CHOW TAI FOOK LIFE INSURANCE CO LTD (Incorporated in Bermuda with limited liability) v. LUK KIN HANG

DCCJ 1136/2024

[2026] HKDC 1755

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1136 OF 2024

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JUDGMENT

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Introduction

1.  The Plaintiff carries on the business of providing insurance policies and products in Hong Kong. The Defendant was formerly an agent of the Plaintiff. The Plaintiff has paid three sums of conditional performance bonus (“CPB”), each in the amount of HK$715,623.00, to the Defendant.

2.  In this action, the Plaintiff seeks to invoke the clawback mechanism under the relevant contractual provisions to recover from the Defendant a portion of the CPB.

3.  While the trial was conducted in Punti, all relevant documents are in English with no Chinese translations. In these circumstances, and without objection from either party, I have prepared this judgment in English.

Background and Relevant Contracts

4.  On 24 July 2017, the Plaintiff and the Defendant entered into an Agent’s Contract for Selling Long Term Insurance Business (“Agent’s Contract”), pursuant to which the Plaintiff engaged the Defendant as its agent. Clause 10 of the Agent’s Contract governs termination, and clause 10.1 provides that each of the Plaintiff or the Defendant “may terminate this Agreement at any time and without giving any reason for so doing by giving thirty (30) days’ notice to the other in writing”.

5.  On the same day, the parties also entered into another agreement titled “Side Agreement”. Clause 1 of section II of the Side Agreement governs the payment of CPB in the first three performance bonus periods. It provides that if the Defendant can meet the validation targets (HK$477,082, HK$715,623 and HK$715,623 respectively for the three periods), the Plaintiff would pay the Defendant a CPB in the sum of HK$715,623 for the relevant period. The Defendant eventually received all three CPB payments in full.

6.  Clause 3 of section IV of the Side Agreement stipulates the clawback mechanism for the CPB. While the agreement sets out three clawback mechanisms, only the first and third are relevant for the purpose of this trial. The first mechanism is under clause 3(a), which provides as follows:-

“a. Conditional Performance Bonus to be Clawed Back by the Company

The Company shall calculate the average Personal AFYC Persistency of:

(i) the 1^st to 24^th PB Month in the 25^th PB Month of this Side Agreement; and

(ii) the 13^th to 36^th PB Month in the 37^th PB Month of this Side Agreement; and

(iii) the 25^th to 48^th PB Month in the 49^th PB Month of this Side Agreement; and

if the average Personal AFYC Persistency calculated as at any one or more of the PB Months in the left column of Table 3 falls below 85%, the Company shall claw back and the Agent shall repay to the Company a percentage of the Conditional Performance Bonus paid by the Company in one or more of the corresponding PB Period as set out in the right column of Table 3:

Table 3

Average Personal AFYC Persistency calculated as at any one or more of the following PB Months of this Side Agreement	Conditional Performance Bonus paid by the Company at the end of:
The 25th PB Month	The 1st PB Period
The 37th PB Month	The 2nd PB Period
The 49th PB Month	The 3rd PB Period

The percentage of Conditional Performance Bonus to be repaid by the Agent to the Company shall commensurate with the average Personal AFYC Persistency as set out in Table 4:

Table 4

Average Personal AFYC Persistency	Percentage of Conditional Performance Bonus to be repaid by the Agent to the Company
80.00% - 84.99%	20%
75.00% - 79.99%	30%
70.00% - 74.99%	40%
65.00% - 69.99%	50%
60.00% - 64.99%	60%
50.00% - 59.99%	80%
Below 50.00％	100%

7.  The term “persistency” measures the retention rate of insurance commissions produced by the Defendant. The Plaintiff calculates persistency by reference to the Defendant’s personal annualized first year commissions using the “LIMRA 19-month formula”, which measures the percentage of policies or premium dollars that remain active and paid through the 19^th month after issuance. Pursuant to table 3, the average personal annualized first year commission persistency of the Defendant would be calculated at the 25^th, 37^th and 49^th performance bonus months, corresponding to the three performance bonus periods. If the persistency falls below 85%, a certain percentage of the CPB would have to be paid back in accordance with table 4.

8.  The third clawback mechanism is under clause 3(c) of the Side Agreement, which provides as follows:-

“c. (i) Subject to Clause 3(c)(ii) of Section IV, at any time within the periods as set out in Table 6, if the Agent’s Contract is terminated with or without reason; the Company shall claw back and the Agent shall repay to the Company a percentage of each Conditional Performance Bonus and Special Conditional Performance Bonus that the Agent has received under this Side Agreement accumulated up to the date of termination of the Agent’s Contract, as are set out in Table 6.

(ii) In relation to each Conditional Performance Bonus mentioned in Clause 1(b) of Section II and Special Conditional Performance Bonus mentioned in Clause 1 of Section III, if the Agent has already repaid to the Company part of it under Clause 3(a) and 3(b) of Section IV (the “partial repayment"), then,

A. if the amount of such partial repayment is equal to or exceeds the amount to be repaid in accordance with Clause 3(c)(i) of Section IV, then no further amount shall be repayable by the Agent to the Company in respect of that particular Conditional Performance Bonus and Special Conditional Performance Bonus; and

B. if the amount of such partial repayment is less than the amount to be repaid in accordance with Clause 3(c)(i) of Section IV, then the amount repayable by the Agent to the Company in respect of that particular Conditional Performance Bonus and Special Conditional Performance Bonus shall be the amount calculated in accordance with Clause 3(c)(i) of Section IV less the amount of partial repayment.

Table 6

The time at which the Agent’s contract is terminated	Percentage of each of the following bonus(es) to be repaid by the Agent to the Company
	Conditional Performance Bonus received at the end of:			Special Conditional Performance Bonus
	the 1st PB Period	the 2nd PB Period	the 3rd PB Period
Before the 12th PB Month	NA	NA	NA	NA
13th-24th PB Month	80%	NA	NA	13th-15th PB Month: NA 16th-24th PB Month: 100%
25th-36th PB Month	60%	80%	NA	80%
37th-48th PB Month	40%	50%	100%	50%
49th-60th PB Month	20%	25%	80%	25%

(ii) The obligations of the Agent to repay the Conditional Performance Bonus and Special Conditional Performance Bonus under this Clause 3 of Section IV shall survive termination of this Side Agreement and Agent’s Contract.”

9.  On 28 August 2020, the parties entered into an addendum, which is supplemental to the Side Agreement, whereby clauses 3(a) and 3(c) of the Side Agreement were varied. Clause 3(a) was amended by the insertion of a sub-paragraph 2 under table 4, which reads:-

“2. If the Agent’s Personal AFYC production in the amount of HK$300,000 from August 2020 to December 2020 fails and / or the Agent’s Contract is terminated with or without reason on or before 31 December 2020, the Company shall claw back and the Agent shall repay the Conditional Performance Bonus for 3^rd PB Period to the Company.”

10.  Clause 3(c) was amended by revising the last row of table 6, extending the relevant termination period from “49^th-60^th PB Month” to “49^th-72^nd PB Month”.

11.  Subsequently, on 9 December 2020, the parties entered into a second addendum, whereby sub-paragraph 2 of clause 3(a) of the Side Agreement (which was added by the first addendum) was revised to read as follows:-

“2. If the Agent’s Personal AFYC production in the amount of HK$300,000 from August 2020 to June 2021 fails and / or the Agent’s Contract is terminated with or without reason on or before 30 June 2021, the Company shall claw back and the Agent shall repay the Conditional Performance Bonus for 3^rd PB Period to the Company.”

12.  On 28 April 2021, the Plaintiff notified the Defendant that the Agent’s Contract and all agreements would be terminated on 28 May 2021 by way of a written notice. Considering that the date of appointment of Defendant was on 24 July 2017, and that the termination would take effect on 28 May 2021, the termination took place within the 37^th-48^th performance bonus month period within the meaning of clause 3(c) of section IV of the Side Agreement.

13.  Pursuant to table 6 in the said clause 3(c), the Defendant is liable to repay 40%, 50% and 100% of the CPB respectively received in the first three performance bonus period, i.e. HK$286,249.20, HK$357,811.50 and HK$715,623.00 totalling HK$1,359,683.70. Commission payable to the Defendant in the sum of HK$3,674.34 would be set off.

Defendant’s Defence

14.  In his Defence, the Defendant advanced the following lines of defence:-

(1)  When the Plaintiff terminated the Agent’s Contract, the reason given was that his 25-month LIMRA persistency rate was below 80%. However, according to clause 3(a) of section IV of the Side Agreement, the Defendant’s performance should be assessed with reference to his 19-month LIMRA persistency rate. The Plaintiff has thus unilaterally changed the agreement and the termination was wrongful.

(2)  According to the second addendum, if the Defendant could produce annualized first year commission in the sum of at least HK$300,000 by 30 June 2021, he would not have to repay the CPB received in the 3^rd performance bonus period. However, the Plaintiff unilaterally terminated his contract with effect on 28 May 2021, depriving him of the opportunity to meet the target by 30 June 2021.

15.  The first line of defence is, in my view, totally misplaced. The Plaintiff has made it clear that the termination notice was issued pursuant to clause 10(1) of the Agent’s Contract, pursuant to which the Plaintiff is entitled to terminate the contract without giving any reason by giving thirty days’ written notice to the Defendant. In other words, the Plaintiff terminated the Agent’s Contract without cause by notice, so it does not matter whether the Plaintiff assessed the Defendant’s performance with reference to the 19-month LIMRA persistency rate or 25-month LIMRA persistency rate.

16.  Insofar as the reason for termination is relevant, I see no wrongdoing on the Plaintiff’s part. I am prepared to accept that the underlying reason for the Plaintiff to terminate the Agent’s Contract was that the Defendant’s 25-month LIMRA persistency rate was not satisfactory. In this connection, I have had regard to a warning letter issued by the Plaintiff to the Defendant on 17 March 2021, where the Plaintiff stated that Defendant’s 25-month LIMRA persistency rates were alarmingly low and that if the Defendant could not raise the rate to 80% or above by 31 March 2021, the Plaintiff would terminate the Agent’s Contract.

17.  It is, however, legitimate for the Plaintiff to take into account factors other than the 19-month LIMRA persistency rate in considering whether to terminate the Defendant’s contract. Insofar as clause 3(a) of section IV of the Side Agreement refers to the 19-month LIMRA persistency rate, it is only concerned with whether the Defendant has to repay any CPB already received. It does not in any way restrict the Plaintiff from taking into account matters such as the 25-month LIMRA persistency rate in assessing the Defendant generally. As the Plaintiff has correctly pointed out, under the Agent’s Contract, even if the Plaintiff is to terminate the contract immediately with cause, it can do so under clause 10.2(h) if the Defendant “does not meet the training, production, persistency or other requirements in respect of the Agent’s operation which may be set by the Company from time to time”, and that clause does not confine the Plaintiff to consider only the 19-month LIMRA persistency rate. In fact, during cross examination, the Defendant accepted that he always knew the Plaintiff would monitor its agents’ 25-month LIMRA persistency rates.

18.  Furthermore, even if the Plaintiff should only terminate the Defendant’s contract if he his 19-month LIMRA persistency rate falls below 85% (a position advanced by the Defendant which in my view is completely wrong), there is no dispute that the Defendant’s performance could not meet the target. According to the undisputed evidence produced by the Plaintiff, the Defendant’s 19-month and 25-month LIMRA persistency rates from January 2020 to April 2021 are as follows, and it can be seen that starting from June 2020 his 19-month LIMRA persistency rate has always been below 85% (save for September 2020):-

Month	19-month LIMRA persistency rate	25-month LIMRA persistency rate
January 2020	0.9386	0.3161
February 2020	0.94	0.3326
March 2020	0.9406	0.3416
April 2020	0.9409	0.3492
May 2020	0.9408	0.359
June 2020	0.5121	0
July 2020	0.5342	0
August 2020	0.5518	0
September 2020	0.874	0.3582
October 2020	0.5556	0
November 2020	0.5564	0
December 2020	0.5538	0
January 2021	0.5523	0.0459
February 2021	0.5546	0.0622
March 2021	0.2892	0
April 2021	0	0

19.  The second line of defence is also without merit. It is true that by way of the second addendum, the Defendant was afforded an opportunity to produce annualized first year commission in the sum of at least HK$300,000 by 30 June 2021 so that he may retain the CPB received in the 3^rd CPB period. Nevertheless, it is expressly stated that if the Agent’s Contract is terminated with or without reason on or before 30 June 2021, the Defendant is still liable to repay the relevant CPB.

20.  In other words, the Plaintiff has expressly reserved its right to terminate the Agent’s Contract before 30 June 2021 and its right to claw back the CPB in that eventuality. I should, for the sake of completeness, record that the annualized first year commission produced by the Defendant from August 2020 to April 2021 was in the mere sum of HK$14,970.12. While it would have been theoretically possible for the Defendant to meet the target had he been given the chance to work until 30 June 2021, it is a far cry from saying that the Plaintiff unreasonably terminated his contract when the Defendant was close to meeting the target. In any event, the Plaintiff is relying on the third clawback mechanism instead of the first one, so the extended timeline under the second addendum is irrelevant.

21.  I therefore reject the defence advanced by the Defendant by way of his pleaded Defence.

Relevant Bankruptcy Proceedings

22.  Mr Jeffrey Lee, counsel for the Plaintiff, has in all fairness drawn my attention to the bankruptcy proceedings in HCB 1325/2022. In that action, the Plaintiff herein petitioned for the bankruptcy of the Defendant herein by reason of the indebtedness which is the same subject matter as that in this present action.

23.  On 5 January 2024, DHCJ Winnie Tsui (as Hon Winnie Tsui J then was) handed down a judgment (see [2024] HKCFI 91), where she dismissed the bankruptcy petition. Her Ladyship was of the view that there were bona fide disputes on substantial grounds as to whether there was an implied term that the Plaintiff’s right to terminate the Agent’s Contract would be exercised in good faith and would not be exercised for arbitrary, capricious, perverse or irrational reasons. Her Ladyship also noted that the following contentions of the Defendant were prima facie arguable and they should not be resolved in a bankruptcy petition, which was a summary procedure:-

(1)  The Plaintiff unilaterally adopted the 25-month LIMRA persistency rate when the agreed benchmark was the 19-month LIMRA persistency rate.

(2)  While the Plaintiff did not mention any reason for terminating the Agent’s Contract in the termination notice, the real reason was that the Defendant could not achieve 80% 25-month LIMRA persistency rate.

(3)  If the Plaintiff terminated the Defendant’s contract by unilaterally changing the requirement, it would not be fair to the Defendant.

24.  In gist, Her Ladyship was concerned that it might be arguable that the Plaintiff terminated the Defendant’s contract in bad faith and/or in breach of an implied term with the illegitimate intention to claw back the CPB already paid to the Defendant. Notably, this is not the defence put forward by the Defendant in his Defence. His first line of defence, as set out and rejected above, was simply that the Plaintiff could terminate the Agent’s Contract by reference only to his 19-month LIMRA persistency rate, but not the 25-month LIMRA persistency rate. His argument was not that the Plaintiff terminated the Agent’s Contract in bad faith with the predominant purpose of invoking the clawback mechanism in the Side Agreement, or that there was any implied term in the Agent’s Contract or Side Agreement.

25.  Having said that, considering the development of the bankruptcy proceedings and that the Defendant is not legally represented, I think it is only fair that I should also determine whether there is any implied term in the contracts, whether the Plaintiff has acted in breach of it, and whether as a result of that breach the Plaintiff’s claim herein should be denied.

26.  The Plaintiff relied on Shek Kin Pong v FTLife Insurance Co Ltd [2019] HKCFI 1781 to contend that there is no implied term to the effect that the Plaintiff’s right to terminate the contract of the Defendant would be exercised in good faith and would not be exercised for arbitrary, capricious, perverse or irrational reasons.

27.  In Shek Kin Pong, a group of agents claimed against the insurance company for sums due as remuneration under their agreements with the company, which sums the company claimed it was entitled to deduct and set off against the amounts payable to the agents upon its termination of their agreements. One main argument advanced by the agents was that the termination clause should not be exercised by the company in order to seek repayment of the monthly allowance and/or bonus earned and received by each agent, and that the company should not exercise its power to terminate unconscionably, without reasonable cause and contrary to the legitimate expectations of each agent, or so as to deprive each agent of the contractual benefit earned and which results in the unreasonable forfeiture of such benefit.

28.  The termination clause in that case was exactly the same as clause 10.1 of the Agent’s Contract herein (which is not surprising as the same insurance company was involved). Hon Mimmie Chan J rejected the agents’ proposed implied term, and Her Ladyship’s analysis of the termination clause and its interaction with the proposed implied term is set out hereinbelow:-

“55.  The right of termination under Clause 10.1 is expressed to be exercisable at any time, without the need to give any reason. Clause 10.8 expressly provides that upon any notice of termination being given, the agent shall forthwith repay all indebtedness and other sums owed or payable. In particular, clause 3 of Section II (the Clawback Clause) expressly states that the Company has the right to clawback the Monthly Allowance and Bonus paid, whenever deemed appropriate. The Duty to Repay Clause under Section III of the Side Agreement expressly provides that the Monthly Allowance and Bonus received by the Plaintiffs shall be repayable forthwith if the Contract is terminated for any reason.

56.  The implied terms contended by the Plaintiffs, that the right of termination under Clause 10.1 should not be exercised in order to seek repayment of the Monthly Allowance and Bonus earned and received, and so as not to deprive the Plaintiffs of the benefits or result in their contractual benefits being forfeited, are all directly contradictory to the express provisions of Clause 10.8 of the Contract, the Clawback Clause in Section II and the Duty to Repay Clause in Section III of the Side Agreement. For that reason, they should not be implied under the principles clearly stated in Kensland Realty Ltd v Whale View Investment Ltd (2001) 4 HKCFAR 381, and applied in Yifung Developments Limited v Liu Chi Keung Ricky HCA 1341/2014, unreported, 25th of April 2016.

57.  In my view, arguments as to whether the Plaintiffs’ work to achieve the performance targets would be rendered futile, and whether it would be worthwhile for the Plaintiffs to do the work and incur the expenses to earn the Bonus or the Monthly Allowances, are commercial decisions which the Plaintiffs should have considered and weighed prior to entering into the Contracts and Side Agreements. The time to consider the financial benefits, the quid pro quo and whether it was all worthwhile was before the Plaintiffs signed the Contracts and Side Agreements, when they were free to negotiate the terms of the bargain to be made with the Company, and not after the event, for raising arguments at trial. The Contracts and Side Agreements were freely negotiated and entered into by the Plaintiffs, and the Court has no role to play in rewriting their agreements or in educating the parties on the pros and cons of the financial arrangements.

58.  Clause 10.1 gave both parties the contractual right to terminate the Contract by 30 days’ notice, as opposed to and distinct from a discretionary power. There is no reference in either the Contract or the Side Agreement to any duty of good faith on the parties, or to the parties’ duty to cooperate. In GDH Ltd v Creditor Co Ltd [2008] 5 HKLRD 895, the Court stated that an overriding principle that in making and carrying out contracts, parties should act in good faith, or observe an obligation to act in the best interests of and in good faith to other parties, is not an obligation recognized by Hong Kong law.”

29.  As mentioned, the termination clause in Shek Kin Pong was the same as clause 10.1 of the Agent’s Contract here. In fact, the clause 10.8 referred to by Hon Mimmie Chan J was also the same as the clause 10.8 of the Agent’s Contract here. There is no material difference between the relevant clawback clauses in both cases. In the circumstances, there is no reason for me to depart from Her Ladyship’s analysis. Furthermore, the ratio decidendi of the analysis is that an implied term cannot contradict an express contractual provision, and that there is no recognized obligation for a contractual party to act in good faith in the absence of any reference in the contracts to any duty of good faith on the parties. That ratio decidendi binds on me: see Poon Ching Man v Lam Hoi Pun DCPI 1585/2011 (unreported, 22 April 2015) at §49.

30.  Shek Kin Pong has been applied in a subsequent Court of First Instance’s decision. In Cheung Li On v Sun Life Hong Kong Ltd [2021] HKCFI 3784 at §114, Hon Au-Yeung J referred to Shek Kin Pong and agreed to the proposition that a contractual right to terminate by notice enabled either party to terminate by notice for no, good or bad reason, and that the duty to act in good faith in making and carrying out contracts was not an obligation recognized by Hong Kong law. Her Ladyship proceeded to reject the implied term proposed by the plaintiff in that case for the following reasons:-

“117. The Termination Clause could function perfectly well without the Implied Term. The Implied Term was not obvious, necessary or reasonable to give effect to the reasonable expectations of both parties.

…

119. Fourthly, the implied duty of good faith may apply to a power to terminate that may prevent a proper exercise of contractual discretion eg to confer a bonus: Tadjudin Sunny, footnote to §4 where that implied duty was not in dispute in that appeal.

120.  The present case did not involve exercise of contractual discretion but a right to terminate.”

31.  Similar to Cheung Li On, there is no contractual discretion involved in the present case. It is also for this reason that HHJ Harold Leong rejected the agent’s proposed implied term in a similar dispute in FTLife Insurance Company Ltd v Ho Suk Yue [2023] HKDC 363 at §§28-30.

32.  I therefore find that there is no implied term that the Plaintiff’s right to terminate the Agent’s Contract would be exercised in good faith and would not be exercised for arbitrary, capricious, perverse or irrational reasons.

33.  On the other hand, as pertinently observed by Hon Winnie Tsui J in the bankruptcy proceedings (see §75 of that judgment), the trial of Shek Kin Pong was conducted before the Court of Appeal’s decision in WD Life Insurance Company (Bermuda) Ltd v Poon Cindy [2019] 3 HKLRD 455 was handed down. In Poon Cindy, the Court of Appeal held that it was arguable that there were implied terms that the power to terminate an agent’s agreement or to demote the agent would be exercised in good faith and would not be exercised for arbitrary, capricious, perverse or irrational reasons. The Court of Appeal has reviewed, among others, the following authorities:-

(1)  Tadjudin Sunny v Bank of America CACV 12/2015 (unreported, 20 May 2016), where the Court of Appeal held at §55 that “a power or discretion given to a party to a contract 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. Such restrictions are implied in order to give effect to the reasonable expectations of the parties to the contract.”

(2)  So Sheung Hin Ben v Chubb Life Insurance [2018] 5 HKC 47, where the Court of Appeal held it was reasonably arguable that there was an implied term that the power of termination had to be exercised in good faith in the context of a claw-back claim of performance bonus and allowances by an insurance company against an agent.

34.  To cater for the possibility that the Court of Appeal may subsequently hold that there should be an implied term in the present context or similar context, I shall set out my views and findings on the basis that a term should be implied into the Agent’s Contract to the effect that the Plaintiff’s right to terminate the contract would be exercised in good faith and would not be exercised for arbitrary, capricious, perverse or irrational reasons (including to claw back the CPB).

35.  According to the unchallenged evidence of the Plaintiff’s witness, Mr Kwok Man To, who is the Associate Director of the Plaintiff’s Distribution Services and Support Department (the Defendant chose not to cross examine him notwithstanding my warning that the witness’s evidence would be taken as unchallenged):-

(1)  The Plaintiff had legitimate business and commercial reasons to monitor the performance of its agents on an ongoing basis. For this purpose, the Plaintiff has always taken into account various indicators for measuring and evaluating the agents’ performance, such as their 19-month and 25-month LIMRA persistency rates and the annualized first year commissions produced by them.

(2)  The Defendant knew that his business performance was evaluated by reference to those different indicators including the 25-month LIMRA persistency rates. In fact, he had access to the Plaintiff’s record showing his own 19-month and 25-month LIMRA persistency rates.

(3)  The Defendant’s performance had been far from satisfactory since June 2020. As can be seen above, the Defendant’s 19-month and 25-month LIMRA persistency rates were consistently below 85%, and his annualized first year commission for the period between August 2020 and April 2021 was in the mere sum of HK$14,970.12. Indeed, the relevant commission for the period from August to November 2020 and from February to April 2021 was nil.

(4)  Due to the Defendant’s poor performance from June to August 2020, the Plaintiff once thought about suspending the payment of the CPB for the 3^rd performance bonus period. To give the Defendant another chance, the parties executed the first addendum and the CPB was released to the Defendant. (I should point out that the Plaintiff actually has no contractual right to suspend the payment of the CPB, but it can claw it back later in light of the Defendant’s poor persistency rates.)

(5)  Despite giving another route to the Defendant to retain his CPB for the 3^rd performance bonus period (i.e. by the production of HK$300,000 annualized first year commission in August to December 2020), the Defendant could not meet the target. It was in such circumstances that the parties executed the second addendum, whereby the timeline for producing the requisite annualized first year commission was extended. Notwithstanding that, the Defendant could only produce annualized first year commission in the sum of HK$14,970.12 by April 2021 and it was unrealistic to expect the Defendant to meet the target by June 2021.

36.  Having considered Mr Kwok’s evidence as well as the documentary evidence in relation to the Defendant’s performance, I find that the Plaintiff terminated the Agent’s Contract out of genuine concern about the Defendant’s business performance and the termination was preceded by the Plaintiff’s endeavors to afford the Defendant with opportunities to improve his performance. The Plaintiff did not terminate the Agent’s Contract with the intention, let alone a predominant one, of clawing back the CPB. Therefore, even if there were an implied term, the Plaintiff did not act in breach of it.

Disposition

37.  By reason of the aforesaid matters, I find in favour of the Plaintiff and make the following orders:-

(1)  The Defendant do pay the Plaintiff a sum of HK$1,356,009.36 (i.e. claw-backs in the sum of HK$1,359,683.70, being set off by commission in the sum of HK$3,674.34); and

(2)  There be pre-judgment interest at 7% per annum or at the rate of HSBC prime rate +3% per annum, whichever is higher, from 28 May 2021 until the date of judgment, and thereafter there be interest at judgment rate until full payment.

38.  As to costs, taking into account the outcome and the contractual provisions under clause 7 of the Agent’s Contract and clause 6 of section IV of the Side Agreement, I make an order nisi that the Defendant do pay the Plaintiff’s costs of the action, to be taxed on an indemnity basis if not agreed, with certificate for counsel.