CHRISTIAN BARET v. HOO CHEUNG ELECTRICAL MANUFACTURING CO LTD

HCA 2047/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2047 OF 2002

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J U D G M E N T

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1.  This is a claim in damages, advanced by the former employee of a Hong Kong based manufacturer for wrongful repudiation by the employer of his contract of employment.

History

2.  The defendant is a family owned and operated business which manufactures ceiling fans.  The plaintiff is British and based in Britain.  In September 1998 he came to be employed for the purpose of undertaking sales of the defendant’s product in Europe.  There was a contract with a subsidiary of the defendant, but that was replaced by one with the defendant.  The term ran to 7 September 2001 with automatic extensions for one year at a time thereafter unless earlier terminated on six months’ notice.  There was no such notice prior to 8 September 2001 and thus the term was scheduled to run at least to 8 September 2002.  The remuneration as contracted for was £50,000 per annum payable monthly in arrears on the 1^st of each month.  The plaintiff was entitled to a car allowance of £ 500 per month, and a pension plan contribution of 10% of his salary.

3.  The plaintiff during the term of his employment was answerable to one of the directors called Wilson Hon who, with his brother, another Hon, owned and controlled the defendant.

4.  It is the plaintiff’s case that in 2001 after some 3 years of employment he sounded out the defendant for an enhanced salary package and, invited to do so, submitted a proposal in writing dated 20 May 2001.  In this he asked for an increase in salary to £54,500 per annum, a like increase to the pension plan contribution to £5,450, an increase in the car allowance to £666.67 per month and a ‘one off’ bonus of £5000.  It is his case that Wilson Hon verbally approved the proposal, but I am more interested in an email from Wilson Hon to the defendant of 16 August 2001 which stated:

“…please be advised once again that your request has been unanimously approved by the Board. Our decision is to execute a new employment contract with your request inclusive…”

5.  Not long after this the parties fell out.  The plaintiff says there were a combination of factors; without warning or discussion the price of the product he was selling was significantly increased, staff he relied on were dismissed and his salary cheques failed to recognize the enhanced remuneration that had been agreed.  Then he became clinically depressed and was unable to work for the latter part of 2001.  During this period he endeavoured to stay in touch and informed, but found he was being increasingly sidelined and effective communication became impossible.  The defence case (as pleaded) was that prices and staff appointments and dismissals were for management, that the plaintiff was paid in terms of contract and that there was reason to believe that he was not ill but was malingering.

6.  The last payment for salary and other emoluments having been paid to the plaintiff on 5 November 2001, purportedly for salary and so on up to 31 October, the plaintiff instructed his solicitors to write to the defendant by letter of 9 January 2002 to the effect that conduct of the defendant and in particular its default in meeting his remuneration package put it in material breach.  By the letter the plaintiff accepted repudiation and claimed damages for salary and other entitlements due up to the date on which the contract was scheduled to expire, being 8 September 2002.  With nothing forthcoming the plaintiff filed a writ.

The Pleadings

7.  Claiming that the defendant had acted in repudiatory breach of the employment contract, and he having accepted repudiation and terminated the contract, he sued for the following:

Salary -	1.11.01 to 31.8.02,
	10 months at £4,541.66 p.m.	45,416.60
	5 days in September	1,135.42
Bonus (one off)		5,000.00
Car allowance (1 month – November)		666.00
Salary and pension enhancement for 2 months, September & October		825.00
Pension		4,542.00
Remuneration for holidays not taken		7,579.00
		£65,164.02
		========

8.  The defendant in its pleaded defence denied wrongful repudiation, claiming that it was the plaintiff who had wrongfully repudiated the contract which the defendant accepted.  It counterclaimed for a declaration that it was entitled to terminate the contract and for damages to be assessed.

Pre-trial

9.  In the period leading up to trial the parties exchanged witness statements, those of the plaintiff and Wilson Hon.  Security for costs was asked for and the plaintiff paid $100,000 into court.  Then shortly before trial the defendant’s solicitors sought and were granted leave to cease to act; come the trial and there was no appearance by the defendant or by anyone on its behalf.

The Hearing

10.  There was nothing before me to counter the evidence of the plaintiff whose case I have already referred to.  The contract spoke for itself, and I am satisfied that the parties were committed by documents to the enhanced remuneration the plaintiff had put in for.

11.  I accept that he received no more pay following the payment made in early November which was salary for the month of October (at the old rate) and for car expenses (at the new rate).

12.  I am satisfied that by paying him no more the defendant materially breached the terms of the contract between the parties, entitling the plaintiff to act as he did to terminate it and claim for the loss.

13.  The claims as pleaded represented his entitlement were the contract to have run its course, with an adjustment in the pension downwards by $454.20 to correct the maths.  The claim for cash in lieu of holidays not taken derives from his having 29.5 days ‘in the bank’ by the time the contract was terminated.  Holidays are provided for in the contract, at 22 working days per year.  The clause reads:

“In the event that the employee decides not to take all the vacation to which he is entitled and in any fiscal year, the employee shall not be entitled to (a) carry forward such vacation to the next following fiscal year at the time without prior written approval given by the Director of Marketing and (b) be reimbursed in monetary form except upon termination.”

14.  The plaintiff relies on (b) for his claim.  But the claim goes back to days taken in 1998, and thereafter.  From the witness box he conceded he had not asked for or been given leave to carry them forward.  I was not addressed on an interpretation of the exception at (b), but it seems to me that it is designed to cover the year or part thereof preceding the termination and goes back no further.  That amounts in this case to only about 1 month’s worth and that comes to £273.74.

15.  The plaintiff recognized that he had a duty to mitigate and adduced evidence that he did attempt to get alternative employment.  I am satisfied that he did all that he reasonably could to mitigate his loss.  He succeeded in July and was offered and accepted employment to begin on 1 August 2005, at a salary of 80,000 euros.  (This converts to £4,261.33 per month, which is £5,326.67 for the period from 1 August to 8 September 2002.)  In addition the plaintiff was paid an unemployment benefit of £53 per week for a period of 20 weeks from March to July 2002.  These amounts serve to mitigate his loss.

The Outcome

16.  I am satisfied that the plaintiff has established liability and quantum of damages he is entitled to.

17.  As adjusted the gross claim comes to £57,404.52 and the earnings in lieu to £6,386.67, so that he is entitled to judgment for £51,017.89.  The counterclaim is dismissed.  Costs are to the plaintiff taxed if not agreed (the costs order is nisi).

18.  The plaintiff is entitled to the sum paid into court as security for costs together with any interest earned thereon.