RICE PETER DAVID v. L AND D HOLDINGS LTD

1990, No. A2309

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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REASONS FOR JUDGMENT

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1. The Plaintiff, who holds a Bachelor of Commerce Degree and an associate member of the Society of Accountants in New South Wales, was an employee of the L & D Group of Companies between October 1989 and January 1990. The Defendant was at all material times and is the holding company of all the companies in the L & D Group. The Plaintiff first commenced his employment with the L & D Group as the Manager of the Corporate Department of L & D Overseas Limited. It was alleged by the Plaintiff that in early January 1990 an oral agreement was reached between himself and one Mr. Paul Deng, acting on behalf of the Defendant, to employ the Plaintiff as the Dealing Director of t & D Securities Limited, a member of the L & D Group. Pursuant to the termination of the Plaintiff's employment with the L & D Group, the Plaintiff took out these proceedings for damages and for breach of the said oral agreement. The Defendant denied the existence of the alleged oral agreement. Alternatively, the Defendant said that if there was indeed such an oral agreement, the contracting party was L & D Securities Limited and not the Defendant.

2. The trial commenced on 9th April 1991 and continued for another three days before it was adjourned part-heard on 12th April 1991 to a date to be fixed Hearing resumed on 13th April 1992 and lasted until 21st April 1992, for another five days. One of the factors contributing to the trial being adjourned part-heard was the very substantial re-amendment made by the Plaintiff to his Amended Statement of Claim half way through the trial.

3. At the commencement of the trial, the Plaintiff's case as per the Amended Statement of Claim was that the oral agreement was "on the terms (a) set out in the written agreement signed by the Plaintiff and delivered to the Defendant on 19th January 1990 and (b) the Plaintiff's salary as from 1st May 1990 pursuant to clause thereof would be at the rate of HK$100,000 per month." The written "agreement" in question (P1) clearly described L & D Securities Limited to be the contracting party and the employer of the Plaintiff. In para. 12(1) of the Amended Statement of Claim, the Plaintiff further averred that "further or alternatively, by two original written agreements (in duplicate) prepared by the Defendant's solicitors and given to the Plaintiff on about 9th January 1990, the Defendant, through its agent L & D Securities Limited, offered to employ the Plaintiff as the Dealing Director of the latter company for a period of one year commencing 1st February 1990 until 31st January 1991 at a monthly salary of HK$70,000 for the first three months and thereafter at a monthly salary to be mutually agreed by the parties on or before 1st May 1990. The said monthly salary after the first three months was in fact agreed by the parties throughout at HK$100,000." In the subsequent paragraphs to the Amended Statement of Claim more references were made to "the said agreements" and "the said written offer". In the premises, the Plaintiff's case at that stage was, firstly, the oral agreement sued upon was on the terms set out in the written "agreement" (PI). Secondly, L & D Securities Limited was acting throughout as the agent of the Defendant. And that the Defendant had by virtue of P1made an offer to employ the Plaintiff as the Dealing Director of L & D Securities Limited which was named as the employer in P'1. Such offer was accepted by the Plaintiff by the assumption of the job on the strength. of P1. In both cases the Plaintiff relied on P1as containing the terms of the alleged contract of employment subject only to certain oral variations on the conditions of employment. The Amended Statement of Claim did not seek to resolve the obvious contradiction that P1 clearly stated that L & D Securities Limited was to be the contracting party and the employer of the Plaintiff in that contract. Neither did Counsel attempt to explain this to me in.his opening. When I asked Counsel to clarify his plea of agency in para. 12 of the Amended Statement of Claim, whether such agency was a matter of expressed or implied provisions or a matter of construction by law, I was told that it is the Plaintiff's case that he reached agreement on 8th January 1990 with both the Defendant and L & D Securities Limited that he was to provide services to the latter. That was the Plaintiff's case when he commenced to give evidence. It then became clear from his evidence-in-chief that he was relying on an oral agreement reached between himself and Mr. Paul Deng representing the Defendant in early January 1990. He said that the written agreement (P1) only came about when he specifically requested something in writing so that he could feel more secured about his employment. In view of his evidence, I saw both Counsel in Chambers and had a discussion over the Plaintiff's pleadings, P1and his oral testimony. When the Court resumed hearing, Counsel for the Plaintiff stated that the Plaintiff's case was that the oral contract reached on 8th January 1990 was between the Plaintiff and the Defendant and that L & D Securities Limited was not a party thereto. No application for leave to re-amend the Statement of Claim was made at that stage i.e. at 3 p.m. in the afternoon of 10th April 1991. The Plaintiff continued to give his evidence in that afternoon until an objection was raised by Counsel for the Defendant as to the admissibility of his oral testimony to contradict the terms of P1. It was only then that Counsel for the Plaintiff first indicated his intention to seek re-amendment of the Statement of Claim. The whole morning of 11th April 1991 was wasted as the Plaintiff could only come up with a draft amendment in the afternoon. The Defendant objected to the application for re-amendment and I heard submissions from both parties for the rest of the day and the following morning. Leave was granted to the Plaintiff to re-amend the Statement of Claim at around noon on 12th April 1991. At the end of the examination-in-chief of the Plaintiff, the Defendant sought an adjournment which was granted when the case was adjourned part-heard to a date to be fixed. During this lengthy adjournment, the Defendant made very substantial amendments to its Re-re-amended Defence consequential upon the Plaintiff's Re-amended Statement of Claim.

4. In the Re-amended Statement of Claim, four separate and different claims were made by the Plaintiff against the Defendant. Firstly, the Plaintiff claimed (in para. 3) that there was an oral agreement made on or about the 5th or 8th January 1990 between the Plaintiff and Paul Deng on behalf of the Defendant that the Plaintiff was to serve the Defendant and L & D Securities Limited as the' Dealing Director of the latter company as from 1st February1990 at the salary of HK$100,000 per month. Under this amended plea all former reliance on P1 had been completely removed. It was alleged that it was an expressed term of the said oral agreement that the Plaintiff's employment was to be for a minimum period of 1 year commencing 1st February 1990, and would continue thereafter until determined by a 3 months notice in writing. It was further alleged that it was also an expressed term of the said oral agreement that the Defendant would execute a written agreement embodying the above terms.The said agreement it was alleged was varied on or about 8th January 1990 to the effect that the Plaintiff salary for the first three months would be HK$70,000 and thereafter at HK$100,000 per month.It was also alleged that on 9th January 1990, at the request of Paul Deng, the commencement Date of the Plaintiff  employment as Director of L & D Securities Limited was advanced to 15th January 1990 instead of 1st February 1990.

5. In his second plea, the Plaintiff alleged that "on terms to be inferred from the two documents (in duplicate) entitled "'AGREEMENT' prepared by the Defendant's solicitors and given to the Plaintiff on about 9th January 1990, the Defendant, or the Defendant through its agent L & D Securities Limited, offer to employ the Plaintiff as the Dealing Director of the latter company for a period of one year commencing 1st February 1990 until 31st January 1991 at a monthly salary of HK$70,000 for the first three months and thereafter at a monthly salary to be mutually agreed by the parties on or before 1st May 1990 The said monthly salary after the first three months was in fact agreed by the parties throughout at HK$100,000.". It was also alleged that it was an expressed term of the said offer that the employment was to continue after the first year until determined by a three month notice. It was further alleged that the said offer was orally varied by Paul Deng to advance the commencement date of employment from the 1st February ]990 to 15th January 1990. The Plaintiff said the said offer was accepted by conduct when he reported duty and began to render services to L & D Securities Limited as its Dealing Director on 15th January 1990; or alternatively the said offer was accepted by the Plaintiff when he signed and returned P1 in duplicate to Paul Deng on or about 19th January 1990. It was pleaded "In the premises, a legally binding contract on terms as aforesaid ("the employment agreement") was entered into between the Plaintiff on the one part and the Defendant or the Defendant as principal through L & D Securities Limited as agent on the other part."

6. In his third plea, introduced for the first time in the re-amendment to the Statement of Claim, the Plaintiff claimed that the Defendant was nevertheless estopped and/or precluded from denying that it entered into a binding contract with the Plaintiff. by reason of the matters pleaded. Reliance was placed by the Plaintiff on the following matters :

(a) The Defendant had by conduct held out (i) Paul Deng as its agent and/or someone with apparent authority being the Chairman and/or Director thereof (ii) L & D Securities Limited as its agent, the Defendant being the major and/or controlling shareholder thereof.

(b) The Defendant through Paul Deng had led the Plaintiff to believe that he was dealing with the Defendant because M Paul Deng had on behalf of the Defendant instructed the Plaintiff to carry out feasibility studies of the Defendant's expansion into the Securities/Financial Investment/Fund Management Services; (ii) the negotiations between the Defendant and the Plaintiff in respect of the employment of the Plaintiff as Dealing Director of L & D Securities Limited were conducted solely or mainly through Paul Deng as representative of the Defendant.

(c) Paul Deng in his said capacity knew or ought to have known that (i) the Plaintiff believed that he was dealing with Paul Deng as agent of the Defendant; (ii) the Plaintiff knew or believed that Paul Deng had no authority to act on behalf of L & D Securities Limited not being a shareholder, director, officer or employee of the same; (iii) that the Plaintiff relied on the conduct of Paul Deng in giving instructions to carry out the said feasibility studies and negotiations on behalf of the Defendant, as well as the Plaintiff entering into a two year lease for an apartment which he would not have entered into but for the existence of a binding contract for employment as the Dealing Director of L & D Securities Limited made between the Plaintiff and the Defendant.

(d) The Plaintiff suffered detriment as a result of believing that a binding contract had been concluded between himself and the Defendant through Paul Deng.

7. It is not very clear whether what I will describe as the fourth plea of the Plaintiff was in fact a subsidiary point which the Plaintiff made as part of his third plea. However, for the sake of convenience, I will treat this as an independent plea rather than a subsidiary point of the third plea. Again, this plea was brought in for the first time in the re-amendment to the Statement of Claim. The Plaintiff alleged that it was a common assumption of both the Plaintiff and Paul Deng acting on behalf of the Defendant throughout the course of dealing between the parties that (i) Paul Deng acted on behalf of the Defendant; (ii) the Plaintiff would enter into a binding contract with the Defendant and (iii) the separate corporate identity of L & D Securities Limited as a wholly owned subsidiary of the Defendant would be disregarded. It was further averred that even if the Plaintiff was mistaken in the existence of the alleged common assumption, it would be inequitable and/or unjust for the Defendant to deny the existence of a binding contract between the Plaintiff and the Defendant or that the Defendant was not a party to such a contract.

8. The Defendant denied categorically the validity of the said four pleas. In addition, in its lengthy Re-re-re-amended Defence the Defendant gave detail accounts and explanations for the events which occurred during the end of 1989 and the beginning of 1990. I do not propose to deal with the Defendant's pleadings in depth at this stage, suffice for me to mention that the Defendant's defence was that there was no such agreement as alleged, or if there existed such an agreement the same was made between the Defendant and L & D Securities Limited.

9. The Plaintiff first commenced his employment with the L & D Group as the Manager of the Corporate Department of L & D Overseas Limited some time in October 1989. As was the practice with the L & D Group, there was no written contract relating to the Plaintiff's said employment. His salary was HK$35,000 a month. There was no agreement as to any specific benefits. It was the understanding that the employment could be terminated by one month notice. The Plaintiff was introduced into the L & D Group by a friend, Mr. Shane Weir, who was already working for the Group at that time. Mr. Weir was then looking for someone with a financial background who can handle immigration and related activities of L & D Overseas Limited. The activities of L & D Overseas Limited entailed setting up investment funds in Canada for the purpose of immigration applications.

10. The Plaintiff said that within a month of the commencement of his employment he was approached by Paul Deng, the Chairman of the Defendant, concerning the establishment of the securities arm of the Group. He said he was instructed by Paul Deng to conduct a feasibility study on the setting up of securities operation within the group. The vehicle to be used in such securities operation was L & D Securities Limited, a wholly owned subsidiary of the L & D Group incorporated on the 26th September 1989. Consequently, the Plaintiff went about making applications to the Government for a dealer licences for himself as well as for L & D Securities Limited. A chain of events were then set in motion including the appointment of the Plaintiff as one of the two Directors of L & D Securities Limited. 'The Plaintiff was at all material times the only active Director in the company. He was not paid any remuneration for such directorship. The Plaintiff also prepared a written proposal which he presented to Paul Deng Paul Deng was the only person from the L & D Group management who dealt with the Plaintiff on this matter. All documents executed by the Defendant as the controlling shareholder of L & D Securities Limited were signed by Paul Deng on its behalf. In order to satisfy the capital requirement of the Commissioner for Securities, the share capital of L & D Securities Limited was increased to HK$7,500,000. This was achieved by the Defendant agreeing to take up another 4,999,998 shares of $1 each in L & D Securities Limited in addition to its existing shareholding of 2,500,000 shares. The Plaintiff alleged that the above matters, as well as other minor events such as the moving of office, gave him the impression that the Defendant was going ahead with the establishment of a securities arm in the L & D Group. Indeed this would have been the impression any reasonable man would have looking at the situation objectively. But Paul Deng said the truth was quite different. He said that Shane Weir complained to him about the performance of the Plaintiff in L & D Overseas Limited. Therefore, said Deng, he instructed the Plaintiff to conduct a feasibility study on the setting up of a securities operation within the Group to test his abilities. Furthermore, the Group was in fact interested in branching out into the securities market at that time. He said despite the appearance, the Group had not yet decided whether it would go ahead with the project. He denied the allegation of the Plaintiff that some time around December 1989 or early January 1990, he had told the Plaintiff that the Group had obtained the bank's approval for a loan to finance the project. He also denied the Plaintiff's allegation that he subsequently gave difficulty in obtaining finance as the reason for not proceeding with the project. In the event, the L & D Group never proceeded with the project, not even up to the, date of the trial.

11. The Plaintiff said when the project was ready to be launched, having obtained the approval in principle from the Commissioner of Securities for the issue of the requisite dealers licences to himself and L & D Securities Limited, he commenced negotiations with Paul Deng in respect of his employment as the Dealing Director for L & D Securities Limited, He said his understanding at that.time was that the operation was to go ahead and he was to have full authority to set up the operation on the basis of his proposal. He said around early January 1990 he had discussions with Paul Deng about his terms of employment as the Dealing Director of L & D Securities Limited. He then gave detailed evidence as to the negotiations which led to an oral agreement on the terms. as alleged in his pleadings. He said that Mr. Joseph Lee, the solicitors for the L & D Group, was present while the agreed terms were mentioned between himself and Paul Deng. He said that he did not mind the absence of a written employment contract previously because he did not feel any risk at that time. However, he said on this occasion he insisted to have the agreement reduced into writing because he felt that he needed some security. He said Deng suggested that it was not necessary. He said that he regarded himself as a group resources for the L & D Group, and thus he was not concerned about this when he was asked to embark on this project in October 1989 while he was still employed by L & D Overseas Limited. However, he said that he insisted on having a written contract of employment as Dealing Director of L & D Securities Limited before he would agree to work full time as such. He said that at that time he was looking for a mew apartment and had indicated to the L & D Group that he was mot prepared to sign the mew lease until he had some form of commitment by the Group of his employment Thus, he said he insisted on getting his contract of employment down in writing. Paul Deng gave a different version in defence. He said that though there was as yet mo decision to proceed with the project, the Plaintiff started to hasten him for better terms of employment as the Dealing Director of L &D Securities Limited He denied ever agreeing to any terms as alleged by the Plaintiff. He said that the Plaintiff told him he was experiencing marital problems with his wife and would require to move to better accommodation in order to please her. The Plaintiff denied this allegation.

12. 'The Plaintiff said that one day after the meeting between himself, Paul Deng and Joseph Lee when his terms of employment were discussed, he received a draft agreement from Joseph Lee. He said that there had been a change of the agreed salary from HK$100,000 to HK$70,000 in the draft. He said when he asked Paul Deng about the change, Paul Deng told him that during the first three months of the operation there will be no cash flow for the company and asked if the Plaintiff would accept the lesser sum of salary for the first three months. The Plaintiff said he agreed. He also said he had discussed a number of minor points about the draft. He said that discussion took place on the morning of 8th January 1990. He said that he received a call from Paul Deng in the afternoon of the 8th when Paul Deng told him that he agreed to the draft. He said that he had made it clear to Paul Deng that he did not wish his work in L & D Securities Limited to be interfered with by anyone else from the Defendant on a day-to-day basis. He said that he would only agree to report to the broad of the Defendant on a monthly basis in terms of profits and performance. He was, however, agreeable to report to Paul Deng as Chairman of the Defendant on day-to-day basis. He said that his understanding of the agreement was to put him under a responsibility which would be over and above that of a Director to his shareholder. He said that he made copies of the draft agreement (P1) and after he signed it he placed it at the office of Paul Deng for his signature. He said Paul Deng was at that time too busy to sign the agreement. Paul Deng again gave a different version in defence. He said that he received a call from Joseph Lee, telling him that the Plaintiff was requesting for the preparation of a draft employment contract. He said that he told Joseph Lee to go ahead with the draft as a delaying tactic to pacify the Plaintiff. He said he never told Joseph Lee that he had agreed anything with the Plaintiff as regard his employment as Dealing Director for L & D Securities Limited. He said that he had never told the Plaintiff that he was too busy to sign P1 as the Plaintiff alleged. He said he discovered that P1 was left in his office a few days before 25th January 1990. He said that on the 25th January 1990 he orally told the Plaintiff that his services with the Group were no longer required. This was subsequently confirmed by a letter dated the 30th January 1990. He denied the alleged meeting between himself and the Plaintiff on 19th January 1990 as alleged by the Plaintiff or at all. He said P1 was back-dated to 19th January 1990.

13. Joseph Lee, the legal adviser for the L & D Group at the material time, said that he had attended meetings involving the Plaintiff, Paul Deng and himself where the setting up of a securities operation within the Group was discussed. He said that he cannot recall any meeting when the terms of employment of the Plaintiff as Dealing Director of L & D Securities Limited were being discussed. However, he agreed that it is possible that there might have been such discussions about the terms of employment of the Plaintiff during such meetings though he may not be paying any attention to such. He said that some time in January 1990 he discovered a note written by the Plaintiff concerning terms of employment between L & D Securities Limited and the Plaintiff. He said that he then checked with Paul Deng as to whether such an agreement was to be prepared. He said that Paul Deng told him to proceed with the drafting. of such an agreement though Paul Deng did not appear to be enthusiastic about it. He denied the allegation of the Plaintiff that he had told the Plaintiff about a reduction of his salary from HK$100,000 to HK$70,000. He said that after checking with Paul Deng he then proceeded to prepare P1and sent it over to the Plaintiff. He said that at that time he knew the Plaintiff had already been appointed as a Director of L & D securities Limited though he was not getting any salary in respect of this position. The handwritten note Joseph Lee was referring to only contained very basic terms of an employment contract. It is not clear, because this aspect of the case was never explored by anyone, as to the basis upon which Joseph Lee prepared the draft contract (PI) which contained very detail terms of the employment. It is not clear as to why Joseph Lee incorporated clause 2 of P1 into the draft agreement which gives the Defendant control over the Plaintiff. However, irrespective of the manner in which Joseph Lee came to such understanding, it is beyond doubt that Joseph Lee was labouring under the understanding that L & D Securities Limited was the contracting party to the agreement and was to be the employer of the Plaintiff and that the Defendant was to have the right of control over the Plaintiff though it was not the employer of the Plaintiff.

14. It was the evidence of the Plaintiff that during the negotiations for his employment as Dealing Director of L & D Securities Limited, there was "no specific mention by whom I was to be employed". He said that it was his understanding that he was to be employed by the Defendant. In the premises, the whole case of the Plaintiff was founded not on any express agreement that the Defendant was to be the contracting party and the employer of the Plaintiff in the alleged contract of employment, but was founded on his own understanding as to who was to be his employer. In justification of his own understanding, the Plaintiff relied mainly on the following matters :-

(i) That Paul Deng was neither a Director or Officer of L & D Securities Limited and thus has no capacity or authority to act on behalf of that company. That Paul Deng was the Chairman of the Broad of Directors of the Defendant and the Defendant was the controlling shareholder of L & D Securities Limited. Therefore, Paul Deng could not have been acting on behalf of L & D Securities Limited in negotiating or making any contract. He could only have been acting on behalf of the Defendant in this respect.

(ii) That the Plaintiff was the only active Director in L & D Securities Limited, the other Director being a mere nominal Director, and was thus the only person who could have acted on behalf of L & D Securities Limited in the negotiation or making of any contract of employment. Therefore, if L & D Securities Limited was to be the contracting party and the employer, he would then have been making a contract with himself. That, the Plaintiff said, would not make any practical business sense. He said in that case he could have agreed to any terms he desired.

(iii) As the Plaintiff was already at that time a Director of L & D Securities Limited, there was no real need for another agreement. The purpose of the agreement was to extend his responsibility towards the Defendant beyond his usual responsibility as a Director to a shareholder. Therefore, he said, the agreement would have been made with the Defendant as the other contracting party.

15. The Plaintiff also relied on the facts pleaded in his Re-amended Statement of Claim to give rise to his alleged understanding of the situation. I do not accept his evidence on his said alleged understanding of the identity of his employer and the contracting party to the alleged contract of employment. One must not lose sight of the fact that at that stage L & D 'Securities Limited was a mere shelf company with no business activities at all. No actual cash had yet been injected into this company by the Defendant. Though the project had all the appearance of an imminent implementation, it had not yet been actually launched. The Defendant via Paul Deng was in effective and absolute control over L & D Securities Limited. The Plaintiff was at all material times fully aware of the corporate relationship between L & D Securities Limited and the Defendant, as well as Paul Deng's authority and control over L & D Securities Limited. The Plaintiff was familiar with corporate finance and investment projects. He was also a professional accountant. It is surprising that it did not occur to the Plaintiff, a professional accountant with experience in this field, that it would not be uncommon for a controlling shareholder of a company in embryonic stage to negotiate and even entered into contracts of employment with a Director or Senior Executive and thereafter cause a general meeting to be held to adopt and ratify the negotiations and contracts. That would be even more common in a case involving a dominant person like Paul Deng and a company like L & D Securities Ltd. when the Plaintiff was the only active Director. In the situation of L & D Securities Limited, a contract of employment with its only active Director can only be negotiated and made through its controlling shareholder or the other nominal Director. It would have been more natural for the Plaintiff to come to the above understanding, rather than his alleged understanding that the Defendant was entering into a direct employment relationship with himself to work for L & D Securities Limited.

16. The above view on the Plaintiff's alleged understanding is further confirmed when one considers the following matters. It is the Plainiff's evidence that "Paul Deng seems very keen to distant himself fron any responsibility of Securities,to avoid any legal responsibility of holding any shares or position in that company " If that was indeed Paul Deng's attitude, it would be surprising that he would involve the holding company i.e. the Defendant in a direct employment relationship with the Plaintiff. Furthermore, it would be unusual for a licenced Dealing Director to be employed by a company which is mot a corporate licence. Perhaps the most damaging piece of evidence against the Plaintiff came from himself. The Plaintiff said that at first he was not completely happy with the terms embodied in P1. He said that he had discussed the matter with Joseph Lee in the office of the latter. He said he then had a telephone conversation with Paul Deng during which Paul Deng indicated his acceptance of "terms as per draft". He said that he indicated to Paul Deng that he also accepted the terms after the matter had been explained to him by Joseph Lee and that he was happy with the draft. Therefore, there is no doubt at all that the Plaintiff was happy with the terms as per P1 and accepted P1 as his contract of employment. However, it is clearly stated in P1 that the employer and contracting party was L & D Securities Limited and not the Defendant. In clause 2(a), the Plaintiff specifically agreed to obey the Defendant as the Defendant was the parent company of the employer. It is not possible for anyone upon reading P1 to be labouring under any mistaken belief that the Defendant rather than L & D Securities Limited was the contracting party and the employer. Attempting to explain this away, the Plaintiff said that he was not concerned with those matters because he was only anxious to get.something down in writing as a security. He was the person who insisted on having a written contract. It would only be natural for him to be concerned about the terms contained in the written contract. It is unlikely that he only took a casual look at the draft before he executed it. Indeed, after looking at the draft he was not happy with it. He went to the trouble of attending at Joseph Lee's office to seek an explanation on two points. It defies all common sense to accept that notwithstanding the Plaintiff's alleged understanding as to who the employer and contracting party should be, he would be prepared to sign Pl. Further, in response to the letter dated 30th January 1990 terminating his employment, the Plaintiff wrote a letter to the L & D Group dated 16th February 1990 captioned "re : employment contract with L & D Securities Limited". In the said letter he referred to the dispute between himself and "the Group in relation to the above" i.e. the captioned contract. He also proposed arbitration in accordance with the terms of Pl. Despite making threats of legal action, there was no reference in that letter to his alleged understanding that the employer and contracting party was the Defendant and not L & D Securities Limited. On the contrary, the tenor of the letter clearly indicated that the employer and contracting party was L & D Securities Limited. After he received notice of termination of his employment with L & D Overseas Limited, the Plaintiff actually accepted a voucher from L & D Overseas Limited paying him the salary for the month of January in the sum of HK$35,000.

17. There is another aspect of the Plaintiff's evidence on P1which is of interest. Initially the Plaintiff produced P1as the original of the document appearing on pp.70 - 75 of the bundle of documents. It was then discovered, after the Plaintiff had completed his evidence, that in fact P1 was not the original of the document in the bundle of documents. In fact the handwritten dates and the signature of the Plaintiff were different. The Plaintiff was then recalled to explain this rather strange phenomenon. The Plaintiff agreed that P1 was not the original ofthe photocopy appearing in the bundle of documents. He said that in fact he had made photocopy of P1before he had written the dates and put his signature on it. He explained that afterwards he dated the photocopy as well as putting his signature on it. The photocopy appearing in the bundle of documents came from that said photocopy of P1 he made at that time. That explains why the handwritten date and the signature appearing thereon were not the same as those appearing on P1. He then produced, as P3, a photocopy of the photocopy of P1 which he had dated and signed. He said he was not able to find the original photocopy of P1 which contained his handwritten date and signature. He also produced as P4 a photocopy of P1which he had obtained a week before the resumed hearing. Apart from the Plaintiff's inability to produce the original photocopy of P1 which he alleged he had made, the explanation given by the Plaintiff cannot be said on the face of it to be unreasonable. However, upon comparing P1 with P3 by holding them up against the light, another strange phenomenon appears. Upon such comparison, it appears that though the typeface of both documents are identical the spacing between the letters were not. This appears on every single page of the document. And it appears in a more obvious fashion in respect of the last page of the document i.e. the back sheet to the draft.This immediately gives rise to a suspicion as to whether P3 could be a photocopy of P1 as alleged.

18. It is also to be noted that Joseph Lee's evidence as to how he came to be instructed to draft P1 was never challenged by the Plaintiff. He said he received a handwritten note from the Plaintiff, whose handwriting he could recognise, containing certain terms of an agreement for the employment of the Plaintiff as Dealing Director of L & D Securities Limited. He said he drafted P1 as per the instructions. It can not be disputed that P1 represented Joseph Lee's understanding of the situation. According to Joseph Lee instructions for the contents of the draft came solely from the Plaintiff and not from Paul Deng. Paul Deng only authorised him to go ahead with the preparation of the draft when he sought confirmation from him. In the premises, Joseph Lee's understanding of the identity of the employer and contracting party would certainly throw light on the Plaintiff's own understanding of the same. In any event, the Plaintiff said he was happy with the draft and accepted P1 as the contract.

19. I accept the Defendant's case that there was never any final decision to set up a securities operation within the L & D Group, albeit that the situation gave rise to an appearance that the project was likely to be implemented. 'There is no reliable evidence of the existence of a binding oral agreement reached between the Plaintiff and Paul Deng. I accept that there were discussions between the Plaintiff and Paul Deng as to the terms of the proposed employment of the Plaintiff in L & D Securities Limited as the Dealing Director when the project was to be implemented. However, I do not accept the Plaintiff's allegation that the said employment as Dealing Director had already commenced in January 1990 as alleged before the protect was actually launched. There is no reliable evidence to support the Plaintiff's said allegation. Evidence in support came either from the Plaintiff's oral testimony or from sources based on what the Plaintiff told others. I fail to see any reason for the commencement of his employment as Dealing Director prior to the issue of dealers licences to the Plaintiff and to L & D Securities Limited. The Plaintiff was already a Director of L & D Securities Limited at that time. I do not accept there was any binding oral agreement reached at that stage as alleged by the Plaintiff. Furthermore, if there was any binding oral agreement reached, the agreement would have been one reached between the Plaintiff and, purportedly, L & D Securities Limited. Paul Deng said it never occurred to. him specifically in what capacity was he discussing the matter with the Plaintiff. The Plaintiff conceded that there was no express mention as to who the contracting party was. The reasonable inference to be drawn from the situation is that Paul Deng was acting in his capacity as the Chairman of the Defendant, which held all the shares bar one in L & D Securities Limited, on behalf of the latter company and not the Defendant. In any event, I do not accept that the Plaintiff was ever labouring under any understanding that the Defendant was to be his direct employer and the contracting party to any such agreement. The Plaintiff's explanation that the appearance of the name of L & D Securities Limited on P1 as the contracting party was of little significance or importance to him, as well as his explanation on the 26th February 1990 letter, are but hopeless attempts to cfisguise the truth. I am satisfied that the Plaintiff's understanding was that L & D Securities Limited was to be his employer and the purported contracting party to the proposed agreement, and that he accepted the same. Therefore, if there ever was any binding oral agreement at all, the same would have been reached between the Plaintiff and Paul Deng purportedly on behalf of L & D Securities Limited. Whether Paul Deng did have actual or apparent authority to act on behalf of L &, D Securities Limited is an entirely different issue. However, any difficulties that might exist in respect of Paul Deng's authority would be more apparent than real in view of the absolute control Paul Deng had over L & D Securities Limited. I do not accept the Plaintiff could have misapprended the situation in view of his experience and knowledge of corporate law and structures as a professional accountant. Indeed, he realised that Paul Deng has no right to remove him as a Director of L & D Securities Limited without first holding a shareholder's meeting of that company. The Plaintiff was obviously aware and appreciated the ability of the Defendant to assert absolute control over L & D Securities Limited in all and every aspect of its affairs.

20. Counsel for the Plaintiff informed the court at the commencement of the trial that the reason for not joining L & D Securities Limited in these proceedings was because it only had a paid-up capital of $2. I do not propose to speculate whether that was also the reason why the Plaintiff embarked upon his desperate attempt to fix liability on the Defendant rather than L & D Securities Limited. But it is of interest to note that the Plaintiff was, all along up till the moment of the termination of his employment with the L & D Group, labouring under the belief that very substantial cash will be injected into L & D Securities Limited. Therefore, up till that moment it would not have made any difference whether the contracting party was the Defendant or L & D Securities Limited for all practical purposes. There is no special reason why the Plaintiff would be concerned to have a contract with the Defendant rather than L & D Securities Limited. Such a concern would naturally arise when he knew that no cash would be injected into L & D Securities Limited. For whatever reason, be it the impoverishness of L & D Securities Limited or not, on the evidence before me it is evident that the alleged understanding of the Defendant being the contracting party was an afterthought of the Plaintiff that only came on to the scene after the termination of his employment.

21. Though the existence of a binding oral agreement is not essential to all of the four claims made by the Plaintiff, the existence of the alleged understanding that the Defendant was the direct employer and contracting party to such agreement is. Not only would such an understanding be essential to the claims founded on a contractual basis, be it express or implied; it is a necessary cornerstone of the claims founded on estoppel or equity. In view of my rejection of the Plaintiff's allegation of a binding oral agreement or any contract to be implied from the circumstances or conduct of the parties, as well as his alleged understanding that the Defendant was the contracting party, all claims made by the Plaintiff must inevitably fail. In the premises, the Plaintiff's claims were dismissed with costs.

Dated the 30th day of May 1992.