LEIF CHRISTENSEN v. REGENT KEN INTERNATIONAL LTD AND ANOTHER

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATION REGION

COURT OF FIRST INSTANCE

ACTION NO. 6011 OF 1996

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JUDGMENT

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1. This is a claim for arrears of salary and expenses, which the plaintiff claims is due to him from either the 1st defendant, or the 2nd defendant, or from both. It arises out of a contract of employment of the plaintiff as a management consultant, by, he contends, either the 2nd defendant or the 1st defendant, or both of them, two companies which are essentially controlled by a Mr LIONG, who gave evidence on behalf of the defendants, and was duly authorised by both of them so to do.

2. The defendants contend that the plaintiff was not employed by either of them, but by Shenzhen Sundarb Glass Company, a mainland firm. That firm, it may be a company, is, on Mr LIONG's own evidence, controlled essentially by himself as the Executive and major shareholder, or holder of the major financial interest in it. The defence does not raise any dispute as to any money due to the plaintiff. It simply says that it is to be sorted out with Sundarb.

3. The plaintiff essentially relies upon a document dated 10 January 1995, which he says was written by him following a meeting the previous day with Mr LIONG, Mr LIONG then representing MS International Investments Limited, the 2nd defendant. That letter reads as follows: "Dear Mr Sundoro,", Sundoro is one of the fore names of Mr LIONG, but it is not contended by the defendants that there is any doubt that the letter was addressed to Mr LIONG, and was in fact received by him. It reads:

"Confirming our discussion of yesterday, it was agreed that I will perform certain functions for your company, MS International Investments Limited. These functions will be outlined by you from time to time. It was agreed that my involvement will be on a phased-in basis, commencing immediately, and increasing month by month to a 3-4 day week commitment. The schedule may be flexible, i.e. some weeks totally and others somewhat less. The compensation to my company was agreed at HK$25,000 per month, payable as well on a phased-in basis as follows."

4. The letter then sets out payments which would be due for January, February, March and April 1995, until the payment for May reached the figure of HK$25,000, as stipulated. It is clear that the lesser figures for the first four months were to reflect the phased-in basis.

5. Mr Christensen, the plaintiff, said that that letter was in fact faxed to Mr LIONG. Mr LIONG agrees that he received a copy, and that he wrote on it his signature and the date, 10 January 1995, and bracketed a number of figures, which figures were variations to some extent, though not entirely, of some of the figures on the original letter. In fact, essentially there were three variations, reducing the phasing-in figures for the months of February, March and April.

6. On that letter, there is no essential dispute as to the terms reflected. However, Mr LIONG's evidence was to the effect that the letter did not constitute a contract with MS until he had agreed it with a Mr MAU, who also had an interest in that particular company. He also contended, though it was difficult to understand him precisely on this topic, and Mr Christensen denied the fact, that Mr Christensen was employed, and had been employed, prior to that date, by Shenzhen Sundarb Glass.

7. I say from the outset, that I accept Mr Christensen's evidence entirely on these matters, and reject any part of Mr LIONG's evidence which is in conflict with it. I found Mr LIONG quite unreliable, and in some cases, prepared to make allegations which did not seem to me to make sense.

8. Nonetheless, the letter having been faxed, the letter having been altered by Mr LIONG in those respects to which I have referred, in Mr Christensen's evidence, there was, it was suggested, an oral variation shortly afterwards, if not on the next day, and that variation was that the employment would be by Regent Ken International Limited, the 2nd defendant, a company also controlled by Mr LIONG. Mr LIONG gave us the reason for that, and there appears to be some ground, or some common ground, with Mr Christensen in this regard, that Mr MAU, who had an interest in MS International Investments, was not happy with Mr Christensen being employed by that company. It is not clear what the reasons were, but nonetheless there was apparently some orally suggested change to the contract of employment.

9. Be that as it may, Mr Christensen became employed, either by MS International Investments Limited or by Regent Ken International Limited, or by both of them on some arrangement which existed between the two companies, which is not wholly clear from the evidence. It may simply have been that Regent Ken undertook to pay him.

10. Mr Christensen was paid, in accordance with the agreement, for a period of time. In fact, the sum of $25,000, due in effect from May of 1995, was paid on occasions, as were the expenses claimed by him in carrying out his work, but those payments started to slip. The claims for expenses were never challenged in principle, and were in fact paid, although perhaps by rounded up lump sums on account, rather than by precise sums on the relevant dates. On one occasion, Mr Christensen was paid $12,000 on a personal cheque by Mr MAU, who was involved with MS International Investments Limited, but not with either of the other two companies.

11. On another occasion, in December, -- on February 14th I correct myself -- on February 14,1996, Mr Christensen was paid the Hong Kong equivalent of RMB10,000 in cash by Mr LIONG, in respect of sums due to him.

12. In any event, certainly by September of 1995, there was a significant deficit or arrears in respect of the money due to Mr Christensen under contract, and the statement of account for September 1995 shows that there were arrears of $70,416. In September there had been a payment of $25,000 - the exact monthly sum under the agreement - and a further sum of $10,000 on account, generally. That deficit continued because it is clear from the next month, in the statement shown, that the deficit had reached $100,037. It continued through November. There were payments in November, in particular, the sum of $31,000 on account on 2 November, but by the end of November, after the November account had been rendered, the total sum due to Mr Christensen was $96,370. The picture continued through December of 1995. On 15 December, there was a payment on account of $30,000 but the deficit still showed an overall sum due to Mr Christensen of $93,665. In January, that sum had increased to $121,508 and then, by the end of February of 1996, the total deficit was $139,329.

13. Those accounts and the invoices in respect of the sums due to Mr Christensen by way of his monthly salary or remuneration and the expenses which were reflected by an itemised schedule attached to the account, were rendered to Regent Ken, the company which Mr LIONG told him was the company that was, in effect, his employer. Those invoices and statements bore the address of the Regent Ken company in Hong Kong but Mr Christensen's evidence, which I accept without reservation, was that those accounts were handed to Mr LIONG or to somebody in Mr LIONG's employment in Shenzhen at an office there, from which work was conducted on behalf of one or more of the three companies which feature in this particular case.

14. I am satisfied that the written contract was with the 2nd defendant, MS International Investments Limited. There was no written variation of that contract in any regard. However, there purported to be an oral variation which substituted Regent Ken International Limited for MS International Investments Limited as the employer of Mr Christensen. And Mr Christensen undoubtedly regarded Regent Ken International Limited as his employer because that was the company to which the invoices were rendered; that was the company on whose cheques made payable to "Cash" he was paid; and that was the company whose headed note-paper he used in accordance with work to be carried out.

15. However, there was, I find, some loose arrangement between these two companies as to who actually or which of them actually employed Mr Christensen. They are closely linked and the border of their activities may be somewhat blurred. I find, as a matter of probability, that his written contract was with MS International Investments Limited; that he worked for Regent Ken International Limited, who took upon the obligation of paying him for his work. Whether there was some internal arrangement whereby MS International delegated matters to Regent Ken or Regent Ken delegated matters to MS, is not clear. All the invoices went to Regent Ken; the payments, on the evidence of Mr Christensen - and I accept his evidence entirely, in contrast with that of Mr LIONG - those payments were made, as I have indicated, on the cheques drawn to "Cash" on Regent Ken's account.

16. There were two letters written by Mr Christensen to Mr LIONG late in the course of their business relationship. The first letter, which is dated 6 February 1996, refers to the outstanding amount at that stage due to Mr Christensen for his monthly remuneration and the expenses due to him, in the sum of HK$121,508. He also made reference, in that letter, to a loan of RMB4,000 made by his wife to Mr LIONG, through him, it appears, on 4 November 1995. Mr LIONG, himself, was entirely unconvincing in respect of this matter, saying that it was his practice to borrow moneys in business and he couldn't be expected to remember from whom he borrowed, how much, for what purpose or when it occurred. This claim, as far as I can ascertain, does not include such sum and I have, therefore, disregarded it in that context. But it features, again, in the second letter from Mr Christensen, dated 3 March 1996, which was his notice of termination of employment.

17. At that stage, he gave notice to Mr LIONG that the amount due to him was the figure we have seen at the end of February - namely, $139,329 - and made reference to sums of money going through the company Sundarb which Mr LIONG had claimed throughout was the actual employer of Mr Christensen. Notice of resignation was given in the last sentence and there was an addendum to the letter, reminding him of the loan of $4,000 which had been made by Mr Christensen's wife.

18. Mr LIONG's evidence was that he never saw any of the statements of account, or indeed the invoices referred to by Mr Christensen; that matters of accounting were not his concern, in any event; that he never saw the letter of 6 February 1996, nor indeed that of 3 March 1996. He had sought to introduce, during the course of his evidence, a number of documents to suggest that Mr Christensen owed money to Sundarb which would have to be taken into account in deciding how much money Sundarb owed to him in respect of the employment which Mr LIONG says was between -- or was by Sundarb or Mr Christensen.

19. Mr LIONG said that at no stage was Mr Christensen working for Regent Ken or for MS International Investments. Yet there is clear correspondence in the papers on Regent Ken headed notepapers, signed by Mr Christensen. There is a letter from Mr LIONG to the Hongkong Bank, giving authority for the bank to make available and disclose to Mr Christensen the bank balances from time to time, available credit and cheques and notices relating to the accounts of Regent Ken International Limited. There is also evidence from Mr David YEUNG, limited though it is in context and relevance, that as far as he was aware the plaintiff was working for Regent Ken as a coordinator in contracts which involved the company employing Mr David YEUNG and Sundarb Glass.

20. All this evidence, which includes that of Mr Christensen, leads me unhesitatingly to the conclusion that the plaintiff was not employed, as the defendants say, by Sundarb Glass but by either Regent Ken or MS International, or both. I have come to the conclusion that the plaintiff's claim is valid against MS International, being evidenced by the written agreement which bears Mr LIONG's signature, albeit a signature to confirm variations in figures. There is no other written document; no other document of any nature suggesting a variation to that contract, other than the letterheads and Mr Christensen's evidence about the cheques on Regent Ken's account, which varies the written agreement. However, Mr Christensen's impression was that he was working for Regent Ken International, having rendered accounts to them, and he having been paid by money drawn on their account, it is clear that Regent Ken International, effectively controlled by Mr LIONG, regarded itself as obliged to pay Mr Christensen's wages, and because of the close connection between those two companies - and Mr LIONG agreed that he was the major shareholder of both, he had an equal shareholding of 35 per cent with his wife in MS International Investments and he was the major shareholder in Regent Ken International.

21. That being the case, I am satisfied that the plaintiff is entitled to judgment against both companies. Clearly, he is only entitled to the sum once but it is judgment against both because I take the view, on all the evidence, that on the written contract, MS International Investments is obliged to pay him by reason of the written contract, and Regent Ken International Limited is obliged to pay him by reason of their practice of so doing and the fact that he was working for them. I am satisfied that there was some flexible, fluid, unidentified, ad hoc arrangement between the two companies which meant that they both had that obligation as employers. Since it is not clear, entirely, what the position is, I regard both companies as his employers, and therefore he is entitled to judgment for the sum of $125,000 plus $14,029 as reimbursable petty cash expenses, and interest on that figure at eight per cent from March 1996 to the date of this judgment to date. That figure has yet to be calculated but the figure upon which the rate of interest is to be calculated is $139,029, being the figure that Mr Christensen has explained is a reduced figure on the original claim by $300 because it was easier to formulate the claim in terms of arrears of wages for the five months, there having been a sort of running account and running deficit which, in some cases, was difficult to explain by way of that particular difference of $300.

22. So there will be judgment for the plaintiff for $139,029 against the defendants, with interest at eight per cent thereon, with effect from March 1996 to date, together with costs. Mr Christensen having represented himself, there will, however, be costs for various attendances and, no doubt, also for various fees, and perhaps for witness expenses, and these costs will be taxed and are to be paid by the defendants.