AIA INTERNATIONAL LTD v. SHUM KA WAI

DCCJ 1571/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1571 OF 2013

____________

________________

DECISION

________________

1.  This is the plaintiff’s application for summary judgment and striking out the counterclaim in each of these nine actions which arise out of substantially similar factual matrices and raise almost identical issues and are therefore heard together.

2.  The plaintiff (“AIA”) is a global insurance company.  Pursuant to a Career Representative’s Contract (“CR Contract”) and a Letter of Understanding (“LOU”), each of the defendants became AIA’s insurance agent in 2010 or 2011.

3.  Alldefendants except one had common up-line managers or leaders, namely, Mr. Marcus Wong (“Marcus”), Ms Wai Wing Ki Annissa (“Wing Ki”) and Ms Wai On Kee Judy (“On Kee”).  Only Marcus and Wing Ki were the up-line manager of the defendant in DCCJ 1786/13.  In the course of their engagement with AIA, all defendants had received from AIA monetary incentives or bonuses pursuant to the terms of the LOU.

4.  The service of all defendants was terminated by AIA by written notices all dated 5 April 2013 giving 15 days’ notice that their contracts with AIA would be terminated on 20 April 2013 (“Purported Termination”).  Such notices were issued pursuant to Clause 23(b) of the CR Contracts (“Clause 23(b)”) which provides that the agreement may be terminated without any reason by either party upon 15 days’ notice in writing.

5.  In each of these actions, AIA claims refund of a certain percentage of the monetary incentives or bonuses paid to the defendants pursuant to Clause 11 of the LOU in DCCJ 1571/13, 1615/13, 1616/13, 1686/13 and 1690/13 (“Group A cases”) and Clause 10 of the LOU in DCCJ 1620/12, 1685/13, 1687/13 and 1688/13 (“Group B cases”), each of which provides that in the event of termination of contract for any reason by either party within a certain period after commencement of contract, the agent agrees to refund a part of the monetary incentives or bonuses. 

6.  In Group A cases, what the defendants received from AIA were a Signing Fee, monthly bonuses and a 1^st Year Production Challenge Bonus (“PCB”).  AIA acknowledges that a 2^nd Year PCB, which each of these defendants claims against AIA by way of counterclaim, is due to the defendants but otherwise claims to be entitled to deduct 50% thereof pursuant to Clause 11 of the LOU so that only 50% thereof remains due to the defendants and AIA seeks to set off the same against part of its claimed amounts.

7.  All defendants have filed a defence and counterclaim, eachasserting that the Purported Termination is an act of repudiatory breach on AIA’s part which has not been accepted by them.  Damages for breach and specific performance are sought by way of counterclaim.

8.  In Group A cases as well as in DCCJ 1688/13, each of the defendants pleads that prior to joining AIA, Marcus, a District Director of AIA, when luring Wing Ki and On Kee to join AIA and to bring with them the defendants as down-line agents, assured Wing Ki and On Kee that AIA would only terminate their service and that of their down-line agents for a sound reason (“Assurance”) and that the Assurance had the backing of Mr. Stewart Lee, a Vice President of AIA (“Stewart”).  In his affirmation in support of the application, a Mr. Chung of AIA denies that AIA would through any person give such assurance to a prospective agent.

9.  In both groups of cases, all defendants plead that the Purported Termination was made with an ulterior motive and/or out of spite.  Reference is made to AIA’s AIA’s Demand in the first quarter of 2013 that the defendants should forgo the 2^nd Year PCB and make some refund to AIA (“AIA’s Demand”), to which all defendants refused to accede.  The Purported Termination came shortly afterwards.

Legal Principles

10.  The principles applicable to applications for summary judgment are clear.  To resist an Order 14 application, the defendant must show that there are triable issues.  A concise statement of the standard approach in an application for summary judgment is to be found in the dicta of Ma J (as the Chief Justice then was) in Schindler Lifts (Hong Kong) Ltd. v. Ocean Joy Investments Ltd [2003] 1 HKC 438.  The court has to determine two questions: firstly, whether what the defendant says is believable as opposed to whether its version of events is to be believed; and secondly, if it is, whether what the defendant says amounts to an arguable defence in law. In determining the first question, the court should not embark on a mini trial of the action on affidavit evidence.  The burden of proof is not a heavy one.  It is not the function of the court at this stage to assess if a defence will succeed at trial.  Insofar as the second question is concerned, summary judgment will not be granted if there are arguable defences or serious disputes of law. Further, it is for the defendant to condescend on the particulars of the defences raised.  Per HH Judge Mimmie Chan (as she then was) in Ever Bright (H.K.) Construction Engineering Limited v Kosasih Muanto (DCCJ 1402/2010), unreported, 13 January 2011.

11.  Mr. Eric Yao, Counsel for the defendants, submitted that there were two issues for ultimate resolution at trial, namely, whether AIA has a right to terminate as it did pursuant to Clause 23(b) (“Issue I”); and whether, even if having such a right, AIA further has the right to demand refund of the monetary incentives/bonuses under the terms of the LOU upon termination of the defendants’ engagement (“Issue II”).  Mr. Vincent Lung, Counsel for AIA, agreed to these postulations and argued along the same lines.

12.  On Issue I, Mr. Yao’s argument runs along these lines:

(a) It is at least arguable that AIA has no right to terminate the defendants’ CR Contracts pursuant to Clause 23(b).

(b) Judging from the fact that the terms and conditions in all nine CR Contracts are the same, they are standard form documents emanating from AIA.

(c) If what the defendants say about the Assurance is true, AIA can only terminate for a reason and this should be a sound reason.

(d) The Assurance can be admitted as extrinsic evidence to render Clause 23(b) unenforceable or to show there was a waiver on AIA’s part as to enforcement of Clause 23(b).

(e) The circumstances herein fall within the exceptions to the parol evidence rule as explained in Chitty on Contracts, (31^st ed) Vol.1 §§12-095 to 12-098. 

(f) Where it appears that the parties did not intend to record all the terms of their agreement in a particular document, extrinsic evidence would be admissible to prove the other terms even if they would vary or contradict those in the document: Chitty on Contracts §12-100.  It is arguable that AIA / Marcus / Stewart did not want to record in the standard form CR Contracts the Assurance which would seem to be inconsistent with Clause 23(b).

(g) Where there is inconsistency between terms, the court may reject the term which least accords with the meaning of the contract as ascertained from the whole of the agreement: Chitty on Contracts §12-100.  It is likely that Clause 23(b) does not accord with the true meaning of the contracts made when it gives the defendants the right to terminate the contract without giving reason upon giving 15 days’ notice while they have promised under the LOU (the terms of which are said to prevail in case of conflict with the CR Contract) to remain as an AIA insurance agent for a minimum of 3 or 4 years.

(h) The Assurance may also have been a collateral contract or warranty having an existence independent of the CR Contract: Chitty on Contracts §12-103.

13.  Having conceded that the phrase “for sound reason” in the Assurance, which he characterized as lawyers’ drafting, was not precise enough to form an enforceable collateral contract term, Mr. Yao suggested that the defendants might well be able to amend their pleadings to better frame their case on collateral contract if allowed to proceed to trial.  On Mr. Lung’s invitation, however, Mr. Yao admitted he would have to take further instructions before he could say whether and how the defendants would propose to amend their pleaded case.

14.  Mr. Yao was acutely aware of the entire contract clause in Clause 22(a) of the CR Contract (“Clause 22(a)”) which reads “(t)his Agreement together with the Schedule of Commissions constitutes the basis of the entire contract between the parties herein”.  He criticized Clause 22(a) as loosely drafted and argued that the word ‘basis’ would necessarily mean only the underlying foundation of the agreement and not the entirety thereof.  He further highlighted the absence of any expressed superseding of all previous agreements before concluding that there should be room for argument as to whether Clause 22(a) would operate to preclude the Assurance and this should be best canvassed at a full hearing at trial. 

15.  Mr. Yao submitted that AIA might have intended to waive Clause 22(a) by making the Assurance through Marcus and Stewart who must belong to the senior management and should be taken to know the terms of the CR Contract and that the giving of the Assurance itself could serve as evidence of waiver.  And there being no decisive authority on whether an entire agreement clause may be waived by a party, summary judgment should not be granted on that basis.  He drew assistance from the discussion of Cheung JA inNatamon Protpakorn v Citibank N.A. [2009] 1 HKLRD 455 at §§34-35.

16.  While not so pleaded in the defence, Mr. Yao also suggested that the defendants might well be acting under the mistaken belief that AIA would abide by the terms of the Assurance.  In law, this may amount to a unilateral mistake which, if known to the other side, would afford a defence, and if not, found a case on rectification: Pacific Century Insurance Co Ltd v Cheng Hon Chung (CACV 293/2002), unreported, 27 December 2002. 

17.  Mr. Yao further argued that the legal principle that a person is not permitted to take advantage of his own wrong as enunciated in New Zealand Shipping Company Limited v Societe des Ateliers et Chantiers de France [1919] AC 1 which Ribeiro PJ described as the ‘prevention principle’ in Kensland Realty Ltd v Whale View Investment Ltd & Anor [2002] 1 HKLRD 87 applies here. He characterized AIA’s Demand as an anticipatory breach on AIA’s part because the defendants had earned their 2^nd Year PCB but AIA withheld payment thereof and instead demanded the defendants to forgo the same.  Upon the defendants’ refusal to accept such breach and chose to continue with their service, there came the Purported Termination as a factual consequence of the prior breach because the defendants were not given any choice when AIA was demanding them to make a decision within two days and had even intimated that refund would be unavoidable should AIA exercise the right to terminate the contracts.  AIA would then be taking the advantage of its own wrong by exercising its contractual entitlement to demand refund of the monetary incentives or bonuses under Clause 10 / Clause 11 of the LOU upon termination of the CR Contract.

18.  In conclusion, Mr. Yao submitted that each of these actions should be allowed to go to trial to establish the factual matrix of the making of the CR Contract in light of the extrinsic evidence on the Assurance.

19.  On the Assurance which forms the foundation of Mr. Yao’s argument on Issue I, Mr. Lung submitted that the phrase “for good reason”is too vague and uncertain to be enforceable.  In any event, a collateral contract or warranty to waive any written contract term is in effect a variation of contract. Clause 20 of the CR Contract expressly requires all modifications to the agreement to be made in writing and duly executed by both parties while Clause 14 of the LOU expressly requires any amendment or waiver of any provisions to be made in writing and signed by both parties.

20.  I agree with Mr. Lung that the phrase “for good reason” is too vague and uncertain to suggest waiver of Clause 23(b) or otherwise give rise to any enforceable collateral contract or warranty to waive or vary the same term.  As Mr. Lung rhetorically asked, who was to determine whether any reason is sound and what would be the benchmark for such determination?  Indeed, Mr. Yao fairly accepted the criticism, hence his suggestion that, subject to the taking of further instructions, the defendants might be able to better frame their case.  In that regard, I agree with Mr. Lung’s observation that for the purpose of resisting an Order 14 application, it is no good for a defendant to say he may be able to improve his case if given the chance to go to trial.  He must be able to demonstrate he has an arguable defence right here and right now. 

21.  The main thrust of Mr. Lung’s argument is that even if the Assurance was ever made, it would have been superseded by the two entire contract clauses, namely, Clause 15 of the LOU (for Group A cases) and Clause 22(a) of the CR Contract.  He referred to a long line of local authorities endorsing the judgment of Lightman J inInntrepreneur Pub Co (GL) v East Crown Ltd [2002] 2 Lloyd’s Rep 611 at §7 where the learned judge held:

“ … such a clause constitutes a binding agreement between the parties that the full contractual terms are to be found in the document containing the clause and not elsewhere, and that accordingly any promises or assurances made in the course of the negotiations (which in the absence of such a clause might have effect as a collateral warranty) shall have no contractual force, save insofar as they are reflected and given effect in that document. The operation of the clause is not to render evidence of the collateral warranty inadmissible in evidence as is suggested in Chitty on Contract, 28^th ed., vol 1, par 12─102: it is to denude what would otherwise constitute a collateral warranty of legal effect.”

22.  Inntrepreneur was followed in Edward Wong Finance Co Ltd v Profit Making Investment Ltd (CACV 1049/2000), unreported, 4 May 2001 at §§33-34, Wing Siu Co Ltd v Goldquest International Ltd [2002] 4 HKC 420 at 429B-H andLucky Zone Holdings Ltd v Winning Beauty Investments Ltd (HCA 784/2012), unreported, 29 May 2013at §§ 25-31.

23.  This long line of authorities serves as a complete answer to the defendants’ reliance on the Assurance to bar AIA from invoking Clause 23(b).  Mr. Yao was therefore driven to put up an attack on Clause 22(a).

24.  On the meaning of Clause 22(a), Mr. Yao is effectively suggesting that the addition of the work “basis” before the phrase “the entire contract between the parties” turns the clause into something other than or less than an entire contract clause.  I cannot agree.  At best, one can say the addition of the word “basis” is a tautology and the clause can do well without such a word but I do not think that the addition thereof can be taken to mean the parties have only set out the foundation of their agreement in a contract documentwhich comprises 37 paragraphs plus schedules and supplementary notes,leaving the “infrastructure” to be found somewhere else.  In any event, Mr. Yao did not attempt to describe what the “infrastructure” would be other than pointing to the existence the LOU, which is expressed to be a contract separate and independent from any other contracts between the parties.  However, the LOU which pre-dates the CR Contract and obliges the defendants to sign the CR Contract within a certain period, clearly serves a different purpose and governsmatters arising before commencement and after termination of the CR Contract.  Indeed, the LOU contains an entire contract clause of its own.

25.  Nor do I find the absence of a clause expressly superseding all prior agreements would undermine the effectiveness of an entire contract clause.  As I see it, the addition of such a clause may serve to ease a contracting party’s mind especially when there is any prior agreement inconsistent with the subsequent written contract, the lack of it would not ipso facto take away the force of theentire contract clause which expressly says the agreement constitutes (the basis of) the entire contract.

26.  Indeed, if Mr. Yao is right, Clause 22(a) would make no commercial sense and defeat the whole purpose of inserting such a clause into the contract.  As Lord Diplock observed in Antaios Compania Naviera SA v Salen Rederierna AB[1985] AC 191 at 201D:

“…if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.”

27.  True it is that the defendants have agreed via the LOU (the terms of which are said to prevail in case of conflict with the CR Contract) to remain as an AIA insurance agent for a minimum number of years and Clause 23(b), which gives not just AIA but also the defendants the same right to terminate the CR Contract by notice, seems to have put a gloss on what would otherwise be a differential treatment to the defendants when their right to terminate the CR Contract by noticeappears to be restricted before the expiry of the minimum service period. That said, differential treatment is allowable as long as the contracting parties freely agree to the same.  And there is no conflict as regards AIA’s right to terminate the CR Contract by notice without giving reason.  I see no inconsistency between the terms of the CR Contract and those of the LOU justifying the court to reject Clause 23(b).

28.  Mr. Yao referred to the likelihood of the CR Contract (and the LOU) being a standard form emanating from AIA.  Without disputing that standard forms were deployed by AIA, Mr. Lung observed, and I agree, that there is a perfectly good reason for AIA as a global insurance company to deploy a standard form to ensure that only those terms with which it is happy would form the basis of their contractual relationship with an agent.  In a commercial world, such certainty is particularly important.  In this connection, Lord Mustill’s comment in Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 388B-D serves as a useful reminder:

“ …the court should remind itself that the task is to discover what the parties meant from what they have said, and that to force upon the words a meaning which they cannot fairly bear is to substitute for the bargain actually made one which the court believes could better have been made. This is an illegitimate role for a court. Particularly in the field of commerce, where the parties need to know what they must do and what they can insist on not doing, it is essential for them to be confident that they can rely on the court to enforce their contract according to its terms.”

29.  In my view, the use of standard forms here is neutral and would not lend support to Mr. Yao’s suggestion that AIA might have through Marcus or Stewart waived any terms thereof by way of the Assurance.

30.  On whether there is an issue of waiver suitable for canvassing at a full hearing at trial, Mr. Lung highlighted the lack of evidence on any post-contractual conduct of AIA that might suggest awaiver of contract terms. Indeed, the evidence of the defendants suggests that AIA when making AIA’s Demand was fully aware of its entitlement to terminate the contracts in order to achieve the same result, that is, the obtaining of refund from the defendants,in the eventthat the latter did not accede to the AIA’s Demand.  Other than the alleged pre-contractual assurance, the defendants are not suggesting that there is any post-contractual conduct on AIA’s part which would point to any waiver of written contract terms.

31.  As to Mr. Yao’s submission that because of the lack of decisive authority on whether an entire contract clause may be waived by a party, summary judgment should not be granted on that basis, he is quoting from the discussion of Cheung JA as follows:

“ 34 I am prepared to accept, for the purpose of this application, that whether or not Clause II. 15 applies depends on the construction of its terms. However, even if by its wording it applies to this case, that is still not the end of the matter because Chitty, at paragraph 12─104, states that such a clause can be waived by a party who might otherwise have relied on it, citing SAM Business Systems Ltd v. Hedley & Co [2003] 1 All ER (Comm) 465. That case was not referred to by the parties in this appeal. But as Sedley LJ recognized in I-Way Limited World v. Online Telecom Limited [2002] EWCA Civ 413, there is still room for debate on this issue because of the absence of decisive authority, and that summary judgment should not be granted on that basis (see also Langston Group Corporation v. Cardiff City Football Club Ltd [2008] EWHC 535 (Ch)). An example of such a clause being rendered ineffective is the case of Edwin John Phillips v. Sa Sa International Holdings Ltd (HCA No. A5190 of 2001), wherein the parties expressly agreed that certain oral terms should not be revealed to the public.

 35. In my view there is clearly room for argument in this case that Clause II. 15 may not be applicable having regard to the sequence of conduct of the defendant as described by the plaintiff.  Both Mr. Lai and Ms Poh belonged to the senior management of the defendant, and they should be taken to know the terms of the Standard Agreement.  If the defendant was of the view that Clause II. 15 governed the relationship of the parties, its conduct in allowing the plaintiff to trade on the terms as agreed by Mr. Lai, its confirmation of the terms when Ms Poh took over from Mr. Lai, taken together with its subsequent conduct in allowing the plaintiff to continue to roll over the contracts although with a limited duration, was fundamentally inconsistent with this avowed position.  The plaintiff stated that by relying on the confirmation she carried out further transactions, and further by relying on the revised terms she had executed six new contracts.  In my view the questions of waiver and estoppel, be it promissory or otherwise, are clearly matters that are available to the plaintiff.  This cannot be resolved in an interlocutory proceeding and should be canvassed at a full hearing at trial.”

(Emphasis added)

32.  InLucky Zone Holdings, supra, To J analyzed what was decided in Natamon in the following terms:

“28. Cheung JA quoted the entire agreement clause in Inntrepreneur and then Lightman J’s formulation and legal basis of the rule.  He treated the oral agreement as a collateral contract which is an exception to the parol evidence rule and that the entire agreement clause was an attempt of the parties to “internalize” the parol evidence rule in their contractual relationship.  He held whether the entire agreement clause applied depended on the construction of its terms and that such a clause can be waived.  This is a trite principle which cannot be doubted.  In Inntrepreneur, Lightman J proceeded on the construction that the entire agreement had the effect of excluding oral terms.  Then Cheung JA went on to hold in §35 that because of the bank’s subsequent conduct in allowing the plaintiff to trade on the terms of the 2001 agreement and 2004 agreement the question of waiver and estoppels arose.  The issue which Cheung JA said was open to dispute was the effect of waiver and estoppel on an entire agreement clause.  It was on his finding that there was evidence of waiver that he held that the dispute should be canvassed at a full hearing at trial.

…

30. …Thus, the meaning and effect of an entire agreement clause is a question of construction; and whether that clause shall have that effect as intended by the parties may be subject to the principles of waiver and estoppel.  There are two questions involved: one is a question of construction, the other is a question of waiver and estoppels.  The Court of Appeal entertained no doubt in respect of the first question but thought there is room for debate in respect of the latter.  It is important to note that the Court of Appeal in Natamon and Fortis Insurance Company (Asia) Limited never for a moment suggested on the basis of construction that pre-contract oral negotiations or oral agreements are capable of defeating the express provisions of an entire agreement clause.  Also, the conduct in those two cases which constituted waiver or estoppels was conduct subsequent to the entire agreement clause.

(Emphasis added)

33.  It is clear from his Lordship’s analysis that what carried weight in Natamon was the presence of evidence pointing to a possible waiver that would merit a full trial when perhaps the issue whether an entire contract clause can ever be waived by a party could be canvassed.  As it turned out, when the matter subsequently went before Harris J (the action having been transferred to the Commercial List and became HCCL 5/2011), his Lordship had no difficulty in affirming the enforceability of the entire contract clause there without having to decide the issue.  Incidentally, I find the following observation of his Lordship in his judgment of 5 July 2013 particularly instructive:

“ 37…More generally it seems to me that this is an unrealistic way in which to view the relationship between a private bank and a wealthy client. The Plaintiff must be taken to know that banks do business on standard terms and that her relationship with the Defendant was governed by the agreements that she had signed. It does not seem to me to be credible to suggest that either party thought that following a discussion, even a detailed one, to agree an investment strategy that what they had agreed gave rise to a free standing contract that was not subject to the terms of the written agreements that had been signed. It is important that there is certainty in the dealings between a bank and its client and one of the purposes of the agreements which banks ask their clients to sign is to provide such certainty. This is the reason why such agreements commonly contain an entire contract clause...

38. It seems to me that this clause clearly applies to an oral agreement of the type, which the Plaintiff argues was made in the present case and excludes reliance upon it.  Indeed it is exactly the type of oral agreement, which such clauses are intended to exclude. If I had found that an agreement as alleged had been reached I would have gone on to find that by virtue of clause 15 the agreement was not binding on the Defendant.”

(Emphasis added)

34.  In my view, the same aptly applies here and AIA is entitled to enjoy the ease of mind that the entire contract clause in its standard form contract would bring about.

35.  On the facts ofLucky Zone Holdings, supra, To J held as follows:

“ 31. Returning to the undisputed facts and the assertions of the Defendants in the present case, the oral term outside the written agreement was made prior to the two share subscription agreements. Assuming for the purpose of the present application that the software had been delivered to and accepted by the Plaintiff, there was no other conduct whatever on which to launch any argument of waiver or estoppel…there was hardly any post-contract conduct on which the Defendants could launch any argument of waiver or estoppels. The defence relying on the oral term fails as a matter of law and fact.”

36.  In these actions, Mr. Yao fairly conceded that there was hardly any post-contract conduct on which the defendants could launch any argument of waiver or estoppels.  All the defendants manage to do is to assert the existence of some pre-contractual assurance, which in itself is fraught with difficulties as discussed above.  I conclude that the defendants’ argument on waiver or collateral contract/warranty in reliance on the Assurance is bound to fail.

37.  As to hissuggestion that the defendants might have mistakenly believed that AIA would abide by the terms of the Assurance, Mr. Yao was unable to point to anything in the evidence to suggest that the defendants were laboring under such a mistaken belief when signing the contracts.  All he could advance by way of submissionwas similarly that if given the opportunity to proceed further, the defendants might be able amend their pleading to bring in this ground and that for now this groundis at least arguable.  I do not see how this can be arguable at all, not just because there is no evidence as to any mistaken belief on the defendants’ part but also because there is nothing to point to AIA’s knowledge of such a mistake.  The facts of Pacific Century Insurance, supra, are clearly distinguishable.  There the defendant alleged an oral agreement whereby he was engaged by the plaintiff as a unit manager with a guaranteed monthly income of $40,000 for 12 months and furtheralleged that after working for about four months, he was provided with copies of the relevant contractual documents whereupon he realised that instead of a guaranteed monthly income, he was subject to a monthly financing scheme.  He protested to the plaintiff’s representative who was said to have promised to rectify the relevant agreement.  As Ma J (as the Chief Justice then was) said,“(f)rom a legal point of view, the effect of the alleged oral agreement is to change the nature of the 1998 Financing Agreement”.  In the present actions, the Assurance is nothing more than what Harris J in Natamon characterized as an oral agreement which, if found to have existed, is liable to be excluded by an entire contract clause.

38.  Turning to the “prevention principle” as explained in Kensland Realty, supra, as Mr. Lung rightly pointed out, it is important to identify the breach and then ask whether the consequence flows from the breach.  The benefit that AIA is said to have enjoyed by taking advantage of its own wrong is the refund of monetary incentives/bonuses.  It is a consequence of the termination of the CR Contract.  Mr. Yao, however, is not saying the termination itself is wrongful. He therefore has to look to AIA’s Demand to find the prior breach.  In this connection, Mr. Lung drew my attention to an email from AIA to the defendants dated 20 March 2013 whereby AIA sent to a table setting out the proposed figure for refund to the defendantsbefore chasing for a reply by another email of 26 March 2013.  In the second email, AIA used the term “settlement” in describing its proposal.  I can hardly find any indication of intention on AIA’s part not to be bound by the contract so as to find any anticipatory breach on its part.  On the contrary, AIA was relying on the full force of the CR Contract when it decided to invoke Clause 23(b) to put an end to the contractual relationship with the defendants when the proposed settlement fell through.  In any event, even if the agents had accepted AIA’s settlement proposal, it would still be open to AIA to invoke the same clause to terminate the CR Contract.  The subsequent termination was therefore not a necessary consequence of AIA’s Demand even if the same demand constituted an anticipatory breach (which the defendants did not accept and the contracts continued for a brief period before the Purported Termination).  At any rate, the benefit in the form of refund of monetary incentives/bonuses is a necessary consequence of the Purported Termination independently of the alleged prior breach.  The “prevention principle” therefore does not apply here. 

39.  I therefore rule against the defendants on Issue I.

40.  In arguing that even if AIA has a right to terminate the service of the defendants, it does not have the further right to demand refund of the monetary incentives/bonuses under the terms of the LOU, Mr. Yao referred to the dictionary meaning of the adjective “any”, as in the phrase “for any reason” in Clause 10 or Clause 11 of the LOU, which carries a quantitative emphasis and depicts a quantity or number of however great or however small, and submitted that there must at least be a reason before AIA could terminatethe CR Contracts.  As no reason was given for the decision to terminate in all these actions (the 15 days’ notice not being a reason), AIA would not be entitled to pray in aid Clause 10 or Clause 11 of the LOU.

41.  In reply, Mr. Lung highlighted the difference between Clause 23 (and Clause 25) of the CR Contract and Clause 10 / Clause 11 of the LOU.  The purpose of the former is to set out the ways in which the CR Contract may be terminated.  It concerns the question as to why.  The latter governs the post-termination consequences and the phrase “for any reason” must be read in this light.  Here the phrase simply means “howsoever” and Clause 10 / Clause 11 of the LOU would take effect irrespective of how the CR Contract is terminated, whether by death, by notice, by fault or otherwise.  It does not address the question as to why and does not require the terminating party, be it AIA or the defendants, to state why a termination is desired in the first place. In short, Clause Clause 10 / Clause 11 of the LOU would operate regardless of how the termination is brought about.

42.  Mr. Lung’s reply provides a complete answer to Mr. Yao’s argument and I rule against the defendants on Issue II as well.

43.  In conclusion, the defendants have no arguable defence to AIA’s claim in each of these actions.  Mr. Yao accepted that should Issues I and II be decided in AIA’s favour, this would completely dispose of these actions and the counterclaims would have to be dismissed.  He also kindly confirmed that the defendants have no dispute on AIA’s calculation in arriving at the claimed amount in each of these actions.

44.  I therefore enter judgment against the defendants in favour of AIA for the claimed amount as set out in paragraph 1 of AIA’s summons in each of these nine actions together with interest at judgment rate from the date of writ to the date of judgment and from the date of judgment until payment.  The counterclaim of each defendant in the same actions is struck out. 

45.  I see no reason why costs should not follow the event.  I make an order nisi that the defendants do pay AIA its costs of these actions including the present application, to be taxed if not agreed with a certificate for counsel.

46.  I thank Counsel for their useful assistance.