GREEN LIGHT MULTIPLEX CO. LTD (formerly known as GREEN LIGHT MARKETING CO. LTD and GLM INTERNATIONAL LTD) v. LAM SHI YAN

HCA 2128/2015 and

HCA 2294/2017

[2024] HKCFI 2101

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2128 OF 2015

ACTION NO. 2294 OF 2017

(TRANSFERRED FROM LABOUR TRIBUNAL CLAIM NO. LBTC 2383 OF 2017)

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(Consolidated pursuant to the Order of Master Hui dated 10 January 2018)

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JUDGMENT

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A.  INTRODUCTION

1.  This trial involves an employment dispute, in which the plaintiff claims against the 1^st defendant for damages for breach of certain implied terms of the employment agreement between them dated 10 June 2010 (“the Employment Agreement”), breach of duty of fidelity and good faith, and breach of fiduciary duties. The 1^st defendant counterclaims against the plaintiff for performance bonus and salaries.

2.  Leave to discontinue against the 2^nd defendant has been granted by consent on 8 March 2021. Be that as it may, he has given evidence at the trial in support of the 1^st defendant’s case. In order to avoid confusion, the 2^nd defendant will be referred to as “Mr Ho” herein.

B.  UNDISPUTED/INDISPUTABLE FACTS

3.  The plaintiff was established in 1991 and has all along been carrying on business in lighting.

4.  Mr Gordon Lai (“Mr Lai”) is the founder and Managing Director of the plaintiff. At all material times, he was actively involved in the management, operation and affairs of the plaintiff, and was, inter alia, personally responsible for signing cheques and making payments on behalf of the plaintiff.[1]

5.  On around 10 June 2010, the plaintiff and the 1^st defendant entered into the Employment Agreement, pursuant to which the 1^st defendant became an employee and General Manager of the plaintiff. The 1^st defendant remained the plaintiff’s General Manager until 7 November 2014.

6.  As the General Manager of the plaintiff, the 1^st defendant was responsible for the daily management and performance of the plaintiff, including logistics and administrative matters. His responsibilities also included interviewing potential new employees, signing quotations to be issued to potential clients, signing purchase orders and project management.

7.  The 1^st defendant was accountable to Mr Lai, and he reported to Mr Lai while he was still working for the plaintiff.

8.  Before the 1^st defendant joined the plaintiff, the latter was mainly in the business of lighting components supply, but was not involved in project lighting business.

9.  Having joined the plaintiff, the 1^st defendant procured Abacus Lighting Limited (“Abacus”) to become a supplier of lighting products (high-mast lighting) for the plaintiff. In his capacity as the General Manager of the plaintiff, he also secured Abacus to enter into an agreement with the plaintiff in November 2013 pursuant to which Abacus granted the plaintiff the exclusive right to purchase, promote and resell (in Hong Kong and Macau) the products and services manufactured and/or sold by Abacus (“the Exclusive Distributor Agreement”).

10.  The Exclusive Distributor Agreement was effective from 1 December 2013 for 3 years (that is, until 30 November 2016).

11.  On 29 September 2014, the 1^st defendant tendered a resignation letter to the plaintiff, in which he stated that he would be resigning from his position as General Manager with effect from 19 December 2014.

12.  The 1^st defendant eventually left the plaintiff on 7 November 2014 with the consent of the plaintiff.

C.  THE PLAINTIFF’S CASE – AN OVERVIEW

13.  The plaintiff’s case may be summarised as follows.

14.  As the General Manager of the plaintiff, the 1^st defendant owed fiduciary duties to the plaintiff.

15.  It was implied in the Employment Agreement, inter alia, that the 1^st defendant :

(1)  would serve the plaintiff with fidelity and in good faith;

(2)  would protect the interest of the plaintiff and not to divert business opportunities to himself or other parties;

(3)  would not solicit customers of the plaintiff;

(4)  would not disclose trade secret or confidential information which he learnt by reason of his employment with the plaintiff;

(5)  would not use, to the detriment of the plaintiff, any information which he had obtained in confidence in the course of or as a result of his employment.

16.  In breach of his fiduciary duties and/or implied terms of the Employment Agreement, the 1^st defendant has wrongfully induced or procured Abacus to breach the Exclusive Distributor Agreement by wrongfully terminating the same in October 2014, and caused Abacus to appoint Pinetum Lighting Limited (“Pinetum”) as its exclusive distributor in Hong Kong and Macau instead.

17.  But for the 1^st defendant’s said breach, the plaintiff would have continued to be the exclusive distributor of Abacus products and services in both Hong Kong and Macau at least until 30 November 2016.

18.  By reason of the 1^st defendant’s said breach, the plaintiff has lost business opportunities (which depended on supplies from Abacus) in:

(1)  a project involving the supply and installation of Abacus High Mast for Hong Kong Boundary Crossing Facilities (HY/2013/05 HKBCF TCSS Tender – 15M/10M/9M CCTV High Mast) (“the Univision Project”);

(2)  the E&M works for the supply for light pole, light fitting and accessories for the Hong Kong Zhuhai-Macao Bridge (Contract No. HY/2011/09) Project (“the HKZM Bridge Project”).

19.  As a result, the plaintiff has suffered loss of profit in both the Univision Project and the HKZM Bridge Project.

20.  Further, in breach of his fiduciary and other duties, the 1^st defendant has unlawfully and wrongfully interfered with the plaintiff’s business relationship with Chat Horn Engineering Limited (“Chat Horn”), which was the main contractor involved in a project concerning the design, supply, installation, testing and commissioning of Abacus Highmast lighting systems and fittings for Pitch No.2, 3 and 4 under the Happy Valley Underground Stormwater Storage Scheme (“the Happy Valley Project”), by causing Chat Horn to cancel its purchase order placed with the plaintiff. While the plaintiff eventually managed to resurrect this project by successfully causing Chat Horn to withdraw its cancellation of purchase orders placed with the plaintiff, the plaintiff had suffered damages because its representatives had to travel overseas to seek support from various people.

21.  Moreover, the 1^st defendant had breached his fiduciary duties and implied terms of the Employment Agreement by wrongfully diverting a mature business opportunity in a project known as “the P533 Project” (which involved the design, supply and delivery of tunnel lighting mimic control panel for P533 South Runway road light control)[2] to Automatic Engineering Limited (“Automatic Limited”). The majority shareholder of Automatic Limited was Mr Wong Wai Chiu Julian (“Mr Julian Wong”), who was also the majority shareholder of Pinetum.

22.  As a result, the plaintiff has suffered loss of profit.

23.  The 1^st defendant was also in breach of his fiduciary duties and implied terms of the Employment Agreement by causing or procuring the plaintiff to supply lighting control products to Automatic Limited on consignment (“the Consignment Arrangement”) which was to the detriment of the plaintiff. As Automatic Limited eventually had returned part of the goods supplied under the Consignment Arrangement to the plaintiff, the plaintiff had suffered damages.

24.  In further breach of his fiduciary duties and implied terms of the Employment Agreement, the 1^st defendant has wrongfully disclosed confidential information of the plaintiff to Pinetum, which as a result was able to obtain the sub-contracts in a project involving the replacement of lighting for Underpass (West Bound) at Route 5 and Route 11 near Wei Wan Street, Discovery Park, Tsuen Wan (“the Discovery Park Project”).

25.  But for the said breach on the part of the 1^st defendant, the plaintiff would have obtained the works in the Discovery Park Project. As a result, the plaintiff has suffered loss of profit.

D.  THE 1^ST DEFENDANT’S CASE – AN OVERVIEW

26.  The 1^st defendant’s case may be summarised as follows.

27.  The 1^st defendant had more than 30 years’ experience in the lighting field, especially in, among others, project lighting and high mast lighting. He had good connection in the project-lighting industry.

28.  In 2010, Mr Lai persuaded the 1^st defendant to join the plaintiff, which the 1^st defendant did on 10 June 2010.

29.  Before the 1^st defendant joined, the plaintiff was mainly involved in selling lighting components.

30.  After the 1^st defendant has joined the plaintiff, he was in charge of its daily management. As its General Manager, the 1^st defendant built up the plaintiff’s sales and project management team. He had hired various staff members who were all answerable to him.

31.  Although the 1^st defendant was the General Manager of the plaintiff, he did not owe any fiduciary duties to the plaintiff.

32.  The 1^st defendant had developed the plaintiff’s project-lighting business, and had brought in business, customers and suppliers. For example, he had been the sole contact for Abacus – a major manufacturer and supplier of lighting columns and high-masts in the Hong Kong and Macau markets for many years. He had been able to secure Abacus to become a supplier of the plaintiff. Subsequently, he even signed on behalf of the plaintiff the Exclusive Distributor Agreement.

33.  The Employment Agreement contained the following implied terms:

(1)  The plaintiff shall maintain and shall not, without reasonable and proper cause, conduct itself in a manner calculated and/or likely to destroy or seriously damage the relationship of confidence and trust between itself as the employer and the 1^st defendant as its employee;

(2)  The plaintiff, being the employer, shall not unilaterally change the status, functions and/or nature of the 1^st defendant’s job, whether by varying, taking away or adding different responsibilities, duties and/or powers, by demoting the 1^st defendant, or otherwise;

(3)  The Plaintiff shall not hinder, obstruct or prevent the performance of the 1^st defendant’s duties and responsibilities as General Manager;

(4)  The 1^st defendant, being the General Manager, shall be given prior notice of any changes in the plaintiff’s personnel, and/or involved in or consulted upon any such changes.

34.  The 1^st defendant’s good working relationship with the plaintiff rapidly deteriorated when Mr Lai began to strip him of his powers and responsibilities in around mid-2014. For example:

(1)  When there was a need to employ a new accountant for the plaintiff in around late July 2014, Mr Lai vetoed the candidate selected by the 1^st defendant without any reason;

(2)  The plaintiff then installed Ms Harris Tsoi (“Ms Tsoi”) as its new Administrative Manager without informing any staff members. Ms Tsoi’s duties substantially overlapped with those of the 1^st defendant. She had vetoed various decisions of the 1^st defendant. The plaintiff and Ms Tsoi also excluded the 1^st defendant from management meetings and restricted his access to accounting records;

(3)  In September 2014, Mr Lai also fired Ms Debby Lai (“Ms Lai”) (who was a long time subordinate of the 1^st defendant), without consultation with the 1^st defendant.

35.  Mr Lai’s actions and dismissive attitude severely undermined the trust and confidence between the plaintiff and the 1^st defendant, who had no choice but to resign on 29 September 2014.

36.  The plaintiff’s unilateral change of the 1^st defendant’s duties and the aforesaid undermining of trust and confidence of the employment relationship entitled the 1^st defendant to treat himself as having been constructively dismissed. The 1^st defendant had accepted the plaintiff’s repudiatory breach on 29 September 2014.

37.  Since the 1^st defendant had been forced out of the plaintiff, he began to make plans for his own future, including exploring future co-operation with Pinetum upon Mr Julian Wong’s invitation.

38.  While during the 1.5 months (between late September 2014 and 6 November 2014) the 1^st defendant had had discussions with suppliers and taken preparatory steps for his next venture, he had ceased and withdrawn from the discussions and preliminary thoughts of mutual co-operation with others after the plaintiff had issued to him a warning letter dated 14 November 2014 which threatened to sue him. Particularly, he had never in fact joined Pinetum.

39.  In relation to Abacus, there was no breach of fiduciary duties at all on the part of the 1^st defendant. Abacus did not terminate the Exclusive Distributor Agreement in 2014 as alleged, nor did it replace the plaintiff with Pinetum. It was natural for Abacus to have concerns that the plaintiff might not have sufficient knowledge to continue to serve as its exclusive distributor after the 1^st defendant’s resignation. It was a commercial decision on the part of Abacus to replace the Exclusive Distributor Agreement with a non-exclusive distributor agreement (dated 13 May 2015) (“the Non-Exclusive Distributor Agreement”).

40.  As far as the plaintiff was concerned, the Univision Project was still at a preliminary stage. At the end of the day, the project was awarded to Mak Hang Kei due to their experience, and the 1^st defendant had nothing to do with it. The plaintiff was also unable to prove its alleged profit.

41.  The HKZM Bridge Project was not a maturing business opportunity as such. It was at preliminary stage only. Furthermore, there was no requirement that the project must use Abacus products.

42.  At the end of the day, Celex LED Technology Limited (“Celex”) was awarded the project because this company had quoted the lowest price.

43.  In relation to the Happy Valley Project, the plaintiff failed to prove that the alleged expenses had indeed been incurred. Nor could it prove that such expenses had anything to do with “resurrecting” the Happy Valley Project.

44.  The plaintiff did not get the P533 Project because of reason which was within the knowledge, choice and control of the plaintiff and/or Mr Lai, and was unrelated to the 1^st defendant. Further the P533 Project was not a maturing business opportunity.

45.  For the Discovery Park Project, the 1^st defendant was not the person who approved the quotations (“the Discovery Park Quotations”). There was no evidence that the 1^st defendant had had any confidential information in relation thereto. Furthermore, it was only at a preliminary stage, and the plaintiff would have difficulty to work on the project in any event due to the departure of the 1^st defendant as well as Mr Marco Chan.

46.  On the 1^st defendant’s counterclaim, the plaintiff had not paid him performance bonus, nor did it pay him the full amount of 3 months’ salary.

E.  THE ISSUES

47.  Parties had compiled a non-agreed list of issues. Despite what the name of the list suggests, the disagreements between the parties are actually relatively minor. I will set them out as follows, even though some of the matters need not be resolved at the end of the day by reasons of this Court’s findings and how the parties ran their respective cases as the trial progressed:

(1)  Whether the terms set out in [15] above were implied terms of the Employment Agreement;

(2)  Whether the terms set out in [33] above were implied terms of the Employment Agreement;

(3)  Did the 1^st defendant owe any fiduciary duty to the plaintiff? If so, what is the basis of imposing such duty?

(4)  Did the plaintiff take away the 1^st defendant’s powers, duties and responsibilities since August 2014 and after 29 September 2014?

(5)  Did the plaintiff’s action or course of conduct leading up to the 1^st defendant’s departure from the plaintiff constituted repudiatory breach of the Employment Agreement and/or constructive dismissal of the 1^st defendant?

(6)  When did the Employment Agreement come to an end?

(7)  In relation to Abacus:

(a)  Did the 1^st defendant wrongfully induce or procure Abacus to breach the Exclusive Distributor Agreement?

(b)  Did the 1^st defendant act in breach of his contractual/fiduciary duties owed to the plaintiff (if any)?

(8)  In relation to the Univision Project and the HKZM Bridge Project:

(a)  Was there any certainty or real or substantial chance that the plaintiff would be awarded the contract and profit from the said project but for the 1^st defendant’s breach?

(b)  Did the plaintiff fail to mitigate its losses (if any) and did the plaintiff avoid any loss?

(c)  What was the provable loss and damage suffered by the plaintiff arising from the 1^st defendant’s breach?

(9)  In relation to the Happy Valley Project:

(a)  Did the 1^st defendant wrongfully or unlawfully interfere with the business relationship between the plaintiff and Chat Horn?

(b)  Did the 1^st defendant breach his contractual/fiduciary duties owed to the plaintiff (if any)?

(c)  Was the 1^st defendant’s breach (if any) causative of any loss on the part of the plaintiff and what was the provable loss and damage suffered by the plaintiff?

(10)  Regarding the P533 Project:

(a)  Did the 1^st defendant wrongfully divert a mature business opportunity from the plaintiff to Automatic Limited?

(b)  Did the 1^st defendant act in breach of his contractual/fiduciary duties owed to the plaintiff (if any)?

(c)  Was there any real or substantial chance that the plaintiff would be awarded the contract and profit from the said project but for the 1^st defendant’s breach?

(d)  Was the 1^st defendant’s breach (if any) causative of any loss (or loss of chance) on the part of the plaintiff and what was the provable loss and damage suffered by the plaintiff?

(11)  In respect of the Consignment Arrangement:

(a)  Did the 1^st defendant wrongfully cause or procure the plaintiff to supply lighting control products to Automatic Limited on consignment?

(b)  Did Mr Lai authorise or have knowledge about the Consignment Arrangement?

(c)  Was the Consignment Arrangement beneficial (or potentially beneficial) or detrimental (or potential detrimental) to the plaintiff?

(d)  Did the 1^st defendant act in breach of his contractual/fiduciary duties owed to the plaintiff (if any)?

(e)  Was the 1^st defendant’s breach (if any) causative of any loss on the part of the plaintiff?

(f)  Was any loss avoided by the plaintiff? Did the plaintiff fail to mitigate its loss?

(g)  What was the provable loss and damage suffered by the plaintiff?

(12)  For the Discovery Park Project:

(a)  Was the plaintiff entitled to take the steps that he took upon his resignation from the plaintiff in preparation of his future career?

(b)  Did the 1^st defendant wrongfully disclose to Pinetum information relating to the plaintiff and/or its customers and/or its suppliers and/or trade secrets?

(c)  Did the 1^st defendant act in breach of his contractual/fiduciary duties owed to the plaintiff (if any)?

(d)  Was the 1^st defendant’s breach (if any) causative of any loss on the part of the plaintiff in relation to the Discovery Park Project?

(e)  Did the plaintiff fail to mitigate its loss? What was the provable loss and damage suffered by the plaintiff?

(13)  On the 1^st defendant’s counterclaim, is he entitled to claim for performance bonus and the balance of the 3 months’ salary?

F.  CREDIBILITY OF WITNESSES

F1.  General Principles

48.  The general principles applicable to the assessment of credibility of witnesses are trite, and I have summarised the same in Hu Lan v David Golden [2023] HKCFI 873 as follows:

“36. When I consider the credibility of various witnesses who had given evidence in court, I shall take the following matters into account:

(1) Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2) Importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3) The court will also attach importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement;

(4) The court should consider a witness’ motive for deliberately not giving truthful testimony. For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest;

(5) It is essential to have regard to the entirety of a witness’ evidence. A witness can make mistakes, but the mistakes do not necessarily affect other parts of his evidence. Likewise, a witness may lie. However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected. A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie;

(6) On the other hand, where it is shown that a witness has been discredited over one or more matters to which he has testified, this fact is relevant to the assessment of his overall credibility;

(7) While the court is entitled to take demeanour into account when assessing testimony, it should be borne in mind that demeanour can be deceptive and is therefore to be approached with care.”

49.  Contemporaneous documentations and inherent probabilities are even more important in a case such as the present when the relevant events took place around a decade ago.

F2.  The plaintiff’s witnesses

50.  The plaintiff has called a total of 4 witnesses, namely, Mr Lai, Mr Daniel Wong, Mr Steven Banks (“Mr Banks”) and Mr Tony Cher Kim Joo (“Mr Cher”).

F2.1  Mr Lai

51.  At all material times, Mr Lai was the majority shareholder of the plaintiff. He therefore has interest in the outcome of this court action.

52.  Generally speaking, while as a whole Mr Lai’s evidence is more credible than that of the 1^st defendant and of Mr Ho, I find that the Court has to be careful when considering Mr Lai’s evidence because:

(1)  As it is shown by his evidence on his knowledge of the Consignment Arrangement (see Section G11.3 below), he is not an entirely credible witness;

(2)  There are quite a number of questions which he could not answer[3] because (1) of passage of time; or (2) he claimed that he was only having a supervisory role at the material time and was not the person who actually did the work concerned.

F2.2  Mr Daniel Wong

53.  Mr Daniel Wong is the current General Manager of the plaintiff. He has impressed this Court as a straight forward and candid witness, who was not argumentative at all.

54.  Hence, generally speaking, this Court would accept his evidence.

F2.3  Mr Banks

55.  Mr Banks has travelled all the way to Hong Kong specifically for the purpose of this trial. There is absolutely no reason why his truthfulness should be doubted. Indeed, Mr Lee for the 1^st defendant also accepted that Mr Banks is an honest witness.

F2.4  Mr Cher

56.  Mr Cher was the Regional Marketing Manager of Schreder (China) Lighting Industrial Company Limited (“Schreder China”) at the material time. He also came to Hong Kong specifically to give evidence at the trial.

57.  Mr Lee submitted that Mr Cher has given a clear impression that he was giving evidence favourable to the plaintiff, and that this is explicable due to the long term working relationship between their companies. With respect, this submission is not understood:

(1)  The fact that a witness’s evidence is favourable to one of the parties per se is simply not a reason for rejection of such evidence;

(2)  Furthermore, it is the unchallenged evidence of Mr Cher that he has in fact left Schreder China in 2017.

58.  I am of the view that Mr Cher is no doubt an honest witness. There is no reason why he had to come all the way to Hong Kong to give false evidence for the plaintiff. Indeed, he has impressed this Court that whenever he was not sure about anything, he had no hesitation in telling the Court that he could not recall the matter. He has given the Court a strong impression he was only trying his best to provide the Court with the best evidence which he could properly give. I accept his evidence.

F3.  The 1^st defendant’s witnesses

59.  Apart from himself, the 1^st defendant has also called Mr Ho as his witness.

F3.1  The 1^st defendant

60.  Mr Lee invited the Court to accept the 1^st defendant’s evidence. I regret to say without hesitation that I decline to do so, because it is apparent that the 1^st defendant is not truthful at all.

61.  There are many examples which may render support to the above finding. For the present purpose, it is adequate to refer to the followings:

(1)  One of the strongest pieces of evidence which was relied on by the plaintiff against the 1^st defendant was that he had handed out his name card which described him as the General Manager of Pinetum (“the Pinetum Name Card”) while he was still in employment with the plaintiff. This was pleaded as a material fact in the Statement of Claim. However, in the 1^st defendant’s 1^st witness statement, he categorically stated that he was puzzled as to how the plaintiff could obtain a copy of the Pinetum Name Card as he allegedly had never given it to anyone. At the trial (3½ years later), he told the Court that while he could not remember when he made his 1^st witness statement in 2020 whether he had distributed the Pinetum Name Card back in 2014, he could remember clearly in the witness box that he had indeed done so. This explanation is simply incredible. In my view, he was trying to conceal the matter when he made his 1^st witness statement. However, he had no choice but to make an admission at the trial because he subsequently found that Mr Cher had signed a witness statement and agreed to come all the way to Hong Kong to give evidence that it was the 1^st defendant who personally gave him the Pinetum Name Card in a meeting on 27 October 2014 (“the 2014 Schreder Meeting”). This matter shows that the 1^st defendant was willing to put anything into his witness statement in defence even though those matters are not true;

(2)  At the trial, the 1^st defendant alleged for the very first time that the 2014 Schreder Meeting was held because Schreder was minded to set up a company in Hong Kong and to recruit him as the General Manager of this new company. It is clear that the 1^st defendant simply made such evidence up so as to give a more proper purpose to the 2014 Schreder Meeting. However, such an explanation is totally incredible because this important matter was not mentioned in paragraph 81 of his supplemental witness statement when he talked about that meeting and the reason why he contacted Schreder at the time;

(3)  The 1^st defendant’s evidence that the Pinetum Name Cards were printed only “as a gesture of [Mr Julian Wong]’s sincerity to work with [the 1^st defendant]”[4] before his exact title was agreed is another clear illustration as to how illogical and improbable his evidence could be. Indeed, he eventually accepted in Court that his work title at Pinetum had been agreed when the Pinetum Name Cards were handed over to him. This is directly contradictory to what he stated in his witness statement;

(4)  In the 1^st defendant’s 1^st witness statement, he described his discussions with Mr Julian Wong to join Pinetum in early October 2014 as “at a very preliminary, embryonic stage”[5]. However, under cross-examination by Mr Chiu for the plaintiff, he accepted that the discussions at the time were already “七七八八”, which I understand to mean “almost complete”. Apparently, “at a very preliminary, embryonic stage” and “七七八八” mean totally different things. However, in order to salvage his own evidence, the 1^st defendant shamelessly told this Court that he would describe “七七八八” as “at a very preliminary, embryonic stage”. Again, this illustrates clearly that the 1^st defendant would not hesitate to say anything which is not true if he thought that that would assist his case;

(5)  Another occasion when it was clear that the 1^st defendant was not truthful in Court was when he was asked by the plaintiff’s counsel whether he knew beforehand that Abacus would issue a letter on 21 October 2014 to terminate the Exclusive Distributor Agreement. At the time, the 1^st defendant answered that he did not know, and he said this was because Abacus could have refused his suggestion, and could decide “not to play with him” (“可以唔同我玩”). It was only after this Court sought clarification with him that the 1^st defendant alleged that he had made a mistake in his answer. In my view, he did not really make a mistake as such, but intentionally told a lie, because he must be clear that Abacus had already issued an authorisation letter on 13 October 2014 appointing Pinetum as its approved sole distributor in Hong Kong and Macau. That means the plaintiff’s status as the sole distributor must have to be terminated. Although the 1^st defendant did change his mind quickly in the witness box and admitted that he did know that Abacus would issue the letter dated 21 October 2014 to the plaintiff, that is not enough to change this Court’s view on his credibility;

(6)  Another obvious example which shows that the 1^st defendant would not care whether what he said was true or not so long as such evidence could support his case concerns the plaintiff’s warehouse. It was when the 1^st defendant was asked to confirm that storage costs would be incurred by the plaintiff if Automatic Limited returned unsold goods under the Consignment Arrangement. The 1^st defendant’s first reaction to such a question was that there was no direct costs as such because the plaintiff had its own warehouse. However, very soon afterwards, the 1^st defendant changed his evidence and said he could not recall whether the plaintiff had any warehouse. As the General Manager of the plaintiff for more than 4 years, the 1^st defendant could not have made a mistake on such a simple matter. In my view, he just said whatever which came to his mind but did not care whether such evidence was true or not.

F3.2  Mr Ho

62.  One of the very important aspects which Mr Ho’s supplemental witness statement was to cover was to explain the operation of the Consignment Arrangement. According to the 1^st defendant’s case, Mr Ho was the person who proposed and carried out the whole arrangement. However, surprisingly, when Mr Ho started to give evidence, he had to correct quite a number of details of the alleged arrangement as stated in his supplemental witness statement. That has caused great concern on the part of this Court as to the reliability of his evidence.

63.  Further, in Mr Ho’s 1^st witness statement, he stated clearly that the terms and conditions of the quotation dated 25 February 2014 under the Consignment Arrangement (“the Automatic Consignment Quotation”) had been discussed at the sales meeting of the plaintiff held in or about February 2014 which was attended by all staff including Mr Lai. However, when he was cross-examined in Court, Mr Ho stated that he did not discuss the content of the said quotation with anyone other than Mr Lai. When the plaintiff’s counsel pointed out to him that his evidence in Court was inconsistent with that contained in his witness statement, Mr Ho explained that although the matter was raised in the sale meeting, it was he who did all the talking, and no one other than Mr Lai had responded to him in the meeting. He said the 1^st defendant and other staff members only answered “唔” and “哦” respectively. I am not impressed by Mr Ho’s attempt to reconcile his evidence at all. In my view, he was more interested in defending his own version of event than telling the Court the truth.

F4.  Conclusion on credibility of witnesses

64.  For the above reasons, generally speaking I would prefer the evidence given by the plaintiff’s witnesses over those given by the 1^st defendant and Mr Ho.

65.  However, that does not mean that the Court should invariably accept the evidence adduced by the plaintiff and reject the evidence adduced by the 1^st defendant. After all, the Court should place great emphasis on documents and contemporaneous evidence. Each issue should be considered separately on the above basis.

G.  DISCUSSION

G1.  Implied Terms of the Employment Agreement

66.  Both sides contended that certain terms had been implied into the Employment Agreement.

67.  In Tadjudin Sunny v Bank of America, National Association (CACV 12/2015, unreported, 20 May 2016), it has been held by the Court of Appeal that:

“37. The starting point for the test of whether a term may be implied into a contract is the well known decision of the Privy Council in BP Refinery (Westernport) Pty Ltd v President, Councillors and Rateplayers of the Shire of Hastings (1977) 180 CLR 266. At 282-283, Lord Simon of Glaisdale, giving the advice of the majority of the Board, stated that 5 conditions (which may overlap) must be satisfied before a term can be implied into a contract, namely:-

(1) it must be reasonable and equitable;

(2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

(3) it must be so obvious that ‘it goes without saying’;

(4) it must be capable of clear expression; and

(5) it must not contradict any express term of the contract.

38. The question of whether any particular term ought to be implied into a contract must not, however, be approached by going through a mechanical process of considering these 5 conditions independently to see whether they can each be satisfied. As pointed out by Lord Hoffman, giving the advice of the Board in Attorney General of Belize and others v Belize Telecom Ltd and another [2009] 1 WLR 1988 at paragraph 27, ‘this list is best regarded, not as [a] series of independent tests which must each be surmounted, but rather as a collection of different ways in which judges have tried to express the central idea that the proposed implied term must spell out what the contract actually means, or in which they have explained why they did not think that it did so’.

39. The rationale for adopting this approach of treating the implication of a term as an exercise in the construction of the contract as a whole was explained by Lord Hoffmann in the same case, as follows:

‘16 Before discussing in greater detail the reasoning of the Court of Appeal, the Board will make some general observations about the process of implication. The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means….

17 The question of implication arises when the instrument does not expressly provide for what is to happen when some event occurs. The most usual inference in such a case is that nothing is to happen. If the parties had intended something to happen, the instrument would have said so. Otherwise, the express provisions of the instrument are to continue to operate undisturbed. If the event has caused loss to one or other of the parties, the loss lies where it falls.

18 In some cases, however, the reasonable addressee would understand the instrument to mean something else. He would consider that the only meaning consistent with the other provisions of the instrument, read against the relevant background, is that something is to happen. The event in question is to affect the rights of the parties. The instrument may not have expressly said so, but this is what it must mean. In such a case, it is said that the court implies a term as to what will happen if the event in question occurs. But the implication of the term is not an addition to the instrument. It only spells out what the instrument means.

…

21 It follows that in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean. It will be noticed from Lord Pearson’s speech that this question can be reformulated in various ways which a court may find helpful in providing an answer - the implied term must “go without saying”, it must be “necessary to give business efficacy to the contract” and so on - but these are not in the Board’s opinion to be treated as different or additional tests. There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?’

40. The judgment of Lord Hoffmann in Attorney General of Belize v Belize Telecom Ltd is also valuable in providing an insight into what one should properly be focusing on when considering questions such as whether the implied term is “necessary to give business efficacy to the contract” or whether it is so obvious that “it goes without saying”:-

‘22 There are dangers in treating these alternative formulations of the question as if they had a life of their own. Take, for example, the question of whether the implied term is “necessary to give business efficacy” to the contract…

23 The danger lies, however, in detaching the phrase ‘necessary to give business efficacy’ from the basic process of construction of the instrument. It is frequently the case that a contract may work perfectly well in the sense that both parties can perform their express obligations, but the consequences would contradict what a reasonable person would understand the contract to mean. Lord Steyn made this point in the Equitable Life case, at p 459, when he said that in that case an implication was necessary ‘to give effect to the reasonable expectations of the parties’.

25 Likewise, the requirement that the implied term must ‘go without saying’ is no more than another way of saying that, although the instrument does not expressly say so, that is what a reasonable person would understand it to mean. Any attempt to make more of this requirement runs the risk of diverting attention from the objectivity which informs the whole process of construction into speculation about what the actual parties to the contract or authors (or supposed authors) of the instrument would have thought about the proposed implication. The imaginary conversation with an officious bystander in Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206, 227 is celebrated throughout the common law world. Like the phrase ‘necessary to give business efficacy’, it vividly emphasises the need for the court to be satisfied that the proposed implication spells out what the contact would reasonably be understood to mean. But it carries the danger of barren argument over how the actual parties would have reacted to the proposed amendment. That, in the Board’s opinion, is irrelevant. Likewise, it is not necessary that the need for the implied term should be obvious in the sense of being immediately apparent, even upon a superficial consideration of the terms of the contract and the relevant background. The need for an implied term not infrequently arises when the draftsman of a complicated instrument has omitted to make express provision for some event because he has not fully thought through the contingencies which might arise, even though it is obvious after a careful consideration of the express terms and the background that only one answer would be consistent with the rest of the instrument. In such circumstances, the fact that the actual parties might have said to the officious bystander ‘Could you please explain that again?’ does not matter.’

41. Hence, instead of asking whether the term sought to be implied is necessary in the sense that without it the contract would become unworkable in practice, the correct question to ask is whether it is necessary to give effect to the reasonable expectations of the parties.

42. Likewise, instead of asking whether the actual parties to the contract would have regarded the term sought to be implied as being obvious (or immediately apparent) although the contract does not expressly say so, the correct question to ask is whether it is what a reasonable person would understand the contract to mean.

43. Lastly, it should be borne in mind that when one is undertaking the exercise of construing a contract for the purpose of determining whether a term ought to be implied into it, one must take into account the proper contextual background against which the contract was entered into by the parties. We shall return to this point later in this judgment when we come to consider whether the anti-avoidance term ought to be implied into the employment contract between the Bank and the plaintiff in the present case.”

68.  As far as the implied terms advocated by the plaintiff are concerned, it is provided in Chitty on Contracts: Hong Kong Specific Contracts, Vol.1 (7^th edition (2022)) at Chapter 12 that:

“Generally. The full terms of the employment relationship will never be set out in the express terms of the employment contract. While certain contracts are more detailed than others, there will always be certain implied terms which will also apply to govern the relationship between employer and employee. These implied terms impose duties on one party and grant reciprocal rights to the other party […]”[6]

“Duty of fidelity and good faith. Employees are obliged to serve their employer with fidelity and good faith. So, employee may not persuade customers of the employee’s current employer to move with the employee to the employee’s proposed new employer. Similarly an employee should not take part in a business in competition with the employee’s employer. This does not, however, amount to a duty not to compete with the employee’s employer following the termination of the employment contract, unless the termination was by the employee and in breach of contract. An intention to act in breach of the duty of good faith is not, in itself, a breach of such duty […] A further consequence of the duty of good faith is the implied duty on employees not to work for another employer in a role inconsistent with the current employment. However, an employee can, of course, work for a third party outside employment hours, provided that this does not cause harm to the employee’s first employer’s business […]”[7]

“Duty not to disclose confidential information. An employee is obliged not to disclose any confidential information that comes to the employee’s knowledge as a result of the employee’s employment. In addition the employee must not use to the detriment of the employee’s employer any information obtained in confidence during employment. The nature of confidential information will depend upon the particular trade or industry and the impact of the release of the information […]”[8]

69.  At all material times, the 1^st defendant was the General Manager of the plaintiff. In my view, there is little doubt that the terms set out in [15] were indeed implied into the Employment Agreement.

70.  I now turn to consider the implied terms as suggested by the 1^st defendant (see [33] above).

71.  In support of the implied term referred to in [33(1)] above, Mr Lee relied on Employment Law and Practice in Hong Kong (2^nd ed, 2016) at §3.045 which stated that:

“The implied term of mutual trust and confidence imposes reciprocal obligations on the employer and the employee not to, without reasonable and proper cause, conduct themselves in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between the employer and employee.” (emphasis added by counsel for the 1^st defendant)

72.  I accept that such a term was indeed implied.

73.  He then cited the case of D A Coleman v S and W Baldwin [1977] IRLR 342 and submitted that the employer must not unilaterally change the nature of the employee’s job duties, including by way of removing important duties from the employee.

74.  In D A Coleman, the employee, Mr Coleman, had been employed by the employer, which carried on business as wholesale greengrocers, since 1940. Mr Coleman had progressed: by around 1972 – 1973, he was doing all the buying of the greengrocery which the employer dealt in. In 1976, when Mr Coleman was on holiday, the duties of buyer were discharged by another member of the staff. It appears that that other staff member had done well with the buying job, so much so that the employer decided to continue with the arrangement despite Mr Coleman’s return from his holiday, and as a result that other member of the staff was assigned to do all the purchasing from the market from then on. Mr Coleman then decided to resign. The issue was whether he should be treated as having been constructively dismissed. The Employment Appeal Tribunal held that:

“[…] It is quite clear on the evidence that not only were the buying duties from which Mr Coleman was removed the most interesting and enjoyable ones, and ones to which he attached considerable importance both in terms of job satisfaction and in terms of prestige, but that from a trading point of view they must have been very important, because […] he did all the buying and therefore was responsible for the procuring of all the merchandise which it was the business of the company to sell. One has only to state this to see that, on any view of it, it was an important part of the functions of his job which were removed from him. […]

[…] Here is a man who had been employed for this firm for 36 years or thereabout and who previously had undertaken as part of his appointment certain well defined duties, an important part of which had been removed in 1975. He has assented to that. Then in 1976 a further very important part of his duties had been removed, to which he was not willing to assent, thus leaving him with only the residual duties which, although they might be important, were of a very humdrum character. In those circumstances, looking at it positively, it seems to us that even without imposing or seeking to impose other duties the employers had unilaterally changed the whole nature of Mr Coleman’s job; that this was in fact a requirement for him to do something fundamentally different. That is not something which without his consent they are entitled to demand. They can ask, they can negotiate, but they cannot do it unilaterally and by way of ultimatum. In those circumstances we think that Mr Coleman was entitled to say, ‘No, I am not prepared to continue to serve you on those terms,’ and that this is in fact a true case of constructive dismissal where the employers by their conduct have intimated an intention not to be bound by the original and unchanged terms of the contract. […]” (emphasis added)

75.  With respect, I do not agree that this authority supports Mr Lee’s contention to its fullest extent. At most, it can only be said that there is an implied term that the plaintiff would not unilaterally change the whole nature (as opposed to just “the nature”) of the 1^st defendant’s job. The change must be fundamental in order to be protected from the perspective of the employee.

76.  It is also quite bold for the 1^st defendant to suggest that an employer cannot vary, take away or add different responsibilities, duties and/or powers. These suggested terms are way too wide and general to be accepted.

77.  The 1^st defendant also advocated that there should be an implied term that he would not be demoted. Mr Lee has not cited any authority in support of this contention. Be that as it may, I accept that this proposed term may be implied into the Employment Agreement, provided the change of title would lead to a fundamental change to the whole nature of the job.

78.  The 1^st defendant also submitted that there should be an implied term that the plaintiff shall not hinder, obstruct or prevent the performance of his duties and responsibilities as General Manager. Mr Lee based this proposed implied term on the employer’s duty of trust and confidence. On my part, I take the view that Mr Lee’s argument means that there is no need to imply another term as suggested other than the trite implied duty of mutual trust and confidence.

79.  Lastly, the 1^st defendant argued that there should be an implied term that the plaintiff shall give prior notice of any changes in the plaintiff’s personnel to the 1^st defendant and/or shall consult him upon such changes. With respect, I do not accept such an argument. While the 1^st defendant has been given the title of General Manager, and had been entrusted with the overall responsibility on the daily management and performance of the plaintiff, this would not change the fact that the 1^st defendant was just an employee who had to report to Mr Lai, who, in reality, was his boss. To imply the proposed term into the Employment Agreement would in effect be elevating the 1^st defendant’s status as a quasi-partner of Mr Lai. This cannot be right.

G2.  Fiduciary duties

80.  Despite the fact that the 1^st defendant was appointed as the General Manager of the plaintiff, he denied that he owed any fiduciary duties to the plaintiff.

81.  In Bloch and Brearley, Employment Covenants and Confidential Information (4^th ed (2018)) at §§4.5-4.6, the learned author stated that:

“4.5 The leading analysis of the circumstances in which an employee who is not a director might owe fiduciary duties is that by Elias J in University of Nottingham v Fishel [2000] ICR 1462 […]:

‘[…] in determining whether a fiduciary relationship arises in the context of an employment relationship, it is necessary to identify with care the particular duties undertaken by the employee, and to ask whether in all the circumstances he has placed himself in a position where he must act solely in the interest of his employer. It is only once those duties have been identified that it is possible to determine whether any fiduciary duty has been breached.’

4.6 An analysis is therefore required as to whether in all the circumstances, and by reference to the specific contractual obligations, the employee has undertaken to act solely in the employer’s interests. In Fishel Elias J further explained (pages 1491G–H) that fiduciary duties:

‘… arise not as a result of the mere fact that there is an employment relationship. Rather they result from the fact that within a particular contractual relationship there are specific contractual obligations which the employee has undertaken which have placed him in a situation where equity imposes these rigorous duties in addition to the contractual obligations. Where this occurs, the scope of the fiduciary obligations both arises out of, and is circumscribed by, the contractual terms; it is circumscribed because equity cannot alter the terms of the contract validly undertaken ….’”

82.  In the present case, the 1^st defendant was the General Manager of the plaintiff. According to the 1^st defendant’s own case, he was recruited by the plaintiff to, inter alia, expand the plaintiff’s business into the project lighting business. Mr Lai also wanted him to introduce and bring over all his business connections with suppliers and customers in the project lighting industry to the plaintiff. Taking these matters into account, I have little doubt that the 1^st defendant did owe fiduciary duties to the plaintiff.

G3.  The plaintiff’s alleged breach of the Employment Agreement and constructive dismissal

83.  The 1^st defendant claimed that the plaintiff had breached the implied terms of the Employment Agreement and that he had been constructively dismissed by the plaintiff because his powers and duties in the plaintiff had been chiselled away since around August 2014. He relied on the following matters:

(1)  In late July 2014, the plaintiff’s accountant at the time (Ms Carmen Ho) resigned. Instead of letting the 1^st defendant fill the position after interviews, Mr Lai vetoed the candidate selected by the 1^st defendant without reason;

(2)  Mr Lai then proceeded to install Ms Harris Tsoi as the new Administrative Manager in mid-August 2014, without informing any staff members in the plaintiff in advance. Ms Tsoi’s duties substantially overlapped with those of the 1^st defendant and vetoed various decisions of the 1^st defendant (including the payment of commission to Mr Ho, and the delivery of gifts to key clients of the plaintiff). There were also arguments between the 1^st defendant and Ms Tsoi since Ms Tsoi refused to follow the 1^st defendant’s instructions to send gifts to key clients, during which Ms Tsoi retorted that she would only be answerable to Mr Lai. Ms Tsoi also excluded the 1^st defendant from management meetings and restricted the 1^st defendant’s access to the accounting records of the plaintiff;

(3)  In September 2014, Mr Lai further hired Ms Peggy Lai, and then fired the 1^st defendant’s long-time subordinate Ms Debby Lai on 19 September 2014 without consultation with the 1^st defendant. This was on the day right after Mr Lai had met with the 1^st defendant and Mr Ho in the Holiday Inn Hotel in Tsim Sha Tsui on 18 September 2014, during which Mr. Lai promised and confirmed that Mr. Ho should continue to mediate the disputes between Ms Tsoi and Ms Debby Lai;

(4)  The 1^st defendant had raised the issues with Mr Lai who had taken a highly dismissive approach and ignored the 1^st defendant’s requests. Mr Lai also told that he would insist on the changes in the plaintiff.

84.  Mr Lai denied that he had deliberately planned and carried out any action to undermine the 1^st defendant’s position.

85.  When the Court considers whether Mr Lai had indeed done anything deliberately to undermine the 1^st defendant’s position and status in the plaintiff, it is important to bear the following matters in mind:

(1)  There is no evidence whatsoever that Mr Lai and the 1^st defendant had had any disagreement or been engaged in any quarrels before the happening of the various incidents relied on by the 1^st defendant;

(2)  It is evident that the plaintiff had been relying a lot on the 1^st defendant’s connections and experience in the project lighting field;

(3)  Ms Tsoi whom the 1^st defendant alleged that the plaintiff had placed above him was responsible for internal administration and logistics matters of the plaintiff as opposed to getting in business for the plaintiff.

86.  In my view, the above surrounding circumstances show that it is inherently improbable that Mr Lai would do anything against the 1^st defendant, whether deliberately or otherwise. Destroying the relationship between the plaintiff and the 1^st defendant would be nothing but detrimental to the benefit of the plaintiff. There is simply no reason for the plaintiff or Mr Lai to do that.

87.  Furthermore:

(1)  It is difficult to understand how Mr Lai’s veto of the 1^st defendant’s suggestion of candidate to fill the plaintiff’s accountant post could amount to a matter which could be taken into account in the 1^st defendant’s claim of constructive dismissal or breach of implied terms: Mr Lai was in reality the boss, and the 1^st defendant was only an employee despite his title of General Manager. Indeed, in his oral evidence, the 1^st defendant accepted that he was only entitled to recommend candidate to Mr Lai but had no right to decide which candidate to employ. In other words, he accepted that his recommendation was subject to the approval of Mr Lai;

(2)  To put the 1^st defendant’s case to the highest, Ms Tsoi’s duties had overlapped only with part of the 1^st defendant’s administrative duties. However, it must be emphasized that the most important duty of the 1^st defendant – getting in project lighting business for the plaintiff – was not affected at all. Therefore, it cannot be said that there was a fundamental change to the whole nature of the 1^st defendant’s job, not to mention that there was no demotion as such;

(3)  The fact that Ms Tsoi refused to follow the instructions of the 1^st defendant is a matter between them. I do not accept that Ms Tsoi’s disagreement with the 1^st defendant could be taken as if it was endorsed by the plaintiff/Mr Lai;

(4)  I do not accept as a matter of fact that the 1^st defendant had been denied access to the plaintiff’s accounts. According to the 1^st defendant’s own evidence, he was able to retrieve the summary of sales, costing and profit of the plaintiff through Ms Debby Lai. If there was any restriction imposed by the plaintiff that the 1^st defendant shall not be allowed access to the plaintiff’s accounting records, he would not have been able to obtain the said records from Ms Debby Lai at all. Indeed, there is no evidence that Ms Debby Lai had been instructed by Mr Lai/Ms Tsoi not to disclose such records to the 1^st defendant at all;

(5)  I also do not accept as a matter of fact that Mr Lai had really asked Mr Ho on 18 September 2014 to mediate, because otherwise it would be inherently improbable that Mr Lai would fire Ms Debbie Lai on the following day. In any event, I do not think Mr Lai was bound to consult the 1^st defendant before he decided to fire any staff member;

(6)  As to Ms Tsoi’s alleged representation that she would only be answerable to Mr Lai, even if she had said so, that would not be enough to support the 1^st defendant’s claim of constructive dismissal or breach of implied terms, because I do not accept as a matter of fact that Ms Tsoi’s alleged stance had been endorsed by the plaintiff/Mr Lai. It is inherently improbable (and there is no evidence to that effect) that the plaintiff/Mr Lai would do anything to please Ms Tsoi at the risk of ruining the relationship with the 1^st defendant who was very important to the business of the plaintiff.

88.  In Mr Lee’s closing submissions, the 1^st defendant further relied on an allegation that after he tendered his resignation letter on 29 September 2014, he was informed by Mr Lai’s secretary on 2 October 2014 that he (the 1^st defendant) was no longer having any authority to sign quotations or purchase orders for new transactions on behalf of the plaintiff with immediate effect.

89.  It is not entirely clear as to the relevance of this part of the allegations, because according to the 1^st defendant’s pleaded case, he had been constructively dismissed on 29 September 2014, and there is no alternative pleaded case that he was constructively dismissed by virtue of the plaintiff’s alleged restriction from 2 October 2014 onwards.[9]

90.  In any event, since the 1^st defendant had resigned, I do not think there was anything wrong on the part of the plaintiff even if it had indeed taken away part of the 1^st defendant’s authority, not to mention that, as a matter of fact, I do not accept the 1^st defendant’s case that he had been deprived of his right to sign quotations on behalf of the plaintiff. This is because, if that was indeed the case:

(1)  The 1^st defendant must have informed Mr Ho about this, given their close relationship: Mr Ho was invited by the 1^st defendant in 2011 to join the plaintiff; the 1^st defendant’s resignation on 29 September 2014 prompted Mr Ho to consider his own career future, and consequentially tendered his own resignation on 9 October 2014;

(2)  Be that as it may, Mr Ho still prepared the Discovery Park Quotations by keeping the name and electronic signature of the 1^st defendant thereon. This supports the plaintiff’s case that the 1^st defendant had not been excluded to sign the plaintiff’s quotations.

91.  To conclude, I hold that the plaintiff’s action or course of conduct allegedly leading up to the 1^st defendant’s departure from the plaintiff did not constitute repudiatory breach of the Employment Agreement and/or constructive dismissal of the 1^st defendant.

G4.  The time when the Employment Agreement came to an end

92.  Given the above conclusion reached by this Court, there is no doubt that the Employment Agreement only came to an end on 7 November 2014 when the 1^st defendant left the plaintiff earlier than originally planned as agreed by Mr Lai.

93.  It goes without saying that the duties which the 1^st defendant owed to the plaintiff did not change despite his tender of resignation on 29 September 2014.

G5.  Abucus – was the 1^st defendant in breach of his duties

94.  As aforesaid, the 1^st defendant tendered his resignation to the plaintiff on 29 September 2014.

95.  On the next day, the 1^st defendant and Mr Banks, Finance Director of Abacus, had had a drink gathering.

96.  There was a factual dispute between the parties as to what had been discussed between Mr Banks and the 1^st defendant during this drink gathering. I will deal with this matter later. However, before I do so, it is necessary to set out a number of emails exchanged between the 1^st defendant and Abacus from early October 2014 to mid-October 2014 first:

(1)  On 5 October 2014, the 1^st defendant sent an email to Mr Banks which stated that:

“It’s good to meet up with you last Tuesday evening for a short drink.

As discussed, I will be leaving Green Light Marketing on or before 19 December 14 and would like to continue working with Abacus for Highmast and poles business under a new company as per below.

Pinetum Lighting Ltd.

Room 401 […]

Email: sandy@pinetum.com.hk

If you agree, I shall be grateful if you will issue an authorization letter as soon as possible to confirm that Pinetum Lighting Ltd will be your exclusive distributor for Hong Kong and Macau Markets with effective from January 15 onwards so that we can secure the Macau business as soon as possible.

Please find attached the Projects List prepared by my colleague who will be soon be working with me in this company very soon.

Please keep this as confidential and I would like to discuss with you the way forward over the phone next Monday evening at around 7:30 evening HK time.”

(2)  On 7 October 2014, the 1^st defendant wrote further to Mr Banks as follows:

“As spoken, Highmast for Happy Valley Project has beed (sic) approved and I can get the order placed in late November or early December 14 for deliveries in late Feb. 15 once we can get the authorization document to be sorted out.

We can discuss the new terms of payment at a later stage.

I look forward to a much more successful co-operation for the years to come bearing in mind that I have been involved in Abacus Highmast and columns business for nearly 20 years since Thorn’s Lighting age.

[…]”

(3)  On 10 October 2014, Mr Banks replied to the 1^st defendant as follows:

“[…]

As discussed on the phone Abacus UK is happy to give your new venture exclusively to sell Abacus products in Macau and Hong Kong going forward. Once you have left Green Light and started the new company I will organise a formal agreement.

There is one project we ask you not to compete on namely Hong Kong LRT station which out (sic) Singapore office is dealing with.

[…]”

(4)  On 13 October 2014, the 1^st defendant chased up Mr Banks by another email:

“In order for us to continue to pursue the Abacus business, I shall be grateful if you will e-mail to me an authorization letter as soon as possible.

If you wish, I can do a sample for you.

I need this letter quickly so that I can do with Happy Valley and opther (sic) projects quickly.

[…]

(5)  Later on the same day, the 1^st defendant sent an email to Mr Banks with the following content:

“Herewith the draft letter:

To whom it may concern.

Abacus Approved Sole Distributor for Hong Kong and Macau

We hereby welcome Pinetum Lighting Ltd Hong Kong as our approved Sole Distributor for Abacus Highmasts Lighting Hinge poles and Lighting Columns Products in Hong Kong and Macau with effective from 2 Jan 2015.

The contact details for Pinetum Lighting Ltd are as follows.

Pinetum Lighting Ltd.

Room 401 […]

Tel. +852-[…]

Fax. +852-[…]

The sole distributor approval covers full range of Abacus products as stipulated in our catalogues.”[10]

(6)  A few hours later, Mr Garry Parsonage (“Mr Parsonage”), the Export Operations Manager of Abacus, sent the 1^st defendant the following email:

“Please see the attached authorization letter for now confirming the agreement. We will follow this up with a final agreement for both parties to sign so everybody is clear on the terms of the agreement. If you need any changes just let me know, I also note that the new company will start with effect from January. Does this mean any orders until then will be received from Green Light?”

The authorisation letter reads:

“Dear Sir,

We hereby confirm Pinetum Lighting Ltd Hong Kong as our approved sole distributor for Abacus exterior lighting solutions in Hong Kong and Macau with effective from 2 January 2015.

The contact details for Pinetum Lighting Ltd are as follows.

Pinetum Lighting Ltd.

Room 401 […]

Tel. +852-[…]

Fax. +852-[…]

The sole distributor approval covers the full range of Abacus products as stipulated in our catalogues along with any custom project requirements […]”

97.  It should also be mentioned at this point that the 1^st defendant has all along denied that he has ever joined Pinetum. He only admitted that he had had a plan to do so when he met Mr Julian Wong of Pinetum for dinner in early October 2014 but such a plan, he alleged, had never materialized.

98.  As explained in the earlier part of this Judgment, the 1^st defendant’s evidence was self-contradictory and unbelievable in this regard and I have no hesitation in rejecting the same. Apart from those matters which I have mentioned in section F3.1 above, it should also be noted that, in the 1^st defendant’s email dated 5 October 2014, he had stated categorically that the name of his new company was Pinetum, and it is simply undeniable that he was already working for Pinetum at the material time in causing Abacus to appoint Pinetum as its “approved sole distributor for Abacus exterior lighting solutions in Hong Kong and Macau”.

99.  Coming back to the drink gathering on 30 September 2014, the 1^st defendant submitted that it was nothing other than a casual chat during which he informed Mr Banks that he might be joining another company after leaving the plaintiff, and that it was Mr Banks who insisted that the 1^st defendant should send him the details of his new company so that Abacus could continue its business relationship with him.

100.  The 1^st defendant also said that Mr Banks’ request had led to the 1^st defendant’s email dated 5 October 2014 in which the address of Pinetum was provided.

101.  The 1^st defendant’s evidence in this regard is, again, totally unbelievable. One only has to make reference to the said email sent by the 1^st defendant to Mr Banks on 5 October 2014, in which the 1^st defendant was already asking Mr Banks to issue an authorization letter as soon as possible so as to confirm Pinetum’s status as Abacus’ sole distributor in Hong Kong and Macau, to realise that the 1^st defendant’s evidence was just a pack of lies.

102.  On the other hand, Mr Banks’ evidence makes much more sense, which I accept. According to him, the 1^st defendant told him that the 1^st defendant was one of the owners of the plaintiff and that various projects of the plaintiff were in fact the 1^st defendant’s own projects, which would be brought to a new company because the plaintiff would be moving away from the Highmast products market. Indeed, it was Mr Banks’ evidence that he had decided that Abacus should terminate the Exclusive Distributor Agreement with the plaintiff only because of such a representation made by the 1^st defendant but not otherwise.

103.  On 22 October 2014, Mr Parsonage sent an email to the 1^st defendant who then forwarded to Mr Lai. It reads:

“Please see our attached letter regarding the subject of you leaving Green Light and our notice to cease the distributor agreement. As you have worked with Abacus for many years and you have been our sole contact in this region with all the Abacus product knowledge we feel that our products will not be promoted effectively through Green Light and intend to look at alternative methods of doing this.”

104.  The “attached letter” as referred to in the preceding paragraph, which was also signed off by Mr Parsonage, reads:

“Dear Mr Lam,

With regards to the distributor agreement Abacus Lighting Ltd has in place with Green Light Marketing Co Ltd we hereby give 90 days’ notice with effect from 21 October 2014 that we intend to cease this agreement. We understand that you will be vacating your position at Green Light and with this considered we feel that Abacus will not have full representation in the region or that Green Light will have sufficient Abacus product knowledge to actively promote our brand.”

105.  On the face of it, the letter issued by Abacus shows that the reason why Abacus wanted to terminate the Exclusive Distributor Agreement was the 1^st defendant’s departure from the plaintiff which could mean that the plaintiff no longer had the expertise to discharge its duty under the Exclusive Distributor Agreement. However, Mr Banks explained in court that Abacus in fact decided to terminate the said agreement and to do business with the 1^st defendant’s new company only because he (Mr Banks) was told by the 1^st defendant that the plaintiff would no longer be in the highmast business. Hence, although it is unexplained as to why the termination letter was written in such a way, I accept the plaintiff’s case that the Exclusive Distributor Agreement was only terminated because of 1^st defendant’s active inducement, rather than his mere departure from the plaintiff.

106.  In this regard, the 1^st defendant raised a number of further arguments:

(1)  While Abacus and the 1^st defendant had an agreement in principle that Abacus would terminate the agreement with the plaintiff and start a new agreement with the 1^st defendant’s new company, this agreement was still subject to contract i.e. that it was not binding until the final contract was signed;

(2)  It was also the intention of Abacus at the time that the formal contract would only be “organized” after the 1^st defendant had left the plaintiff and started the new company;

(3)  As the letter dated 21 October 2014 stated, Abacus only gave a 90 days’ notice to terminate the agreement, but it was not terminated there and then;

(4)  At the end of the day, no formal agreement has been entered into between Abacus and Pinetum;

(5)  In fact, the Exclusive Distributor Agreement did not provide Abacus with any right to terminate the agreement by giving notice as such;

(6)  At the end of the day, the Exclusive Distributor Agreement was not terminated until the plaintiff entered into the Non-Exclusive Distributor Agreement on 13 May 2015 (as it was so stated in the latter agreement).

107.  In my view, such arguments made by the 1^st defendant are futile, because, according to the evidence of Mr Banks and Mr Lai (both of which I accept), from the plaintiff’s and Abacus’ respective points of view, Abacus treated (and the plaintiff accepted) the Exclusive Distributor Agreement as having come to an end as a matter of reality in the period between January and May 2015. Mr Banks further confirmed in court that Abacus had treated Pinetum as its exclusive distributor in the same period, even though no goods had actually been sold to Pinetum. Indeed, Mr Parsonage had issued an authorization letter on 13 October 2014 and appointed Pinetum as Abacus’ sole distributor in Hong Kong and Macau. There could not be two exclusive distributors at the same time.

108.  In other words, as a matter of fact, the plaintiff had lost its right as sole distributor of Abacus in Hong Kong and Macau in January 2015, if not earlier.

109.  In my view, the plaintiff’s loss of such a right was plainly because of the 1^st defendant’s active procurement/inducement. In fact, he lied to Mr Banks for this purpose. Such actions on the part of the 1^st defendant were apparently done in breach of his duty of fidelity and fiduciary duties owed to the plaintiff.

110.  Insofar as it is the 1^st defendant’s argument that Abacus did not breach the Exclusive Distributor Agreement, I disagree, because Abacus was not entitled to terminate such an agreement by giving notice in 2014 by relying on Clause 12 thereof which provides that:

“Term and Termination

Unless earlier terminated as provided below, the term of this Agreement shall commence on 1 December 2013 (Date) and shall continue for 3 years. As the end of the term, the Agreement shall continue until terminated by either party on at least 90 Days prior notice.” (emphasis added)

111.  As far as the plaintiff’s loss is concerned, it is its pleaded case that but for the 1^st defendant’s aforesaid breach, Abacus would not have wrongfully terminated the Exclusive Distributor Agreement and the plaintiff would have continued to be the exclusive distributor of Abacus products and services both in Hong Kong and Macau at least until 30 November 2016, and would have been awarded and be able to complete the Univision Project and the HKZM Bridge Project. I will deal with these projects in Sections G6 and G7 below.

112.  Risking to state the obvious, the 1^st defendant’s reliance on the case of Kao Lee & Yip v Koo Hoi Yan [2003] 3 HKLRD 296 (at [57]) and his argument that he was only taking preparatory steps in contemplation of life after leaving the plaintiff is very bold and totally misplaced, for it is clear that he had gone far beyond the reasonable and acceptable limits.

113.  Before I leave this topic, I should also say a few words on the project list which the 1^st defendant sent to Mr Banks by his email dated 5 October 2014 as attachment (“the Project List”).

114.  It is the plaintiff’s case that the Project List contained confidential information. On the other hand, the 1^st defendant claimed that all information in the said list could be obtained in the public domain, and therefore did not constitute trade secret as such.

115.  The actual project list which was sent by the 1^st defendant to Mr Banks has not been placed before the Court at all. When Mr Banks was shown a table of the plaintiff dated 14 October 2015 (which was the only table in the trial bundle that might be of the same kind as the Project List in question), he told the Court that the Project List which he received from the 1^st defendant was not similar to the said table, and that the Project List contained less details than the said table.

116.  In such circumstances, this Court is unable to make any findings as to what exactly the Project List contained. Neither could the Court draw any inference on its content. Hence, the conclusion is that the plaintiff failed to prove that the Project List contained any trade secret as such.

G6.  The Univision Project

117.  It is the plaintiff’s case that but for the termination of the Exclusive Distributor Agreement, the plaintiff would:

(1)  have been awarded the Univision Project;

(2)  have completed the Univision Project.

118.  The plaintiff relied on its quotation dated 23 July 2014 (“the Univision Quotation”) issued to Univision Engineering Limited (“Univision Limited”) for the supply and installation of Abacus products at the consideration of $2,110,000, which Mr Peter Chan of Univision Limited signed and returned on 25 August 2014, and alleged that because of its loss of exclusive distributor status, Univision Limited was able to engage, and indeed subsequently engaged, Mak Hang Kei (HK) Construction Limited (“Mak Hang Kei”) to supply Abacus products for the Univision Project. As a result, the plaintiff alleged that it had suffered from loss of gross profit in the sum of $271,652.21.

119.  The 1^st defendant alleged that the Univision Quotation was not a binding contract as such, and was only evidence of preliminary interest for further negotiation on the part of Univision Limited. Parties were free to change their mind until a formal contract was entered into. Further, since the plaintiff was subsequently engaged by Mak Hang Kei for undertaking part of the Univision Project, the plaintiff’s alleged loss was avoided in whole or in part.

120.  Be that as it may, it was not really undisputed by the parties that:

(1)  The plaintiff and Univision Limited had had an agreement on the price of the Abacus products as quoted in the Univision Quotation;

(2)  Eventually, Univision Limited used Abacus products for the Univision Project;

(3)  The Abacus products were supplied by Mak Hang Kei to Univision Limited for the Univision Project;

(4)  The plaintiff was subsequently engaged by Mak Hang Kei to complete the installation work of the CCTV Masts.

121.  It must be borne in mind that if the Exclusive Distributor Agreement was still effective at the material time, no company other than the plaintiff could have supplied Abacus products to Univision Limited for the Univision Project.

122.  In other words, Mak Hang Kei could not have been awarded with the sub-contract but for the fact that the plaintiff was no longer the exclusive distributor of Abacus products in Hong Kong.

123.  Viewed in such light, even if the Univision Quotation was not a binding contract as alleged by the 1^st defendant, that does not really matter. The crucial facts are that Univision had decided to use Abacus products (as demonstrated by its execution of the Univision Quotation and its subsequent purchase of the same from Mak Hang Kei), and that Univision Limited had no choice but to purchase from the plaintiff.

124.  Hence, the plaintiff must have suffered loss by reason of its loss of the purchase contract with Univision Limited.

125.  The 1^st defendant’s allegation that the plaintiff did not have the expertise to install the Abacus products cannot hold water, as demonstrated by the engagement of the plaintiff by Mak Hang Kei for the installation work.

126.  The 1^st defendant also relied on Univision Limited’s letter dated 23 June 2020 in its defence of this claim. This letter, which was signed off by Mr Peter Chan, reads:

“This is to confirm that the order for the contract had been placed with Mak Hang Kee Constructions Ltd due to the fact that they had more experience in handling the project of this nature […]”

127.  The 1^st defendant’s reliance on this letter must be futile because it does not address the point that Mak Hang Kei could not even enter the race for the Univision Project (by suggesting to use Abacus products) but for the termination of the Exclusive Distributor Agreement.

128.  The 1^st defendant also argued that the plaintiff had failed to mitigate its loss in that:

(1)  The plaintiff had never sought to hold Abacus to the Exclusive Distributor Agreement which would last until 2016;

(2)  The plaintiff did not ask for another exclusive distribution agreement in around May 2015;

(3)  The plaintiff did not insist that the Univision Project must be covered by the 2017 Exclusive Distribution Agreement;

(4)  The plaintiff did not propose a reduction in price;

(5)  The plaintiff did not propose the use of substitute products.

129.  While the 1^st defendant did plead “failing to mitigate” in paragraph 64(2) of the Re-Amended Defence and Counterclaim, it was actually pleaded in the following way:

“Insofar as the Plaintiff had been subsequently engaged by Mak Hang Kee Construction Ltd for part of the Univision Project and profited therefrom, the Plaintiff’s loss (which is denied in any event) had been avoided in whole or in part. Further, it is averred that the Plaintiff cannot recover for any such losses that it has failed to mitigate.”

130.  It can be seen that the defence of “failing to mitigate” was pleaded in relation to the plaintiff’s sub-contract with Mak Hang Kei. It has nothing to do with the alleged failures referred to in [128] above, which had never been expressly pleaded. In my view, it is very unfair if the 1^st defendant is allowed to rely on new grounds of defence in such a way.

131.  In any event, I accept Mr Lai’s evidence that, as a businessman, his priority was to maintain good relationship with Abacus, and he was not minded to resort to litigation as a matter of course. He’d rather to have a non-exclusive distributor agreement than totally nothing.

132.  To conclude, the 1^st defendant should be held liable for the plaintiff’s loss of profit in supplying Abacus products for the Univision Project.

133.  According to the evidence of Mr Daniel Wong, the plaintiff had suffered a loss of gross profit calculated as follows:

Univision Material Supply Revenue		$1,374,000.00
Less: Costs quoted from Abacus		($1,020,692.40)
Less: Transportation costs		($81,655.39)
Gross Profit		$271,652.21 =========

134.  I accept Mr Daniel Wong’s evidence despite Mr Lee’s challenge on his evidence.

135.  The 1^st defendant’s argument that the plaintiff had suffered a loss which was less than the above by reason of its having been engaged by Mak Hang Kei is misplaced. This is because, as Mr Daniel Wong explained, the above calculation only took into account the profit which could have been earned by supplying the Abacus products concerned.

136.  Hence, the 1^st defendant should be liable to the plaintiff in the sum of $271,652.21.

G7.  The HKZM Bridge Project

G7.1  The plaintiff’s case

137.  The plaintiff’s case may be summarised as follows.

138.  The plaintiff had already begun to provide design and submission services for BYME (E & M Contractor of the HKZM Bridge Project) back in November 2013 and all such services were rendered by using Abacus products.

139.  By an email dated 31 July 2015, Mr Grover Ho, a Sales and Marketing Executive of the plaintiff, sent a quotation (“the BYME July Quotation”) to Mr Chan Kin Keung of BYME (“Mr Chan”) and Mr Leung Chun Ming of BYME (“Mr Leung”).

140.  By an email dated 3 August 2015, Mr Chan replied to Mr Daniel Wong as follows:

“Generally we accept your final offer subject to approval from SOR. By the way, prepare (sic) of materials for formal submission is appreciated.” (emphasis added)

141.  In the period between 3 August 2015 and 7 August 2015, the parties were finalising the quotation for the HKZM Bridge Project.

142.  On 7 September 2015, Mr Grover Ho sent a revised quotation (“the BYME September Quotation”) to Mr Chan and Mr Leung upon BYME’s request. The fact that BYME had asked the plaintiff to issue the said quotation means that the vendor of the HKZM Bridge Project, the Highways Department, had approved the use of Abacus products in the said project.

143.  By an email dated 15 September 2015, Mr Leung asked Mr Grover Ho to “proceed the material and drawing submission accordingly”. BYME also sent a purchase requisition dated even date to the plaintiff, seeking to purchase lighting pole fittings (Beghelli) and light pole (Abacus) from the plaintiff in the quantity and at the price as per the BYME September Quotation.

144.  However, because of the plaintiff’s loss of its exclusive right regarding the sale of Abacus products in Hong Kong, BYME was able to engage, and did engage, another company which outbid the plaintiff for the supply of Abacus products for the HKZM Bridge Project.

145.  As a result, the plaintiff suffered a loss of gross profit in the sum of $2,292,196.64, which is calculated as follows:

Contract sum for Abacus light poles		$5,387,090.00
Less: Costs quoted from Abacus		($2,865,642.00)
Less: Transportation costs		($229,251.36)
Gross Profit		$2,292,196.64 ==========

G7.2  The 1^st defendant’s case

146.  The 1^st defendant denied liability in relation to the alleged loss. It was asserted, inter alia, that[11]:

(1)  The 1^st defendant had never been involved in the E&M works for the supply for light pole, light fitting and accessories for the HKZM Bridge Project while he was in the employment of the plaintiff and did not participate in the tender process of BYME;

(2)  The HKZM Bridge Project did not specifically require lighting suppliers/sub-contractors to supply high-mast lighting from Abacus;

(3)  Abacus had continued its supply of products to the plaintiff at the material time;

(4)  The BYME September Quotation did not amount to a binding contract, and was at best indication of preliminary interest for further negotiations on the part of BYME. Before formal contract was entered into, parties were free to change their minds, and there was no obligation on the part of BYME to award the HKZM Bridge Project to the plaintiff.

147.  The 1^st defendant also disputed quantum. It was said that the costs quoted from Abacus was at least US$376,209 (i.e. $2,934,430.20).

G7.3  Discussion

148.  In my view, the 1^st defendant’s various lines of defence on liability are misconceived.

149.  First, whether the 1^st defendant was ever involved in the HKZM Bridge Project while he was still in the employment of the plaintiff is totally irrelevant because the plaintiff’s claim in this regard is not premised upon what the 1^st defendant did or omitted to do on behalf of the plaintiff in the said project.

150.  Second, I do not think the plaintiff has to prove that the vendor or main contractor or anyone else has specified that Abacus products must be used in the HKZM Bridge Project before the plaintiff could establish liability against the 1^st defendant. I agree with Mr Chiu for the plaintiff that it is enough in the circumstances where:

(1)  The plaintiff competed for the project by proposing to use Abacus products; and

(2)  at the end of the day, Abacus products had been used for the HKZM Bridge Project.

151.  Third, neither is the fact that Abacus had continued its supply of products to the plaintiff at the material time relevant. The crux of the matter is that the plaintiff was no longer the exclusive distributor of Abacus products, and as a result, it had to face competition with other companies which could also supply Abacus products in Hong Kong.

152.  Fourth, it is not fatal to the plaintiff’s claim even if the BYME September Quotation was not a binding contract. In fact, realistically, it was exactly because the said quotation was not a binding contract that BYME was able to switch to another supplier (Celex) which had outbid the plaintiff[12]. This is exactly the complaint of the plaintiff: it would not have been lost to anybody else as far as the supply of Abacus products is concerned but for the termination of the Exclusive Distributor Agreement. In this regard, it must be borne in mind that BYME had indicated its acceptance of the plaintiff’s “final offer” back on 3 August 2015, “subject to approval from SOR” (Schedule of Rate). Hence, I accept the plaintiff’s case that but for the 1^st defendant’s breach, it is more likely than not that the plaintiff would have been awarded the HKZM Bridge Project.

153.  The 1^st defendant (together with Mr Ho) alleged that BYME was still inviting for quotations from various suppliers in around January 2016. However, they could not produce any documentary evidence in support. I therefore do not accept their mere say-so as I find that they are generally speaking incredible witnesses. In any event, I do not think that would affect my analysis of the plaintiff’s claim.

154.  The 1^st defendant also alleged that the plaintiff had failed to mitigate its loss. It was pleaded in paragraph 65(5) that:

“In the premises, paragraph 47(11) is denied. In any event, the quantum of the Plaintiff’s loss (which is denied) is not admitted. In particular, it is averred that the costs quoted from Abacus was at least US$376,209 (i.e. HK$2,934,430.20) as evidenced in a quote sent by way of email from Mr. Garry Parsonage of Abacus to Mr. Daniel Wong of the Plaintiff on 22 April 2015 at 10:36p.m. Further, it is averred that the Plaintiff cannot recover for any such losses that it has failed to mitigate.”

155.  What the 1^st defendant is now trying to argue is that the plaintiff had failed to mitigate in that:

(1)  It had never tried to propose another product; and

(2)  It did not propose to reduce its price earlier.

156.  As discussed under section G6 above, in the circumstances where the alleged reasonable steps had not been expressly pleaded, I am of the view that the 1^st defendant should not be allowed to rely on such steps.

157.  To conclude, I am of the view that there was undoubtedly a real or substantial chance that the plaintiff would have been awarded the contract but for the 1^st defendant’s breach.

158.  I now turn to quantum.

159.  To recap, the plaintiff claims for loss of gross profit in the sum of $2,292,196.64, which is calculated as follows:

Contract sum for Abacus light poles		$5,387,090.00
Less: Costs quoted from Abacus		($2,865,642.00)
Less: Transportation costs		($229,251.36)
Gross Profit		$2,292,196.64 ==========

160.  The contract sum of $5,387,090.00 was made up of:

Items	Qty	Unit price	Total
6M lamp pole single arm	56	$8,701	$487,256
6M lamp pole double arm	73	$9,060	$661,380
5M lamp pole double arm	14	$8,701	$121,814
12M lamp pole single arm	16	$12,559	$200,944
12M lamp pole double arm	291	$13,456	$3,915,696

(“the Contract Sum Break-Down”)

161.  Mr Lee argued that the above quotation of $5,387,090.00 had never been accepted by BYME and therefore it could not be used to prove the damages suffered by the plaintiff. With respect, this argument has overlooked the following matters:

(1)  By email dated 3 August 2015, Mr Chan has already indicated that BYME “accept[ed] your final offer”[13]. While that was said in relation to the BYME July Quotation, such a quotation was only revised subsequently because of the need to change the quantity of pole light;

(2)  The Contract Sum Break-Down was adopted by BYME in the Purchase Requisition dated 15 September 2015;

(3)  Even if the 1^st defendant’s case that the Purchase Requisition is an internal document prepared for the purpose of seeking budgetary approval is correct, the adoption of the BYME September Quotation by BYME must mean that BYME has accepted such quotation.

162.  I therefore accept the contract sum put forward by the plaintiff.

163.  The 1^st defendant then argued that the costs quoted from Abacus was at least US$376,209 (i.e. $2,934,430.20).

164.  Mr Daniel Wong also agreed to this figure[14].

165.  Mr Lee went further to argue that the plaintiff has not even obtained a quotation from Abacus on the costs of the 5M poles. In this regard, I accept Mr Daniel Wong’s evidence that when he calculated the costs of the 5M poles, he simply adopted the costs of the 6M poles. What Mr Daniel Wong did makes sense to me, because it is evident that the price quoted by the plaintiff in the BYME September Quotation for 5M lamp pole double arm was as same as that quoted for 6M lamp pole single arm. Furthermore, even if the costs of the two types of lamp poles are not the same, logically (and there is no evidence showing otherwise), the cost of the 6M lamp pole must be more than the 5M lamp pole. In other words, there is no ground for the 1^st defendant to allege that the plaintiff has claimed more than it is entitled to.

166.  Mr Lee then challenged Mr Daniel Wong’s calculation of transportation costs on the basis that there is no detailed explanation as to how it was arrived at. He asked the Court to find that the level of costs should be higher. However, he has provided no basis in support of his assertion.

167.  As I explained earlier, I find that Mr Daniel Wong is an honest witness. I therefore accept his evidence on transportation costs.

168.  Lastly, Mr Lee submitted that, while Mr Daniel Wong accepted in Court that the actual number of products used or purchased may vary from the amounts stated in the Purchase Requisition because of the situation at the site, there is no evidence that the variation would be minimal. Insofar as it is his submission that, as a result, the plaintiff has failed to prove its claim, I disagree. I accept Mr Daniel Wong’s evidence that the variation, if any, would be minimal. I therefore find that the Court should adopt the figures in the Purchase Requisition for the purpose of ascertaining the loss suffered by the plaintiff.

169.  I therefore come to the conclusion that the plaintiff has suffered from a loss of gross profit in respect of the HKZM Bridge Project in the sum of $2,223,408.44, which is calculated as follows:

Contract sum for Abacus light poles		$5,387,090.00
Less: Costs quoted from Abacus		($2,934,430.20)
Less: Transportation costs		($229,251.36)
Gross Profit		$2,223,408.44 ===========

G8.  The Happy Valley Project

G8.1  The plaintiff’s case

170.  Chat Horn is the main contractor involved in the Happy Valley Project, and placed purchase order with the plaintiff, which was supposed to supply certain floodlights for the said project.

171.  On 21 October 2014, Abacus wrote to Chat Horn as follows:

“This is to confirm that we will not support nor supply any high masts required for [the Happy Valley Project] to [the plaintiff], as our distributor agreement with them will be terminated very soon.

Please contact our new Hong Kong authorized distributor of whom we understand you already have the details of for the purchase, technical or warranty support of high masts required for the Happy Valley Project.”

172.  On 4 November 2014, Performance in Lighting Singapore Pte. Ltd (“PILS”), a supplier of those floodlights, also informed Chat Horn that:

“This is to confirm that we will not support nor to supply SBP Floodlights for [the Happy Valley Project] to [the plaintiff] since their key personnel are leaving soon.

Please contact our new Authorized Distributor for the purchase, technical or warranty supports of SBP floodlights required for the Happy Valley Project.”

173.  As a result, Chat Horn wrote to the plaintiff on 25 November 2014 as follows:

“It has brought to our attention recently that your high mast supplier, Abacus Lighting Ltd, and your lighting supplier, Performance Lighting Ltd., will not support nor supply the products / equipment as required in our captioned purchase order via your company. Attached please find the letters to us from Abacus Lighting Ltd dated 21 October 2014 and Performance Lighting Ltd dated 4 November 2014 which are self-explanatory for your reference.

Such situation should have been well made known to your goodself and reasonable time had been given for your rectification but without success which was demonstrated in various emails communication between your good self and us during the period from 14/11/2014 to 20/11/2014. In view of the above, we have to accept your breach and to cancel our purchaser order No.4556 dated 18/8/2014 to your company accordingly. […]”

174.  The plaintiff then spent time and costs to save the Happy Valley Project, which was achieved when Chat Horn withdrew the cancellation of its purchase order on 3 December 2014. It was pleaded in paragraph 29 of the Re-Amended Statement of Claim that:

“In order to resurrect the Happy Valley Project, [Mr] Lai had travelled to Singapore to meet the representatives of PILS and to Shanghai to meet the representatives of Abacus.”

175.  The plaintiff therefore claims against the 1^st defendant for the followings[15]:

(1)  Travelling and accommodation expenses in the sum of $10,000 incurred for the representatives of the plaintiff to fly to Singapore to seek support from PILS for the Happy Valley Project;

(2)  Travelling and accommodation expenses in the sum of $20,000 incurred for the representatives of the plaintiff to fly to Shanghai on two occasions to seek support from Abacus for the Happy Valley Project;

(3)  Alternatively, damages and/or equitable compensation in the sums of $10,000 and $20,000.

G8.2  The 1^st defendant’s case

176.  While the 1^st defendant initially denied the plaintiff’s claim in his pleading, he frankly admitted in Court that when he chased Mr Banks for an authorisation letter from Abacus by his emails on 13 October 2014 (see [96(4)] and [96(5)] above), he was minded to make sure that:

(1)  Pinetum could become the exclusive distributor of Abacus in Hong Kong soonest;

(2)  Pinetum could place order with Abacus as soon as possible for the Happy Valley Project which was originally the plaintiff’s project.

177.  While the 1^st defendant tried to shift the blame to Chat Horn by saying that it was Mr Edmond Kong of Chat Horn who chased him for the said authorisation letter, I do not consider this matter relevant at all.

178.  In the course of cross-examination, the 1^st defendant also stated initially[16] that he could not recall whether he did pass the authorisation letter which he received from Abacus to Mr Edmond Kong. In the light of the circumstances, I am of the view that this only reflects badly on his credibility.

179.  The 1^st defendant also gave evidence in Court that he only told PILS that he was going to leave the plaintiff, and did not mention anything else. I reject his evidence in that regard. Given how aggressive he was in diverting away the plaintiff’s exclusive distributor right as demonstrated above, I hold that it is more likely than not that he must also have persuaded PILS not to supply further products to the plaintiff for the Happy Valley Project.

180.  To conclude, I am satisfied that the defendant was in breach of his contractual and fiduciary duties owed to the plaintiff.

G8.3  Quantum

181.  What remains to be considered is whether the plaintiff has proved its damages.

182.  As aforesaid, it is the plaintiff’s case that it has incurred $10,000 for a trip to Singapore and another $20,000 for his trips to Shanghai, so as to talk to PILS and Abacus respectively.

183.  In the plaintiff’s Answers to the 1^st defendant’s Request for Further and Better Particulars of the Statement of Claim, the plaintiff further pleaded that:

(1)  In relation to the trip to Singapore:

(a)  Mr Lai met Mr Roberto Baggio of PILS on 18 November 2014 at 3pm at Hyatt Hotel in Singapore;

(b)  The total costs of $10,000 covers flight tickets ($3,500), hotel accommodation ($2,500), travelling expenses in Singapore ($1,000) and other expenses ($3,000).

(2)  In relation to the trips to Shanghai:

(a)  It was Mr Lai who made a total of 3 trips[17] to Shanghai;

(b)  Mr Lai met Mr Zeng Shen Tai and Mr Zhao Bi of Abacus in the period between November 2014 and January 2015 in different hotels and restaurants in Shanghai;

(c)  The total costs of $10,000 per trip covers flight tickets ($3,500), hotel accommodation ($2,500), travelling expenses in Shanghai ($1,000) and other expenses ($3,000).

184.  I am of the view that the plaintiff has failed to prove the alleged damages for the following reasons:

(1)  Mr Lai did not touch on the aforesaid expenses in his witness statements at all;

(2)  Neither did the plaintiff produce any documentary proof such as invoice/receipt for the flight tickets or hotel accommodation etc. in support of the claim;

(3)  In other words, before Mr Lai was cross-examined in Court, there was absolutely no evidence in support of the plaintiff’s claim in this regard;

(4)  When Mr Lai was cross-examined in Court, he stated that he had flown to Shanghai once only for the alleged purpose of persuading Abacus, as opposed to twice/thrice as pleaded;

(5)  By a letter dated 23 December 2017, Mr Zeng (General Manager of Shanghai Jadee E&M Company Limited (“Jadee Limited”) in Shanghai) confirmed that Jadee Limited has only been the OEM manufacturing agent of Abacus in China and that it had no authority to speak on behalf of Abacus;

(6)  Mr Lai also accepted in Court that Mr Zeng was not directly employed by Abacus, and that he had no authority to represent Abacus as far as its business in Hong Kong was concerned;

(7)  Hence, it is not explained why Mr Lai considered it useful to talk to Mr Zeng at all for the purpose of savaging the Happy Valley Project;

(8)  Mr Lai’s evidence in court on his trip to Singapore was limited and was inadequate to prove his pleaded case in that regard. What he pleaded in his Further and Better Particulars cannot be treated as if they were his evidence.

G9.  The P533 Project

G9.1  The plaintiff’s case

185.  It is the plaintiff’s case that the 1^st defendant has diverted a mature business opportunity from the plaintiff to Automatic Limited in the following circumstances.

186.  On 26 May 2014, Gammon E&M Limited (“Gammon Limited”) issued an Instruction to Sub-Contractor (“the Gammon Instruction to Sub-Contractor”), and instructed the plaintiff to carry out a series of work.

187.  The Gammon Instruction to Sub-Contractor expressly referred to the plaintiff’s quotation dated 11 February 2014 (“the P533 February Quotation”) which quoted an amount of $430,000.

188.  On 25 February 2014, the plaintiff issued a Letter of Intent (“the P533 Automatic Letter of Intent”) to Automatic Limited regarding the P533 February Quotation and accepted Automatic Limited’s quotation price of $358,500.

189.  On 11 September 2014, the plaintiff issued a revised quotation (“the P533 September Quotation”) to Gammon Limited which was signed by the 1^st defendant and quoted a price of $535,500.

190.  On 15 October 2014, the 1^st defendant sent an email (“the Email to Gammon”) to Mr Tony Tsz Kin Chau (“Mr Chau”) of Gammon Limited, and stated that:

“For the recent lighting control system for P533 tunnel project, I suggest you consider to place order direct to Automatic Engineering Ltd. since we have no direct involvement for the system for this project and that I will be leaving Green Light in about a month’s time.”

191.  It is the plaintiff’s case that the 1^st defendant had full knowledge of the terms of the P533 February Quotation, the P533 Automatic Letter of Intent and the P533 September Quotation, and that the plaintiff had already been instructed by Gammon Limited to carry out the works referred to above. The drawing submission prepared by the plaintiff had also been reviewed by the architect.

192.  As a result of the 1^st defendant’s aforesaid email, Gammon Limited subcontracted the works under the P533 Project to Automatic Limited, and thereby causing the plaintiff’s loss of chance to continue working for Gammon Limited under the said project.

193.  The plaintiff therefore claims against the 1^st defendant for loss of gross profit in the sum of $71,500 (on the basis of the P533 February Quotation) or alternatively $109,020 (on the basis of the P533 September Quotation).

G9.2  The 1^st defendant’s case[18]

194.  The P533 Project was part of a wider project concerning the south runway of the Hong Kong International Airport, and it was Mr Ho who was responsible for this project.

195.  The plaintiff initially submitted the P533 February Quotation to Gammon Limited in February 2014, which was tentatively accepted by Gammon Limited, which gave preliminary instructions to the plaintiff to carry out the works in the Gammon Instruction to Sub-Contractor. However, those preliminary instructions were subject to revision and further agreement.

196.  The P533 Project concerned the provision of tunnel lighting control on which the plaintiff had no expertise. It was intended by the plaintiff that Automatic Limited, which was experienced in tunnel lighting control, would be engaged by the plaintiff as a lighting sub-sub-contractor/supplier to carry out the project, which was known to Gammon Limited at all material times.

197.  The plaintiff submitted the P533 September Quotation as a revised quotation in September 2014 upon Gammon Limited’s request for additional works/materials to be done/supplied in relation to the P533 Project. However this revised quotation was not accepted by Gammon Limited.

198.  After the 1^st defendant has left the plaintiff, the plaintiff continued to discuss with Mr Wong of Automatic Limited regarding a revised quotation. There were also requests from the plaintiff to obtain a reduction in Automatic Limited’s quoted prices as well as better payment terms. However, Mr Lai did not follow the matter up upon his receipt of a revised quotation from Automatic Limited and as a result no agreement was reached between the plaintiff and Automatic Limited.

199.  On 2 January 2015, Gammon Limited wrote to the plaintiff (“Gammon’s Withdrawal Letter”) as follows:

“Due to lacking of resource to carry out the captioned work from your company, we are writing to withdraw the Instruction to Sub-Contractor ref, J3455/1020/004 from your Sub-Contract.

This letter is served as a formal notification of withdrawal of the Instruction and to record there are no abortive works or materials as a result of the withdrawal.”

200.  Hence, the withdrawal of the plaintiff from the P533 Project had nothing to do with the 1^st defendant at all. It was due to the plaintiff’s failure to follow up the project and to accept Automatic Limited’s revised quotation.

201.  Furthermore, the P533 Project was not a maturing business opportunity and the plaintiff’s quotation was subject to further revision and discussion. As no formal contract had been signed, Gammon Limited was free to change its mind, and was not obliged to award the work to the plaintiff.

202.  The 1^st defendant did not gain any profits, salary and/or commission from Automatic Limited as a result of Gammon Limited’s decision to directly work with Automatic Limited.

203.  In any event, the opportunity relating to the P533 Project was not brought to the 1^st defendant by virtue of his employment with the plaintiff.

204.  Further, the plaintiff cannot recover any alleged loss that it had failed to mitigate.

G9.3  Discussion

205.  Mr Lee for the 1^st defendant has made quite a number of different arguments which I will deal with in turn below.

206.  First, it was said that according to the evidence of the 1^st defendant himself and of Mr Ho, the 1^st defendant had little involvement in the P533 Project, and that the only involvement on the part of the 1^st defendant was the issuance of the Email to Gammon.

207.  In my view, whether it was the 1^st defendant or Mr Ho who was in charge of the P533 Project is totally irrelevant. The focus of the plaintiff’s complaint was the issuance of the Email to Gammon, and the right question to ask is who issued that email and why that was done.

208.  In fact, the argument that the 1^st defendant was not responsible for the P533 Project in the first place only reinforces the plaintiff’s case that the purpose of the said email was to divert the business opportunity to Automatic Limited: If there was any need to communicate with Gammon Limited in relation to the P533 Project, it was normally done by Mr Ho who was the main person responsible for this project.

209.  Second, Mr Lee argued that the plaintiff’s role in the P533 Project was as an intermediary, given no one in the plaintiff had sufficient expertise to handle the project, and as a result the plaintiff was not the one which in fact provided the substantive services to Gammon Limited.

210.  With greatest respect, this again is an irrelevant matter. It is undisputed that Gammon Limited knew about this arrangement (including the fact that Automatic Limited was the plaintiff’s sub-contractor) all along, and had not raised any objection against it.

211.  In any event, this cannot justify the issuance of the Email to Gammon.

212.  Third, it was argued on behalf of the 1^st defendant that the Gammon Instruction to Sub-Contractor were preliminary instructions and did not constitute mature business opportunity.

213.  The short answer to this argument is that it cannot be disputed that Gammon Limited had already given instruction to the plaintiff to start working under the Gammon Instruction to Sub-Contractor which reads:

“Dear Sirs,

We write to confirm the following instructions given to your representative by our Tony Chau on 26 May 2014.

Details:

You are instructed to carry out the following works:

1. Supply and delivery of Tunnel lighting control panel with mimic panel with reference to […]

2. Submit shop drawing for tunnel lighting control panel and mimic panel

3. Material Submission of tunnel lighting control panel and mimic panel

4. Training, Programming & T&C for the tunnel lighting control

5. Provided interface with Airfield SCADA

[…]

The work will be measured and valued as follows:

The Price shall be referred to your quotation ref GLM-Q173-0914(R4) dated 11 Feb 2014” (emphasis added)

214.  It can be seen that the allegation that the instruction was “preliminary” is simply contradicted by the Gammon Instruction to Sub-Contractor itself.

215.  Moreover, the 1^st defendant’s own evidence at paragraph 75 of his 1^st witness statement as follows should be noted:

“[…] The reason why Gammon wanted to use the Plaintiff as an intermediary was because the Plaintiff was already a contractor hired by Gammon to work on another part of the P533 Project, and it may not want to go through the trouble of seeking approval (whether internally or from the employer) for retaining a new sub-contractor, especially when the amount for the project is not too involved (sic).”

216.  Furthermore, if the said instruction was in such a preliminary stage and that there was no obligation on the part of Gammon Limited to engage the service of the plaintiff, there was no need for Gammon Limited to issue a “formal notification of withdrawal of the Instruction” (see Gammon’s Withdrawal Letter quoted in [199] above).

217.  The fact that further changes to the instructions were required subsequent to the issuance of the Gammon Instruction to Sub-Contractor is, in my view, irrelevant, and would not affect the view expressed above, because the existence of those changes does not necessarily mean that the instructions given in the Gammon Instruction to Sub-Contractor were preliminary nor does it mean that the business opportunity was not mature at the time.

218.  Fourth, it was argued that because of the numerous comments made by the Airport Authority, the plaintiff had to revise its quotation, which led to the issuance of the P533 September Quotation, and that Gammon Limited had not accepted the new price quoted by the plaintiff.

219.  Insofar as it is argued that because the new price had not yet been agreed and therefore there was no mature business opportunity, I disagree, for it is undisputed that instructions to work had already been given by Gammon Limited to the plaintiff.

220.  Further, as pointed out by Mr Chiu for the plaintiff, Gammon Limited did not mention about the plaintiff’s price in the Gammon’s Withdrawal Letter at all as the reason for withdrawal of instructions.

221.  In my view, the 1^st defendant’s argument in this regard is only relevant as far as quantum is concerned, which I will further consider below.

222.  Fifth, Mr Lee pointed out that even if the plaintiff proceeded with the P533 Project, its profit margin would be minimal. He quoted the 1^st defendant’s witness statement as follows in support:

“72(d) As a result of the above, the Plaintiff would either suffer a loss or only obtain negligible profits (and yet have to bear risk of matters going wrong) if it proceeded to undertake to carry out the works set out in the P533 MCP Quotation at the price requested by Gammon. As such, it was clear that the best option was simply for the Plaintiff to terminate its involvement with the project, and for Gammon to contact Automatic directly. It was under such circumstances that the email dated 15 October 2014 was sent.

73. As far as I can recall, by the time of my departure from the Plaintiff, the above issue remained unresolved and Gammon refused to pay more for the additional material it requested (while Automatic refused to lower its prices). This would mean that the project would either create a loss and/or not general (sic) any real profits for the Plaintiff. Further, under Automatic’s payment terms requiring a substantial deposit from the Plaintiff, and this was something the Plaintiff found unfavourable and/or was reluctant to accept. I recalled that no revision/amendment was finalized between Gammon and the Plaintiff (or between Plaintiff and Automatic) at the time I left the Plaintiff.” (Mr Lee’s emphasis)

223.  What the 1^st defendant in effect was saying by virtue of the above was that not only did he not breach his duties to the plaintiff, he was actually doing something good for the plaintiff’s interest.

224.  In paragraph 49(3) of the Re-Amended Defence and Counterclaim, the 1^st defendant pleaded the followings in response to paragraph 34(3) of the Re-Amended Statement of Claim (which was the paragraph under which the Email to Gammon was quoted in full):

“As to paragraph 34(3), the admissibility of the email as pleaded is not admitted. The pleadings and averments contained in this Re-Amended Defence are made without prejudice to the right of 1^st Defendant to strike out this paragraph or challenge the admissibility of the email pleaded therein. The 1^st Defendant also reserves the right to plead further upon further and better discovery. Without prejudice to the foregoing, it is averred that:-

(a) The contents of the email pleaded do not support the allegation that the 1^st Defendant diverted business opportunity from Plaintiff to Automatic.

(b) At all material times, it was mutually understood between Gammon and the Plaintiff that the P533 Project was to be done by Automatic since the Plaintiff did not have the necessary expertise.

(c) The Plaintiff had been discussing P533 Project and the relevant quotations with Automatic. Hence, Automatic had full knowledge of the terms of the P533 quotations with the consent and knowledge of the Plaintiff. The matters pleaded in this Section VII hereinabove are repeated.”

225.  It can be seen that the alleged good intention was not pleaded at all. In my view, the 1^st defendant is not allowed to rely on such a material matter in his witness statement without including it in his pleading.

226.  Even if the Court is obliged to consider this part of the 1^st defendant’s evidence, I have no hesitation to reject such evidence and hold that the alleged good intention is an after-thought on the part of the 1^st defendant because if he had had such a good intention, he would have included it in his Re-Amended Defence and Counterclaim when he pleaded his case in relation to the Email to Gammon.

227.  Sixth, the 1^st defendant argued that the Email to Gammon did not cause the plaintiff to lose the P533 Project. He suggested that the real causes were:

(1)  No one in the plaintiff had the expertise to handle the P533 Project even as an intermediary after Mr Ho’s departure from the plaintiff;

(2)  The issue of pricing among the plaintiff, Automatic Limited and Gammon Limited remained unresolved.

228.  In my view, these cannot be the real reasons because:

(1)  Gammon Limited knew about the plaintiff’s role as an intermediary in the P533 Project all along and had never raised any objection;

(2)  The 1^st defendant accepted in Court that Mr Ho only had limited experience in the work involved in the P533 Project;

(3)  The issue of pricing was simply not referred to in the Gammon’s Withdrawal Letter.

229.  While this Court has rejected the reasons suggested by the 1^st defendant, I bear in mind that, after all, it is the plaintiff which bears the burden of proving the link between the Email to Gammon and the Gammon’s Withdrawal Letter.

230.  When considering this question, it should be borne in mind that the Gammon’s Withdrawal Letter cited “lack of resources” as the reason why the instructions to the plaintiff were withdrawn.

231.  However, if that was the real reason, it is strange that there was no prior warning issued by Gammon Limited, which, if any, would normally have been referred to in the Gammon’s Withdrawal Letter.

232.  Furthermore, given the limited role which the plaintiff played in the P533 Project, I wonder what “resources” would be required for the purpose of carrying out the work according to the Gammon Instruction to Sub-Contractor, as such work would be done by the plaintiff’s sub-contractor – Automatic Limited. Indeed, in the 1^st defendant’s 1^st witness statement, he had the following to say at paragraph 75:

“[…] all along and even prior to submission of the P533 Project, Gammon was already well aware of Automatic and its expertise in tunnel light control, and it was also aware that the Plaintiff was only acting as an intermediary […]”

233.  Having considered all the relevant evidence, I hold that it is more likely than not that Gammon Limited decided to withdraw its instructions to the plaintiff in the P533 Project because of the Email to Gammon.

234.  Seventh, the 1^st defendant stated that he did not make any personal gain out of the P533 Project, and therefore he had no motive to cause Gammon Limited to withdraw its instructions to the plaintiff.

235.  In my view, it is clear that the intention of the 1^st defendant when he issued the Email to Gammon was to cause Gammon Limited to withdraw its instructions to the plaintiff in the P533 Project. That was clearly what he wanted to achieve as reflected in the Email to Gammon. Whether the 1^st defendant has made any personal gain as a result is neither here nor there.

236.  As far as the 1^st defendant’s motive is concerned, it should be remembered that:

(1)  the majority shareholder of Automatic Limited was Mr Julian Wong, who was also the majority shareholder of Pinetum;

(2)  the Email to Gammon was sent by the 1^st defendant on 15 October 2014. At around that time, the 1^st defendant was admittedly trying hard to procure Abacus in appointing Pinetum to become the exclusive distributor of Abacus in Hong Kong in place of the plaintiff (the 1^st defendant sent chasers to Mr Banks on 13 October 2014 – see [96(4)] and [96(5)] above).

237.  Given the relationship between Automatic Limited and Pinetum, it is not difficult to infer that the 1^st defendant was trying to assist Automatic Limited in getting a sub-contract from Gammon Limited directly and kicking the plaintiff out of the picture. Whether at the end of the day Automatic Limited could successfully get the sub-contract and whether Automatic Limited could make any profit out of it is another matter which is totally irrelevant.

238.  I therefore find that:

(1)  the 1^st defendant had wrongfully diverted a mature business opportunity away from the plaintiff;

(2)  the 1^st defendant had acted in breach of his fiduciary duties and duty of fidelity and good faith owed to the plaintiff;

(3)  there was a real/substantial chance that the plaintiff would have been awarded the contract and profit from the said project but for the 1^st defendant’s breach.

G9.4  Quantum

239.  The question of quantum may well be a more difficult issue as far as the P533 Project is concerned.

240.  It is evident that Gammon Limited had initially accepted the P533 February Quotation (for the sum of $430,000).

241.  However, because of subsequent comments made by the employer on the technical side of the work, the P533 February Quotation had to be revised, and as a result, the plaintiff issued the P533 September Quotation (for the sum of $535,500).

242.  A comparison of the two quotations shows that most of the items were the same, save that there is an additional item “Supply Relay Control circuits for Manual override control” in the P533 September Quotation. Be that as it may, for all the pre-existing items, the plaintiff had adjusted the price of each of them upwards.

243.  It is undisputed that Gammon Limited had not accepted the P533 September Quotation before the instructions were withdrawn in January 2015.

244.  It is unclear as to why the plaintiff was entitled to increase the price as quoted in the P533 February Quotation. It is also unknown as to whether the additional item in the P533 September Quotation was appropriate in the circumstances.

245.  However, since all the items in the P533 February Quotation were still included in the subsequent P533 September Quotation despite the comments made by the employer of the P533 Project, it can be inferred that the original items were not affected at all despite the subsequent development of the project.

246.  I am of the view that the fairest way to assess damages in relation to the P533 Project is to rely solely on the P533 February Quotation and disregard the P533 September Quotation.

247.  In that regard, the plaintiff alleged that the amount of damages should be in the sum of $71,500 calculated as follows:

Contract sum		$430,000
Less: Costs quoted from Automatic Limited		($358,500)
Gross Profit		$71,500 ======

248.  It seems that Mr Lee is challenging the above calculation on the basis that it is highly unlikely that there are no other costs which have to be incurred by the plaintiff. However, it is the 1^st defendant’s own case that the plaintiff was just an intermediary and all the works were in fact done by Automatic Limited.

249.  I therefore accept that the plaintiff has suffered a loss of $71,500 by reason of the 1^st defendant’s breach of duties.

G10.  The Discovery Park Project

G10.1  The plaintiff’s case

250.  The plaintiff’s pleaded case may be summarised as follows.

251.  On 16 October 2014, the plaintiff issued a quotation to Kum Shing (K.F.) Construction Company Limited (“Kum Shing”) for the supply of luminaries of Schreder for the Discovery Park Project, that is, the Discovery Park Quotation (at the price of $444,185) (“the Kum Shing Quotation”).

252.  On 27 October 2014, the 1^st defendant met Mr Karl Reynders, the Chief Regional Officer of Schreder Singapore Pte Limited, and Mr Cher of Schreder China, which was one of the plaintiff’s suppliers, at Sheraton Hotel (defined as “the 2014 Schreder Meeting”).

253.  At the said meeting, the 1^st defendant handed out the Pinetum Name Card to Mr Reynders and Mr Cher and persuaded them to do business with Pinetum.

254.  By reason of the 1^st defendant’s position as the General Manager of the plaintiff and the fact that he had signed the Discovery Park Quotations on behalf of the plaintiff, the 1^st defendant had full knowledge of the terms of the said quotations, the parties thereto, and the plaintiff’s intention to act as a sub-contractor in the Discovery Park Project. Be that as it may, he, acting as General Manager of Pinetum, met representatives of Schreder, and persuaded them to do business with Pinetum.

255.  The plaintiff had also wrongfully disclosed information to Pinetum, namely, information relating to the plaintiff and/or its customers and/or its suppliers and/or trade secret (e.g. costing).

256.  Given the fact that Pinetum was an extremely new company to the lighting industry, and considering the close proximity between the departure of the 1^st defendant from the plaintiff and Pinetum being awarded sub-contracts which the plaintiff had been pursuing, it can be inferred that the 1^st defendant must have disclosed confidential information of the plaintiff which he obtained by virtue of his being the General Manager thereof to Pinetum, and/or used such information to assist Pinetum in obtaining the sub-contracts in the Discovery Park Project (which Pinetum indeed successfully did).

257.  But for the 1^st defendant’s breach, the plaintiff would have obtained the works as stipulated in the Discovery Park Quotation, and as a result the plaintiff has suffered loss of gross profit in the sum of $88,837 ($444,185 x 20%).

G10.2  The 1^st defendant’s case

258.  The 1^st defendant accepted that he did have discussions with Mr Julian Wong about the possibility of working together through Pinetum. That was only a preparatory step which he was entitled to take for his future occupation, and in the course of which he had never disclosed to Pinetum any information and/or trade secrets (including but not limited to costing of the plaintiff). However, he alleged that such discussions were preliminary, and his initial thoughts had never been materialized. He had never been employed by Pinetum nor Mr Julian Wong. Neither had he occupied any position whether paid or unpaid within Pinetum. He had also never obtained any payment or remuneration (in any form) from Pinetum. Nor did he ever own Pinetum, whether legally or beneficially.

259.  Furthermore, he did not make contact with Kum Shing regarding the Discovery Park Project at all. He had never solicited Kum Shing to withdraw their business with the plaintiff. Instead, it was Kum Shing which had actively invited quotations from various lighting suppliers and sub-contractors. Moreover, by the time the plaintiff submitted its tender for this project on 16 October 2014, he had already tendered his resignation and his responsibilities as General Manager of the plaintiff had been removed. He had never been involved in the preparation of the tender for the said project.

260.  It cannot be inferred that he must have disclosed confidential information of the plaintiff to Pinetum by the mere fact that Pinetum managed to obtain the sub-contracts in the Discovery Park Project.

261.  Kum Shing had only previously engaged the plaintiff to provide lighting for a few minor lighting projects in the past, and had never engaged the plaintiff to provide tunnel lighting, which was the type of lighting required for the Discovery Park Project. It is more likely than not that the plaintiff would not have been awarded the Discovery Park Project anyway.

G10.3  Discussion

262.  As I see it, the plaintiff relied on two complaints against the 1^st defendant as far as the Discovery Park Project is concerned:

(1)  The 1^st defendant, in his capacity as Pinetum’s General Manager, met the representatives of Schreder, and urged them to do business with Pinetum;

(2)  The 1^st defendant had disclosed confidential information to Pinetum such that Pinetum could outbid the plaintiff and obtained the Discovery Park Project.

G10.3.1  The 2014 Schreder Meeting

263.  There were 4 persons who had attended this meeting, and out of which only the 1^st defendant and Mr Cher have given evidence at the trial.

264.  As aforesaid, despite his initial denial in his witness statement, the 1^st defendant admitted in Court that he did hand out the Pinetum Name Card to the representatives of Schreder. However, he said that Schreder was minded to set up a company in Hong Kong and recruited him as the General Manager of this new company. As I held above, I am of the view that this evidence, which is also denied by Mr Cher, is totally incredible.

265.  What is left is Mr Cher’s evidence, which I found to be credible. However, all he could say about the 2014 Schreder Meeting were that:

(1)  During the meeting, the 1^st defendant handed out the Pinetum Name Card and persuaded them to engage into business relationship with Pinetum;

(2)  The 1^st defendant talked about a business opportunity that he was in total control of, and he said that Schreder must work with Pinetum so as to win the project. However, Mr Cher could not recall the particulars of this project, nor could he recall whether they had discussed just one project or more than one project.

266.  In particular, Mr Cher did not say that the 1^st defendant had ever persuaded Schreder in the said meeting not to supply any products to the plaintiff, whether in relation to the Discovery Park Project or otherwise.

267.  It should also be noted that, unlike the Abacus scenario in which the 1^st defendant apparently had assisted Pinetum in snatching the exclusive distributor right from the plaintiff, there is insufficient evidence to establish that the plaintiff had such a right as far as Schreder is concerned:

(1)  Although Mr Cher did mention in Court that Mr Lai was the representative of the Hong Kong market, he did not go further to say that the plaintiff was Schreder’s exclusive distributor in Hong Kong;

(2)  Although Mr Lai denied in cross-examination that other suppliers could equally get Schreder’s products from Schreder, he subsequently said that he could not recall whether the agreement with Schreder was exclusive or non-exclusive;

(3)  In fact, Mr Lai accepted at one stage in Court that the plaintiff and Schreder did not sign any exclusive distributor agreement.

268.  That being the case, while I have no doubt that the 1^st defendant has breached his fiduciary duties and duty of fidelity and good faith owed to the plaintiff by presenting the Pinetum Name Card while he was still under the employment with the plaintiff, I do not think the plaintiff could advance its claim on the Discovery Park Project by relying on the 2014 Schreder Meeting.

G10.3.2  Disclosure of confidential information to Pinetum

269.  In a gist, what Mr Chiu is arguing is that, it can be inferred that the 1^st defendant had disclosed the Kum Shing Quotation to Pinetum (so that the latter could ultimately outbid the plaintiff and obtained the Discovery Park Project) on the basis of the following matters:

(1)  The 1^st defendant had knowledge of the details of the Kum Shing Quotation;

(2)  The 1^st defendant has already joined Pinetum at the material time;

(3)  The 1^st defendant has actively procured Schreder not to do business with the plaintiff;

(4)  Pinetum has obtained the Discovery Park Project from Kum Shing.

270.  The problem with the plaintiff’s claim is that there is no evidence as to why Kum Shing awarded the Discovery Park Project to Pinetum instead of the plaintiff. It may or may not be because Pinetum had successfully undercut the plaintiff. It is therefore a quantum leap for the plaintiff to say that simply because Pinetum had got the project and the 1^st defendant was already working for Pinetum at the material time, the Court could make the inference as suggested by the plaintiff. It should also be noted that, while it is evident that the 1^st defendant did persuade Schreder to work with Pinetum, Mr Cher did not say that the 1^st defendant had ever asked Schreder not to do business with the plaintiff anymore.

271.  That being the conclusion, without disrespect to counsel, I am not minded to deal further with the question as to whether the 1^st defendant had knowledge about the Kum Shing Quotation which parties had argued extensively on.

272.  The plaintiff’s claim on the Discovery Park Project is therefore rejected.

G11.  The Consignment Arrangement

G11.1  The plaintiff’s case

273.  Under this head, the plaintiff claims that the 1^st defendant, in breach of his fiduciary duties and/or the Employment Agreement, has wrongfully caused or procured the plaintiff to supply lighting control products to Automatic Limited on consignment, despite the fact that the plaintiff has never had any policy or practice to sell goods on such a basis.

274.  But for the 1^st defendant’s breach of duties, the plaintiff would not have ordered the subject goods from Tridonic (Shanghai) Co. Ltd. (“Tridonic”).

275.  The plaintiff therefore claims against the 1^st defendant for the sum of $203,000, being the value of the unsold and returned goods which the plaintiff was unable to re-sell and had to be written off.

G11.2  The 1^st defendant’s case

276.  The 1^st defendant alleged that:

(1)  The plaintiff maintained a sales target regarding quantity and value of lighting products and components which it would purchase from Tridonic, in order to maintain Tridonic as the plaintiff’s supplier;

(2)  The plaintiff had a policy and practice to sell and deliver products from Tridonic to purchaser on consignment (“the Consignment Practice”) which Mr Lai had knowledge;

(3)  Pursuant to the Consignment Practice, Mr Ho would prepare consignment quotations (“Consignment Quotations”) and he would keep Mr Lai informed of the same;

(4)  The Consignment Quotations had been uploaded to the plaintiff’s server;

(5)  The Consignment Practice (including the Consignment Arrangement[19]) was or could be beneficial to the plaintiff, and was done with the knowledge and permission of Mr Lai;

(6)  The 1^st defendant had the authority to issue the Automatic Consignment Quotation.

277.  It was further averred that a comparison between the value of the returned goods ($203,640) and the value of the good consigned ($484,265) shows that more than half of the consigned goods had been sold.

278.  Moreover, the returned goods could have been resold easily.

G11.3  Discussion

279.  First of all, I must say that the 1^st defendant’s case that the plaintiff has had a policy and practice to sell and deliver products from Tridonic to purchaser on consignment (i.e. the Consignment Practice) is totally unbelievable and I reject the same, for this assertion is contradictory to Mr Ho’s evidence that he “came up with the idea of marketing Tridonic products by way of consignment in or around late 2013”[20].

280.  I also do not accept Mr Ho’s evidence that there was a need in 2014 to set up the Consignment Arrangement for the purpose of keeping the plaintiff’s right to sell Tridonic products, because according to his own evidence:

(1)  the plaintiff had failed to meet such sales target from 2011 onwards. If the non-meeting of sales target would bring such a fatal result, it is unexplained why the plaintiff was still able to sell Tridonic products in the 2013-2014 financial year;

(2)  the plaintiff was only a non-exclusive distributor of Tridonic products. There was no harm for Tridonic to have one more such distributor at all. It is inherently improbable that Tridonic would have set a sales target together with such a serious consequence.

281.  In the course of his submissions, Mr Lee emphasised that Mr Ho was the one who was responsible for the Consignment Arrangement and that while the 1^st defendant’s signature appeared in the Automatic Consignment Quotation, it was just an electronic signature affixed by Mr Ho. It is unclear what purpose Mr Lee wanted to or could achieve:

(1)  It has never been the 1^st defendant’s pleaded case that he had no knowledge about the Consignment Arrangement at the material time;

(2)  To the contrary, he pleaded that he had the authority to issue the Automatic Consignment Quotation;

(3)  In fact, it was the 1^st defendant’s evidence that:

“I must reiterate that, although I have signed off the [Automatic Consignment Quotation], Ho was the person in charge of this consignment arrangement with Automatic […]”[21]

282.  What requires more analysis is the question as to whether Mr Lai had approved the Consignment Arrangement back in late 2013 to early 2014 which led to the issuance of the Automatic Consignment Quotation in February 2014.

283.  In this regard, while the 1^st defendant’s case is that such an approval had been given, Mr Lai denied that and alleged that he only knew about the Consignment Arrangement for the first time when Automatic Limited delivered a Goods Return Note to the plaintiff on 27 October 2014.

284.  Having carefully considered the evidence adduced and the submissions of both sides, I have come to the conclusion that it is more likely than not that Mr Lai has indeed given his approval for the Consignment Arrangement back in late 2013/early 2014 for the following reasons:

(1)  Mr Lai accepted in Court that he had been able to retrieve the Automatic Consignment Quotation from the plaintiff’s server. This is consistent with the evidence adduced by the 1^st defendant that such a quotation had been uploaded to the said server from the very beginning. If the 1^st defendant/Mr Ho was indeed doing something behind the back of Mr Lai, such a quotation would not have been so uploaded, because this means Mr Lai (and/or Ms Tsoi since she joined the plaintiff) could discover the allegedly improper Consignment Arrangement at any time;

(2)  Moreover, when Mr Ho sent the Automatic Consignment Quotation to Automatic Limited, he had copied the same to Marco Chan and Debby Lai of the plaintiff. While I am aware that they were recruited by the 1^st defendant to join the plaintiff, there is no allegation that they colluded together to harm the plaintiff at the material time. The fact that Mr Ho had disclosed the said quotation to other staff members there and then shows that he had nothing to hide and this tends to support the 1^st defendant’s case that the Consignment Arrangement had been approved by Mr Lai;

(3)  Mr Ho’s evidence was that he had raised the matter in relation to the Consignment Arrangement in the monthly sales meetings. Mr Lai at the beginning of his cross-examination gave the Court an impression that he never attended such meetings. However, it has been subsequently proved by the 1^st defendant’s late production of various monthly sales meeting minutes that Mr Lai had in fact attended at least several of them (even though the earliest minutes produced were in relation to meetings held after the date of the Automatic Consignment Quotation);

(4)  Although special leave has been given to the plaintiff’s legal team to seek instruction from Mr Lai specifically on the monthly sales meeting minutes which the 1^st defendant only produced in the course of the trial, Mr Lai told the Court in his subsequent evidence that he did not search (nor to instruct his staff to search) the plaintiff’s server for verification of the genuineness of the minutes produced by Mr Ho, or for that matter, minutes for meetings held in late 2013/early 2014. In my view, adverse inference may be drawn against the plaintiff in this regard, because it is more likely than not that such a new arrangement would have been discussed in such monthly sales meetings;

(5)  Furthermore, it is evident that Mr Lai did issue an email on 29 August 2014 which showed that not only would he attend monthly sales meeting, he was quite involved in the matters to be discussed. This lends further support to the 1^st defendant’s case that Mr Lai knew about the Consignment Arrangement;

(6)  As I pointed out at the beginning of this Judgment, although it was Mr Lai’s evidence that his involvement in the plaintiff dropped significantly after the 1^st defendant joined the plaintiff, he is bound by his pleaded case that, at the material time, he was actively involved in the management, operation and affairs of the plaintiff[22].

285.  The plaintiff relied on the Salary Payment Advice dated 7 November 2014 (“the Salary Payment Advice”) to argue that Mr Lai did not know about the Consignment Arrangement because the plaintiff (Ms Tsoi) was still asking the 1^st defendant for a copy of the Automatic Consignment Quotation on his last day of work. I do not accept that this argument may assist the plaintiff, because even if Ms Tsoi really did not have a copy of the said quotation, that does not mean that Mr Lai had no knowledge about the said arrangement back at the time before Ms Tsoi joined the plaintiff.

286.  The plaintiff further relied on the following emails and submitted that they show that the 1^st defendant did not have authority to enter into the Consignment Arrangement on behalf of the plaintiff:

(1)  On 24 June 2014, Mr Lai sent the following email to the 1^st defendant:

“Subject: Automatic Account

Dear Sandy,

Please give a report on the rationale and authorization of the payment term for the above account. Thanks.”

(2)  The 1^st defendant then replied on the same day:

“There is really no authorization as such for the payment terms for Automatic’s account.

I will take this up and get partial payment to be received within 2 weeks with the remaining to be cleared within the next two months.”

287.  However, it can be seen that all that Mr Lai was querying was the payment term. Contrary to what the plaintiff pleaded[23], Mr Lai did not query about the Consignment Arrangement as such by virtue of the email as pleaded in paragraph 40(6A) of the Re-Amended Statement of Claim. Indeed, it would be contrary to the plaintiff’s own case if he had done so because Mr Lai stated that he only knew about the Consignment Arrangement in October 2014.

288.  Hence, the aforesaid emails cannot shed light on the crucial question – whether Mr Lai had approved the Consignment Arrangement in late 2013/early 2014. At most, they could be used to show that it was acknowledged that Mr Lai did not know about the payment term of 90 days as opposed to the usual 30 days. But that is not the issue.

289.  The above finding would be adequate to dispose of this claim.

290.  Having said that, I should further add that:

(1)  Since the 1^st defendant was the General Manager of the plaintiff, I tend to agree with him that he must have the authority to enter into the Consignment Arrangement because he has the overall responsibility on the performance of the plaintiff (see Clause 5 of the Employment Agreement);

(2)  Putting the questions concerning approval and authority aside, it is difficult to see how it can be said that the 1^st defendant has breached his duties owed towards the plaintiff by entering into the Consignment Arrangement, simply for the reason that there were unsold and returned goods which the plaintiff could not resell. It should be noted that there is no pleaded case that the 1^st defendant had given any advantage to Automatic Limited by virtue of this arrangement.

291.  For the above reasons, the plaintiff’s claim in this regard is rejected.

G12.  The 1^st defendant’s counterclaim

292.  The 1^st defendant counterclaimed against the plaintiff for performance bonus on the basis of Clause 8 of the Employment Agreement and his monthly salary during the notice period, and for damages for the plaintiff’s breach of the Employment Agreement.

293.  As I have found that the plaintiff has not breached the Employment Agreement at all, I will only deal with the first two heads of claims.

G12.1  Performance bonus

294.  Clause 8 of the Employment Agreement provides that:

“A bonus rate of 5% on Gross Profit is granted. Gross Profit means sales less all the direct material, logistic and associated costs related to projects.”

295.  In support of his claim, the 1^st defendant has produced a table setting out the plaintiff’s gross profit for the period between January 2014 and September 2014 on the basis of figures which the 1^st defendant gathered from Ms Lai in September 2014 (“the Calculation Table”). According to the calculation therein, 5% of the gross profit of the said period would amount to $196,520.78.

296.  The plaintiff has not adduced any evidence to dispute the correctness of the Calculation Table.

297.  However, it is argued by Mr Chiu for the plaintiff that the 1^st defendant is not entitled to any performance bonus because:

(1)  The 1^st defendant is not entitled to any pro rata performance bonus under the Employment Agreement;

(2)  According to the audited report of the plaintiff for the year ended 31 March 2015, the plaintiff suffered a loss in the 2014 – 2015 financial year.

298.  As far as the 1^st argument is concerned, I note that Clause 8 of the Employment Agreement is rather straight forward. Apart from stipulating how gross profit is calculated, it only provides that the 1^st defendant is entitled to 5% of the gross profit earned by the plaintiff as his performance bonus. It does not say that the 1^st defendant has to complete a full financial/calendar year before he is entitled to performance bonus. Indeed, the plaintiff’s argument that the 1^st defendant is not entitled to pro rata performance bonus is akin to saying that there is an implied term that performance bonus would only be granted on full-year basis, which is not pleaded at all.

299.  I therefore reject this argument.

300.  The 2^nd argument is not an answer to the 1^st defendant’s counterclaim for performance bonus at all, because there is no monthly breakdown in the audited report. It cannot serve to challenge the accuracy of the Calculation Table.

301.  Insofar as it is alleged that the bad performance of the plaintiff between October 2014 and March 2015 was attributed to the 1^st defendant’s breach of duties, I am of the view that the damages caused by such breach had been considered and awarded (if proved) separately. It would in effect amount to double-counting if the Court takes this into account again here.

302.  In Mr Lai’s witness statement, he also mentioned that the 1^st defendant should not be entitled to any performance bonus because Clause 6 of the Employment Agreement provides that:

“You must be able to achieve the sales target of not less than HK$25M during the period from July 2010 to June 2011.”

303.  Mr Chiu did not refer to this clause in his closing submissions at all in support of the plaintiff’s defence to the 1^st defendant’s counterclaim. I will therefore assume that this argument is no longer relied on. In my view, such an approach taken by Mr Chiu is wise, because:

(1)  It has never been pleaded by the plaintiff (nor is it provided in the Employment Agreement anyway) that the 1^st defendant has to satisfy such a condition precedent before he is entitled to payment of performance bonus;

(2)  It is apparent that the said Clause 6 only applies to the period from July 2010 to June 2011.

304.  To conclude, I would allow the 1^st defendant’s counterclaim for performance bonus for the sum of $196,520.78.

G12.2  Outstanding salary

305.  The basis of the 1^st defendant’s claim for outstanding salary for the 3 months’ notice period is that he has been constructively dismissed by the plaintiff.

306.  As I have ruled against the 1^st defendant in relation to his claim of constructive dismissal, his claim for outstanding salary should also be dismissed.

H.  DISPOSITION

307.  By reasons of the aforesaid, I allow the plaintiff’s claims against the 1^st defendant for the following amounts:

Univision Project		$271,652.21
HKZM Bridge Project		$2,223,408.44
P533 Project		$71,500
Total		$2,566,560.65

308.  The said total amount should be set-off against the 1^st defendant’s counterclaim for performance bonus in the sum of $196,520.78.

309.  The 1^st defendant is therefore liable to pay the plaintiff the net sum of 2,370,039.87.

I.  COSTS

310.  By way of two amendments to its pleadings, the plaintiff has abandoned quite a number of other claims against the 1^st defendant. However, it seems that this Court does not have to take those abandoned claims into account when considering the appropriate costs order at this stage because:

(1)  The first amendment was made pursuant to Order 20 rules 1 and 3 of the Rules of the High Court (“the RHC”). The 1^st defendant is therefore entitled to his costs occasioned by the withdrawn claims without any express order of the court pursuant to Order 62 rule 10 of the RHC;

(2)  The second amendment was made pursuant to an order made on 15 October 2021 by Master Keith Lam who ordered that the plaintiff shall bear the 1^st defendant’s costs of and occasioned by the amendment.

311.  Having considered the partial success of the plaintiff’s claim and of the 1^st defendant’s counterclaim, I provisionally take the view[24] that:

(1)  The 1^st defendant should pay 70% of the plaintiff’s costs of the action;

(2)  The plaintiff should bear 50% of the 1^st defendant’s costs of the counterclaim.

312.  Furthermore, it is noted that the plaintiff’s solicitors have failed to comply with the following parts of the court order made at the Pre-Trial Review (“the PTR Order”)[25]:

(1)  paragraph 5 thereof which required the marking up of references of all documents at the margin of the trial bundle – the plaintiff only provided the Court with a table containing all such references on the 2^nd day of the trial;

(2)  paragraph 6 thereof which required the plaintiff to prepare electronic bundles – the bundles were eventually prepared by the 1^st defendant’s solicitors.

313.  The plaintiff’s solicitors admitted by their letters to the Court dated 16 January 2024 and 26 January 2024 respectively that it was their fault. In the latter letter, they have undertaken:

(1)  not to claim the costs of and incidental to the preparation of the trial bundle; and

(2)  not to charge or recover from the plaintiff any costs of and incidental to the preparation of the trial bundle.

314.  As far as the electronic bundles are concerned, the preparation thereof would not have been done by the 1^st defendant’s solicitors but for the inaction on the part of the plaintiff’s solicitors. It was only because of such inaction that the 1^st defendant’s solicitors had to do it and incur costs. I see no reason why the 1^st defendant should be asked to bear such costs.

315.  With all the above in mind, I make the following costs order nisi :

(1)  Subject to the aforesaid undertakings, the 1^st defendant shall pay 70% of the plaintiff’s costs of the action;

(2)  The plaintiff shall bear 50% of the 1^st defendant’s costs of the counterclaim, together with the 1^st defendant’s costs of preparation of the electronic bundles;

(3)  Such costs shall be taxed if not agreed.

316.  The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper) within 14 days hereof.