ONC LAWYERS (a firm) v. YIU WING CHING JOHN

DCCJ 909/2015

[2019] HKDC 144

IN THE DSTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 909 OF 2015

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J U D G M E N T

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1.  The Plaintiff is a law firm in Hong Kong and the Defendant its salaried partner between 22 March and 31 December 2012. By this Action, the Plaintiff sued the Defendant for damages in the total sum of $732,663.5 comprising:

i) $537,663.5[1], arising from the Defendant’s breach of contractual, tortious and equitable duties in failing to protect the Plaintiff’s interest by requesting sufficient costs on account when acting for Mr Vincent Au Kwok Chuen (“Au”) (“breach of duties claim”); and

ii) $195,000, arising from the Defendant’s misrepresentation in connection with his resignation (“misrepresentation claim”).

Brief Facts

2.  The Plaintiff is a law firm engaging in, inter alia, commercial litigation in Hong Kong. At all the material times, Mr Ludwig Ng (“LN”) and Mr Sherman Yan (“SY”) were 2 of the 3 equity partners of the firm.

3.  The Defendant was qualified to practise in Hong Kong as solicitor in 1997, and England and Wales in 1998. He practised in Hong Kong as a solicitor specializing in commercial litigation as from 1997 until end of 2015.

4.  In early 2012, the Plaintiff posted advertisements for a senior litigation associate[2]. Prompted by an employment agent, the Plaintiff knew that the Defendant was then looking for job opportunity. After several interviews, by a letter of employment dated 13 February 2012 (“employment letter”), the Defendant agreed to join the Plaintiff as a salaried partner[3]. It is common ground that the Defendant started to work for the Plaintiff on 22 March 2012[4]. It is fair to say that there is no dispute that the Defendant is engaged as the Plaintiff’s employee though it was pleaded the Defendant breached his duties as Plaintiff’s partner[5].

5.  When the Defendant joined the Plaintiff, he was a solicitor of 15 years standing engaged predominantly in litigation. He was also a part-time lecturer in The University of Hong Kong between 2004 and 2005.

6.  Of relevance to the present action are the following clauses in the employment letter[6]:

(i) Clause 4: -

“You will be employed as a non-equity partner, primarily engaged in handling of the legal work which you will introduce to the Firm as well as other legal work assigned to you by the Firm. …

(ii) Clause 7: -

“In respect of the files introduced by you, which is within your expertise, you are expected to be primarily responsible and substantially involved in terms of time cost.”

(iii) Clause 9: -

“Your monthly salary is HK$130,000. …”

(iv) Clause 12: -

“Subject to the following, commission at the firm’s usual rates and terms will be paid.

Under and subject to the current office policies and regulations … for Primary Clients, that is, those that are introduced to the Firm by you, you will be entitled to a commission as follows: -

…

- 10% of the net fees received for all other types of file.”

(v) Clause 22: -

“Either party may terminate the employment at any time by giving to the other at least 3 months’ written notice or wages in lieu thereof. However, after a notice of termination is given, the Firm may review your then workload and, at its sole discretion, shorten the notice period.”

(vi) Clause 33: -

“You are not required to bear any liability incurred by the Firm apart from those resulting from your own fault or negligence in relation to your duties to the Firm. …”

The Breach of Duties Claim

7.  There is no dispute that by end of April 2012[7], upon the Defendant’s introduction, the Plaintiff acted for Au to defend a High Court Action HCA771 of 2009 (“the said High Court Action”) involving one Grand Field Group Holdings Limited (“Grand Field”) which is a Hong Kong listed company. Au had been its executive director. Au sided with one camp of shareholders who had disputes with another camp. Au was sued together with others for breach of fiduciary duties as a director in the said High Court Action. According to the Defendant, the size of claim against Au was about $50 million, and he was sued together with other former directors. In fact, Au was also involved in 2 other District Court Actions, namely DCCJ 3863/2010 DCCJ 3864/2010 with Grand Field (these three cases are collectively referred to as “Au’s cases”). In one District Court case Au was being sued by Grand Field and in the other, Au sued Grand Field.

8.  It is the Defendant’s unchallenged evidence that Au was his first client introduced to the Plaintiff after his joining. The Defendant was entitled to, according to the employment letter, 10% of the profit costs received from Au as commission.

9.  Under the Plaintiff’s internal system, the Defendant is the “Supervising Partner (“SP”)” primarily responsible for the conduct of Au’s cases and SY was the “Responsible Equity Partner (“REP”)”.

10.  It is the Plaintiff’s case that they have a practice of asking their client to sign a standard engagement letter before working for that client. In that letter there is a standard clause of asking client to put the Plaintiff in fund as costs and disbursements on account[8]. It is not in dispute that Au had not been asked to sign such engagement letter.

11.  On 13 July 2012, Au deposited the Plaintiff a sum of $80,000 as costs on account. The said High Court Action was then already set down for a 20-day trial. It was the Defendant’s case since complex legal argument would be involved but Au had a limited budget, he suggested to Au to instruct a junior counsel to appear for him at the said High Court trial[9]. Au agreed. A junior counsel was briefed with an agreed lump sum fee of $120,000 for the entire trial. The meaning of “limited budget” is a subject of controversy at trial.

12.  Counsel’s brief was delivered on 30 July 2012. In fact, according to bill no.1 (see the following paragraph), the Defendant together with Au attended conference with counsel to be briefed on 16 July 2012, i.e. 3 days after the said costs on account was deposited[10]. The trial eventually proceeded as scheduled on 2 August 2012 lasting until 28 August 2012[11].

13.  A total of 4 bills were issued to Au. These bills were drawn up and initiated by the Defendant and signed by SY particulars of which are as follows:

	Bill No	Date of Issue	Amount
i)	No.1	6 September 2012	$439,038.5[12]
ii)	No.2	28 September 2012	$21,105.5[13]
iii)	No.3	1 November 2012	$129,347[14]
iv)	No.4	30 November 2012	$6,975[15]
		Total:	$596,466

14.  Grand Field and Au later entered into a global settlement over Au’s cases. Au signed a Deed of Settlement dated 22 October 2012. By the said Deed, Au would receive a net sum of $330,000 from Grand Field on or before 15 November 2012 by way of bank transfer into his personal account.

15.  When the said Deed of Settlement was signed, only bills nos. 1 and 2 had been issued. Bill no. 3 (mainly counsel’s fee) was issued after the said Deed. Shortly after the issue of bill no.3 and on 5 November 2012, Au settled bill no. 2 ($21,105.5), leaving bills nos.1 and 3 unsettled.

16.  On 5 November 2012, i.e. on the same date when Au’s cheque of $21,105.5 was received, one Mr Wong, the credit control officer of the Plaintiff sent an email to the Defendant, notifying him that according to the Plaintiff’s internal credit control policy, a reminder chasing after payment of bill no.1 had to be issued to Au on 7 November 2012. It was because the said bill had been outstanding for 2 months by then, unless consent to withhold was obtained from SY.

17.  In the morning of 6 November 2012, the Defendant wrote an email to SY informing him of the said settlement. It was stated in the said email there would be an “incoming settlement sum in the amount of $330,000 from the other side’s solicitors to settle the outstanding bill on 15 November 2012”. It was also stated, inter alia, that Au would be referring another matter to the Plaintiff for handling, and that he would settle bill no.1 in full no later than 15 November 2012[16]. He asked SY under the circumstances, whether the reminder should be issued. SY instructed the said reminder to be withheld[17].

18.  On 8 November 2012, instead of by bank transfer as set out in the Settlement Deed, a post-dated cheque issued by Grand Field and dated 12 November 2012 was received by the Plaintiff. The Defendant immediately notified Au[18]. He also sent an email to Au that they would deposit the said cheque with Au’s bank account if he could confirm his Chinese name written on the cheque being correct, which Au did in the same evening[19].

19.  On the next day, i.e. 9 November 2012, the Defendant instructed his secretary to deposit the cheque as arranged. The cheque was eventually cleared on 12 November 2012[20].

20.  Accordingly, as at 9 November 2012 when the $330,000 cheque payable to Au was received, bills nos. 1 and 3 totalling 488,385.5 remained outstanding[21].

21.  After issue of bill no. 4, Au issued a cheque of $150,000 as partial payment of bill no.1 under cover of his handwritten note dated 4 December 2012. The note was addressed to the Defendant promising to settle “the rest of bill no.1 and further minor ones”[22]. Accordingly, after partial settlement of the Plaintiff’s bill no.1, the following remained unpaid by Au:

	Bill No	Amount
i)	No.1	$209,038.5[23]
ii)	No.3	$129,347
iii)	No.4	$6,975
	Total:	$345,360.5

22.  No further payment was received from Au. As can be seen below, the Defendant left the Plaintiff’s employ by end of 2012. It is the Plaintiff’s case that SY had asked his credit control department to call the Defendant on how Au’s outstanding bills could be settled. The Defendant replied that Au was willing to settle the outstanding bills[24].

23.  Between 8 January 2013 and 3 May 2013, the Plaintiff issued to Au a total of 3 chasers for payment. For the one issued on 3 May 2013 it was stated that if the outstanding amount was not settled within 7 days, the Plaintiff would take recovery actions against him. It is noted that counsel’s fee had not yet been settled then. The Plaintiff’s explanation is that when Au sent in his cheque, he expressly stated it was for settling bill no. 1. Counsel’s fee was billed under bill no. 3.

24.  By his letter of 9 May 2013, Au raised for the first time the billed amount excessive[25]. On 22 May 2017, Au took out proceedings in the Court of First Instance (“CFI”) demanding his bills be taxed under the Legal Practitioners Ordinance, Cap 159 (“taxation proceedings”).

25.  From documents disclosed, Au and the Plaintiff were later engaged in an acrimonious fight on the outstanding fees. The Plaintiff issued a statutory demand against Au. The Plaintiff contended that by reason of the said handwritten note (see [21] above) which amounted to an agreement, Au was not entitled to have his costs taxed[26]. On the other hand, apart from challenging the fee being unreasonable, Au also alleged that there had been verbal promise that the total litigation costs would be capped between $200,000 and $240,000[27]. He even went on to amend the Originating Summons of the taxation proceedings to the effect that the so-called capped fee agreement should be enforced.

26.  Master Leong of the CFI dismissed Au’s application. By his decision of 23 December 2013, Master Leong considered Au lying at will and dishonest. Judgment for the outstanding sum was entered against Au[28]. On appeal, the capped fee allegation was, again, dismissed by Hon. Mimi Chan J on 26 February 2014. However, the learned judge set aside the Master’s decision to allow the said note to be examined and allowed, if considered fit, by a taxing master[29]. This was eventually done on 11 April 2014 by Master Chow. Judgment was entered against Au for the sum of $345,360.5.

27.  Enforcement action failed to bring about any fruitful result. Au was eventually made bankrupt by the Plaintiff on 24 September 2014 by an order of the court[30].

28.  It was the Plaintiff’s case that as a result of the recovery action, including the heavily contested taxation proceedings, they have incurred untaxed costs of $384,606.7. By consent of counsel at the first day of trial, it was agreed if the Defendant was found liable eventually, the quantum under the head of recovery costs would be capped at 50% of the claimed amount, i.e. $192,303.

29.  Counsel appearing for Au in the said High Court Action issued his fee note for $120,000 to the Plaintiff on 25 October 2012. Despite repeated reminders, counsel’s fee remained unsettled. During the legal fight with Au, the Plaintiff had once asked the Defendant to settle the said counsel’s fee on the ground he was the one who had personally signed counsel’s brief[31]. It was refused. Counsel issued his 13^th reminder on or about 6 January 2014. His fee was eventually settled by the Plaintiff by 2 equal instalments on 30 January and 4 March 2014[32].

The Misrepresentation Claim

30.  It was the unchallenged evidence of the Defendant that his mother was diagnosed to have suffered from multiple myeloma, a kind of bone cancer, in July 2012[33] when the Defendant was under the Plaintiff’s employ[34]. The Defendant was his mother’s only son. On 15 November 2012, the Defendant tendered his resignation. He stated that he had to devote more time to take care of his mother who had serious illness[35]. Although it was not expressly mentioned the notice being 3 months, the Defendant stated in his resignation he was “providing notice in accordance with [the] employment contract”. The official last day of the Defendant with the Plaintiff, according to the employment letter, should be 14 February 2013.

31.  It was the Plaintiff’s case that the Defendant had indicated to them that he would be emigrating to Canada with her mother for treatment and convalescence. At that time, the Plaintiff still considered the Defendant a competent lawyer. They were on good terms. They therefore invited the Defendant to be their non-resident partner or consultant in Canada. By an email dated 7 December 2012, the Defendant told them he had already got a part-time consultant job in Canada, and that he would like to cut off totally from Hong Kong to avoid double taxation, suggesting he would neither stay with the Plaintiff nor in Hong Kong[36].  

32.  On 10 December 2012, a meeting was held between the Defendant, SY and LN to discuss the Defendant’s resignation. The holding of this meeting on 10 December 2012 was not in dispute. However, what had been said at this meeting was hotly disputed. The Plaintiff said (disputed by the Defendant) the Defendant asked for an early termination of his employment with effect from 31 December 2012. LN and SY said they tried to persuade the Defendant to stay with them by offering him extended leave or part-time post so that he could have more time to take care of his mother. They even proposed the Defendant to be their non-resident partner in Canada. However, the Defendant told that his mother would be in Canada for convalescence and treatment.  He repeated he had already got a part-time post there. He did not want double taxation. He even offered to refer cases to the Plaintiff in Hong Kong. LN and SY said they respected the Defendant’s choice and agreed to the Defendant’s early termination on 31 December 2012 upon the Defendant’s request. They cut short the Defendant’s 3-month notice by 1½ month upon request.

33.  The Defendant’s case (disputed by the Plaintiff) is that as early as in November 2012, he had a meeting with SY who suggested if he was not to stay with the Plaintiff, they would rather let him go by end of 2012[37]. This was, he said, supported by SY’s email of 7 December 2012[38]. It was put to SY at trial that it was SY who proposed to cut short the notice period to end of December 2012 at the 10 December 2012 meeting. SY denied and said it was suggested by the Defendant[39].

34.  It is not in dispute the Defendant joined Messrs Edwards Wildman Palmer (“EWP”), a firm of solicitors in Hong Kong on 2 January 2013, i.e. 2 days after the Defendant’s last day with the Plaintiff.

35.  Upon discovery in the action, it was revealed that the Defendant had started applying to EWP as early as March 2012[40], i.e. more or less at the same time he joined the Plaintiff. He attended several interviews with EWP starting 12 April 2012[41] through arrangement of an recruitment agent. After accepting the employment offer from EWP, the Defendant provided particulars of referees to them as required by the employment agreement. The following is not in dispute:

i) EWP’s official offer to the Defendant came earlier than the Defendant’s resignation. EWP’s offer letter was dated 31 October 2012 while the Defendant’s resignation to the Plaintiff was dated 15 November 2012[42];

ii) Under EWP’s offer letter, the Defendant was to join between 1 and 31 January 2013[43];

iii) On or about 3 December 2012, the Defendant proposed to start working for EWP on 24 January 2013, which was agreed to by EWP on the same date[44];

iv) On 17 December 2012, the recruitment agent confirmed the Defendant’s passport had been returned endorsed with the immigration visa[45];

v) On 18 December 2012[46], the Defendant wrote an email to a partner of EWP proposing he would like to change the joining date from 24 January to 2 January 2013, and it was accepted by EWP[47]. It is noted certain part of the email had been redacted, and whether the redacted part throws light on the reasons for the change was unknown[48].  

36.  It is the Plaintiff’s case that the Defendant had never disclosed anything whatsoever about his intention to join EWP any time before he left the Plaintiff. The Plaintiff said that the Defendant told lies with a view to misleading the Plaintiff so that he could be released early to join EWP. Had they known of the Defendant’s intended move, they would not have agreed to any early release.

37.  The Defendant strenuously denied the Plaintiff’s allegation of cheating. It is the Defendant’s case that his romantic partner, one Mr Chan Kin Sing (“Chan”), with whom he had registered their union in Canada and lived together[49], found that his mother was not feeling well in or around April 2012[50]. His partner took the opportunity to suggest that the Defendant was to apply for permanent residency in Canada. Once the Defendant became a permanent resident of Canada he could take his mother there for treatment[51]. It was the Defendant’s case that in preparation for emigration to Canada, the Defendant applied on 21 May 2012 to the National Committee on Accreditation for Assessment of Legal Credentials[52]. He also engaged an immigration consultant, Rothe International, in or about June 2012 to assist him in the application. His application was sponsored by Chan, a permanent resident of Canada. His emigration visa was approved on 17 December 2012[53] though in cross-examination, he admitted prior to this date, his consultant had told him his application was going to be successful[54].

38.  In August 2012, his mother was hospitalized for treatment of myeloma[55]. It was the Defendant’s case that it was then his and his partner’s utmost wish of bringing the Defendant’s mother to Canada for residence and treatment. As advised by Rothe’s staff, one Ms Mary Chan, the most optimistic estimation for granting of the application would be around early 2013[56]. The following were the progress relating to his emigration in the following months. The happening of these events are not in dispute. The question is whether they help support the Defendant’s alleged intention:

i) On 10 August 2012, Chan emailed the Myeloma Canada to inquire as to treatment options and costs for the Defendant’s mother[57];

ii) On 3 October 2012, the Defendant consulted the immigration consultant as to when his partner Chan should resign, and he got his reply from the consultant by 5 October 2012[58];

iii) In late October 2012, Chan bought a property in Vancouver. It is the Defendant’s case it was intending  for use as their primary residence when they emigrate to Canada[59];

iv) On 30 October 2012, the immigration consultant advised that Chan could resign if he wanted to[60];

v) By an email dated 7 November 2012, the immigration consultant asked for the Defendant’s UK/HK Police certificate for the purpose of the emigration application;

vi) On 15 November 2012 he resigned;

vii) On 27 November 2012, the Consulate General of Canada informed the Defendant’s consultant that pending a final assessment, the visa may be ready for approval[61];

viii) On 3 December 2012, Chan resigned to take effect on 2 January 2013. Chan eventually obtained his tax clearance of his tax from the Inland Revenue Department[62]; and

ix) On 7 December 2012, SY emailed the Defendant noting it was said that there would be a final decision that date. There was urgency to prepare next year budget of the Plaintiff. The Defendant replied immediately on the same date by email that, inter alia, he was referred to a part-time consultant post by a contact in Canada[63]. At trial, the Defendant agreed the said email set out the reasons for declining, and related to confirmation on whether he would be a part time consultant after resignation. His email therefore had nothing to do with the notice period[64].

39.  It was the Defendant’s case when he tendered his resignation, he had the intention to bring his mother to Canada. It was only when after Dr Chan, his mother’s attending doctor advising against such move that he told EWP that he would be joining on 2 January 2013.

40.  It is therefore, according to the Defendant, neither a case of cheating nor pondering when he resigned. It is a case of subsequent change of intention upon occurrence of an unexpected event. He had every intention to emigrate to Canada with his mother and take care of her as at the meeting on 10 December 2012. His representation to the Plaintiff was true then[65]. It is submitted on the Defendant’s behalf had he decided to join EWP, he would have immediately notified EWP after his meeting with SY/LN on 10 December 2012 to bring forward his start date instead of waiting until 18 December 2012[66].

41.  The Defendant said as a result of the doctor’s advice against his mother doing long haul travelling, his partner Chan was also forced to withhold returning to Canada starting his own business.  He then decided to take up the employment with EWP on 2 January 2013 so that the family could have income while waiting to see how his mother’s condition might become[67].

42.  The Defendant also advanced a case that it was the Plaintiff who, because of financial constraint and probably with a view to saving money, cut short his notice to end of December 2012. In order to save holiday pay in lieu, the Plaintiff required him only to work up to the morning of 24 December 2012 instead of end of the month[68]. On the other hand, he had every intention to work his full notice period. He had never asked for early release or shortening of notice period[69]. He said he was under no duty to give any reason for his resignation. The provision of reason was because he treated SY his friend and did not want to feel bad[70]. He did not provide this with a view to asking for shortening of his notice period.

43.  He said even SY congratulated him by email on 5 February 2013 after learning he had joined EWP. Had there been misrepresentation as alleged, SY would have been offended. He would confront instead of congratulate him[71].

44.  SY disagreed and said immediately after his apparently congratulating email, he wrote to LN describing the Defendant as “thief”[72]. SY said the email to the Defendant was written in a sarcastic tone. LN then replied asking him to forget about it.

45.  It is not in dispute the Defendant did not respond to his email. SY said such was unusual and not expected from the Defendant who always maintained an image of being an easy-going and courteous person. SY therefore said the Defendant should have realized this was sarcastic. This leads to the Defendant challenging the authenticity of the 2 emails exchanged between SY and LN at CB1/260.  

46.  The Defendant’s mother unfortunately passed away on 8 October 2013[73].

47.  As regards why he still went through all the process even when he had no intention to join EWP, the Defendant’s explanation is this. His contract with EWP was a conditional one[74]; and it contained no compensation clause[75]. When he accepted the offer, he considered it was up to him whether to provide EWP with names of referees required for the contract. It is only a backup option in case the Defendant could not emigrate to Canada. In his witness statement, he said originally it was stated he would start working for EWP on 24 January 2013. At trial, he added it was a random date picked by him on 3 December 2012 as pushed by the recruitment agent[76]. If they really went to Canada, he could just apologise to EWP and the recruitment agent on the excuse of her mother’s medical condition[77]. He could therefore walk out anytime with no legal obligation after signing the contract[78].

48.  At trial, the Defendant further explained that his character was such that he always felt difficult to say no to persuasion, and wanted to help friends. The recruitment agent was his friend. He wanted to help her. Further, he enjoyed interviews with international renowned law firms and being appraised highly by the interviewers. He admitted this made him feel “high” and he enjoyed the process very much. That explained, he said, why he continued attending interviews until the appointment stage. He treasured the interviews more than the offer[79]. These interviews also gave him good opportunities to understand practice of international firms, but it did not mean that he had to join them.

49.  During cross-examination, the Defendant agreed that he accepted EWP’s offer on 7 November 2012[80]; and he provided names of referees to EWP on 8 December 2012[81]. Mr Wong SC for the Plaintiff submitted (see below) the latter was a crucial piece of evidence which the Defendant should have disclosed on day one but he had kept it to the very last minute.

50.  The Defendant said that the Plaintiff used his name to apply for banking facility of $3 million from the Chiyu Bank in about August 2012. He did not expect to sign such facility letter. Neither had he been told to sign this when joining the Plaintiff. He lodged a complaint against the Plaintiff to the Privacy Commissioner for Personal Data (“PCPD”) in March 2013 for use of his Hong Kong Identity illegitimately and without his consent to obtain a loan from Orix Asia Limited. Dissatisfied with the decision of the PCPD, he lodged an appeal to the Administrative Appeal Board (“AAB”). The Defendant claimed the present action was commenced by the Plaintiff against him with malicious intent in retaliation for the complaint and the appeal[82]. It is not in dispute that the Defendant took out an action against, inter alia, the Plaintiff, LN and SY for damages for wrongfully disclosing his information for financial gain in the CFI in December 2015 (HCA2823/2015).

The Parties’ Pleaded Cases

The Plaintiff’s Case

51.  The Plaintiff’s pleaded case is that by reason of the Defendant’s position as its salaried partner, the Defendant owed to them fiduciary duties[83]. It is because, by reason of his position, the Defendant had been entrusted with substantial degree of authority to handle the Plaintiff’s clients. The Plaintiff had to rely on the Defendant’s experience and skill to protect its interest when dealing with its clients. The relationship of trust and confidence reposed on the Defendant, which is subject to abuse, was clear. Further or alternatively, the Defendant owed the Plaintiff contractual, tortious and equitable duties to[84]:

i) exercise reasonable care and skill in preserving and handling the Plaintiff’s assets; and

ii) act faithfully in the best interest of the Plaintiff.

52.  In respect of the the breach of duties claim, the Plaintiff’s case, in gist, is as follows:

i) the Defendant did not assess or did not sufficiently assess the creditworthiness of Au before committing the Plaintiff to incur substantial costs and disbursements for Au’s case;

ii) the Defendant failed and/or refused to obtain sufficient costs on account from Au. Only $80,000 was asked for but it was even insufficient to cover counsel’s fee of $120,000 which he had committed the Plaintiff to pay;

iii) the Defendant failed and/or refused to exercise a solicitor’s lien over the cheque of $330,000 payable to Au despite the facts that Au’s then outstanding costs to the Plaintiff was as high as $488,385.5[85], particularly when Au had given a promise to settle such costs using the settlement money of $330,000; and

iv)   the Defendant failed and/or refused to take appropriate and prompt measures to recover the outstanding amount from Au.

53.  It is the Plaintiff’s case that had the Defendant exercised due care and skill to protect the Plaintiff, the damages now suffered by the Plaintiff in respect of Au’s cases could have been avoided.

54.  Regarding the misrepresentation claim, the Plaintiff’s claims against the Defendant were founded on fraudulent, reckless or negligent misrepresentation, at common law and/or s.3 of the Misrepresentation Ordinance, Cap 284[86]. It is the Plaintiff’s case that the Defendant’s representations, namely, (i) he would move to Canada to take care of his mother who was terminally ill; (ii) he had found a job at a Canadian law firm; (iii) he would refer related cases to the Plaintiff after he had settled in Canada, were all false. There was reliance on these representations and the Plaintiff cut short the Defendant’s notice by 1½ month. Had the Defendant disclosed he would be joining a competing law firm in Hong Kong after his resignation, the Plaintiff would not have agreed to an early termination upon request. In addition, the Plaintiff would have insisted on enforcing clause 22 of the employment letter.

55.  Accordingly, the Defendant was required to pay damages represented by wages in lieu of notice in the sum of $195,000[87] for early termination if he wanted to join EWP on 2 January 2013[88].

The Defendant’s Case

56.  Regarding the breach of duties claim, this Court considers it fair to summarize the Defendant’s grounds of defence broadly as follows:

i) He admits that he owes contractual or tortious duties to the Plaintiff as pleaded, namely[89]:

a) duty to exercise reasonable care and skill in preserving and handling the Plaintiff’s assets; and

b) duty of fidelity to act faithfully in the best interest of the Plaintiff;

ii) he did NOT admit he owed equitable duties to the Plaintiff[90];

iii) he did NOT admit that the duties owed by him to the Plaintiff being fiduciary in nature[91];

iv) he was acting in accordance with an acceptable common practice of competent solicitors. He was not negligent and he should not be judged with the benefit of hindsight that he should adopt the best course[92]. The Boland test was relied on;

v) It is accepted by Mr Chan, counsel for the Defendant at the 1^st day of trial that the accepted common practice was to ask for costs on account. However, not asking for costs on account per se is not a breach of duty of a solicitor[93]. The Defendant had already exercised due care in assessing Au’s creditworthiness and balanced all relevant considerations before asking for $80,000 costs on account. Knowing that Au had a limited budget he had managed to secure representation by a junior counsel who was willing to charge an all-inclusive fee of $120,000 for the entire 20-day trial;

vi) the Plaintiff did not have a strict policy of asking for costs on account for disbursement from clients, and if there were, the Defendant had never been told. The fact that the Plaintiff had up to $20 million account receivables was telling of the absence of such policy[94];

vii) the Plaintiff was then in financial hardship and therefore was more relaxed in asking for costs on account with a view to keeping and/or attracting more clients;

viii) the $330,000 cheque was issued to Au personally and it would be quite impossible to hold the cheque to ransom in the circumstances[95]. If the Defendant were to do it, Au would have requested direct transfer pursuant to the settlement agreement. It would also antagonize Au[96]. Even if the lien were successful, loss could not have been avoided as only part of the outstanding would remain unpaid. The “but for’ test is not satisfied. There was no indication that Au would become bankrupt, and it was not improper to deposit the cheque in accordance with Au’s instruction in the circumstances[97];

ix) the Defendant could not have and/or could not reasonably have envisaged that Au would not honour its obligation to pay the Plaintiff. In any event $150,000 had been paid after the deposit of the $330,000 cheque into Au’s account; and

x) The Plaintiff was liable to contributory negligence as SY, being the REP having the overall supervision of Au’s cases, should at least be partially responsible. It is because despite the fact that the Defendant had kept SY posted of the development of the case, the Plaintiff continued acting for Au well knowing Au had insufficient costs on account[98]. Only LN and SY had the authority to approve acceptance of retainer and issued bills.

57.  The Defendant averred that the failure on the part of a client to settle bills of costs is an inherent risk of running a law practice, like any other business[99].

58.  It is the parties’ common ground that there is not much significance whether the duties are referred to as “equitable” or not.

59.  As regards the misrepresentation claims, it was submitted on the Defendant’s behalf that in order to ground a case on misrepresentation, the Plaintiff must rely on misrepresentation of facts, not promise: [20] of Glory Gold Ltd v Star Play Development Ltd[100]. By comparing the alleged particulars of misrepresentation pleaded at [30] with the pleaded falsities at [32] of the statement of claim, the Defendant’s case is that the alleged misrepresentation is either true as a matter of facts ([30(1)])[101] or does not fall within the category of existing facts ([30(2)] to [30(4)] are promises as to future[102]), or that the alleged fact cannot be proved as a matter of evidence (i.e. [30(5)])[103].

60.  It is submitted on the Defendant’s behalf there was a change of plan after the Plaintiff had cut short his notice period. It was beyond the Defendant’s control. It is also the Plaintiff who took the initiative and voluntarily, probably because of financial hardship, to ask the Defendant not to serve the full notice period. The Defendant did not ask for it.

Evidence

61.  Whether or not the Defendant had checked the credit worthiness of Au and if so, how; whether or not there had been a change of plan as alleged by the Defendant; and why he still attended interviews with EWP to its appointment stage despite his apparently determined plan to go to Canada are matters only known to the Defendant. These facts are in serious dispute. The Defendant’s intention is a matter of fact that can only be inferred from all the circumstances. There is also dispute as what happened on 10 December 2012. Cross-examination of witnesses are therefore of crucial importance to help resolve the dispute.

62.  The following 5 witnesses testified at trial. They have filed signed statements each verified by the maker’s statement of truth prior to trial. They also relied on affirmation/affidavit made. Each witness had attended trial for cross-examination.

 For the Plaintiff

i) Mr Ng Siu Wing Ludwig, i.e. LN: he relied on 3 statements and one affidavit respectively dated:

 a) 30 October 2015;

 b) 27 November 2015;

 c) 25 February 2016 (affidavit); and

 d) 18 August 2016;

ii) Mr Yan Sherman Cheuk-ning, i.e. SY: he relied on 3 statements and 1 affirmation respectively dated:

 a) 30 October 2015;

 b) 27 November 2015;

 c) 26 July 2016 (affirmation); and

 d) 18 August 2016.

For the Defendant

iii)   Mr Yiu Wing Ching John, i.e. Defendant: he relied on 2 statements and 3 affidavits respectively dated:

 a) 24 October 2015;

 b) 26 November 2015;

 c) 22 January 2016 (affidavit);

 d) 9 March 2016 (affidavit); and

 e) 5 April 2016 (affidavit).

iv)   Chan Kin Sing, i.e. Chan: he relied on his witness statement dated 24 October 2015; and

v) Lau Suk Yi Anne Marie (“Lau”): she relied on her statement dated 28 October 2015 and affidavit made on 4 March 2016.

63.  This Court will assess a witness’ credibility by testing his evidence against contemporaneous documents and/or undisputed and/or indisputable and/or independent evidence. If that is impossible and the truthfulness of the evidence depends entirely on a witness’ credibility, the evidence will be assessed by reference to the consistency of his/her testimony with his/her prior answers/statements given orally or in writing. Whether a witness’ evidence is to be believed will also be assessed by reference to its inherent plausibility or implausibility taking into account the circumstances of this particular case. Further, when a witness is discredited when cross-examined on an issue, particularly on a material one, it throws light negatively on his/her overall credibility.

64.  Mr Wong SC for the Plaintiff complained that there was material non-disclosure of documents on the part of the Defendant in that documents and emails relating to EWP and his mother’s doctor(s) were disclosed in a highly selective manner. These documents, even when disclosed, were overly redacted. The Plaintiff was therefore prevented from knowing the full story of the Defendant’s dealings with EWP and his doctor(s). His submission is that the failure to make discovery was deliberate because the Defendant, being a solicitor specialised and experienced in litigation, could not have been ignorant of the requirements and the principles governing discovery. The natural inference is that these documents, if disclosed, would have exposed facts unfavourable to him.

65.  The Defendant denied, though he admitted there had been oversight in disclosure. At trial, he admitted having, prior to trial, failed to disclose 2 emails particular of which would be set out in the following paragraphs.

66.  In this connection, Mr Wong SC draws this Court’s attention to the following propositions in situation when a party fails to make disclosure:

i) if the non-disclosure of relevant documents is  deliberate, an irrebuttable presumption will be made against the wrongdoer for the uncertainty created by    the non-disclosure; and

ii) if the non-disclosure is not deliberate, an adverse   inference may be drawn against the wrongdoer.

67.  In support, Mr Wong SC relies on Hong Kong and Shanghai Banking Corporation v Chan Yiu-wah[104], a CA decision at 464B-G, 467B-469F; Man Sun Finance (Holdings) Ltd v Foo Sau Chun & Others[105] at [51] – [52]; and Tam Ying Man v Leung Ka Chun[106] at [60] – [64] in support.

68.  After going through these authorities, this Court accepts Mr Wong’s said propositions.

Credibility of Witnesses

69.  This Court will be guided by the above principles when assessing credibility of witnesses and resolving factual disputes. With them in mind this Court would like to comment on the credibility of witnesses.

Chan

70.  Regarding Chan, he is considered truthful. However, he admitted in cross-examination he did not have any personal knowledge about the Defendant’s dealing with the Plaintiff, his professional engagement and dealing with EWP. In the Court’s judgment, his evidence on these areas are necessarily hearsay, and with respect, of low evidential value. Whether his evidence will be accepted basically depends on this Court’s assessment of the Defendant’s credibility.

Ann Marie Lau

71.  As regards Ms Ann Marie Lau, her stay with the Plaintiff was short[107]. After hearing her evidence and that of LN and SY, this Court accepts that the Plaintiff was not happy with her performance and she was asked to leave, and to leave early after she had tendered her resignation. This was not denied. It was she who provided the Defendant with the Plaintiff’s financial reports which were still kept by her while under the Plaintiff’s employ. She also testified that the Plaintiff set up a Credit Control Department and one Mr Wong was engaged to chase after non-payment of bills, thus suggesting the Plaintiff in fact had cash flow problem. She also said she had seen cash flow analysis of the Plaintiff prepared containing, inter alia, loans from banks, bank balance, etc. 

72.  Although she disagreed with suggestions that she held grudges against the Plaintiff, this Court accepts she had been asked by the Plaintiff to leave. Further, it was observed in Court that she appeared to adopt an unfriendly attitude towards the Plaintiff. Accordingly, this Court will assess her evidence with scepticism. Further, as regards the dealing between the Defendant and the Plaintiff, she admitted she really did not have any personal knowledge. It is plainly obvious. This Court’s overall assessment is that her evidence has little use in the overall assessment of the parties’ cases.

LN and SY

73.  LN and SY are observed to be straight forward, frank and fair witnesses. They are unshaken and do not appear to this Court to be evasive. Their evidence generally tallied with what they have stated in their own prior written statements and showed no apparent or material contradiction or inconsistency despite cross-examination. This Court found both of them honest.

The Defendant

74.  The Defendant was in the witness box for 3 days. He is observed to be courteous, smart and ready to grasp gist of questions. However, for reasons more particularly discussed below, he is neither a truthful nor a credible witness. He is evasive, non-committal and shifting in his evidence with an apparent purpose to avoid answers that might lead to an adverse inference against him or to play down effect of his prior assertions. It is also this Court’s conclusion that he had deliberately withheld discovery of relevant and necessary documents adverse to his case. He had not disclosed to Court the truth.

75.  On the question of discovery, the Defendant admitted at trial he had omitted to disclose at least 2 emails prior to trial. This is so despite the Plaintiff’s specific discovery request back in December 2015[108]. The Plaintiff specifically requested discovery of non-redacted correspondence and emails between the EWP and the Defendant and family doctor’s advice. The Defendant swore an affidavit in response to it[109]. In gist, what he said by that affidavit was that he had already disclosed all what he considered to be relevant to the proceedings. At trial, the Defendant explained it was his oversight, misunderstanding of focus, and a misunderstanding that it (the 8 December 2012 email) would have been subject to legal professional privilege because he had provided this email to his counsel. He also said he did not want EWP be affected because such information may touch on EWP.

76.  A closer look of the 2 omitted emails shows the Defendant’s oversight/misjudgement explanation totally unconvincing and utterly unbelievable. Given he is an experienced litigation solicitor, this Court considers his omission deliberate.

The 2 Emails

77.  The first email in question was dated 14 December 2012. It was only disclosed on the 2^nd day of trial[110]. It was an email which EWP confirmed satisfaction of all condition precedent contained in EWP’s offer letter. The second email is a prior email dated 8 December 2012. It was admitted for the first time by the Defendant that it existed when he was cross-examined by Mr Wong SC on the 4^th day of trial, i.e. 12 July 2017. He was then asked on when he provided his referees’ particulars to EWP. The Defendant admitted that by his email of 8 December 2012, he provided the name of his last referee to EWP[111]. This email was never disclosed.

78.  The question of whether on 10 December 2012 when he met SY and LN he had the intention to join EWP was a live and crucial issue. It has all along the Defendant’s case that his contract with EWP a conditional one. As long as these conditions precedent were not satisfied, he would not be bound by it. So it would be important that he should continue in control of his fate by withholding particulars of referees from EWP. Since he eventually joined EWP, the natural question of when he saw fit to provide referees’ particulars to EWP must arise. The disclosure of all contemporaneous documents relevant to this crucial issue obviously helps answer the question. The earlier he took steps to satisfy such conditions, the more apparent he was determined to join. This crucial issue is plain and obvious to the whole world.

79.  The explanation of oversight to this obvious question from the Defendant, who being a solicitor specialized and experienced in litigation, is unbelievable and is to be rejected. Further, this Court finds his further explanation on ground of legal professional privilege an affront to common sense. How a document would become privileged only because it was passed to counsel for advice. If what he said were true, no documents relevant to a litigation would be discoverable for the obvious reason they must have come to the hand of counsel in the course of litigation. His explanation in Court is nothing but an excuse and a futile attempt to explain himself away for his deliberate failure.

80.  Secondly, in his email to EWP dated 18 December 2012, the Defendant wrote to EWP asking for a change of commencement date to 2 January 2013. It is noted that a substantial part of the email was redacted. Towards the end of the email, the non-redacted part starts with “In the circumstances, I would like to explore with you and [redacted] as to whether we can change the joining date to 2 January 2013”[112]. According to the tone, it is reasonable to infer that the Defendant had set out in the redacted part his reasons to bring forward the start date. These reasons are obviously relevant and important to understand why he asked so, and whether it related to his mother, as alleged, or otherwise. However, exactly that part was redacted. The non-disclosure of the redacted part is dubious. Mr Wong’s complaint is valid.

81.  Other examples that he is slippery and not honest can be seen in the following paragraphs.

82.  The Plaintiff grounded their case that the Defendant had failed to take any step or sufficient steps to ask for sufficient costs on account despite obvious evidence indicating Au was in financial problem. The Defendant denied and said he did assess Au’s credit worthiness before acting on the strength of $80,000. It is his case he has sufficient grounds to conclude Au was able to pay his bills.

83.  In this connection the Defendant had this to say in his witness statement[113]:

“… After I had joined the firm, I suggested to Mr Au that due to the complexity of the arguments of the breach of fiduciary duties of directors, he should instruct a law firm to represent him at the 20-day trial in the High Court. In addition, if he had limited budget to engage counsel, I would recommend a junior counsel of high calibre...." (relevant part highlighted)

84.  For obvious reason he was questioned on the meaning of “limited budget”. His explanation was that it meant Au was unwilling to dig into his own pocket and spend millions to instruct lawyers to defend the said High Court Action which arose from his employment even he could afford to do so. He said his understanding was Au was only willing to set aside a small budget for this matter, just like wealthy people setting a budget for purpose of a particular matter. As such he found for Au a very competent junior counsel (then in limited practice) who was willing to take up Au’s case at a global fee of $120,000 for a 20-day High Court trial. He said then he did provide Au an estimate that his total legal costs would be around $360,000, as to $120,000 being counsel’s fee, and $240,000 his firm’s fee. The latter could be broken down into his junior’s fee of $200,000, and his supervising fee of $40,000. In the witness box he explained it was then his plan that one Ms Marie Leung, his junior solicitor charging at the rate of $2,500 an hour, was to attend trial jotting notes. His junior’s fee was roughly estimated to be around $200,000. This he came up before trial.

85.  However, according to the bills issued, he did attend court during most of the 20-day trial. His charging rate was $4,000 an hour. Obviously it caused an escalation of Au’s costs exposure beyond his initial estimate. He was asked why this was the case.

86.  His explanation is this. After the first 2 days of attendance, Au requested him to attend throughout the trial. In light of this change, the Defendant was then asked whether he had requested Au for any top-up of the already insufficient costs on account. His reply was he did ask once[114]after such change.

87.  His answer was in apparent contradiction with his statement in that he said Au had not been asked again to top up. In [59] of his first statement[115] he had this to say:

“The Plaintiff firm issued the 1^st bill of costs to [Au] only 6 September 2012 to demand [Au] for settlement of the amount stated in the 1^st bill. The Plaintiff never chased me and/or [Au] for more and/or sufficient costs on account during the interim period at least from 30 July 2012 to the issuance of the said 1^st bill of costs (no.B121041183) by the Plaintiff.”

88.  His further explanation was that it was the Plaintiff who had never chased after him, but he did chase after Au for additional costs on account.

89.  This Court has a number of observations in relation to his answers.

90.  Firstly, the Defendant’s explanation in paragraph [88] is totally unconvincing. This Court believed had the Defendant really chased after Au for more costs on account, in the light of the Plaintiff’s serious allegation that he failed to make sufficient effort to protect the firm’s interest, he would have stated in details his request to Au in his witness statements. Absolutely nothing about this can be found in any of his 2 statements and 3 affidavits.

91.  Secondly, what he had explained is evasive and unfair. As seen in all the 4 bills, it is the Defendant who is primarily responsible for the conduct of Au’s litigation. All the fees were charged either by him or his junior. No time charge of SY whatsoever was billed. Although he appeared non-committal, he eventually agreed that he, being the introducer, was the primary file handler of cases he referred to the Plaintiff. SY, being the REP, relied heavily on him as primary case handler[116]. In the circumstances, he was the one exactly relied on by the Plaintiff to take care of the Plaintiff’s interest. It would be unfair to say that the Plaintiff did not chase after him and/or Au if he did not tell SY. It was he who was then representing the Plaintiff. In the cross-examination, he did say he had talked to SY about this when bumping into him in office. Again, it had never been mentioned in any of his statements or affidavits. When further challenged, he said he did talk to SY regarding the $80,000 costs on account, and SY replied it was up to him. Again, this sort of “implied consent” particularly from SY had never been mentioned in any of his written statements which reasonable person, not to mentioned experienced litigation lawyer, is expected to detail. Neither was it pleaded in the defence. This, if it were true, might amount to a good or at least a powerful defence. This Court does not believe his evidence in this respect.

92.  Thirdly, in this Court’s judgment, when one talks about a person having a “limited budget” on a particular matter, in its ordinary meaning it means that person does not have much money to spend on that matter. It does not carry the meaning now explained by the Defendant. It is a deliberate twisting of ordinary meaning or doing violence to language. This Court cannot help coming to the conclusion the Defendant was lying as he went along.

93.  Fourthly, this Court has to point out the Defendant’s explanation of “limited budget” a lie when one looked at what he and Au had exchanged at the material time by reference to evidence disclosed by Au in the taxation proceedings. This Court has warned itself that Au had been remarked by the court as dishonest and “was lying at will”[117]. This Court will exercise extra caution when scrutinizing what Au had said.

94.  What this Court will be referring to below are only several text messages quoted by Au as having been sent to him by the Defendant. Snapshots of the telephone screens showing the actual texts were also exhibited by Au[118]. The authenticity of which the Defendant did not seek to challenge. It is because in his re-examination, the Defendant was particularly referred to Au’s 5^th affirmation filed in the taxation proceedings which he had expressly disagreed to. However, he said nothing about Au’s 4^th affirmation referred to in the following paragraph.

95.  In Au’s 4^th affirmation affirmed on 29 July 2013 filed in the taxation application, Au deposed to the facts that he received 4 text messages from the Defendant on 13 July 2013 after the Defendant had found counsel willing to charge at $120,000. The 4 texts are[119]:

“Even counsel is that junior they charge a daily fee of 6000”

“cheapest is 120000”

“Can U take out 80000 at the moment”

“If senior junior counsel must not be less than 300000”

(my emphasis)

96.  First, on a balance, I accepted the Defendant did send out the aforesaid messages to Au. Second, from the tone of the above text messages, it is apparent the Defendant realized Au was then in financial difficulty, otherwise he would not have added the words “at the moment” when asking the Defendant to put up $80,000. If what the Defendant had now asserted of “limited budget” were true, his concern and emphasis then should have been on the amount of money to be put up rather than the time of its putting up which was indicative of an inability to coming up the fund then. Had the Defendant truly believed Au had set aside a specified though small budget for the unwarranted litigation, this Court believed the Defendant would have asked Au in a different way, and in any event not the way he did now.

97.  Another example of the Defendant attempting to shift liability is this. He asserted in his pleadings that by issuing bill no.3, the Plaintiff agreed to continue acting for Au and therefore expecting Au would settle the bills, see: [13] of the Amended Defence verified by his statement of truth[120]. Accordingly, his case is that it was the Plaintiff, not himself, who elected to continue acting for Au, and any loss arising therefrom not his responsibility.

98.  In cross-examination, he agreed that it was he who prepared the bills for SY to sign; and that the bill no.3 of $129,347 basically covered counsel’s fee note of $120,000. The rest were minor attendances in October 2012[121] such as telephone conversation, writing emails and considering the engrossed Deed of Settlement. Bill no. 3 therefore covered expenses which the Defendant had already committed the Plaintiff to pay in July 2012. This part of his pleadings and assertions are most unfair, misleading and a fallacious argument with perverted logic.

99.  An example of the Defendant trying to be vague is the exact time he was advised against taking his mother to Canada.

100.  In his pleadings, the Defendant said in early December 2012, the treating doctor advised his mother against taking long haul flight to Canada[122]. He did not particularly plead any relationship between the decision made at the meeting on 10 December 2012 and the doctor’s advice. In his witness statement, he elaborated a bit more. He said after the final date for leaving the Plaintiff was fixed at the meeting (obviously suggesting 10 December 2012), he sought advice from Dr Joyce Chan. However, he did not spell out clearly whether it was on 10 December 2012 that he asked Dr Chan in his witness statement. He only said “forthwith”[123]. Originally, it appeared he sought advice from Dr Chan when his mother returned for follow-up - 17 December 2012[124]. It was because he discovered as relevant the payment slip bearing this date apparently to suggest this was the relevant date.

101.  At trial, on cross-examination he disclosed for the first time that it was after the meeting with the Plaintiff in the morning of 10 December 2010 that he immediately called Dr Chan by phone. He said his mind on 10 December 2012 was to go to Canada, and that explained why, stressed by the Defendant, he immediately called the doctor after his last date with the Plaintiff was fixed[125]. He received the negative advice over the phone. The same advice was repeated at the follow-up treatment on 17 December 2012. After discussing with his partner and on the next day, i.e. 18 December 2012, he emailed EWP to confirm the start date be brought early to 2 January 2013[126].

102.  The Defendant was asked on why he could not be more specific about the time he sought advice from Dr Chan if he had already got the above dates clear and exact in his mind. His answer was not direct. So far as could be discerned, his explanation seemed to be that it was not until after knowing his last date with the Plaintiff on 10 December 2012 that he immediately sought advice from Dr Chan. It was only after confirming with Dr Chan at the follow-up at St Teresa Hospital on 17 December 2012 that he called EWP to bring forward his start date.

103.  His answer is unsatisfactory. As said above, towards the end of cross-examination it was revealed he did in fact send out on 8 December 2012 particulars of his last referee, thus satisfying all the conditions precedent of EWP’s employment and committing himself to EWP. Is it not his case that he was determined to bring his mother to Canada for treatment and therefore he had deliberately withheld sending out referee’s particulars in order not to committing himself to EWP. He was asked why then he did not see fit to make the enquiry with Dr Chan before he released such particulars on 8 December 2012. If Dr Chan’s advice was his mother could go, there was simply no need to send over reference to EWP at all, thus avoiding the risk of being bound, and the hassle of finding excuses to getting out. Further, the enquiry was as simple as making a phone call, as he did on 10 December 2012. His answer was that it did not occur to him he should do so that way.

104.  This Court considers the Defendant’s above explanation totally unconvincing and inconsistent with his own case. Obviously he was trying to be vague and non-committal on any exact date. At the same time, he withheld the crucial facts relating to his dealings with EWP. All moves were with a view to gaining as many leeway as possible. Had he been so convicted to bring his mother to Canada as alleged, this Court believes he should have at least asked Dr Chan earlier about the suitability of his mother travelling before committing himself to EWP.

105.  The above are not exhaustive examples of the unreliability of the Defendant’s evidence. He is obviously an untruthful, slippery and dishonest witness. If there is contradictory primary evidence given by the parties, this Court will resolve the conflict against the Defendant, unless there are good reasons to the otherwise.

Discussion

The Breach of Duties Claim

106.  It is the parties’ common ground that the Defendant, being an employee of the Plaintiff, owes the Plaintiff the following duties:

i) to exercise reasonable care and skill in handling the  Plaintiff’s case[127]; and

ii) to act in the best interest of the Plaintiff in the course  of his employment[128].

107.  The Defendant denied being in the position of a fiduciary and owed no equitable duties to the Plaintiff. As stated above, counsel agreed that the label of “equitable duties” is immaterial. I respectfully agree. It is the substance and nature of duties owed to the Plaintiff which matter.

108.  In Wong Sui Kwan v Cheong Pui Fan[129], I considered a consultant with his particular terms of agreement with the firm not a fiduciary relying on the principles distilled from the Australian High Court decision of Hospital Products Ltd v United States Surgical Corporation and Others[130]. Whether a party is a fiduciary cannot be decided by the job title but can only be determined by reference to the nature and character of the particular relationship in question. Hospital Products Ltd (supra) was approved in the Court of Final Appeal in Active Profit Ltd v Nissho Iwai Hong Kong Corporation Ltd & Others[131]. In [168] of Wong Sui Kwan, I summarized the following 4 factors for considering whether a fiduciary relationship arose. I venture to repeat them below with some elaboration relying also on Hospital Products Ltd (supra):

i) whether the relationship is one of confidence and trust   which may be abused by the party entrusted with such  duty: -

 When the nature of the relationship is such that    confidence and trust are reposed on a party by the entrusting party, who is in a position of disadvantage  or vulnerability and therefore had to rely upon the party entrusted for protection or for looking after of  his interest, such relationship is very likely to give rise to a fiduciary relationship.

ii) whether there is inequality of bargaining power: -

 Such inequality needs be considered but it alone is insufficient to create a fiduciary relation in every case.

 iii)  whether the relationship is purely commercial: -

 When the parties’ relationship is of a pure commercial   kind, dealing at arm’s length and on equal footing, a    fiduciary relationship is less likely to arise.

iv)   whether there is reliance by one party on another to  procure the best available terms in respect of a job  entrusted to the latter: -

 The fact that there is a duty to perform cannot in every   case create a fiduciary obligation but it was held in some cases when a party relying on the defendant    solely for negotiation of terms it does give rise to a  fiduciary relationship.

109.  The 1^st and the 4^th considerations in the preceding paragraph are of particular relevance to the present case.

110.  In the present case, the Plaintiff was at the material time looking for a senior litigation lawyer. As evidenced by his resume, the Defendant held himself out to the Plaintiff as a senior litigation lawyer with 15 years’ experience in a wide spectrum of cases, particularly in complex commercial litigation involving listed companies[132]. Prior to joining the Plaintiff, he had been a senior consultant for about 3 years and salaried partner for about 5 years in 2 firms. He was engaged by the Plaintiff to do what he held himself out to be specializing.

111.  The Defendant, though internally and by reason of the employment contract, was engaged as an employee, he was held out to the whole world as a partner of the firm, and most importantly, with his express consent. That explained why his name appeared in the statutory Business Registration of the Plaintiff, and his appointment and removal required statutory notification to the Inland Revenue Department[133]. That may explain, perhaps, why he was required to sign banking facilities letters when the Plaintiff as a firm was a borrower. As a held out partner, it is within the Defendant’s scope of duties (a finding of this Court) to independently handle the Plaintiff’s litigation clients, particularly those introduced by him to the firm, see: clauses 4 & 7 of his employment letter[134]. It was reflected in the undisputed evidence (and if the Defendant were to dispute such evidence, it is the finding of this Court) that it is he who assessed the complexity of Au’s case; he searched and identified suitable counsel to be engaged for Au; he came up with an estimate of Au’s fee; he negotiated and decided on the amount of costs on account to be put up by Au without reference to the REP; he (assisted by his junior chosen by him) had the conduct of the entire litigation without reference to SY or LN as reflected in the time costs charged under the bills; and he alone decided when to issue bills to Au. It is also he alone, as an experienced practising professional who analysed the merit of Au’s case and advised him of his exposure, both legally and financially. SY had never been involved in the above.

112.  On the other hand, it is also he alone who knew then the extent of the Plaintiff’s commitment to Au, in terms of manpower and financial exposure such as counsel fee and other disbursements, and had committed the firm to it. That is reflected in the undisputed evidence that he alone decided who to handle and to accompany Au throughout the trial. It was not his evidence that prior to asking for costs on account he had consulted or discussed the same with SY or LN. Although at trial the Defendant did say he did tell SY about the progress of the case. This Court considers such allegation misleading because he was unable to particularize when and how. What he said in his evidence is that he told SY only when bumping into him in office. Again this Court does not believe him and accepts SY’s evidence in preference to his. This Court believes he enjoyed a very high degree of autonomy in handling clients on the Plaintiff’s behalf, both professionally and commercially in negotiating terms between them and thus committing the Plaintiff’s resources to such clients.

113.  The Defendant raised a lot of allegations suggesting LN and SY did retain a lot of control on Au’s case. This Court disagrees and considers it evasive. As said above, this Court accepts the Plaintiff had delegated to the Defendant as a Plaintiff’s partner substantial professional and commercial judgment in dealing with litigation clients introduced by the Defendant. In respect of cases handled by the Defendant or at least in respect of Au’s case, the role played by SY and LN was minimal, mainly restricted to chasing after outstanding payment. They relied on senior and trusted staffs like the Defendant, to the extent they held them out as partners, to deal with their clients. Given the Defendant’s held out experience and credential, the Plaintiff is not negligent in such delegation.

114.  There had been mentioning of a 3E system in the firm. This Court accepts the Plaintiff’s evidence that such system was used to monitor earnings of fee earners but not anything alarming in a file. This Court accepts that in 2012 the Plaintiff had opened about 250 litigation files. They were additional to those existing on-going files, and therefore this Court accepts that as a matter of agreement and mutually accepted practice between the parties, the Defendant was relied upon solely to decide on whether to accept a retainer, and if so on what terms and thus committing the Plaintiff’s resources, such as junior solicitors to deal with these cases.

115.  In my judgment, the Defendant was placed in a position of trust and responsibility by the Plaintiff. It follows in my judgment that, in carrying out his duties as a salaried partner working independent of the REP whose role was only nominal, the Defendant owed fiduciary duties to the Plaintiff to, inter alia, be loyal, act in good faith and in the best interest of the Plaintiff in the course of his employment. The duty of loyalty required the Defendant to protect the Plaintiff’s interest in respect of matters confided to him in the course of service. By reason of his fiduciary duty he has to act the best he can to protect such interest.

116.  There are overlaps between duties owed by a fiduciary to his principal and those by an employee to his employer. The duty to act for the best interest of the Plaintiff is the common one. That encompasses an obligation to act the best he can for the protecting the Plaintiff’s best interest. The Defendant admitted this aspect of duty owed to the Plaintiff.

117.  After reading the closing submission of Mr Wong SC, it is fair to say the Plaintiff is satisfied that the Defendant’s breaches being complained of fall within the scope of the aforesaid admitted duties[135]. The Plaintiff’s case is premised on the basis that the Defendant was in breach of these admitted duties. Although apparently, apart from the common duties admitted, it will be unnecessary to refer to other core fiduciary duties, it is this Court ruling that the Defendant stands in the position of a fiduciary vis-à-vis the Plaintiff as pleaded. In Cobbetts LLP and another v Hodge[136], the English court came to a similar view that a salaried partner stood in a fiduciary relation with his firm.

Whether any Assessment of Au’s Credit Worthiness

118.  It has been stated in The Hong Kong Solicitor’s Guide (“Guide”) Principle 4.01 that a solicitor has to advise his client of an estimate of his costs to be incurred, what resources are available to his client, and whether the likely outcome will justify the expenses or the risk involved. After that assessment, then comes how that payment is to be paid to the firm and if counsel is to be involved, how counsel’s fee is to be settled. The stress on counsel’s fee is obvious. It is because solicitors will be personally liable to counsel’s fee as a matter of professional conduct. Principles 4.7 and 12.04 stipulate:

“(4.7) A solicitor may, at the outset of the retainer, requires his client to make a payment or payments on account of profit costs and disbursements to be incurred.”

(12.04) In the absence of reasonable excuse a solicitor is personally liable as a matter of professional conduct for the payment of a barrister’s proper fees. Failure to obtain funds on account of a barrister’s fees shall not of itself constitute reasonable excuse.”

119.  It is the Defendant’s case that he is well aware of these requirements. However, his case, in gist, is this. There is no hard and fast rule that as a matter of professional requirement or the firm’s policy the Plaintiff’s clients should pay costs on account, or sufficient costs on account to cover counsel’s fees and/or profit costs before accepting the retainer. It depended on circumstances. In order to protect the Plaintiff’s interest, he had already conducted a credit worthiness assessment of Au, and considered that Au would be ready, willing and able to settle the bills when they fell due or Au was asked to do so.

120.  For reasons more particularly elaborated from [82] to [96] above, this Court believes at the time the Defendant agreed to take on Au’s case, he in fact knew that the Au was in financial difficulties meeting his legal fee, otherwise he would not have formed the view that Au had a limited budget. If not for his knowledge of Au’s financial difficulty, he would not have asked Au whether he could provide the money at the moment. All these indicated that he was fully aware of Au’s problem with paying fees. Further, he was well aware of Au having been acting in person for the preceding 2 years; already entangled in a number of on-going litigations; had been ousted from his employment in the listed company as CEO since about 2009 and the claim amount was huge[137]. These were indicative of a person having problem paying legal fees. The risk of Au defaulting payment was a real and apparent one. It was particularly so because if he was defeated after trial, the substantial judgment against Au would have a devastating effect on him financially, rendering payment of costs difficult if not impossible. This Court believes when agreeing to act for Au, it is manifestly clear to the Defendant there was a very real risk Au would be unable to settle his legal fees. He solely relied on his trust on Au.

121.  This Court accepts asking for costs on accounts not a must as a matter of professional practice. This Court also accepts that asking for costs on account not mandatory as a matter of the Plaintiff’s policy. It depends on what sort of clients the Plaintiff was dealing with. The Defendant alleged the Plaintiff was in financial difficulty, and that was why it needed to raise loan from bank and financial institutions. It was keen to accept retainers and therefore not strictly asking for costs on accounts in order to attract clients.

122.  After hearing explanation from SY and LN, this Court accepts the fact that the Plaintiff had account receivables of $20 million not indicative of financial difficulty for a law firm of the Plaintiff’s size, given at the same time they had a monthly billing of $10 to $12 million. Further, given a firm with annual payroll of $50 to $65 million and annual rental of $15 million (facts accepted by this Court), this Court accepts applying for banking facilities useful to keep running of the firm smoothly. This Court does not believe because of any financial problem, the Plaintiff chose to be more relaxed in asking for costs on account. It makes perfect commercial sense not to ask costs on account from financial institutions, liquidators, Law Society, etc for the obvious reason they were apparently financially strong, and the chance of default on account of financial difficulty slim. However, in Au’s case, the Defendant knew Au was financially tight, and the Court cannot see how acting for him with costs on account even insufficient to cover counsel’s fee can, as suggested by the Defendant, help the Plaintiff’s business.

123.  In light of the Defendant’s knowledge of Au’s limited financial capability (as found by this Court) and his duty to protect the Plaintiff’s best interest, the next question is whether there is/are any other valid reason(s) held by the Defendant that Au could satisfy the Plaintiff’s bills.

124.  When cross-examined along the line what made him believe Au could settle or have the financial ability to settle the Plaintiff’s costs such that he decided not to ask for more costs on account, the Defendant justified by saying:

i)  he knew of Au’s background, namely a Guangzhou  City Political Consultative Committee member and appeared to have a lot of connection suggesting it  would be unlikely for well-known people who had promised to pay not to pay;

ii) he had known Au for about 3 years before taking up  the Au’s Cases;

iii) Au appeared financially capable in that he:

a) drove in a luxurious Mercedes;

b) had once dug into his own pocket to pay office rental  at $100,000 per month when he was engaged in the boardroom fight;

c) earned about $70,000 a month before leaving  Grand Field;

d) would be earning about RMB50,000 to 60,000 a   month in the Mainland after the Settlement   Agreement was signed;

e)  had purchased a property in Belvedere Garden  in names of his children;

f) children had grown up and had paid him on a  monthly basis; and

g) had a property in Dongguan; and

iv)  he had promised to pay and it did not occur to him Au    could not pay.

125.  In relation to the above, the Court has a number of observations.

126.  First, the above information about Au is rather superficial. The Defendant admitted he only knew Au in 2009 when he was then acting for Grand View. At that time, Au was already involved in the alleged boardroom fight. He was later embroiled in litigation. It was undisputed Au ceased to be director the same year on 9 November. So he was unsure as to whether Au had eventually been reimbursed before he left the company; and whether the Mercedes was a company car for Au’s use when Au was in its employ. In fact, when Au was still the CEO of Grand View, he knew Au’s litigation costs were paid by the company. Further, it will be difficult, if not impossible, for anyone with experience in life, to come to any meaningful assessment of one’s ability to pay legal fee without knowing one’s liabilities or regular expenses. In the Court’s judgment, a monthly income of HK$70,000 or RMB 60,000 would be regarded as a modest income in the metropolitan city like Hong Kong where living expenses, particularly rental, are among the highest in the world.

127.  Second, most of the information above, particularly the matters referred to in [124(iii)] above, had never been mentioned in any of his prior statements/affidavits. He only blurted them out in the witness box. It has to be remembered that from the outset, it has been one of the Plaintiff’s main thrusts that the Defendant had failed to assess Au’s credit worthiness. Had these matters been honestly taken on board by the Defendant when asking Au to put up only $80,000 while exposing the Plaintiff to costs of at least $360,000 (see [84] above), this Court believes the Defendant would have mentioned them in details in his statements/affidavits. None was mentioned there.

128.  Third, the Defendant had exhibited news articles apparently showing Au a well-known figure and businessman associated with the PRC. I have read these articles[138]. It cannot really help the Defendant in the sense he was financially capable. These articles were published in the PRC. They simply showed that Au was speaking on a number of issues as a chairman of a carpark association and holder of public office. He might be associated with some rich and famous businessmen but definitely not indicative of Au’s financial capability. Au might be known to Guangzhou, but apparently not to Hong Kong. There is no way to compare Au to the sort of institutional clients such as bank, insurers, liquidators, Law Society and big name companies referred to by SY and LN who were financially sound. Although being financially capable does not mean a client will settle his bill, financially unsoundness on the other hand will definitely put the Plaintiff at the risk of their bills unpaid.

129.  Fourth, as a matter of common sense as seen from media, being well known does not mean one is financially sound. This point cannot help the Defendant because he was fully aware Au was having a limited budget.

130.  Taking his evidence in its entirety, this Court does not believe there is any rational reason based on which the Defendant could come to the decision he made now. Most importantly, given these explanations were absent from all his witness statements, this Court does not believe the Defendant had ever genuinely considered the alleged reasons or weighed them at all when he asked $80,000 from Au. These reasons were after-invented ones for the purpose of defending the claims.

131.  The conclusion of this Court is that he, perhaps for the purpose of bringing in clients with a view to gaining commission, or purpose only known to him, risked accepting Au’s retainer without taking at all or sufficiently taking on board the Plaintiff’s interest. When Au’s doubtful ability to pay legal fee was so apparent to him and he was aware of it, he simply failed to take step to protect the Plaintiff’s costs exposure. In fact, when decided to accompany Au throughout the entire 20-day trial, the Plaintiff’s revised profit costs were increased to $400,000[139], making the Plaintiff’s revised costs exposure as high as $520,000[140]. He did nothing to protect the Plaintiff’s initial and subsequent costs exposure. He left payment of bills to his hasty and ungrounded trust on Au. It is a breach of duties on the Defendant’s part to protect the best interest of the Plaintiff.

132.  Objectively, this Court considers he failed to exercise reasonable care and skill in asking for costs on account, and is, in my judgment, negligence. In addition, he also failed to act in good faith to consider what is in the best interest of the Plaintiff because this Court did not believe he honestly believe $80,000 is sufficient to protect the Plaintiff’s interest. He simply did not address his mind to the Plaintiff’s interest when asking Au for the costs on account. He was then only concerned with taking up this client. It is a hasty decision to bring in high risk client without properly addressing his mind to the risk involved. He entirely left it to the mere hope that Au would settle the costs eventually despite the fact he was sure Au had a “limited budget”. Alternatively, no reasonable solicitors would have come to the conclusion he did given his knowledge of Au’s financial condition at the time of the retainer.

Lien Over the Settlement Cheque

133.  Lien is a right of a person to retain the property of another which is rightfully in his possession as security for the performance of a payment obligation, e.g. debt, until the said obligation is satisfied. It is settled principle that a solicitor can exercise a lien over his client’s papers in his possession until his fee in respect of work done on his client’s instruction has been satisfied, see: Li Fu Yat Tso v George YC Mok & Co[141]. The Plaintiff asserted the Defendant should try to exercise lien on the settlement cheque of $330,000 in order to protect their interest. The Defendant said it was quite impossible as a matter of law and of reality.

134.  In the Court’s judgment, the Defendant’s submission on law is unarguable and is rejected. The fact that it was a cheque issued by Grand Field to Au personally is no bar to the exercise of the lien. It is exactly a document belonging to Au that lawfully came to the Plaintiff’s possession. The Plaintiff was entitled to exercise a lien over it as a matter of law. It was not in dispute when the cheque of $330,000 made payable to Au was received, Au owed the Plaintiff a total sum of $488,385.5, see: [20] above. The right to exercise the lien had arisen.

135.  Further, it is the Defendant’s case that Au would be receiving a settlement sum “… of $330,000 from the other side’s solicitors to settle [the] outstanding bill on or before 15 November 2012…. He [i.e. Au] said he will settle the first bill[142] in full no later than 15 November 2012]”[143]. From what the Defendant had said, this Court did not believe asking Au to endorse over the cheque would antagonize him. Is it not this was what exactly Au had promised him to do, unless the Defendant was telling lie when writing his email to SY. At trial, the Defendant expressly confirmed that Au told him to settle the bill with the settlement sum[144]. So this Court believes it would not be a surprise to Au had he made such request. There was also no dispute the said cheque could be indorsed over to the Plaintiff as a matter of law. Had the Defendant exercised the lien on the Plaintiff’s behalf, or at least saw fit to ask Au, this Court believes the Plaintiff stood a better chance to recoup the entire amount of the cheque instead of only a sum of $150,000. Upon repeated cross-examination, the Defendant agreed eventually exercise of a lien on the cheque an option, though he insisted it not the best option[145]. In the Court’s view, at least Au’s position could be known after the Defendant had made the request of using the cheque for payment of fee. The Plaintiff could then take prompt action to protect its interest if a negative response was shown.

136.  It was not in dispute the Defendant had never asked. In light of this Court’s finding he was fully aware of Au being financially tight, he should have made use of this opportunity to exercise, or at least to attempt to exercise, the lien over the said cheque. He breached his duty by failing to take steps to protect the best interest of the Plaintiff.

Contributory Negligence

137.  It is submitted on the Defendant’s behalf if the Defendant was held liable, the Plaintiff should be contributory liable as well. It was because the Plaintiff ought to have known Au’s costs on account insufficient, e.g. SY being the REP and there was the 3E system but they made no complaint. As stated above, these allegations have been rejected. The allegation against SY as regards his role unfair. It is the Defendant who had been entrusted with the duties to protect the Plaintiff’s interest when dealing with the Plaintiff’s clients. When bill no.1 was issued, the 20-day trial was already over. Almost all costs incurred for Au had already been incurred. It was perhaps because counsel had not yet delivered his fee note that the Defendant did not cover counsel’s fee in the first 2 bills[146]. Any decision to cease acting for Au could not help contain any loss. It is neither unreasonable nor negligent on the part of the Plaintiff to entrust such duties to the Defendant, given his seniority and experience held out by him. The contention of contributory negligence must fail.

Requirement of Bad Faith

138.  It is the Defendant’s contention that there is a requirement of bad faith in order for a claim for breach of duty to act in the Plaintiff’s best interest to succeed.

139.  In this Court’s judgment, it is wrong. The Plaintiff’s case, as understood from the pleadings and submission, had never premised on bad faith on the part of the Defendant. The absence of bad faith, in my judgment, does not mean the Plaintiff could never prove a breach of duty claim. In this connection, this Court shares Mr Wong’s submission that as a matter of principle, a negligence act is sufficient to constitute a breach of duty to act in the best interest of another party. There is no need for the plaintiff to show dishonesty or mala fides, see: Keep Point Development Ltd v Chan Chi Yim & Others[147].

Boland Test

140.  It is also contended on the Defendant’s behalf that the test expounded in Bolam v Friern Hospital Management Committee[148] is applicable. The test is that the Defendant should be assessed by reference to the standard of the ordinary skilled man exercising and professing to have that special skill; and it is sufficient if he exercises the ordinary skill of an ordinary competent man exercising that particular art. The Defendant is not negligent if he was acting in accordance with a practice accepted as proper by a responsible body of professional man (and in the present case, the solicitors), and merely because there is a body of opinion who would take a contrary view. It is not good enough if with the benefit of hindsight, the Defendant should have adopted the best or better courses. Further, the absence of opinions from a body of responsible solicitors is fatal to the Plaintiff’s case.

141.  In this Court’s judgment, the Boland test is normally applicable to the solicitor and client relationship in which the latter was alleging the former’s professional standard falling short of a standard normally expected of a reasonable competent solicitor. As said above, the Plaintiff’s main case here is breach of duty on the Defendant’s part to act in the best interest of the Plaintiff. Bolam is therefore not applicable.

142.  Even assuming Bolam were applicable, for practice of lawyers, it is unnecessary for the Plaintiff to call expert evidence to establish an applicable standard, see: Jackson & Powell on Professional Liability (8^th ed), [6-008] to [6-010]. Further, the learned author also considered breach of duty, unless touching on technical or professional standards, very often can be determined as a matter of common sense. The learned author has this to say in the said paragraphs:

“6-008: In two categories of cases, supportive expert evidence is not necessary for a finding of negligence. The first category is solicitors’ negligence cases. Expert evidence is rarely admitted upon the question whether a solicitor has discharged his duty of skill and care. The rationale appears to be that the courts themselves possess the necessary professional expertise to decide the question. …

6-009: The second category of cases … are those cases in which the issue of breach of duty is not decided on the application of the Bolam test in its ordinary form. Three types of case make up this category:

6-010: (1) …

(2) …

(3) Cases in which it is not necessary to apply any particular professional expertise in order to decide whether the defendant has failed to exercise the skill and care expected of an ordinary member of his profession. … In the architect case of Royal Brompton Hospital NHS Trust v Hammond (No.7), Judge Seymour QC put it this way:

‘ … if I am satisfied on the evidence that an obvious mistake was made which would not have been made by any careful person of whatever profession, or, indeed, of none, then I can find that the person who made that mistake was negligent….’

… A detailed discussion of the role of expert evidence in professional negligence claims, particularly claims against construction professionals, is contained in the judgment of Judge Llyod QC in Royal Brompton Hospital NHS Trust v Hammond (No.9). The judge commented that expert evidence may be needed to assist the court to assess the evidence, for example, by indicating which factors or technical considerations would influence the judgment of a professional person, in cases where the negligence alleged is not a failure to follow an established professional practice. Otherwise, in such cases, expert evidence is not indispensable. The issue of breach of duty may be determined as a matter of common sense. Alternatively, the court may itself possess the necessary expertise to assess the evidence; …”

(Emphasis added)

Relief

143.  It is this Court’s finding that the Defendant was well aware of Au’s limitation financially to settle legal costs. It is also the finding of this Court that he simply failed to do any or sufficiently do credit worthiness assessment of Au because had he done or addressed his mind to the same he would have come to a conclusion that he should get more costs on account from Au, or simply should not have acted for him at all. Should he have done the assessment, there would never have any outstanding fee; and the recovery fee would not have been incurred. The causal link is clear and has been established.

144.  This Court is satisfied the Defendant is liable to the Plaintiff for the breach of duties’ claim in the sum of $537,663.5[149].

Misrepresentation Claim

145.  The learned author of Misrepresentation, Mistake and Non-disclosure (4^th ed) John Cartwright has this to say at para 3.02 regarding elements for misrepresentation claims:

“…The remedies for misrepresentation generally define actionable statements using such concepts as whether the statement was false, and was sufficiently clear to be actionable; whether the claimant was entitled in circumstances to take the statement seriously and therefore to rely on it; whether he did in fact rely on it and suffer a consequence against which the remedy in question is designed to protect. …”

(Emphasis added)

146.  It is the Plaintiff’s case that the misrepresentations were fraudulently and/or recklessly and/or negligently made, see: [33] of the Statement of Claim[150]. The Plaintiff was induced by and in fact acting on the representations which are false when cutting short the notice by 1½ months and as a result, suffered loss see: [31] of the Statement of Claim[151]. In relation to the elements of fraudulent/reckless and reliance, Mr Wong SC referred this Court to the principles set out Cai Yi Rui v Chateau Cellar Ltd[152] and Glory Link Investments Ltd v Young Pui York[153] and Zurich Insurance Co plc v Hayward[154].

147.  Mr Wong SC also relies on Spencer Bower & Handley: Actionable Misrepresentation (5^th ed)[155] in support of his proposition that half-truth, i.e. partial representations without disclosing all material information, constitute misrepresentation. In [4-16] to [4-18], the learned author states:

“4.16 Silence may be misrepresentation if what is stated is false and qualifying facts are withheld …

4.17 A representor must not add anything which makes false what would otherwise have been true; or omit anything required to render true what would otherwise be false. A half truth may be a misrepresentation. To state a thing which is true only with qualifications known to, but withheld by the representor, is to say something which is false. Such a statement is a ‘lie’, in a most dangerous and insidious form. ‘If a man’ said Chambre J, ‘professing to answer a question, selects those facts only which are likely to give a credit to the person of whom he speaks, and keep back the rest, he is a more artful knave than he who tells a direct falsehood….

4.18   A statement is not a misrepresentation merely because it is incomplete, … Lord Cairns referred in the later case to ‘such a partial and fragmentary statement of fact, as that the withholding of that which is not stated makes that which is stated absolutely false.’ …”

(Emphasis added by me)

148.  From the above, Mr Wong SC has helpfully summarized that in order for the Plaintiff to succeed in their misrepresentation claim, the Plaintiff has to establish the following[156]:

i)  there was a representation by the Defendant;

ii)   representation was false;

iii)  the Plaintiff relied on the representation;

iv)  the Plaintiff suffered loss as a result of the misrepresentation;

v) for fraudulent misrepresentation, the Plaintiff has to show that additionally, the Defendant knew the same was false at the time of representation; and for  reckless misrepresentation, the Defendant was  reckless as to whether the same was false;

vi)  as far as reliance is concerned, it is sufficient for the Plaintiff to prove the representations were a contributing cause; and

vii)  in case of half-truth, i.e. partial representation without disclosing all material information constitutes misrepresentation.

149.  Mr Wong SC has submitted, and indeed this Court also considers it fair to say, that the Defendant has no objection to the above propositions as revealed in the submission lodged on his behalf. Further, this Court accepted Mr Wong’s proposition that the reliance of half-true being a misrepresentation needs not be pleaded provided all material facts had been stated, see: Lee  Yuk Shing v Dianoor International Limited (In Liquidation)[157], and Suen Shu Tai v Tam Fung Tai[158]. This Court is satisfied that all relevant facts sought to be relied on by the Plaintiff have basically been pleaded and properly set out in evidence. The Defendant should know what case he was exactly to face. 

150.  The question is therefore whether the Plaintiff has satisfied the requirements and thus the Defendant was held liable to the Plaintiff for the damages claimed.

Some Finding of Facts

151.  There is no dispute that the Defendant had never disclosed to the Plaintiff that he would be joining EWP after he left the Plaintiff’s employ. The Defendant had also confirmed during cross-examination (see [38(ix)] above) that his reply email of 7 December 2012[159] was concerned with whether or not he would remain with the Plaintiff as a part-time consultant. It did not concern with cutting short his service. This Court believes that when SY suggested “Let’s meet next Monday [i.e. 10 December 2012] to finalise this as we need to prepare next year budget” in his earlier email, he was concerned solely with manpower planning, practising certificates, insurance, etc, as explained by him at trial. The “this” in his email referred therefore to whether to join as part-time consultant after leaving the Plaintiff’s employ rather than early termination by end of year. If the Plaintiff still wanted to engage Defendant, cutting budget is, on a balance, less likely. It is also the Court’s view that the Defendant knew exactly what SY was then talking about. He replied in the context, putting up various excuses such as part-time job and tax reason to decline the Plaintiff. By the same email, he told the Plaintiff his intention to cut his tie with Hong Kong, suggesting to leave Hong Kong for good, presumably taking his mother with him.

152.  So as at 7 December 2012, this Court does not believe the Plaintiff was thinking of cutting the Defendant’s last day to end of 2012. The Plaintiff was then expecting to meet the Defendant face to face on 10 December 2012 to sort out the matter of part-time consultant. This is the context of “prepare next year budget”, which was not something arose out of the context of financial difficulty. This Court believes, as testified by LN, the Plaintiff wanted the Defendant to confirm before year end as they needed to make arrangement for practising certificates and insurance for the coming year.

153.  It is also this Court’s finding that on 8 December 2012, the Defendant was determined to join EWP by providing them with the last referee’s particulars[160]. It is because such move would commit the Defendant to the EWP by satisfying all conditions precedent which he alleged he would avoid to do for the sake of his mother. This Court has considered the Defendant’s explanation, but was unable to accept it[161]. Since the Defendant said he was so determined bringing his mother to Canada for treatment and convalescence as asserted by him, this Court believes he should have already obtained the necessary advice from his mother’s treating doctor before providing such particulars to EWP. This is the most natural and reasonable step to take, and could be done by a simple phone call (as the Defendant had alleged he had done but on 10 December 2012 after the meeting). It saved his trouble of explaining to EWP if he needed to back out in case his mother was assessed fit to travel. His explanation that it did not occur to him to ask Dr Chan before 8 December 2012 is plainly and utterly implausible, given his evidence that his mother was his prime and only concern. Further, this Court will definitely draw an adverse inference against the him as there was deliberate non-disclosure of relevant and crucial documents which, if disclosed, would seriously undermine his case.

154.  Alternatively, if he had ever had the idea of moving to Canada and bringing his mother there for treatment, this Court believes the Defendant would have already dropped the idea by 8 December 2012 the latest, the date he sent over the last referee’s particulars to EWP.

155.  On a balance, this Court does not believe that he was in 2 minds as at 10 December 2012 when he met SY and LN. He was then very sure to join EWP. Neither bringing his mother to Canada by himself, nor moving to Canada as alleged were his options when he met SY/LN on 10 December 2012.

156.  There is serious dispute as to whether at the meeting on 10 December 2012, it was SY/LN who offered to cut short the notice period, or it was the Defendant who requested to cut it short. On a balance, this Court believes it was the Defendant who asked the Plaintiff for an early release by representing to SY/LN at the said meeting that he would take his mother to Canada for treatment; stay in Canada after his resignation; had found part-time jobs there; would refer cases to the Plaintiff; and would like to cut tie totally with Hong Kong for tax reason. It has to be remembered as at that date, the parties were still on good terms. The Plaintiff still liked and treasured the Defendant otherwise they would not have offered him the post of a part-time consultant after his resignation. This Court accepts LN’s evidence that normally if solicitors resigned, they would not normally invite them to stay because most of them would have found a new or better offer. It is only because of the Defendant’s special condition that they offered to retain him in another capacity.

157.  On the other hand, this Court believes the Defendant knew that in the eyes of SY/LN, he still had their favour then. He expected, given his mother’s serious medical condition, SY/LN would be sympathetic and very accommodating. This Court believes the Defendant was ready to, and did in fact use his mother’s medical conditions to earn sympathy from the Plaintiff and asked for an early release. This Court does not rule out by bringing forward the last date to end of the year, the Plaintiff might gain some administrative convenience. However, this Court does not believe it was an operating factor at all. Further, by offering him the post as a part-time consultant, the Defendant valued the service of the Defendant. It would be illogical that when the Defendant declined the offer they would turn around and ask him to leave earlier. It is this Court’s finding that the notice was cut short by the Plaintiff upon the Defendant’s request and apparently with a view to doing the Defendant a favour. As said by the Defendant in cross-examination, he would be prepared to use the same excuse to back out from EWP’s contract, if needed be when circumstances arise. So likewise this Court believes he would use this excuse vis-à-vis the Plaintiff to suit his purpose.

158.  This Court believes the Defendant knew that had he disclosed his intention to join EWP after his resignation, the Plaintiff would not have agreed to cut short his notice, unless the Defendant paid wages in lieu of notice to them.

159.  In Court, he said he immediately made a phone call to Dr Chan after the meeting with SY/LN on 10 December 2012. This part of his evidence is unbelievable. As stated above, the Defendant had never mentioned his telephone discussion with Dr Chan in any of his written statements. If bringing his mother to Canada for treatment his sole or determining consideration, this Court believes he should have stated in his statements in details this crucial phone call which made him scrap a plan that he and his partner had whole-heartedly worked towards for the past 6 months. Omission of this crucial part of his evidence from his statement is totally unbelievable.

160.  Though the Defendant might have asked Dr Chan whether her mother was fit to travel the long journey to Canada on 18 December 2012, this Court does not believe it was material to his joining of EWP, because as analysed above, he had already made up his mind to join on 8 December 2012 the latest. Neither does this Court believe it had anything to do with the bringing forward of his commencement date with EWP to 2 January 2013.

161.  There is evidence suggesting the Defendant did want to move to Canada with his partner, Chan. This evidence appears to support his contention that as at 10 December 2012 he still intended to bring his mother to Canada for treatment. This part of the evidence has to be weighed against the other evidence pointing in the opposite direction, the most crucial of which is his voluntary provision of last referee’s particular to EWP on 8 December 2012.  Further, he carried on attending various interviews even after he knew of his mother’s medical condition and even after his partner had purchased the Canadian property which he claimed would be their home in Canada. He went so far as to accept the employment offer on 7 November 2012. Soon after (but not before) accepting the offer he resigned on 15 November 2012. On 3 December 2012, he confirmed joining EWP on 24 January 2013. Despite the fact that he received on 27 November 2012 further positive news from the Canadian Consulate General that his application might be ready for approval in the near future[162], on 8 December 2012, he committed to EWP by voluntarily satisfied the last condition precedent of the contract. On 10 December 2012, he was sure can could leave by end of December 2012. Around that time, he was told his last date would be 24 December 2012. On 14 December 2012, EWP confirmed satisfaction of all conditions precedent. A short while later and on 18 December 2012, he moved his commencement date with EWP to 2 January 2013. All these were consistent with and indeed indicative of a strong intention on his part to join EWP but not going to Canada as alleged.  

162.  The Defendant said he wanted a safety option in case he could not go to Canada. Again this Court cannot accept that. He was extensively cross-examined on his intention to go to Canada and joining EWP. He was firm to say that as in September 2012, joining EWP was not a live option. He further expressed that he was confident his emigration to Canada would succeed as it was a sponsored application, which was different from an investment application the success of which was less certain[163]. If they passed stage I, his application was very likely to succeed[164]. By 30 October 2012,the immigration consultant had expressed good news were received in that he had successfully passed the first stage and his partner could safely resign then. His partner then duly resigned. In fact, before his partner’s resignation, in October 2012, his partner had already bought their residential home in Canada. It showed that they were very confident that they would be settling there. As said above, even the Canadian Consulate General had given positive indication on 27 November 2012. So it does not appear to this Court he required such “safety option”. Why then he still needs the “safety option”. For reasons only known to him, this Court believes he somehow would like to have benefit of both worlds, but in any event had eventually dropped the idea of going to Canada (if there had been any), staying there and bringing his mother together with him for treatment the latest on or before 8 December 2012. Therefore, as at 10 December 2012 when he met SY/LN, he was not in 2 minds. He was then determined to join EWP. It is not a case of subsequent change of mind in light of change of circumstances unforeseen at the time of the representation.

163.  In fact, according to his written complaint dated 31 October 2014 to the AAB[165], he said he was at his final stage of negotiation for his joining EWP as at September 2012! This was inconsistent with his evidence that as in September 2012, he was determined to go to Canada with his mother[166]. His own complaint in 2014 before the present proceedings suggested that he had all along had a very clear intention to join EWP. At least it was inconsistent with his allegation in these proceedings that his heart then was to take his mother to Canada, stay there and work there. This Court believe he made up his evidence as the trial went along. That perhaps explains why there were lots of inconsistencies in his evidence particularly on his intention at a particular time, and one really had difficulty to understand what exactly he was trying to portray.

164.  The Defendant’s suggestion that the lack of compensation clause in EWP’s contract suggesting that it would be easier for him to back out with no liability is difficult to understand, particularly from a solicitor holding out to be specialising in litigation. The Defendant had not elaborated further as to why he came to this view. As suggested by Mr Wong SC in his closing submission, EWP might have already lined up clients and business in anticipation of the Defendant’s joining. Given the time and costs incurred in the long process of interview, this Court accepts Mr Wong’s submission there is a real risk he would be sued. In that case, it would be difficult to see how the Defendant can resist liability.

Any Representation

165.  By reasons of the above, it is obvious the Defendant had made representations to the Plaintiff as detailed above.

Whether the Representation is False

166.  Again, by reasons of what has been set out above, the representations that the Defendant would be going to Canada, working there, referring clients to the Plaintiff and taking his mother for treatment there were all false, at least as at the time when he asked for favour from the Plaintiff on 10 December 2012. The Defendant knew that these representations were false at that time. He had the clear intention to join EWP when he made the representations, as opposed to moving to Canada. Further, he deliberately withheld his intention to join EWP otherwise the Plaintiff would not have cut short his notice. Half-truth, by withholding material facts, as said above, is also a misrepresentation.

Any Reliance

167.  Each representation of the Defendant was intended to be relied on by the Plaintiff, and the latter did rely on them to cut short the notice period from 3 months, as required by the Defendant’s employment letter, to one and a half months, as requested by the Defendant. In other words, the Plaintiff was induced by the false representations to waive notice period of one and a half months. The Defendant had successfully won the sympathy of SY/LN. That explains why SY was angry when he knew that the Defendant had joined EWP instead of going to Canada. He expressed to LN that the Defendant a “thief”. This Court considers the aforesaid 2 emails, which are now the subject matter of the Defendant’s challenge, genuine. The greetings from SY to the Defendant is, this Court believe, a necessary hypocrisy.

Any Loss Suffered

168.  This Court accepted the Plaintiff’s case that had they known of the Defendant’s intention to join EWP, they would not have cut short the notice period to end of December 2012. It is the finding of this Court that the Defendant did not intend to serve the entire 3-month notice as he contended because the EWP contract required him to join in January 2013, and serving the requisite notice in full would take him to mid-February 2013. He used the representations (or misrepresentations) to induce the shortening of the notice period.

169.  The Plaintiff asked for damage equivalent to 1½ months’ salary of the Defendant. It is fair to say that the Defendant, though contending vigorously his liability, did not oppose it was the proper quantum had he failed in these proceedings.

170.  In the Court’s judgment, the measure of damage could be guided by sections 6, 7 and 8A of the Employment Ordinance, Cap 57, i.e. the amount of wages which would have been payable had the employee not given sufficient notice of termination to his employer. This Court considers the amount of $195,000, being 1½ months’ wages payable by the Defendant to the Plaintiff had he only given half of the requisite 3-month notice to the Plaintiff, represents the correct measure of damage suffered by the Plaintiff. This Court now so order this amount against the Defendant.

Dispositions and Orders

171.  For all the reasons above, the Defendant should be liable to the Plaintiff in respect of both breaches, and this Court now so orders. In respect of damages, the Defendant do pay the Plaintiff a total sum of $732,663.5, being the aggregate of:

i) $537,663.5 representing damages payable under the  Plaintiff’s breach of duties claim; and

ii) $195,000 representing damages payable under the Plaintiff’s misrepresentation claim.

172.  There is no reason why the usual rule of costs to follow the event should not apply. This Court therefore makes a costs nisi that the Defendant do pay the Plaintiff’s costs of the action on District Court scale, to be taxed if not agreed with certificate for counsel, such order nisi be made absolute in 14 days if no application is made to this Court during this period to vary the same.