiff says that the defendant benefited from an unwarranted discount of $116 and free gifts of $100.

168.  In the witness statement, the defendant said she has no recollection of this transaction.  But she went on to suggest that the staff handling the transaction might have omitted by mistake to complete the transaction on the system after the customer made payment.  The mistake was discovered when she was trying to tally the sums after the shop was closed. She therefore completed the transaction on the system according to the records of the purchase in her notebook.  She contends that the invoice represented a genuine transaction.

169.  In cross-examination, the defendant however put forward another version of events.  It is difficult to try to set it out because her answers were at times incoherent.  She appeared to be saying that:-

(i)   It is also possible that the shop did not meet the sales target for the day and hence the defendant called a customer late at night.  He agreed to make a purchase and hence an invoice was issued.  The company driver would later deliver the goods to the customer and collect the payment.  It is of course a completely new revelation.

(ii)   But the defendant was not able to explain why in that case the invoice in the present transaction actually shows that the price was already paid in full by cash.

170.  When it was pointed out to the defendant that she was offering two different versions of events to explain the same transaction, she eventually adopted the version given in her witness statement.

171.  I have no hesitation in rejecting the defendant’s evidence which is incoherent, self-contradictory and therefore incredible. 

172.  However, at the same time, I am unable to uphold the plaintiff’s claim.  No doubt it is highly irregular and questionable behaviour on the part of the defendant that she was completing a transaction after the shop was closed.  The conduct calls for an explanation.  In the absence of a plausible explanation, it may readily be inferred that the defendant was engaging in some dishonest conduct.  However, the plaintiff’s claim suffers from the same problems as in Transaction Nos 5 and 10 – see, eg, para 99 above.  The plaintiff has failed to pinpoint its loss.  I therefore reject the claim in Transaction No 12.

Transaction No 18

173.  The transaction took place on 20 July 2013.  The plaintiff says that the defendant wrongfully failed to issue an invoice for the transaction.

174.  The plaintiff relies on two credit card payment slips which show that a customer called Wilson Lui made two payments of $638 and $400 at 17:51.  There was also a delivery note showing that a purchase was made by Wilson Lui under invoice no 26592 on 20 July 2013 and delivery was due on 24 July.

175.  The CCTV footage at about the same time of the credit card payment slips shows a transaction took place as follows:-

(i)   Customer T was standing at the counter with a pack of “NPO有機藍莓雞肉糧5lb”.  He was served by another staff, who is identified by both parties as May.

(ii)   Some time later, May handed out a folder of forms to customer T.

(iii)   The defendant took out some vouchers from the side cabinet. 

(iv)   The forms were then handed back by Customer T to May.

(v)   The defendant passed the vouchers to Customer T.

(vi)   May worked on the cashier computer and handled the credit card payment by Customer T.

(vii)   Customer T did not take away any pet food products before departing from the shop.

176.  According to the plaintiff’s records, no invoice was issued in respect of the above purchase by Customer T. 

177.  The invoice no 26592 referred to in Customer T’s delivery note relates to a purchase made by a VIP customer called Wong Pui Pui at about 18:09 for a pack of “NPO有機藍莓雞肉糧25lb” at the price of $638.

178.  Furthermore, the plaintiff’s inventory record shows that at the stocktaking which was done on 30 July 2013, four packs of the same product were missing.

179.  The plaintiff’s case is that:-

(i)   Customer T was Wilson Lui.  He initially wanted to purchase a pack of the NPO 5lb product which cost less than $600.  Upon finding out that the plaintiff would only make delivery if the purchase was at least $600, the customer purchased a pack of NPO 25lb product instead, which cost $638.

(ii)   He also bought four $100 gift vouchers.

(iii)   Wilson Lui became a VIP member and filled in a delivery request.

(iv)   He paid a total sum of $1,038 by credit card but was not given a receipt.  He did not take away the product.

(v)   The defendant did not record Wilson Lui’s purchase on the system at all.  The unrelated invoice no 26592 issued to Customer U was wrongfully attached to Wilson Lui’s delivery note.

(vi)   The plaintiff claims loss of cash of $1,038, on the basis that the transaction was not recorded in the plaintiff’s system at all and therefore remains unaccounted for.

180.  The defendant has no recollection of the incident and does not have a positive factual case.  It is however submitted on her behalf that the plaintiff cannot prove that she was responsible for the transaction.  First, the CCTV footage shows that May was the staff serving Wilson Lui.  The defendant’s only involvement was the giving of the gift vouchers to the customer.  Secondly, the invoice no 26592 also shows that the handling staff was May, not the defendant.

181.  Mr Poon submitted that it is therefore difficult to see why the defendant ought to be held responsible for the loss (if any at all) arising out of the transactions by the two customers.

182.  In any event, the plaintiff’s inventory records are problematic.  The record relied on by the plaintiff is different from the record of another stocktaking conducted on 31 July 2013.  The inventory count on 30 July 2013 shows that four items of the NPO 25lb product were missing whereas the inventory count on 31 July 2013 (just one day later) shows that no NPO 25lb product was missing. 

183.  Lastly, it is submitted that, insofar as Wilson Lui is concerned, he did pay and the plaintiff did receive credit card payment in the total amount of HK$1,038.  On the face of the evidence before the court, the NPO 25lb product (subsequently delivered to him) and the gift vouchers (taken away by him on the day) were indeed fully paid for.  Similarly, for Customer U, she apparently paid HK$638 in cash for the same food product. 

184.  I agree that to substantiate the loss of HK$1,038, it must have been the case that that sum in cash was taken from the cashier register by the defendant some time on the same day.  There is, however, no evidence to that effect.

185.  I accept the defendant’s submissions.  The evidence would appear to show that it was May who was primarily handling the two purchases on the day.  Further, even assuming that the defendant also played a part, there is insufficient evidence to show how she benefited from the transaction.  For these reasons, I reject the plaintiff’s claim in Transaction No 18.

Transaction No 19

186.  The transaction took place on 25 July 2013.  It relates to invoice no 56704. 

187.  On the face of the invoice, a VIP customer purchased seven items with VIP discounts and paid $646 by credit card and $21 by cash.  The material item here is the seventh item shown in the invoice, namely “Tomlyn 營養液 (肝味) 1oz”.  Its original price was $78.  The other point to note is that the sum of the original prices of the first six items was $646, which is an exact match of the sum settled by credit card.

188.  The CCTV at about the time of the invoice shows the following:-

(i)   Customer V presented a number of items at the counter for payment.  The plaintiff’s position is that the CCTV shows clearly that she purchased six items only, which correspond with the first six items listed on the invoice.  The defendant’s position is that more than six items were placed into Customer V’s shopping bag before she departed.

(ii)   Customer V paid for the goods by credit card only, took the goods and left the shop.

189.  Based on the invoice and the CCTV footage, the plaintiff says:-

(i)   Contrary to the invoice, Customer V purchased six items only without any VIP discount and paid with credit card in the sum of $646.

(ii)   When Customer V left the shop, the defendant added the seventh item to the invoice and applied VIP discount to the entire invoice.  In doing so, the defendant paid $21 to purchase the Tomlyn product worth $78.  She therefore pocketed the sum of $57.

190.  The defendant says she does not have much recollection of the incident.  But she thinks it possible that she might have forgotten to give VIP discount to Customer V prior to charging her credit card and that when she realised the mistake, she might have suggested to the customer that she buy some more product and pay by cash so that the VIP discount could be applied to the whole invoice.  Following her suggestion, Customer V purchased the seventh product.

191.  I reject the theory put forward by the defendant. The objective fact as disclosed by the CCTV footage is that Customer V did not pay any cash to the defendant at any time before she departed from the shop.  That is incontrovertible evidence that directly contradicts the defendant’s theory.  Notwithstanding that, the defendant still refused to accept what was shown to her in the CCTV footage in cross-examination.  The refusal casts a very bad light on the reliability and credibility of the defendant’s testimony.

192.  Mr Poon also submitted that it is for the plaintiff to prove that Customer V was not a VIP customer.  This will have an impact on the amount of the loss suffered.  On the materials before me, given that Customer V paid for her purchases without any discount, it would point to the conclusion that she was not herself a VIP member.

193.  I find that after Customer V left the shop, the defendant added the seventh item to the invoice and applied a VIP discount to the whole invoice.  I therefore allow the claim of $57 in respect of Transaction No 19.

Transaction No 20

194.  The transaction took place on 26 July 2013.  It relates to invoice no 26739.  This is the transaction in relation to which the customer made a complaint to the plaintiff thus triggering the investigation into the transactions handled by the defendant.

195.  On the face of the invoice, a VIP customer called Lau Lai Lai purchased five products with VIP discount and paid for them by (a) one $100 gift voucher, (b) $354 by EPS, and (c) $41 in cash.  The time shown on the invoice was 19:51.

196.  The CCTV however shows:-

(i)   At about 19:47, Customer W made a purchase and paid cash only.  No receipt was issued.  The cash drawer did not open.  The defendant placed the cash on the counter table and slipped it under the keyboard of Cashier 02.

(ii)   At about 20:01, Customer X made payment by EPS. She did not pay cash or hand over any gift voucher to the defendant. 

(iii)   Shortly after that, the defendant squatted down and took some paper from somewhere near the floor, scanned the paper into the system and placed it inside the drawer of Cashier 02.  In cross-examination, initially the defendant disagreed that the paper was a voucher but eventually changed her answer accepting that that piece of paper was a voucher.

(iv)   A receipt was issued.  The defendant walked over to Customer X with it in her hands and the two of them can be seen having a conversation about the receipt.

(v)   Three days later, on 29 July 2013, Customer X made a formal complaint to the plaintiff against the defendant for using Customer X’s VIP discount on two products which she did not purchase and someone else’s gift voucher in her purchase without her authorisation. Customer X said that she also worked in retail business and found the defendant’s conduct questionable.

197.  Based on the invoice, the CCTV footage and the customer complaint, the plaintiff says that this was a combined transaction. The defendant wrongfully combined the separate purchases made by Customer W, a non-VIP customer, and Customer X, a VIP customer, into one single transaction. In doing so, the defendant reaped the value of the VIP discount purportedly given to Customer W when in fact the customer paid the full price.  The plaintiff suffered a loss of $15.30. 

198.  The defendant has some recollection of the incident and puts forward a positive case as follows:-

(i)   The two separate purchases were combined into one invoice by mistake.  As can be seen from the CCTV footage, she was tending to a few customers at about the same time or one immediately after another. 

(ii)   Customer W simply put a $100 gift voucher and cash at the counter and left without waiting for the receipt.  As the defendant was at the same time handling another customer’s purchase, she did not realise that Customer W’s transaction was not completed on the system.  Because of that, that transaction was mistakenly combined with that of Customer X.

(iii)   The defendant tried to explain the situation to Customer X after she realised what had happened.

199.  Further, Mr Poon repeated the same submission that in order to substantiate its loss, it is for the plaintiff to prove that Customer W was not himself a VIP member and that it has failed to do so.

200.  I reject the defendant’s factual case.  It is directly contradictory to what is clearly shown on the CCTV footage and is against common sense and inherent probabilities:-

(i)   The CCTV footage shows that Customer W paid cash only, contrary to the defendant’s allegation that he also tendered a $100 gift voucher.  It can be seen that the defendant squatted down and took out a gift voucher from some space near the floor and scanned the voucher when she was handling Customer X’s purchase.  It shows that the defendant’s case was a lie and she persisted with her lie in the face of clear and incontrovertible evidence.

(ii)   There is no dispute that Customer X’s purchases amounted to $354 which she paid in full by EPS.  Clearly there would be no plausible reason why in the normal course of things the defendant would nonetheless go ahead to scan a $100 gift voucher, which had been kept underneath the cashier register, to settle the payment.  In cross-examination, the defendant insisted that she was careless and she did so by mistake.  This defies common sense.  It is clear that there is nothing careless about what the defendant was doing.  It was a deliberate act on her part to “cash in” the gift voucher.

201.  I find that the defendant wrongfully combined Customer W’s purchase into Customer X’s so as to earn the discount of $15.3.  I allow the claim in that amount in Transaction No 20.  As regards Mr Poon’s submission regarding Customer W’s VIP status, I repeat the observation stated in para 66 above.

Transaction No 21

202.  The transaction took place in June and July 2013.  The nature of the alleged wrongdoing stands apart from the other transactions and stems from a customer’s credit card being charged twice for the same purchase.  There is no CCTV footage in support.

203.  The plaintiff’s case is as follows:-

(i)   The plaintiff was informed by its bank on 17 July that a customer’s credit card was swiped twice on 2 June, at 13:24 and then at 13:27, each in the sum of $502, with two distinct authorisation codes. The bank asked the plaintiff to check whether it had double charged the customer by mistake.

(ii)   Kwong was in charge of the matter.  She found only one credit card payment slip provided by the shop for that amount on that day.  The cardholder’s name was Chong LL Shirley.

(iii)   Kwong asked the shop for an explanation on 19 July.

(iv)   There was an email reply from the shop on 21 July.  The defendant accepts that it was sent under her direction.  The explanation put forward was that on 2 June, it just happened that another customer made an order by phone but there was no stock in the shop.  The handling staff executed it as a “mail order” and the transaction was treated as a deposit transaction and the amount happened to be also in the sum of $502. That explains why the figures tallied for the day, despite the double charging of the credit card.

(v)   The deposit transaction was recorded in invoice no 54188 (“訂貨(先付訂金)”) for $502 paid by credit card.

(vi)   There was another invoice showing a refund of this deposit.  The refund invoice was numbered 54671 and dated 13 June.  Here, the deposit was exchanged for some goods on 13 June.  The material point to note here is that the refund invoice was executed under the defendant’s own VIP account (“會員: 14815 – MK CABIA”).

(vii)   What followed was a curious development on 22 July when the plaintiff received a fax from the defendant.  It was a mail order form dated 2 June and the invoice no 54188.  The former was a request to the bank to charge $502 on a credit card of a holder called Choi Tai Man Sing.

(viii)   Kwong explained that a mail order form is one method by which a customer makes payment by credit card.  Upon receiving a customer’s instruction (eg, by phone) and obtaining the details of his credit card, the shop staff would call the bank to obtain an authorisation code.  Once obtained, the staff should fill out the mail order form by stating the cardholder’s name, his card number, the charge amount and the authorisation code and fax the form to Kwong. At the end of each day, Kwong would fax the form to the bank for processing.  The bank would charge the card accordingly and the amount would usually be credited to the plaintiff’s account in one or two days.

(ix)   The unusual feature about the mail order form in this case was that although it was itself dated 2 June, according to the inquiries made by Kwong with the bank, the authorisation code stated in that form was obtained on about 22 July and according to the bank statement, the corresponding sum of $502 was posted to the plaintiff’s account on 24 July. 

(x)   In other words, the plaintiff says that the transaction with Choi Tai Man Sang was genuine but took place on about 22 July.

(xi)   During Kwong’s cross-examination, she confirmed that she was involved in the handling of the mail order form and in fact she was the person who wrote down the name “Choi Tai Man Sing” and Choi did pay HK$502 to the plaintiff.

(xii)   The plaintiff paid back $502 to the bank for being a double swipe.  That became a loss to the plaintiff.

(xiii)   In respect of the refund invoice no 54671, the plaintiff says that it should have received $502 as a deposit in the first place, upon such refund by exchange of goods, that also became a loss to the plaintiff.

(xiv)   Leung explained that there is no rule prohibiting employee from becoming a VIP member but it would be very rare because the plaintiff already provides discount of about 30 to 40% off to its staff, which is more than any discount offered to VIP customers.

(xv)    P claims a total loss of $1,004.

204.  The defendant’s reply is, in gist, that she was not the staff handling the transactions now complained of:-

(i)   In her witness statement, the defendant suggested that the transaction was handled by May and she only assisted to rectify the matter.  She claims that she was not involved in the day-end tallying for that day.  The defendant also denied that she handled the refund transaction under invoice no 54671.  More importantly, she explained that the reference to “會員: 14815 - MK CABIA” was not her own VIP membership account but was a code designated for the shop.  It would be used by the shop staff, including herself, if, for instance, the customer’s VIP card could not be used or there was no new VIP membership card.

(ii)   In examination-in-chief, the defendant changed her evidence and said that it was another staff named “雀”, but not May, who had mistakenly swiped the customer’s credit card twice, because the credit card machine ran out of paper.  May only handled the mail order form.

(iii)   It was put to the defendant that the authorisation code seen on the mail order form was obtained only on about 22 July.  The defendant could not recall.

205.  Mr Poon also challenged the plaintiff’s case by pointing out that there is a complete lack of CCTV footage to show the defendant’s involvement.  Further, the invoice no 54188 recording the deposit transaction indicated on its face that it was May (but not the defendant) who was the salesperson in charge.  This accords with the defendant’s recollection that she was not responsible for the deposit transaction.  The defendant further confirmed that the handwriting on the mail order form was not hers.

206.  I accept the plaintiff’s factual case.  It is well supported by the contemporaneous documents.  Most revealingly, the defendant’s representation to Kwong that the mail order form in the sum of $502 was executed on 2 June is contradicted by the objective evidence that it was in fact executed only on or about 22 July.  It must follow that the refund invoice on 13 June which purported to refund the sum of $502 paid on 2 June must have been a sham.  The other piece of material evidence is that the refund transaction was executed under the defendant’s VIP account.  In this regard, I reject the defendant’s allegation that the VIP number, which bore her name, was a code assigned to the shop instead.

207.  However, on quantum, I do not consider that the plaintiff suffered loss in the sum of $1,004 as claimed.  On 2 June, it sold goods worth $502 to Chong LL Shirley.  It received payment of $1,004 on that day but later returned $502 to the bank.  On 13 June, the defendant wrongfully put together the refund invoice and received goods worth $502 based on the earlier sham deposit invoice.  On the whole, therefore, the plaintiff was out of pocket by $502 only, representing the value of the goods received by the defendant. 

208.  For these reasons, I allow the sum of $502 in respect of Transaction No 21.

Transaction No 22

209.  The transaction took place on 28 July 2013.  It relates to invoice no 56834.

210.  On the face of the invoice, a VIP customer purchased five items.  Amongst them were three packets of “北海道雞包小食500g”. The original price of the product was $98.  But there was a promotional offer whereby a purchase of two packets together would cost $188 (ie $94 per packet) and a purchase of three would cost $248 only (ie $82.7 per packet).  With the VIP discount of 5%, the customer effectively paid $78.6 for each of the three packets.  The other two items cost $117 (after discount) and the whole invoice was for $353.  To settle it, the customer paid $296 by EPS and $60 by cash, with $3 change given back to her. 

211.  The CCTV footage however shows that Customer Z bought only two packets of “北海道雞包小食500g”, but not three as shown in the invoice.  After Customer Z left the shop, the defendant then served a few more customers.  She then worked on Cashier 01 and completed a transaction. 

212.  Based on the invoice and the CCTV footage, the plaintiff says that it was a combined transaction.  Customer Z only purchased four items and the defendant wrongfully added a fifth item, namely one more packet of “北海道雞包小食500g” to the invoice.  In doing so, the defendant bought the product which was worth $98 by merely paying $57.  The plaintiff therefore suffered loss in the sum of $41.

213.  The defendant puts forward a positive case for this incident.  She says that Customer Z was offering to give a packet to the defendant’s dog as a gift.  The defendant then suggested that she would pay for the packet but the purchase could be combined with Customer Z’s purchase so that the promotional discounted price which applied to a purchase of three packets could apply.  Customer Z agreed.  The defendant therefore paid $57 cash to settle the balance of that invoice.

214.  In support, the defendant highlights the following scenes in the CCTV footage:-

(i)   The defendant first began serving Customer Z by scanning her goods.

(ii)   While awaiting payment, it appears that the defendant and Customer Z were speaking to each other.

(iii)   Then the defendant took up a calculator and, despite being handed back her card and a payment slip, Customer Z lingered on at the counter area to speak with the defendant.

(iv)   Then the defendant left the counter area.  She was followed by a dog.  She appeared to continue speaking with Customer Z.

(v)   Customer Z then left the shop while the defendant took down a packet from a shopping rack.

(vi)   The defendant subsequently returned to the counter area, hugging onto a packet.

(vii)   The defendant then again used a calculator in the presence of a colleague and even produced the calculator before her colleague while apparently speaking with her.

(viii)   The defendant then proceeded to use the cashier computer before entering the store room.

(ix)   Later, the defendant returned to the counter area apparently holding onto some cash notes.  She then continued to use the cashier computer.

(x)   When customers approached the counter for payment, the defendant appeared to have put the cash notes into her jeans pocket before serving them.

(xi)   Finally, after serving a series of customers, the defendant took out the cash notes from her pocket (three $20 notes), placed them into the cashier register and took back some coins.  A receipt was printed out after the cashier drawer was closed.

215.  So, in essence, the defendant is saying that it was not a sham transaction as she had only purchased the product at a reduced price with the approval of Customer Z.  Mr Poon also highlighted that the foregoing interpretation of the CCTV footage was accepted by Leung during cross-examination. 

216.  I have difficulty in accepting the defendant’s case.  I find that it goes against inherent probabilities.  While it is fairly common that customers would sometimes show appreciation to sales staff by giving red packets at festive season, for a customer to offer a gift to the staff in the form of a product available for sale in the shop is much less common.  The defendant’s version of events also seems a very complicated way of a customer showing appreciation to the defendant.  I consider that the more probable inference is that as suggested by the plaintiff.  The conclusion is reinforced by the fact that the defendant only added the third packet to the invoice after the customer left the shop. 

217.  I find that the defendant added one more packet of “北海道雞包小食500g” to Customer Z’s invoice without the latter’s approval.  I therefore allow the claim for $41 in respect of Transaction No 22.

Transaction No 23

218.  The transaction took place on 19 and 20 July 2013.  It relates to invoice nos 56431 and 26601.  It concerns the use of six $20尊貴coupons and nine $100 gift vouchers numbered GV10009926 to GV10009933 and GV10010000.

219.  On the face of the invoice no 56431, on 19 July 2013, at about 18:42, a customer called Chong Lai Bik purchased the above numbered $100 gift vouchers and paid for them by credit card.  There are two visa card payment slips for $800 and $100 respectively signed by the same customer.  There is also a delivery note for delivery to 陳太, who, according to a printout of the VIP member records, would appear to be or relate to Chong Lai Bik, as the delivery address was the same.  The point to note here is that in the delivery note, the handwritten remarks which appear to state that the delivery related to invoice no 56431 and the date of purchase was 19 July were crossed out.

220.  On the face of invoice no 26601, on the following day (ie 20 July 2013), at about 20:57, a customer purchased 12 items which cost $1,303 in total.  The customer paid by six $20 尊貴coupon ($120), cash of $145 and visa payment of $1,038.  The handling staff was stated to be May.

221.  The plaintiff highlights two of the items shown in the invoice, “Evanger’s高質雞肉+紅米狗糧15kg” and “Evanger’s雞肉蕃薯南瓜 (無穀麥) 狗糧2kg”.  They were sold at their original prices of $698 and $218.  In other words, the customer paid $916 for these two products.

222.  The CCTV footage on 19 July 2013, however, shows that at about 18:35, which is about the time of the invoice no 56431, Customer AA made payments by credit card.  She appeared to be filling out some document.  In the process, the defendant appeared to be making a number six signal with her right hand (ie by holding up the hand in a fist with her thumb and little finger sticking out).  Then Customer AA placed two coins on the counter.

223.  The CCTV footage on 20 July 2013 shows:-

(i)   At about 20:53, Customer BB made payment by credit card.  There is a credit card slip for the payment of $100 at 20:54.  No receipt was issued.

(ii)   At about 21:02, Customer CC made payment by cash.  The defendant did not put the cash inside the cashier drawer but held it in her hands.  No receipt was issued.

(iii)   At about 21:04, Customer DD made payment by cash.  The defendant gave some change to the customer.  It is not clear from where the defendant retrieved the change, but it is clear that she did not take it from the cashier drawer.  No receipt was issued.  After the customer left, the defendant put some cash in a gap underneath the table.

(iv)   From about 21:09 onwards, the defendant worked on Cashier 02 but she was not serving any customer.  After some time, the cashier drawer popped open and a receipt was issued.

224.  The plaintiff further relies on the following CCTV footage showing three other transactions on subsequent days:-

(i)   On 23 July, at 20:31, Customer EE made payment by cash.  The defendant took out some paper from the side drawer and scanned it into the system.  The cashier drawer popped open (at which time a receipt was printed but the customer had already left).  The defendant then placed the cash received from the customer not inside the drawer but underneath it.

(ii)   On 25 July, at about 15:37, Customer FF made payment by cash.  The defendant slipped the cash under the keyboard of Cashier 02.  The customer took away the goods and left. Immediately afterwards, the defendant took out some paper from the side drawer and scanned it into the system at Cashier 02.  The cashier drawer opened and the defendant can be seen counting cash above the drawer.

(iii)   On 28 July, at 13:46, Customer GG made payment by cash.  The defendant can be seen bending down apparently looking for something.  Then she is seen holding some paper which she scanned into the system at Cashier 02.  The cashier popped open and a receipt was issued.  The defendant took out some cash from the cashier drawer and handed it over to the customer.  But she did not hand over the receipt which had already been issued.

225.  The above three purchases correspond with three invoices by date and time, which are numbered 26686, 26710 and 26774 respectively.  In each of these invoices, contrary to the CCTV footage showing each of the customers paying cash, the customer was recorded to have used a $100 gift voucher.  Judging from the unique numbers of the three gift vouchers as recorded in the invoices, they were indeed three of the nine vouchers which Chong Lai Bik purportedly purchased on 19 July 2013.

226.  Based on the above documents and the CCTV footage, the plaintiff says:-

(i)   On 19 July 2013, Customer AA, who was a VIP member, did not buy the nine gift vouchers, as documented in the invoice no 56431.  Instead she purchased the two Evanger’s items and paid $906 for them.  She also filled out a delivery form for the two items. Leung explained in cross-examination that no VIP discount applied to such product of over 5lb.  Hence the two items cost $906 only ($698 + $218 x 95%). For reasons unknown, Customer AA only paid $900 by her credit card.  The defendant then told her that she needed to pay an extra $6 to make up the shortfall.  Hence the defendant’s number six hand signal and the placing of two coins by Customer AA on the counter.  Customer AA left the shop without taking any gift voucher.

(ii)   The invoice no 56431 therefore represents a sham transaction in which the defendant wrongfully obtained nine $100 gift vouchers.

(iii)   Subsequently, the defendant “cashed in” three of these nine vouchers in three transactions on 23, 25 and 28 July. 

(iv)   The defendant did not complete Customer AA’s transaction on the system but instead combined it with the purchases made by Customers BB, CC and DD on the following day into one single invoice, ie invoice no 26601.  And in that invoice, she made use of six $20尊貴coupons.  VIP customers were only entitled to use one $20 coupon for every $200 of purchase.  In doing so, she “cashed in” coupons worth $120.

(v)   The plaintiff claims the loss of $120 as none of the customers had paid by such coupons.  (The plaintiff does not make a claim for the $100 gift vouchers used by the defendant in this transaction.)

227.  The defendant has no recollection of the incident.  But she suggests that according to the invoice no 26601, May was the handling staff. 

228.  I accept the plaintiff’s case. 

229.  The CCTV footage and the various invoices really speak for themselves.  They show a sequence of events in support of the plaintiff’s case, to which the defendant simply has no answer.  The CCTV footage shows that the defendant issued an invoice for the sale of gift vouchers when in fact only pet food was bought by the customer. It also shows that the defendant made use of some of these gift vouchers and the $20 coupons in other customers’ transactions when those customers in fact paid by cash or credit card.  The defendant’s conduct was highly irregular and suspicious and, in the absence of a plausible explanation, suggests dishonest intention. 

230.  Mr Poon took issue with the fact that the CCTV footage did not seem to cover the time period from 20:57 on 20 July.  But this does not seem to bear any significance.  Also, the fact that May’s name was put down in invoice no 26601 does not detract from the objective fact that the defendant was captured on the CCTV footage handling the transactions at the material time.

231.  When questioned about these transactions in cross-examination, the defendant gave incoherent answers.  She refused to acknowledge the events plainly captured by the CCTV. It was only after prolonged examination that she finally conceded that some of the events in fact took place as recorded.  For instance, after a number of questions, she finally conceded that Customer AA placed two coins on the counter.  Initially she insisted that she could not remember what happened and could not see clearly what was recorded in the CCTV footage.  Another telling example is that although she finally accepted that she had made a gesture by holding her fist but with the thumb and little finger sticking out, she nonetheless disagreed that it was the number six sign.  On the whole, the defendant testified in an evasive manner which strongly suggests that she was not telling the truth.

232.  I agree that the plaintiff suffered loss when the defendant wrongfully used the six $20 coupons in substitution of the original payment made by the customers.  I allow the claim of $120 in respect of Transaction No 23.

Transaction No 24

233.  The transaction took place on 3 January 2013. It relates to invoice no 46613.

234.  On the face of the invoice, at about 19:06, a VIP customer purchased a number of items with VIP and promotional discounts. The discounts amounted to $221.  The total price was $1,526 which he paid by credit card.  It was around the time of Chinese New Year.  The customer received four $20新春coupons and a寵物月曆worth $59. 

235.  However, the plaintiff could not find from its records the credit card payment slip made by that customer.  What it found instead was a credit card payment slip showing a payment of the same amount ($1,526) by the defendant’s own credit card with the processing time of 22:55 on the same day.  There is no CCTV footage produced for this transaction.

236.  The plaintiff suggests that it was a combined transaction.  The invoice in question comprised purchases made by different customers.  By combining these purchases as a single purchase made by a VIP member, the defendant pocketed the unwarranted discount of $221, 新春coupons of $80 and free gift of $59. 

237.  The defendant has no recollection of the incident but remembers that the VIP customer concerned was a regular customer. But she cannot remember why she had made payment for the customer.  She however insists that the plaintiff did not prohibit staff from making payment on behalf of customers. 

238.  Mr Poon repeated the submissions made in respect of Transaction Nos 5, 10 and 12 (see, eg, para 98 above) and attacked the evidential basis of the plaintiff’s claim. 

239.  In my view, it is highly suspicious that, first, the transaction was not completed when the purchase was made and, second, the defendant used her own credit card to make payment for the transaction at such a late hour.  Even on the defendant’s case, it remains unclear whether the customer had already taken delivery of the goods when she swiped her credit card.  Such conduct calls for close scrutiny. 

240.  Furthermore, I consider that it would be highly out of the ordinary that at a retail shop of the plaintiff’s nature, a sales staff would from time to time make payment on behalf of a customer using her own credit card.  This certainly goes contrary to our everyday shopping experience and it is simply something which people do not tend to do in Hong Kong. I therefore reject the defendant’s suggestion that she used her credit card with the customer’s consent or approval.

241.  In the absence of a plausible explanation, the defendant’s conduct points to dishonest intention.  Having said that, however, I accept Mr Poon’s submission to the effect that it is not possible for the plaintiff to pinpoint its loss.  I reject the claim in Transaction No 24.

242.  In summary, I allow a total sum of $1,557.8 under the head of the 24 transactions.

THE UNWARRANTED DISCOUNTS

243.  Under this head of claim, the plaintiff complains that the defendant carried out “combined transactions”, which follow the modus operandi in some of the 24 transactions, such as Transaction No 1.  In each case, she wrongfully combined separate and unrelated purchases made by different customers into one single invoice.  In so doing, the defendant pocketed discounts and free gifts, which would not otherwise have been available but for the combination.  (She also earned “big transaction” bonuses from such combination.  It is common ground that the staff handling one single transaction of over $1,000 would earn a “big transaction” bonus of $10. However, the plaintiff makes no claim concerning the bonuses here.)  The plaintiff’s claim under this head amounts to $36,747 in total. 

244.  Kwong has compiled a table setting out 145 transactions, which took place during the period from June 2011 to August 2013.  Copies of the corresponding invoices are produced. 

245.  The invoices record that the purchases were paid for on two or more different dates, sometimes a few days apart, and sometimes a few months later.  As an illustration, in an invoice dated 6 July 2011 (no 15018), four packs of “日本桃味幼嫩滑豆腐貓砂7L” which cost $360 (after discount) were paid for by $100 in cash on the same day and then more than four months later by $260 in cash.  And there is no apparent reason why the purchases would be settled in such an unusual manner. 

246.  Relying on the peculiar feature of split payments on different days for a single invoice in each of the identified transactions, the plaintiff says that the single invoices were fabricated by the defendant by way of combining individual genuine transactions.

247.  The defendant’s position is that the plaintiff has proffered no direct evidence, such as CCTV footage, to prove that the transactions were in fact a combination of different smaller transactions.  In her witness statement, the defendant said she does not understand why the plaintiff would say it had suffered losses and she does not accept that it had. 

248.  For the same reasons given in respect of Transaction No 1, I consider that the peculiar feature revealed in the invoices point to the conclusion that these invoices and the circumstances in which they had come about are highly suspicious and suggest a dishonest motive.  They call for an explanation.  The defendant has failed to come up with any.  We are here talking about mass market pet products sold at a retail shop in Mongkok.  We are not dealing with exquisite and luxurious merchandises in the high-end market.  It is extraordinary why in these modest transactions carried out at the plaintiff’s shop in Mongkok, customers would routinely have to make part payments and only completely pay off the balance a few days or sometimes even a few months later.  In the absence of a plausible explanation, I am satisfied that the invoices identified under this head were sham invoices put together with an ulterior motive to reap benefit in one way or another.

249.  Having so ruled, however, I am not in a position to allow the claim, as the evidence adduced by the plaintiff presents problems of different kinds, some affecting the issue of liability and others the assessment of quantum. 

250.  On these issues, I generally accept Mr Poon’s submissions.  He identified the following problem areas:-

(i)   Some of the invoices show that only one item of goods was sold.  Eg, invoice no 31929 dated 4 April 2012 records that a VIP customer purchased one “Circle Pet 五層爬梯遊樂場5801杏” at a discounted price of $629 and made payment on two days, namely 4 and 16 April 2012.  The split payment was obviously suspicious.  It suggests that the VIP customer might not have paid in the manner recorded.  Nevertheless, on the face of the invoice, the plaintiff cannot demonstrate how the discount of $69 could have come about by reason of combination as the invoice shows the sale of one item only.  In respect of such one-item invoices, in cross-examination, Kwong was unable to explain how they could have constituted a combination of smaller transactions.

(ii)   In some other invoices, while two different dates were shown as dates of payment, full payment was recorded to have been made on one date and the entry “$0.00” was recorded for the other date.  The problem here is that while one naturally wonders why the entries were made in this way, they mean that there was no split payment in the first place, which is the very basis of the plaintiff’s claim under this head.  The plaintiff has failed to show combination in these transactions.

(iii)   Some of the invoices are not, on their face, attributable to the defendant as they set out the names of other staff as the salesperson.  The invoices are the plaintiff’s key evidence to prove the defendant’s wrongdoing.  Where they expressly stated that some other staff was the handling person or the space was left blank, I do not think it is open to the court to find on balance that the defendant was involved even though those transactions were apparently sham transactions.  The evidence here is not cogent enough to attribute the wrongdoing to the defendant.

(iv)   Mr Poon submitted that if an invoice showing the purchase of a number of items had indeed been a combination of smaller transactions, the amount of the earlier part payment should have reflected the total price of some of the items purchased (presumably without discount). Examples were shown to Kwong but she was unable to answer this.  She was also unable to find an example where a particular record can be squarely divided into two distinct smaller transactions. 

(v)   Even where an invoice is free from the above problems, Mr Poon submitted, and I agree, that I am not in a position to find that the discounts given on the face of the invoices were all unwarranted as this must depend on the individual sales values of the alleged smaller transactions and also whether, and which of, the customers might have already been VIP members entitled to discount or that the customers might have otherwise been entitled to some promotional offers in the first place.  In the absence of further evidence shedding light on these issues, it is impossible for me to ascertain which items of discount were indeed unwarranted and therefore represented the plaintiff’s losses.  Therefore, for the same reasons given in respect of Transaction No 5, I am unable to make any award in respect of these transactions.

(vi)   In this regard, there are some examples in which one partial payment itself already amounted to more than $1,000 which, according to the plaintiff’s policy, would automatically entitle the customer to VIP status and discount.  Discounts given in respect of the items covered by that partial payment would therefore be warranted and not claimable.  Again, there is no way for me to identify what items were covered by these partial payments of over $1,000.

(vii)   Lastly, the table contains a manifest error in relation to the invoices which record that one of the payment methods was “Mail Order (Visa)”.  The interpretation should be that in each of these cases, the customer made a part payment by visa card in a mail order transaction.  In the table, however, the amounts paid this way were all mis-counted as discounts given to the customers.  Accordingly, there is an over-claim by the plaintiff, which amounts to $14,941 in total.

251.  To sum up, under this head, the plaintiff has failed to adduce adequate and cogent proof that the defendant had perpetrated the wrongful act of combination and/or that it has failed to pinpoint the losses that it had suffered.  For these reasons, I reject this head of claim in full.

THE CASH VOUCHERS

252.  Under this head of claim, the plaintiff complains that the defendant concocted sham refund transactions, either for goods purchased or deposits paid, and obtained gift vouchers for her own benefit when in fact the customers of the original transactions never demanded a refund.  In so doing, the defendant received gift vouchers in the value of the purportedly refunded goods or deposits, which represent the losses the plaintiff suffered from these sham refunds.  They amount to $12,106.50 in total. 

253.  Kwong has compiled a table setting out 18 transactions under this head.  They took place during the period from July 2012 to July 2013.  Copies of the corresponding refund invoices are produced. 

254.  One of the transactions is Transaction No 11. 

255.  All the refund invoices show that $100 gift vouchers were given to the customers in exchange of goods previously purchased or deposits previously paid.  In some cases, additional products were also given in exchange because the value of the original goods was not in the hundreds. In some transactions, the customer had to pay a small additional sum to tally the amount. 

256.  The plaintiff says that the company policy, which was known to all the staff including the defendant, is always that goods bought or deposits paid can only be refunded by goods, but not by cash or gift vouchers, the latter being as good as cash.  The transactions therefore reveal a consistent pattern of the defendant violating the policy and the reasonable inference to be drawn is that these were in fact fake transactions which the defendant was fabricating them so as to obtain the gift vouchers.

257.  The defendant asserts that the refund transactions were all genuine.

258.  I have found that the plaintiff’s policy, of which the defendant was aware, was that only goods could be given to customer in refund transactions.  The refund transactions which we see here were therefore highly irregular and suspicious.  I further note that where the refund was for deposit previously paid, some of the invoices show that the original deposits paid carried odd cents, eg, $400.80, $800.50, $400.10 and $500.60.  It seems out of the ordinary that a customer would choose to pay a deposit with odd cents, given the nature of deposits in general. 

259.  In my view, subject to the qualification below, the reasonable inference to be drawn is that the defendant made up these refund transactions and wrongfully received gift vouchers and, in some cases, additional goods for her own benefit.

260.  The qualification applies to seven transactions in which the invoices did not on its face refer to the defendant.  Either that the salesperson was stated to be some other staff or the relevant space for filling out the name of the salesperson was left blank.  I reject the plaintiff’s claim for these seven transactions for the same reasons given in para 250(iii) above.  It was agreed in closing that the amounts claimed for the seven transactions are in the sum of $5,293.60.  This sum should be deducted from the plaintiff’s claim.

261.  Lastly, the plaintiff claims the sum of $319 in respect of Transaction No 11.  (As mentioned, the claim should have been for $381.)  In any event, for the reasons set out in para 159(x) above, the sum of $319 should be deducted.

262.  I allow the claim under this head in the total sum of $6,493.90.

THE UNNECESSARY CREDIT CARD CHARGES

263.  Under this head of claim, the plaintiff complains that the defendant used her own credit card in transactions when the customers had in fact made payment in cash.  In so doing, the defendant received the cash and would be able to earn points on her own credit card.  At the same time, the plaintiff suffered losses because credit card charges were incurred which were unnecessary in the first place.  These charges amount to $248.49.  They were incurred from November 2012 to July 2013.

264.  The plaintiff has produced a spreadsheet table setting out the details of 22 transactions.  Copies of the corresponding credit card payment slips are produced each showing that the defendant made payment to the plaintiff by her card.  The amounts paid range from $20 to $2,000.  The table also includes the alleged unnecessary charges incurred in Transaction Nos 1, 5 and 24.

265.  In reply, the defendant points out that not all the transactions are captured on the CCTV and it is therefore not clear if the customers actually paid cash to the defendant.  Further, the defendant explains that she would sometimes make payments by credit card for and on behalf of familiar customers when they were unable to pay personally.  That would often happen when a customer made an order by phone.  She emphasises that she did so with a view to boosting the sales of the shop.

266.  Mr Poon also submitted that on the evidence before the court, the plaintiff does not have any express rule against staff members using their own credit cards to pay on behalf of customers.

267.  For the reasons set out in paras 62 and 240 above, I find that in these transactions the defendant made payments using her own credit card when the customers had in fact settled the purchase by cash.  I reject the defendant’s suggestion that she did so with the knowledge or approval of the customers.  In this regard, I should point out that as shown by the payment slips, the majority of these credit card transactions were processed late in the evening, just before or even after the shop was closed.

268.  The plaintiff suffered losses in the form of the credit card charges which it would not have incurred if the defendant had not engaged in the wrongdoing.  I award the sum of $248.49 in full under this head.

THE UNACCOUNTED FOR GOODS

269.  On 3 September 2011 and 9 August 2013, the plaintiff conducted a full-scale stocktaking at the Mongkok shop.  The results were recorded in the 2011 inventory table and the 2013 inventory table.  The tables show that goods in the value of $45,424 and $54,897 were unaccounted for as of the two respective stocktaking dates.  The plaintiff says that, without its knowledge or consent, the defendant had misappropriated and/or procured the misappropriation of these goods, whether negligently or otherwise and should compensate the plaintiff for the lost goods.  The total claim under this head amounts to $100,321.

270.  Leung confirmed that she personally conducted both stocktakings, which were thorough and comprehensive inventory counts performed by physically counting and scanning each and every single product at the shop into the system.  The “onhandqty” and “takeqty” columns in the tables represent the quantity recorded in the plaintiff’s system before the stocktaking and the quantity counted at the stocktaking respectively.  Where the former number is larger than the latter for a particular item, the difference represents the number of the missing items.

271.  According to Leung, the stocktaking in 2011 was triggered by a former employee, Cheung, admitting to misconduct.  At that time, Cheung told the plaintiff that the defendant was committing similar misconduct at the Mongkok shop.  Although the 2011 stocktaking revealed missing goods, the plaintiff did not want to think the worst of the defendant.  It was not until the incidents in July 2013 when the plaintiff started to have suspicions about the defendant.

272.  The defendant denies having misappropriated any goods or caused any goods to be missing.  She also complains that the stocktaking in 2013 was conducted after her dismissal and in her absence.

273.  I accept Leung’s evidence as regards the background to the stocktaking conducted in 2011 and how she personally conducted the stocktaking in both 2011 and 2013.  I find that the two inventory tables were compiled based on the information gathered by Leung personally and that there were missing goods found as of those two dates.  (As to the actual value of the missing goods, see further below.)  That said, however, I reject the plaintiff’s claim under this head as there is inadequate evidence to show either that the defendant misappropriated the goods herself or the loss was caused by her negligence.

274.  The plaintiff’s evidence is solely confined to the two inventory tables.  Leaving aside the accuracies of some of the entries in the tables for the time being, the fact that there were missing goods at the shop, without more, does not lead to the conclusion that they were taken by the defendant or that they were all lost due to her negligence, notwithstanding that she was the store supervisor during the relevant time. 

275.  I agree with Mr Poon’s submissions that there is simply no evidence on how the goods became missing or unaccounted for.  The defendant was not the only staff working at the shop.  There were other full-time and part-time staff.  One must wonder on what basis the plaintiff can readily point to the defendant being the sole culprit.  In fact, during her employment, the plaintiff regularly conducted stocktaking at the Mongkok shop (though on a much smaller scale, eg, counting certain products only).  The plaintiff’s routine practice is that where missing goods were found, deductions would be made from the salaries of not only the defendant but also the other staff working at the shop.  Furthermore, as a matter of common sense, missing stock can be attributable to various causes, such as shop theft and miscounting.

276.  Furthermore, Mr Poon pointed out, and I accept, that the inventory tables contain inaccuracies.  In some cases, it would appear that goods were in fact not missing but were shown to be so in the tables. Where that is the case, the claim for misappropriation simply falls apart.  In other cases, wrong prices had been assigned to particular goods.  As a result, the quantum of loss cannot be ascertained.  Set out below are some notable discrepancies found in the plaintiff’s records which point to various inaccuracies in the inventory tables:-

(i)   The 2013 inventory table shows that the value of the missing goods to be in the sum of $54,897.  This figure is different from the total sum stated in another excel table purportedly showing also the value of the missing goods in the same stocktaking exercise.  That table was filed by the plaintiff in another set of proceedings against the defendant at the Small Claims Tribunal (SCTC 15948/2014) in April 2014 and shows a total loss of $51,659 instead. 

(ii)   In Transaction No 8, as noted in para 122 above, the plaintiff’s inventory records, namely the isolated table produced under that transaction and the 2013 inventory table show two different prices for the same product “Regal幼犬糧15lb” as of the same day. 

(iii)   There is another discrepancy revealed in that isolated table.  There, it indicates that the shop had a surplus stock of 41 items of the product “Regal 糧 140g” whereas the same product could not be found at all in the 2013 inventory table. 

(iv)   In Transaction No 19, the seventh item listed in the invoice was “TOMLYN營養液 (肝味) 1oz 411600”.  According to that invoice which was created on 25 July 2013, its original price was $78. However, in the 2013 inventory table which was supposed to show the price as of 9 August 2013, the same product (bearing the same serial number) was priced at $168.  

(v)   In another (one-page) isolated table showing the inventory records as of 31 July 2013, the products “Rosewood礦物磨牙石19630” and “RW Small Pink 88506” each had one item missing.  That is to be contrasted with the 2013 inventory table which indicates the opposite, namely that those two products each had one surplus item in stock. 

277.  Given the vast number and wide range of products sold by the plaintiff and the fact that the stocktaking was done manually, there is bound to be room for error.  I consider that these were genuine mistakes made by the plaintiff.  Nevertheless, in light of the mistakes and for the reasons stated above, this head of claim must fail for lack of cogent evidence.

UNWARRANTED DISCRETIONARY BONUS

278.  Under this head of claim, the plaintiff’s case is that from December 2010 to August 2013 when the defendant worked at the Mongkok shop, the plaintiff had paid discretionary bonuses to her which in total amounted to $342,442.27.  In para 16 of the statement of claim, the plaintiff pleads that by reason of her dishonest or wrongful conduct, she was not entitled to any of these discretionary bonuses.  The plaintiff now seeks the return of the bonuses in the lesser sum of $290,721.67 as loss suffered. This is because if the full amount is claimed and allowed, the sum left in the hands of the defendant would be less than the minimum wages prescribed by statute for that period.  The pleading contains no other plea in respect of this head of claim. 

279.  As the store supervisor of the Mongkok shop, the defendant’s base monthly salary was $5,500.  She also received a “good attendance” bonus (勤工獎) of $500 per month and a discretionary yearly bonus of a month’s salary.  She was further entitled to various bonuses depending upon, amongst other things, her monthly sales volume, the sizes of individual sales transactions and/or the monthly sales volume of the shop. 

280.  It is important to understand the legal basis on which the plaintiff seeks the return of the bonuses already paid over the years.  It is then for the court to rule on the validity of such basis.

281.  In his opening submissions, Mr Ngai argued as follows:-

“… Where payments of the discretionary bonus were dependent upon D’s performance at P’s business and payments were unduly made on the basis of false performance detailed in the sham transactions. If not for the false transactions, P would not have paid discretionary bonus to D and D is therefore accountable for them.” (italics added)

“… where the discretion was wrongly exercised and bonus had been paid on the basis of the sham transactions, where P was hoodwinked into believing D had good past performance and rewarded D on such basis, when in reality such performance was false, the D must be liable for the unwarranted bonus received. It would be wholly irrational for P to still have granted discretionary bonus to D if P have had full knowledge of the sham transactions at the material time.” (italics added)

282.  There is no elaboration on the legal basis for the return claim in the plaintiff’s written closing submissions save that Mr Ngai added that it is a point of law and that the defendant was only entitled to her bonus on a bona fide basis.

283.  As far as evidence is concerned, Leung Ho Yan said that Ms Chung, the plaintiff’s director, had told her that if the plaintiff had found out about the defendant’s misconduct, it would have terminated her employment much earlier on and would not have paid the discretionary bonuses to the defendant.

284.  The sentiment expressed by the director is perhaps understandable.  From the employer’s perspective, the plaintiff clearly felt being cheated when it learnt of the defendant’s dishonest conduct.  From the employee’s perspective, however, she would no doubt feel that she had earned those bonuses by, eg, meeting the sales targets set by the plaintiff and that these bonuses had been paid to her a few years back and it would not be right for the employer to now ask for their return.

285.  Notwithstanding the subjective feelings of the parties, whether the defendant is now liable to return the bonuses must ultimately be determined by reference to the contractual terms agreed between the parties, either expressly or by implication.  Alternatively, the plaintiff will have to demonstrate some other legal basis in support of its claim.

The employment contract

286.  The parties entered into a written employment contract in January 2010.  It contained the following provisions on remuneration:-

“五、超額銷售獎金計劃： 公司按酌情權、因應市場因素、業務狀況及員工表現可於不同時間推出不同形式的超額銷售獎金計劃，鼓勵員工士氣。有關是否推出超額銷售獎金計劃，公司有最終的決定權，員工不得異議。另外，超額銷售獎金計劃的細則、內容、形式及獎金計算方式，亦以公司公佈作準。公司有權隨時修改及終止任何超額銷售獎金計劃；而未做滿一個月者，將不會發放任何獎金。

六、各項獎金及津貼： 勤工獎

僱員如符合以下條件者，可於每月獲得HK$500.00之勤工獎。

1. 在整個月內沒有遲到或早退；

2. 如有任何遲到或早退，則每月之總數不能超過60分鐘或遲到不能多過3次；

3.   在整個月內沒有領取任何無薪病假或事假；

4.   必須在公司做滿一個月以上。

…

十七、   年終花紅：

公司按酌情權，因應市場因素業務狀況及員工表現發放。”

287.  The other relevant document is a letter dated 1 February 2011 (“the 2011 letter”) issued to the defendant regarding adjustment to the various bonus amounts:-

“有關：調整目標獎金

公司對於你的工作表現非常滿意，由2011年2月1日起，閣下在店舖的目標獎金，將提高內容如下:-

	現在	調整後(11年2月起)
薪金	$5,500	$5,500
勤工獎	$500	$500
獎金	1%	1%
（按店舖生意額的百份比計算）（所定的%是每間店舖不同）
第一目標獎金（店舖）	$700	$730
第一目標獎金（個人）	$700	$730
第二目標獎金（店舖）	$700	$750
第二目標獎金（個人）	$700	$750
第三目標獎金（店舖）	$0	$780
第三目標獎金（店舖）	$0	$780

備註：

1. 除薪金外以上獎金及目標獎金都是賞贈性質，是由僱主酌情發給的：如表現欠佳或違反公司守則有關獎金將會被扣減。

2. 公司可因應運作成本或其他因素而隨時更改以上獎金計算的百分比及金額，各項獎金的調整，員工亦不得異議：

3.   薪金及獎金都是保密資料，不可公開給其他同事知道，否則便違反公司守則及會被紀律處分。

4.   如有任何爭議，Pet Line Company Limited為最終決定權。”

288.  According to an excel table compiled by the plaintiff, the monthly income of the defendant, after MPF deduction, ranged from about $11,000 to $22,000 whereas the base salary was $5,500 throughout. The bonus component, though variable in amount, had therefore been consistently much higher than the base salary component.  The former was made up of different items, including not only those stated in the 2011 letter, but also the “big transaction” bonus and another bonus called “遊戲獎金”.

289.  To illustrate what the monthly income was made up of, I produce an extract of the payroll slip for May 2013 as an example:-

“PAYMENT入息
ITEM	AMOUNT HK$
Basic Salary工資	$5,500.00
Incentive勤工獎	500.00
獎金	5,112.42
第一目標獎金（店舖）	730.00
第二目標獎金（店舖）	0.00
第三目標獎金（店舖）	0.00
第一目標獎金（個人）	730.00
第二目標獎金（個人）	830.00
第三目標獎金（個人）	0.00
大單獎金	500.00
遊戲獎金	700.00
扣除因病假之獎金	0.00
扣除/退回賠償店舖貨物	(75.73)
扣除遲到罰款	0.00
合共	$14,526.69
扣除強積金後 共	$13,800.36”

290.  I should at the outset make one observation. The bonuses which the plaintiff says should be returned are not themselves “tainted” by the wrongful conduct of the defendant, which forms the subject-matter of the other heads of claim.  The basis of the plaintiff’s claim here is not that the defendant had put together fake transactions so as to meet the objective targets set for the respective bonuses.  The factual basis here is simply that had the plaintiff found out earlier about the defendant’s wrongful conduct, it would not have paid out the bonuses which it had paid out based on the other genuine transactions. 

No legal basis for the return

291.  I am of the view that the plaintiff has failed to put forward any legal basis on which it may seek the return of the bonuses already paid to the defendant. 

292.  First, the employment contract contained no express clause which conferred such right on the employer. 

293.  Secondly, in the absence of an express term, is there room for the implication of such a term?  However, implied term is not pleaded by the plaintiff.  And it was not until the end of Mr Ngai’s oral closing submissions that he mentioned that the plaintiff could also rely on implied term.  But it was only a mention and nothing more.    

294.  It would be for the plaintiff to spell out clearly the scope of any implied term.  For instance, what kind of behaviour or conduct would justify the return of bonuses already paid?  All these issues aside, it is well-known that there is a high threshold for an implied term to arise as a matter of law.  See, eg, the recent discussion in the employment context by the Court of Appeal in Tadjudin Sunny v Bank of America, NA CACV 12/2015, 20 May 2016, at paras 37 to 45.  It is doubtful that an implied term to the effect that the defendant ought to return the various bonuses already paid in the present circumstances would arise.  In the absence of any submissions in this regard, it is not open to me to make any ruling.

295.  Thirdly, Mr Ngai has not cited any precedent on the legal basis for the return of bonuses.  The cases he relied on concern how the discretion to pay bonus to an employee should be exercised in the first place.  

296.  Fourthly, those parts of his opening submissions as italicised in para 281 above are not correct.  As can be seen from the sample payroll slip, the various bonuses paid were by reference to, eg, the sales volume of the shop for that month.  The “good attendance” bonus was awarded based on, eg, whether the defendant was punctual for work and whether she took any leave for that month.  All these bonuses were not paid on the basis of “sham” or “false” transactions as alleged by Mr Ngai.  They would appear to have been paid on the strength of genuine performance by the defendant. 

297.  Under this head of claim, the factual evidence would appear to be more to the point.  The plaintiff’s contention is that if it had known about the defendant’s misconduct, it would have terminated her employment much earlier on and would not have paid her the discretionary bonuses.  Hence the bonuses paid now represent its loss (subject to the minimum wage adjustment). 

298.  The difficulty with this contention is that as a matter of contractual principle, the function of damages is generally to put the innocent party into a position it would have been in if there had been no breach.  Here, to allow the plaintiff to recoup the bonuses in full would not have achieved that end result as the defendant had indeed performed her side of the bargain (eg by reporting to work punctually and by handling sales transactions up to the pre-set target levels for the month).  All these could not be unwound and the plaintiff would be much better off if it were to fully recover the bonuses.  Mr Ngai’s submissions have not addressed all these points.

299.  In conclusion, I reject the claim for discretionary bonuses already paid as the plaintiff has failed to make out any proper legal basis in support.

300.  That would be sufficient to dispose of the matter.  For completeness, however, I would proceed to consider the plaintiff’s contention that it could have exercised its discretion not to pay the bonuses to the defendant in the first place.

Did the plaintiff have a discretion not to pay bonuses in the first place?

301.  Mr Poon submitted that according to clause 5 of the employment contract, while the defendant had a discretion to decide whether to implement a bonus scheme and, if so, the terms of such scheme, once a scheme was declared by the plaintiff, it would be bound to pay the defendant according to its terms.

302.  Whether the plaintiff was vested with a discretion to pay the various bonuses to the defendant turns on the construction of the employment contract.  I shall treat the provisions of the 2011 letter as forming part of the contractual terms governing the payment of bonuses, notwithstanding that it was issued after the employment contract and that it has not been signed.  It seems tolerably clear that the purpose of the 2011 letter was to set out the detailed terms regarding bonuses as contemplated in clause 5 of the contract.

303.  On the one hand, clause 1 under “Remarks” of the 2011 letter expressly provided that save for the base salary, all bonuses were of a gratuitous nature and were payable at the discretion of the plaintiff.  It went on to say that the plaintiff could make deductions from the bonuses in the event of unsatisfactory performance or non-compliance with company guidelines. The express language would support the plaintiff’s contention that it had a discretion over bonuses.

304.  On the other hand, the following matters, when considered as a whole, point to the conclusion that the parties had intended that the defendant was entitled to receive the bonuses so long as the conditions set forth in the letter were met and the plaintiff did not enjoy any discretion whether to pay or not in those circumstances, notwithstanding the express language to the contrary.

305.  First, on the face of the contractual terms, save for one bonus, the conditions which were required to be met for the employee to earn the bonuses would appear to be objective in that there was no room for the employer to exercise any judgment.  It was mostly a matter of calculations:-

(i)   The “good attendance” bonus for any given month was conditional upon the employee (i) not reporting to work late or leaving work early on more than three occasions or for more than an aggregate of 60 minutes; (ii) not taking any unpaid sick leave or special leave; and (iii) having been in employment for more than one month.  If these conditions were satisfied, the employee would receive a bonus of $500 for that month.  So, it would be merely a matter of reviewing the employee’s attendance records.

(ii)   The bonus which was simply referred to as “the bonus” in the 2011 letter was set to be 1% of the sales volume of the shop.  As shown in the sample payroll slip, this item varied from month to month and was calculated to the cent.  Hence it can be deduced that the determination of the amount was broadly a matter of applying the pre-set percentage to the sales volume of the month.

(iii)   The first, second and third target bonuses were each a fixed amount bonus.  It is not known what those targets were. 

(iv)   The end-of-year bonus was stated to be subject to market conditions, the business and the employee’s performance.  This would be the only bonus which would depend on some judgment on the part of the plaintiff.

306.  Secondly, save for the end-of-year bonus (the amount being one month’s base salary payable in January of each year), all bonuses were calculated from month to month and payable monthly together with the base salary.  The bonus amount could be as much as twice or even three times the base salary.  Looking at the matter from this perspective, the bonuses were indeed a key component of the employee’s monthly income.

307.  Thirdly, there is no denying that a base salary of $5,500 for a full-time job is very low.  By today’s standards in Hong Kong, one can hardly maintain one’s livelihood on this sum alone.  As noted above, that amount was even lower than the minimum wage prescribed by law at the time. In fact, according to the plaintiff’s excel table, based on the number of hours which the defendant had worked, the minimum monthly salary payable under the law would be about $8,000 on average.  What it reflects is that the employee would certainly look to the various bonuses as an essential part of her monthly income. 

308.  Objectively speaking, the purpose of the remuneration structure is clear.  The employee would receive a monthly income, which comprised a fixed part and a variable part.  The latter would be tied to the business performance of the shop and the employee during that month.  And, save for the end-of-year bonus, the performance would be measured by some objective criteria.  These bonuses served as an incentive for the employee to generate more sales for the shop.  Once the conditions, eg, sales targets, were satisfied, the employee would expect to be paid the variable component according to the pre-set formulae or fixed amounts, which she would consider as earned according to the employment terms.  In the circumstances, a reasonable person, having all the background information as identified above, would have understood that the employee should be remunerated according to the bonus terms once the conditions for payment were satisfied.  As such, the bonuses were not truly discretionary.  They were no different from the base salary in that the employee could legitimately expect the employer to pay if the objective criteria were met.

309.  For the above reasons, if it were necessary for me to rule on the construction issue, I would hold that contrary to the express language employed in the employment contract that the bonuses were at the discretion of the plaintiff, the defendant was entitled to receive the bonuses (save for the end-of-year bonus) so long as the objective criteria were met and the plaintiff could not withhold them.  In this regard, I agree with Mr Poon’s submission that the discretion conferred on the plaintiff only goes to the implementation of bonus schemes but once the schemes were implemented and the employees so notified, the plaintiff became contractually bound to pay the bonuses in accordance with the terms of the scheme.  It would necessarily follow that the plaintiff’s claim for the return of the bonuses already paid would fail as it was not wholly up to the plaintiff to decide whether to pay or not in the first place.

310.  I do not think this conclusion would be unduly harsh to the plaintiff.  Upon discovering the defendant’s wrongdoing, while the plaintiff would still have been bound to pay the bonuses already earned according to the contractual terms, there was nothing to stop it from claiming against the defendant in respect of the fake or sham transactions and seeking compensation accordingly.  And that is exactly what the plaintiff is doing in this action.  In my view the grievance felt by the plaintiff should not be addressed by an attempt to deprive the defendant of the bonuses which she had in fact earned over the years, just like the plaintiff could not possibly ask the defendant to return the base salary earned during the same period on the ground that the defendant had been behaving in a dishonest manner in respect of some of the transactions.

311.  In light of this conclusion, it is not necessary for me to proceed to consider if the employment contract did confer a discretion on the plaintiff, whether it could have refused to pay the bonuses to the defendant by reason of her dishonest and wrongful conduct.  I simply note here that counsel have referred me to the well-known authorities in this area, including Clark v Nomura International plc [2000] IRLR 766, Horkulak v Cantor Fitzgerald International [2004] IRLR 942 and Post Vanessa Jane v Nomura International (Hong Kong) Ltd HCA 7259/1997, 29 May 2001.  The principle, as recently reiterated in Tadjudin Sunny (at para 55), is that a discretion given to a contractual party which on its face is unqualified is generally to be read as being subject to an implied requirement that it can only be exercised in good faith, rationally and for a proper purpose, and not arbitrarily or capriciously or in a manner which is not bona fide.

312.  To sum up, for the reason stated in para 299 above, I reject the claim for discretionary bonuses in its entirety.

CONCLUSION

313.  To sum up, I allow the plaintiff’s claims as follows:-

The 24 transactions	$1,557.80
Unwarranted discounts	–
Cash vouchers	$6,493.90
Unnecessary credit card charges	$248.49
Unaccounted for goods	–
Unwarranted discretionary bonus	–
Total	$8,300.19

314.  Accordingly, there be judgment for the plaintiff in the sum of $8,300.19.  It was agreed in closing that interest on any sum awarded should carry interest at half judgment rate from the date of writ to judgment and I order accordingly.

315.  On costs, the sum now awarded is much smaller than the plaintiff’s claim.  That said, it is clear that much of the time and efforts were spent on the 24 transactions.  I make an order nisi that the plaintiff do have costs of the action, to be taxed if not agreed, with certificate for counsel and that the defendant’s own costs be taxed in accordance with the Legal Aid Regulations.