DCCJ 1881/ 2005
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 1881 OF 2005
____________________
BETWEEN
EIL COMPANY LIMITED
Plaintiff
and
SIU CHUN WAH VINCENT
1st Defendant
LI SIU CHING
2nd Defendant
CHAN SUK FONG CANDY
3rd Defendant
__________________________
JUDGMENT
__________________________
Coram: Deputy District Judge E. Yip in Court
Date of Hearing: 3 - 6 January 2006 & 9 January 2006
Date of Judgment: 24 January 2006
The plaintiff’s case
1. The plaintiff trades in electronic parts. The 3 defendants were its employees. They conspired to defraud and injure the plaintiff by inducing it to trade with a fictitious company. They made fraudulent misrepresentations to the plaintiff. The plaintiff could not get payment. They were in breach of trust, fidelity, and good faith in secretly setting up a company to approach the plaintiff’s customers. The plaintiff terminated their employment. The plaintiff claims the value of the goods, damages, interest and costs.
The 3 defendants’ case
2. The defendants denied having conspired together or made any representations to the plaintiff. They denied any knowledge that that was a fictitious company. They denied the plaintiff’s exclusive right to approach those customers after termination of their employment.
The issues to be determined
3. I have to determine the issues of:
(1)
Whether they conspired to defraud and injure the plaintiff by inducing it to trade with a fictitious company [para. 17, Amended Statement of Claim, p. 19] ;
(2)
Whether they made fraudulent representations to the plaintiff [para. 15, Amended Statement of Claim, p. 19 ];
(3)
Whether they assisted another person in breach of duty of trust, fidelity and god faith or breach of trust by making fraudulent representations [para. 18, Amended Statement of Claim, p. 19] ;
(4)
Whether they were in breach of trust in secretly setting up a company to approach the plaintiff’s customers [para. 19, Amended Statement of Claim, p. 19] ;
(5)
If any of the above, the loss and damage suffered by the plaintiff;
(6)
Mr. Yeung’s application to reopen the cross-examination of Ronnie Kong, the plaintiff’s 1st witness;
(7)
The Labour Tribunal’s exclusive jurisdiction over the present action.
A note for reading
4. Both counsel for the plaintiff and the defendants put forward an agreed Trial Bundle. With the exception of 2 faxes [p. 95 and p. 236] , all documents are produced without further proof. The implications of p. 95 and p. 236 will be seen in due course [para. 74 of this Judgment] .
5. It is the plaintiff’s case that the defendants had relied on the confusion of names to deceive it. In the present action, all names are originally in Chinese. Some companies and places have only Chinese names. The use of English names will easily cause confusion. Therefore for names originally in Chinese, I will retain the Chinese names, without any English translation, to avoid confusion.
The plaintiff’s evidence
The Dramatis Personae
6. Since 2001, the plaintiff became a distributor of products manufactured by Melexis, a supplier of Integrated Circuits from Belgium. One of the main products was part number US1881KUA (“the Product”) . The plaintiff had a closely associated company and marketing arm in Shenzhen, PRC, 深圳市星亮電子公司（“星亮”） . Ronnie Kong (the plaintiff’s 1st witness) was the plaintiff’s majority shareholder and managing director. He was also 星亮’s beneficial owner. He controlled both companies.
7. Ronnie Kong’s wife, Natalie Lam Ying (“Natalie Lam”, the plaintiff’s 2nd witness) , was the plaintiff’s operations manager.
8. Mr. Eric Leung Hau Fuk (“Eric Leung”, the plaintiff’s 3rd witness) , was the plaintiff’s engineering director.
9. Since January 2000, Vincent Siu Chun Wah (“the 1st defendant”) , was the plaintiff’s Product Marketing Manager. His job duty included all the marketing and pricing and customer identification of Melexis’s products including the Product.
10. Since August 2002, Alex Li Siu Ching (“the 2nd defendant”) , was the plaintiff’s sales manager in charge of the China market. Mr. Sean Ping (or Shaun Ping) Yat Fung (“Ping”) was a member of 星亮’s sales team. He had to report to the 2nd defendant in duties. As reflected in his namecard [p. 234] , 星亮 was directly related to the plaintiff.
11. In case of sale of Melexis’s products to a customer in China, the 1st, the 2nd defendants, and Ping would have to work together.
12. Since July 2001, Candy Chan Suk Fong (“the 3rd defendant”) , was the plaintiff’s sales manager in charge of the Hong Kong market.
13. In case of sale of Melexis’s products to a customer in Hong Kong, she and the 1st defendant would have to work together.
The company known as “宇航“
14. In sales meetings between January and April 2003, the 1st and the 2nd defendants made oral representations to Ronnie Kong, Natalie Lam, and/or Eric Leung, as the case may be [para. 5 –7, PW1 Ronnie Kong’s 1st Statement, p. 49 – 50; para. 5 – 7, Ronnie Kong’s 2nd Statement, p. 58 – 59; para. 2 – 3, PW2 Natalie Lam’s Statement, p. 66 – 67; para. 2 – 4, PW3 Eric Leung’s Statement, p. 72 – 74] . The representations were as follows:
(1)
There was a
large computer cooling fan manufacturer known as 宇航 with a head
office in Taiwan and a large factory in China;
(2)
They had
met a Mr. Tsui (“Tsui”) of宇航;
(3)
宇航 had the
potential to become a big client as it had a regularly huge
demand for the Product;
(4)
Tsui originally asked for 1% commission but later only asked for 60 days to pay the purchase order;
(5)
宇航 would
buy the Product from the plaintiff if the plaintiff could sell
at a low price on favourable terms.
The 2nd defendant gave Ronnie Kong the namecard (p. 229) of Tsui. Tsui was described as宇航’s Purchasing Manager of its factory in Shenzhen, China. In reliance on their representations, Ronnie Kong agreed to sell a large quantity of the Product to 宇航 [para. 7, Ronnie Kong’s 1st Statement, p. 49 – 50] .
15. On 16, 22, 28 May 2003 respectively [p. 106] , the 1st and the 2nd defendants got from宇航3 purchase orders, each for 500,000 pieces, a total of 1,500,000 pieces, of the Product (at US$0.068 per piece) . The total sum was $US$102,000 (or HK$795,600) . The plaintiff’s cost from Melexis was US$0.064 [para. 9, Ronnie Kong’s 1st Statement, p. 50] .
16. On about 16, 22, and 28 May 2003 respectively [p. 139 – 147] Ping collected the goods under each purchase order to the order of宇航.
17. In late June 2003, Ping disappeared with all files on his desk.
18. The plaintiff never received any payment.
The enquiry about 宇航
19. On 4 June 2003, Candy So, a customer co-ordinator for the China market, left the plaintiff. Natalie Lam took over her job temporarily.
20. On 10 June 2003, Ronnie Kong received a call from the plaintiff’s client, a Mr. Choi of K & L Wei (“K & L”) . K & L told the plaintiff that it had received an offer to sell K & L the Product from a company called VCA Technology Co. Ltd. (“VCAT Co. Ltd.”) , 深圳市馬力士科技有限公司 in Chinese. VCAT Co. Ltd. quoted a much higher price (US$0.13 per piece) than the plaintiff. Ping was known as the contact person [para. 10 – 11, Ronnie Kong’s 1st Statement, p. 50 – 51] .
21. After the call, Ronnie Kong personally tried to contact 宇航 by phone and fax. He found that all the information about宇航 was false. It was a fictitious company. He suspected that more senior staff in Hong Kong were also involved.
22. A company search [p. 104] revealed that Ping was深圳市馬力士科技有限公司’s authorized representative, general manager, and director. It had no English name. The registration would be valid from 17 April 2003 to 17 April 2013. Ping invested RMB￥400,000 and owned 80% shares. A person known as孫曉明 invested RMB￥100,000 and owned 20% shares. Ronnie Kong reported the matter to the police in Hong Kong.
23. On 13 June 2003, Mr. Kenny Tam (“Kenny Tam”) , the plaintiff’s project engineer, revealed that he had, upon the 1st defendant’s request, registered for the 1st defendant a new internet domain name for a company known as “VCA Technology Limited” (“VCAT Ltd. ”) [para. 11, Ronnie Kong’s 1st Statement, p. 51] on 9 June 2003.
24. On 19 June 2003, Ronnie Kong instructed solicitors to write to the defendants to terminate their employment with immediate effect on the ground, amongst others, of deceiving the plaintiff into trading with 宇航 [the letters, p. 100 – 102] .
25. Ronnie Kong and Natalie Lam subsequently had a meeting with a Tsui of敏泉of the Taiwanese-based cooling fan company originally known as 宇航. This Tsui informed them that 宇航had already changed its name to敏泉電子（深圳）有限公司（“敏泉”） a year ago. The 1st , the 2nd defendant, and Ping had visited his factory and were aware of the change of name [para. 19, Ronnie Kong’s 2nd Statement, p. 63; para. 13, Natalie Lam’s Statement, p. 70] .
26. The plaintiff discovered [para. 23, Ronnie Kong’s 1st Statement, p. 53; para. 20, Ronnie Kong’s 2nd Statement, p. 63; p. 233] that the 3rd defendant had contacted 4 of its existing customers as follows:
(1)
On the same
day of being informed of the termination of employment, Silverise;
(2)
On the
following day, IntelliSense;
(3)
Later in
the same month, Linear;
(4)
Sometime
afterwards, Eastar.
27. The plaintiff also discovered that the 1st , the 2nd defendants had visited the factory of 敏泉 in 福永 on 20 February 2003 [see 敏泉 ’s namecard, p. 231; Ping’s 2 emails to the 2nd defendant dated 19, 20 February 2003 respectively, p. 125, 126; the 2nd defendant’s expenses record, p. 150] .
The plaintiff’s change in emolument terms
28. The defendants suggest that the allegation of deception was suspiciously close to the time of the their complaint at the Labour Department for change in emolument terms. It is relevant because it tends to suggest a fabricated case to counter their complaint. We have to go back to the history.
29. On 16 January 2003, Ronnie Kong emailed [p. 110] the plaintiff’s staff, including the 3 defendants as follows:
(1)
The
plaintiff would postpone the 2002 double pay in 3 equal instalments from end of January 2003 to end of March 2003;
(2)
The
plaintiff intended to replace the existing double pay scheme by
another one based on individual staff member’s performance and
the plaintiff’s profitability.
30. On 5 May 2003, Ronnie Kong emailed [p. 100] as follows:
(1)
The
plaintiff would cancel year end double pay for 2003;
(2)
The
plaintiff would change the commission scheme.
So far the precise formula of the scheme had not been determined.
31. On 12 June 2003, they lodged a complaint at the Labour Department about the change in emolument terms.
32. On 13 June 2003, they each emailed Ronnie to object to the change in emolument terms [p. 114 – 117] .
33. On 19 June 2003, the plaintiff instructed solicitors to write to terminate their employment with effect from 19 June 2003.
34. On 31 July 2003, they filed a claim in the Labour Tribunal (LBTC 6659/ 2003) for compensation due to the termination of employment. Apart from unpaid salaries that the plaintiff had subsequently paid, the other items of claim had yet to be set determined at a trial to be set down in future.
The defence evidence
35. Each of the defendants gives evidence. They call no witnesses. I shall only set out such parts of their evidence which is different from or go beyond the plaintiff’s evidence.
The 1st defendant’s evidence
36. Most of the defendants’ evidence is covered by the 1st defendant’s evidence [in his statements; his evidence in Court] . They did not know that 宇航 was fictitious. They did not, and had no authority to, approve the price or persuade the plaintiff to trade with宇航. It was Ronnie Kong who could and did make the decision to do so. Ping’s wife, Lily Lai, was and still is the head of the accounting department in 星亮. The plaintiff could try to locate Ping through her.
37. Before the termination of employment, they had not put their heads together to do anything against the plaintiff’s interest. Afterwards, they were under no restraint of trade as to what they might do, including contacting the existing customers of the plaintiff’s.
The subject of 宇航
38. He had not raised the name of宇航 to any one. He just heard of its name and its transaction with the plaintiff from others in about or before April 2003. It was Ronnie Kong who, in about the end of April 2003, first brought it up. Ronnie Kong told him that the plaintiff’s transaction with宇航 was about to conclude. In the 2nd defendant’s presence, Ronnie Kong asked him to have a meal with Tsui in Shenzhen [para. 11 – 14, the 1st defendant’s Statement, p. 37 – 38] . Pursuant to this instruction, he, the 2nd defendant, and Ping had a meal with Tsui [the 1st defendant’s evidence-in-chief] . The 1st and the 2nd defendants never visited any factory of 宇航.
The setting up of VCAT Ltd.
39. In early June 2003, he, his wife (Winnie Chu Pui Shan, “Winnie Chu”) , the 3rd defendant, and Raymond Yau Chun Keung (“Raymond Yau”) began to discuss the setting up of a company. Before the incorporation of the company, Winnie Chu was working full time as an administrative assistant in a charity known as Project Vision. Raymond Yau was the 3rd defendant’s boyfriend. Raymond Yau was and still is an insurance agent.
40. The company would trade in electronic parts, plastic products, and home electrical appliances. The 4 of them had a consensus that the company would have 2 directors, Winnie Chu and Raymond Yau. He and the 3rd defendant would not be the directors because of 2 reasons:
(1)
Advice
received that all 4 of them could optimize tax benefit under
Personal Allowance;
(2)
Possible
conflict of duties whilst in the employ of the plaintiff.
41. Raymond Yau alone named the company VCAT Ltd 捷信科技有限公司 in Chinese. He did not want to waste time to ask Raymond Yau why such names were used.
42. He is referred to a fax, which bears the letterhead深圳市馬力士科技有限公司, whose (non-registered) English name [p. 95, 239] appears to be VCAT Co. Ltd. He denies any knowledge of VCAT Co. Ltd. or any connection between his VCAT Ltd. and that VCAT Co. Ltd.
43. In early June 2003, he asked Kenny Tam to register an internet domain for VCAT Ltd.
44. In mid-June 2003, he put up the rental deposit for the office of VCAT Ltd. He had not yet known by then who would work there.
45. On 4 July 2003, VCAT Ltd. was incorporated. Winnie Chu and Raymond Yau became the directors.
The 2nd defendant’s evidence
46. His evidence is the same as the 1st defendant’s.
47. Beyond that, he admits that on 15 February 2003, he emailed Ping to ask Ping to arrange for him an appointment with the Melexis customer the following week.
48. On 19 February 2003, Ping emailed to inform him that they would visit the factory of宇航the following afternoon.
49. In the morning on 20 February 2003, Ping emailed to request him to set off earlier. They had to visit 宇航 in 福永. He accepts in Court that he had gone to the vicinity of Shenzhen Airport, which was in the vicinity of 福永. He denies that on that day or any other days he had visited 敏泉 (previously known as 宇航 ) in 福永. He had not seen any customers on that day.
50. He says he only knew of the non-existence of any factory of宇航 at the location of 深圳市龍崗區坪山鎮坪環工業城 lately. 龍崗區坪山鎮was not in福永.
51. He openly confronted with the plaintiff for the change in emolument terms although he was only little affected by the scheme and the precise formula had not been determined by the plaintiff.
The 3rd defendant’s evidence
52. Her evidence is the same as the 1st defendant’s.
53. Beyond that, she says that in June 2003 there were 19 – 20 staff in the plaintiff, 4 – 5 of them were in the sales team. She had never been involved in any transaction with 宇航. She knew Raymond Yau named the company “VCAT Ltd.” because Raymond Yau had engaged a Fung Shui master to look at the Fung Shui and come up with the name.
54. In June 2003, she did not know that the 1st defendant had taken up a tenancy for the office of VCAT Ltd. Before being informed of the termination of employment, she did not know what kind of business VCAT Ltd. would be doing. She had a consensus with the other 3 that she should not be made its director.
This Court’s findings
On the 1st defendant’s evidence
55. He impresses me as an intelligent witness. He says that the 4 of them had a consensus that the company would have 2 directors, Winnie Chu and Raymond Yau. He and the 3rd defendant would not be the directors because of 2 reasons:
(1)
Advice
received that all 4 of them could optimize tax benefit under
Personal Allowance;
(2)
Possible
conflict of his and the 3rd defendant’s duties whilst in the employ of the plaintiff.
However, he is unable to give a sensible explanation as to how they could optimize tax benefit under Personal Allowance. I do not find such to be a reason at all. It is clear that he does not want to admit the sole reason for not being the director. He well knew that VCAT Ltd. would approach the plaintiff’s existing customers. I do not find such evidence (of his belief of a tax benefit) credible.
56. He says that even up to mid-June 2003 when he put up money to rent the office for VCAT Ltd., he had no idea of whether he would leave the plaintiff to run VCAT Ltd., what people, or how many people would run VCAT Ltd. I do not find such evidence credible.
57. I do not find him a credible witness. I reject his evidence wherever it is in conflict with the plaintiff’s evidence.
On the 2nd defendant’s evidence
58. He says that he had not visited any customers, including宇航, on 20 February 2003. Later he is referred to his expenses record [p. 150] . The record showed a ￥30-trip by taxi/coach from the vicinity of Shenzhen Airport to a Prod-Art Factory. He then accepts that he had actually visited a Prod-Art Factory that day.
59. However, according to Ping’s emails to him [dated 20 February 2003 late morning, p. 126] , he was requested to set off earlier on 20 February 2003 to visit 宇航’s factory in 福永 and惠爾得’s factory in 龍華 [full address 深圳市龍華鎮 , see 惠爾得 ’s namecard, p. 235] . According to his expenses record [p. 150] , he had actually been to the vicinity of Shenzhen Airport, and had lunch with the 1st defendant. Beyond a bare denial of having visited宇航’s factory in 福永, he is unable to give more details of those visits that day.
60. It is clear that if he admits having visited 宇航’s factory in 福永 on 20 February 2003 or at all, he will be put on notice that 宇航 had already changed its name to敏泉. He cannot afford to confirm Ronnie Kong and Natalie Lam’s evidence of meeting a Tsui of敏泉of the Taiwanese-owned cooling fan company originally known as 宇航. This Tsui had informed Ronnie Kong and Natalie Lam that 宇航had already changed its name to敏泉電子（深圳）有限公司（“敏泉”） a year ago, and that the 1st , the 2nd defendant, and Ping had visited his factory and were aware of the change of name [para. 19, Ronnie Kong’s 2nd Statement, 2005, p. 63; para. 13, Natalie Lam’s Statement, p. 70] .
61. I do not find him a credible witness. I reject his evidence wherever it is in conflict with the plaintiff’s evidence.
On the 3rd defendant’s evidence
62. She says that it was Raymond Yau’s idea to set up the company (VCAT Ltd.) . She had told the others that she did not intend to be involved in its work because she was still the plaintiff’s employee. Despite that, she took part in the discussions and consensus relating to its formation and directorship.
63. Winnie Chu and Raymond Yau were not in the trading field. The 1st defendant says he did not know when he would work for VCAT Ltd. She says that even in June 2003, she did not know that the 1st defendant had taken up a tenancy for the office of VCAT Ltd. Before being informed of the termination of employment, she did not know what kind of business VCAT Ltd. was doing. If she had little wish of being involved, I see no reason why she would have taken part in any discussions or consensus at all. As I see it, she is only trying to belittle her involvement. Her prior and active involvement is actually reflected by her contact with the plaintiff’s existing customers at the first possible opportunity [on the same day of being informed of the termination of employment, Silverise, and on the following day, IntelliSense] .
64. I do not find her a credible witness. I reject her evidence wherever it is in conflict with the plaintiff’s evidence.
On the plaintiff witnesses’ evidence
65. Mr. Yeung [para. 47 – 48, Closing Submissions] refers to the plaintiff’s amendment as to the mode of delivery of the Product to the customer. Initially, it was stated [para. 5, Statement of Claim, filed on 28 August 2003, p. 21] that:
The plaintiff sent the goods to [宇航] …
Later, it was amended [para. 2, Amended Statement of Claim, filed on 28 September 2004, p. 16] to:
The goods were duly collected … from the plaintiff’s Shenzhen office.
I look at the plaintiff’s invoices [p. 139, 142, 145] . They clearly showed 3 batches of goods, each 500,000 pieces, shipped to 宇航 at the address of the plaintiff’s own Shenzhen office, namely 星亮, and collected by Ping. The plaintiff’s case remained the same with or without the amendment. So I disagree with this submission.
66. Mr. Yeung refers [para. 49, Closing Submissions] to the plaintiff’s and his counsel’s confusing use of short-forms to denote “VCAT Ltd” or “VCAT Co. Ltd.”, as the case may be, from time to time. I see no confusion at all. So I disagree with this submission.
67. Mr. Yeung submits [para. 52, Closing Submissions] that the plaintiff attempts to put up the false image that 星亮 was a branch of the plaintiff so that the loss and blame from星亮 (in respect of the goods not paid for) could be shifted onto the plaintiff’s staff in Hong Kong. The goods were duly transferred or sold to星亮. 星亮 must have accounted to or paid to the plaintiff.
68. As I see it, it cannot be challenged that Ronnie Kong was the controlling hand of both the plaintiff and星亮. Even the namecard of Ping [p. 234] suggested that 星亮 was closely related to the plaintiff. I see no advantage for putting up any such image. They have remained separate legal entities. Besides, Mr. Yeung has no basis to suggest that星亮 must have accounted to or paid to the plaintiff. So I disagree with this submission.
69. Mr. Yeung submits [para. 53, Closing Submissions] that the plaintiff attempts to confuse the 3rd defendant’s name, Candy Chan, with Candy So, a staff member who left in June 2003. The purpose is to make communications between Ping and Candy So to look like those between Ping and the 3rd defendant. Throughout, the 3rd defendant had no communications with Ping because she was responsible for the Hong Kong market only.
70. As I see it, the plaintiff has never suggested that Ping had ever emailed the 3rd defendant in the transaction with 宇航. Candy So’s email address has throughout been [p. 124, 125] :
<candy@eilhk.com>
So I disagree with this submission.
71. Mr. Yeung submits [para. 56, Closing Submissions] that the plaintiff does not disclose Ping’s employment file, which will show that Ping’s wife, Lily Lai, still works in星亮.
72. This matter has never been pleaded. It is raised first time at trial. Ronnie Kong is not asked if he knew their relationship. When asked, Natalie Lam replies that she does not know it. Eric Leung replies that he does not know Lily Lai still works in星亮. Their answers are not challenged. The plaintiff cannot have dealt with this matter prophetically. So I disagree with this submission.
73. Ronnie Kong, Natalie Lam, and Eric Leung are unshaken under cross-examination. I find them credible and reliable witnesses. I accept all their evidence.
The admissibility of the fax provided by K & L admissible
74. Mr. Yeung [para. 32, Closing Submissions] disputes the admissibility of the document bearing the letterhead of深圳市馬力士科技有限公司 with an English name “VCAT Co. Ltd.” [p. 95] . It is hearsay from an unknown source. It makes no commercial sense. It has so many unexplained markings. I agree with Mr. Yeung’s submission that its truth cannot be relied upon. But I regard that the fact of somebody using the name “VCAT Co. Ltd.” on as early as 10 June 2003 is relevant to the issue of whether the plaintiff fabricated this case to counter the 3 defendants’ claim [originated from a complaint made on 12 June 2003] in the Labour Tribunal.
The allegation of a fabricated case to counter the claim in the Labour Tribunal
75. Mr. Yeung submits generally [para. 45 – 46 of Closing Submissions] that the plaintiff fabricated the present claim to counter the 3 defendants’ claim in the Labour Tribunal, and specifically [para. 50, Closing Submissions] that the plaintiff had invented an English name “VCAT Co. Ltd.” [for 深圳市馬力士科技有限公司 , which had no English name] . This would implicate the (1st and the 3rd defendants’) innocent “VCAT Ltd.” by its similarity. I accept Ronnie Kong’s evidence that on 10 June 2003, he received a call from the plaintiff’s client, K & L. K & L told him that it had received an offer to sell it (K & L) the Product from a深圳市馬力士科技有限公司 with an English name “VCAT Co. Ltd.” [para. 10 – 11, Ronnie Kong’s 1st Statement filed on 7 May 2004, p. 50 – 51; the fax, p. 95] . It is not in dispute that (the 1st and the 3rd defendants’) VCAT Ltd. was incorporated only on 4 July 2003 and the defendants contacted the plaintiff’s customers only after termination of employment on 19 June 2003. But Mr. Yeung now argues that the plaintiff invented the English name “VCAT Co. Ltd.” only afterwards
76. Ronnie Kong denied such an allegation. I find Ronnie Kong a credible and reliable witness. So I reject this submission.
The hearsay evidence that the 1st , the 2nd defendants and Ping knew that 宇航 had changed its name to 敏泉
77. Ronnie Kong mentioned Natalie Lam’s and his subsequent meeting with a Tsui of敏泉of the Taiwanese-based cooling fan company originally known as 宇航. This Tsui informed them that 宇航had already changed its name to敏泉電子（深圳）有限公司（“敏泉”） a year ago, that the 1st , the 2nd defendant, and Ping had visited his factory and were aware of the change of name [para. 19, Ronnie Kong’s 1st Statement, dated 28 January 2005, p. 63; para. 13, Natalie Lam’s Statement, dated 28 January 2003, p. 70] . Mr. Yeung has no objection to its admissibility. At any rate, I am satisfied that such evidence shall not be excluded on the ground of hearsay [s. 47, Evidence Ordinance (Cap. 8)] . Where appropriate, I can rely on the truth of such evidence.
The Issues as determined
Whether they conspired to defraud and injure the plaintiff by inducing it to trade with a fictitious company
78. I find that the 1st , the 2nd defendants, and Ping, upon their visit to宇航’s factory in 福永 on 20 February 2003, if not before, had entered into an agreement between themselves to perform acts with an intent to injure the plaintiff. The trio was then aware that the Taiwanese-owned 宇航 had already changed its name to敏泉. 宇航 had become a fictitious company. Pursuant to such an agreement, they concealed such knowledge from the plaintiff. They told the plaintiff of a fruitful meeting with Tsui of 宇航. They recommended 宇航highly to the plaintiff whilst Ping processed the purchase orders. They induced the plaintiff to trade with 宇航. In reliance of such representations, the plaintiff traded with 宇航 and parted with the goods. Pursuant to the trio’s agreement, the goods were collected by Ping. Ping disappeared. The goods were never paid for. The plaintiff suffered loss of the value of the goods, HK$795,000.
79. I find both liability and quantum proved against the 1st and 2nd defendant jointly and severally. There is no evidence that the 3rd defendant was in this conspiracy. I find her not liable.
Whether they made fraudulent representations to the plaintiff
80. This cause of action is based on the same facts. I find both liability and quantum proved against the 1st and 2nd defendant jointly and severally. There is no evidence that the 3rd defendant made any representations. I find her not liable.
Whether they assisted Ping in breach of trust, fidelity, and good faith by making fraudulent representations
81. This cause of action is based on the same facts. I find both liability and quantum proved against the 1st and 2nd defendant jointly and severally. There is no evidence that the 3rd defendant assisted Ping. I find her not liable.
Whether they were in breach of trust in secretly setting up a company to approach the plaintiff’s customers
82. There is evidence of the 1st and the 3rd defendants’ setting up VCAT Ltd. before termination of employment. However, the evidence does not go so far as to suggest that the defendants had approached the plaintiff’s existing customers before termination of employment. The pleaded case and the evidence of how the defendants were in breach under this cause of action is not clear. I find the defendants not liable.
Mr. Yeung’s application to reopen the cross-examination of Ronnie Kong
83. Several hours into the cross-examination of Natalie Lam, the plaintiff’s 2nd witness, Mr. Yeung applies to re-open the cross-examination of Ronnie Kong, the plaintiff’s 1st witness. He says that during his own voluntary absence (despite refusal by this Court) to do another case in the High Court, his stand-in solicitor, Mr. Yim, who has not fully prepared the case, has omitted to cross-examine Ronnie Kong on some aspects. The overriding interest of justice shall approve of his application. I do not find Mr. Yim incompetent, negligent or defective in the conduct of defence. I reject his application. The full circumstances are set out in the Appendix hereto. I will raise the matter with the Bar Association after handing down the present Judgment.
The Labour Tribunal’s exclusive jurisdiction
84. Mr. Yeung submits, just before the 3rd defendant gives evidence, that only the Labour Tribunal, not this Court, has the jurisdiction for the present action. I have considered this submission despite its lateness. I refer to section 7(1) and (2) of the Labour Tribunal Ordinance, Cap. 25:
(1)
The
Tribunal shall have jurisdiction to inquire into, hear and
determine the claims specified in the Schedule.
(2)
Save as is
provided in this Ordinance, no claim within the jurisdiction of
the Tribunal shall be actionable in any court in Hong Kong.
The Schedule does not contain any of the heads of claim in the present action. So I reject this submission.
The Conclusion
85. I give judgment to the plaintiff as against the 1st and the 2nd defendants jointly and severally for conspiracy to defraud and injure the plaintiff, fraudulent representations, and assisting Ping in relation to Ping’s breach of trust, fidelity, and good faith, in the sum of HK$795,600 being the value of the goods. I give judgment to the 3rd defendant as against the plaintiff. There is no apparent reason why costs should not follow the event. I make an order nisi that the plaintiff shall get costs from the 1st and the 2nd defendants, with certificate for counsel. The 3rd defendant shall get costs from the plaintiff, with certificate for counsel. The cost order shall become absolute 14 days from today.
Dated this 24 January 2006
EDDIE YIP
Mr. Victor Dawes , instructed by M/s Huen &
Partners for Plaintiff
Mr. Yeung Yeuk Chuen, instructed by M/s K.W. Luk & Co. for 1st ,2nd & 3rd Defendants.
Appendix
1.
From the
first pleadings onwards, the plaintiff was represented by Huen & Partners whereas all 3 defendants by K.W. Luk
& Co. On 5 August 2005, the District Court Registrar fixed the
present trial, estimated to last 5 days, to take place between 3 and
9 January 2006.
2.
On 30
December 2005, K.W. Luk & Co. wrote to me. According to the imprint at the top, the faxed letter arrived at 16:09 hours. The letter informed me that Mr. Yeung would be engaged in a short matter in High Court (HCCC 300/2004) in the morning of 3 January 2006. He would be unable to attend my court until 12:00 noon. With their clients’ consent, Mr. Yeung was said to have proposed that Mr. Yim, the handling solicitor would conduct trial from 9:30 a.m. until the plaintiff finished the examination-in-chief of the first witness. This might save my time in waiting for the arrival of Mr. Yeung. Mr. Yeung was also said to have proposed that he would save his opening submission until the plaintiff finished the plaintiff’s case. K.W. Luk
sought my indulgence in allowing the above arrangement. They
wanted me to reply before 1:00 p.m. on 31 December 2005.
3.
At before 10
a.m. on 31 December 2005, I instructed my clerk to fax back the
Direction of “No”. She told me that she faxed back this answer
at about 10 a.m. on the same date.
4.
On 3 January
2005, the 3 defendants were represented by Mr. Geoffrey Chun, of
counsel, instructed by Mr. Yim of K.W. Luk & Co. The plaintiff was represented by Mr. Dawes of counsel. In the presence of Mr. Yim, Mr. Chun explained right away that he had a limited instruction to make an opening speech for the defendants but no further. At about 10: 03 a.m., when the plaintiff’s first witness (Ronnie Kong, “First Witness”)stepped into the witness-box, Mr. Chun turned around to converse with Mr. Yim. He turned back to tell me that he had no further instructions to represent the defendants. Mr. Yim
was sitting 3 feet behind him. He asked to be discharged and I
ordered so. I asked Mr. Dawes of counsel to proceed with the
plaintiff’s case.
5.
Upon Mr.
Dawes’s completion of examination-in-chief of the first witness, Mr. Yim
asked for an adjournment. He submitted that the proceedings
today were developing in a new and an unexpected manner which was
prejudicial to his clients. His camp had not anticipated that Mr. Chun would ask to be discharged so soon because he had not given Mr. Chun any instructions to be discharged. (Mr. Yim did not address me on why he had not stopped Mr. Chun from making the application to be discharged 3 feet in front of him.) As a result of Mr. Chun’s discharge, the 3 defendants were without counsel in such a short notice. I asked Mr. Yim why my Direction had not been implemented. He submitted that as a result of the Direction, Mr. Yeung, Mr. Chun and he himself had had a conference yesterday to sort out what to do. Both counsel were instructed to represent the 3 defendants. I refused to adjourn to wait for Mr. Yeung. After consultation with his clients, Mr. Yim took up the trial by cross-examining the First Witness. At 10:36 a.m. Mr. Yeung
arrived in time to cross-examine Natalie Lam (“Second Witness”).
6.
At the
latter part of cross-examination of the Second Witness, Mr. Yeung told me that he had instructions to apply to re-open the cross-examination of the First Witness. First, he did not expect Mr. Yim would proceed with the cross-examination of the First Witness. Mr. Yim was not fully prepared for cross-examination of the First Witness. Second, I did not allow him to ask the Second Witness certain questions conerning
the First Witness’s knowledge and decisions, to which the Second
Witness’s answer would be not be relevant. The interest of
justice required me to allow him re-open the cross-examination of
the First Witness. I refused application without stating the
grounds. I did not then give my reasons. Now I do.
7.
Mr. Yeung had elected to disregard my Direction of 31 December 2005 conduct his other case instead. Mr. Yim told me that he had held a conference with Mr. Yeung and Mr. Chun to see what to do. Before me, Mr. Yim criticized Mr. Chun’s failure to carry out the instructions to represent the defendants. Mr. Yim, who was throughout present and conversing with Mr. Chun in court, had remained silent both when Mr. Chun first indicated his limited instructions and afterwards applied for discharge. Soon after Mr. Chun had left, Mr. Yim
began to criticize Mr. Chun’s failure.
8.
I saw nothing unusual for the present trial to take place despite Mr. Yeung’s and Mr. Chun’s absence. Mr. Yim had never told me that he was not fully prepared to cross-examine the First Witness. He had also obtained his clients’ instructions before cross-examining the First Witness. Besides, all witness statements had been exchanged long before trial. Mr. Yeung arrived at 10:36 a.m. He had elected to proceed with the cross-examination of the Second Witness despite my repeated rulings that the Second Witness could not answer questions relating to the First Witness. He only made the application at 3:20 p.m. I regarded that he should not first try at length to fish something out of the Second Witness’s evidence and then ask to re-open the First Witness’s evidence for a second run when the Second Witness was about to complete her evidence.
9.
Mr. Dawes objected to Mr. Yeung’s application. He submitted that the Court did not exist to suit counsel’s convenience. I agreed. There was no basis for the defence camp’s expectation that my court existed to suit Mr. Yeung’s convenience. When I did not suit Mr. Yeung’s convenience, they began to argue that it was a new and unexpected event to continue with the trial in Mr. Yeung’s absence. Mr. Yim had obtained his clients’ instructions to cross-examine the First Witness. If Mr. Yim had had been unable to take up the case, he ought to have told me himself soon enough and not through Mr. Yeung nearly 5 hours later.
10.
All defendants, Mr. Yim, Mr. Chun, and Mr. Yeung had considered the possible scenarios and made decisions accordingly. Mr. Yeung had not told me specifically that, or how, Mr. Yim’s cross-examination was so incompetent, negligent, or defective that in the interest of justice, his clients should have the First Witness’s evidence re-opened. Therefore I refused Mr. Yeung’s application.
The End