POON YIU CHEUNG v. WORLD MASTERY TECHNOLOGY LTD

DCCJ 632/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 632 OF 2005

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JUDGEMENT

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The Claim

1.  By this action, the Plaintiff seeks to recover from the Defendant his commission due and payable upon termination of his contractual relationship as sales representative of the Defendant.

2.  According to the Re-amended Statement of Claim, the Plaintiff said he is a salesman specialised in promoting sales of printed circuit boards (“PCB”), cables and related electronic products globally and in particular in the North American markets, including Canada and the USA.

3.  Sometime in mid August 2001, by an oral agreement between the Plaintiff, and the Defendant acting through its general manager Mr. Tsui Chi Kwong Andrew (“Mr Andrew Tsui”), the Defendant appointed the Plaintiff as its freelance sales representative to promote sales of PCB manufactured and supplied by the Defendant.  Plaintiff said the Defendant agreed to pay him 6% of the sales generated by the Plaintiff as his commission.  The Plaintiff would further reimburse him expenses incurred for the Defendant including long distance call, and would pay him CAD$2,000.00 per month as payment in advance for the commission he would earn.

4.  It is the case of the Plaintiff that he had introduced several of his customers to the Plaintiff including, Kingstec Industries Inc./Kingstec Technologies Inc., BoardTECH LLC, and Cambridge America LLC.

5.  According to the Plaintiff, his relationship with the Defendant was later formalised in writing.  A written agreement dated 25 December 2003 has been signed by the Plaintiff with the Defendant (“the Agreement”).  Article 5.1 of the Agreement provides for the percentage of commission payable, calculated according to the sales amount to each of the said three companies.  For new accounts, the percentage of commission payable is to be agreed and the new agreement on such percentage shall be appended to the Agreement.

6.  The Plaintiff claims that he has promoted sales on behalf of the Defendant.  But the Defendant has failed to pay any commission to him for July 2004 onward.

7.  On or about 6 August 2004, the Plaintiff has given 3 months’ notice to the Defendant by an e-mail to terminate the Agreement in accordance with Articles 5.1 and 6.1 of the Agreement.  Article 5.1 provides inter alia that the payment of commission survives the Agreement.  Hence he claims the commission due before termination.

8.  Further, the Plaintiff claims that the Agreement has been terminated by him as aforesaid in accordance with Article 6.1.  And according to Article 6.1, he would be entitled to commission for another 6 months from date of notice, namely, 6 August 2004 and he therefore claims further commission from 7 August 2004 up to 5 February 2005.

9.  At the closing, the parties agree that commission from the customers serviced by the Plaintiff, calculated according to the Agreement, as at 6 August 2004 is HK$330,078.49, and commission calculated up to 5 February 2005 is HK$621,926.00 (and HK$598,447 if invoices on tooling are not to be taken into account). 

10.  The Plaintiff has reduced his claim to the said amount of HK$621,926.00. Initially, there is argument on how to calculate the commission.  The Plaintiff has applied for taking of account of his earning, which is now abandoned.  The only issue on the calculation of commission is whether the invoice amount for tooling is part of the sales amount.

The Case of the Defendant

11.  It is the case of the Defendant that in 2001, they had employed the Plaintiff as a co-ordinator for the Defendant’s customers in North America and Canada at a monthly salary of CAD$2,000.00 without any commission.  And the Defendant claims that prior to the employment, the Plaintiff has no experience in PCB products.

12.  The Defendant also denies that the said 3 companies are introduced to it by the Plaintiff.  But it is not disputed that the Agreement has been signed by the parties and the parties are bound by the terms thereof. 

13.  Initially, according to the Amended Defence and Counterclaim, the Defendant claims that the Plaintiff has been in breach of the Agreement in failing to assist the Defendant to follow up outstanding invoices with the customers served by the Plaintiff.  It is entitled to withhold payment of the commission.  At the closing, this line of defence is abandoned.  And subject to the counterclaim for loss, and the issue whether Article 6.1 is applicable, the Defendant admits the calculation of commission as I mentioned above.

14.  The Defendant claims the written termination by the Plaintiff on 6 August 2004 is a unilateral termination by the Plaintiff, which amounts to a repudiation of the Agreement.  The Defendant accepted the repudiation on the same date but without prejudice to its claim for loss and damages arising from breach of the Agreement by the Plaintiff.  Accordingly, the Plaintiff would at best be entitled to commission up to 6 August 2004.

15.  The Defendant claims that the Plaintiff owes a fiduciary duty to it that he should neither solicit PCB orders from the customers of the Defendant nor place those order with other PCB manufacturers.  Further, the Plaintiff should not obtain any secret profits and/or rebates from any customer and/or competitor of the Defendant.

16.  It is the prime case of the Plaintiff that he has given improper discounts to BoardTECH from April 2003 to December 2005, thereby causing loss of profit to the Defendant.  The Defendant also claims that the Plaintiff received rebates from BoardTECH which the Plaintiff has to account to the Defendant.  The Defendant counterclaims for such loss and seeks to set off such loss against the commission payable to the Plaintiff.

17.  The Defendant also claims that the Plaintiff has solicited business from the Defendant’s customers and referred the business to other PCB manufacturers, thereby causing loss to the Defendant.  The Defendant also seeks to set off such loss against the commission.

18.  It is the case of the Defendant that its counterclaim exceeds the Plaintiff’s claim.  And they are happy to claim such amount to sufficiently set off the amount of commission I found they are liable to pay the Plaintiff.

Issues in Dispute

19.  The first issue in dispute is whether the Plaintiff has been an employee of the Defendant at some stage.  It cannot be disputed that under the Agreement, it has been expressly stated that the Plaintiff is an independent contractor, and the Defendant accepts that this is not the case.  The dispute is whether from 2001 to before just signing of the Agreement, the Plaintiff was then an employee.  The nature of relationship between the Plaintiff and the Defendant may affect my ruling on the fiduciary duties, if any, owe by the Plaintiff to the Defendant. 

20.  The second issue is the fiduciary duty of the Plaintiff to the Defendant.  I believe it is not argued that the Plaintiff should not receive rebates from any of the customers of the Defendant.  The Plaintiff denies that he has received rebates from BoardTECH as alleged or at all and argues that the Defendant fails to prove the rebates payment.

21.  On the issue of diverting business, the Plaintiff denies he is not entitled to refer the customers he served to other manufacturer, as he is an independent contractor and never an employee.  It is the case of the Plaintiff that for some customers, the Defendant cannot provide the PCB product as required, and he would provide information of other manufacturers to them. 

The Plaintiff’s Evidence

22.  The Plaintiff gave evidence that he was recruited by Mr. Andrew Tsui in 2001 to develop business for the Defendant in the North America.  He has agreed to work as a freelance sales agent for the Defendant, on the basis that he would be allowed to develop his own client base.  He would develop his own client base and introduce them to the Defendant, meaning that he could retain “ownership” to those customers and the Defendant would not assign them to other agents, and would pay him commission of sales from these accounts.  He has a commission of 6% on the sales amount, and to receive an advance payment of CAD$2,000 per month, such payment to be adjusted against the commission he earned on yearly basis.  It is not disputed that there is no adjustment and the Plaintiff claims that the advance payment (before signing of the Agreement) is about the same as the commission he earned.

23.  The Plaintiff claims that he brought the Defendant significant sales from the above named 3 companies.

24.  On the procedure to conclude a deal with any customer, the Plaintiff said after obtaining from the customer the model number of PCB to be ordered and the volume, he would send it to the sales assistant or sales manager of the Defendant for quotation.  The authorised acceptable prices would be sent to him for further negotiation with customers.  If there is counter-offer, he has to start the pricing review by Defendant again.  He agrees that he is not entitled to commit any sale price with customers without prior consent/approval of the Defendant.

25.  And after an order is placed, the payment process would be taken up by the account department of the Defendant without his involvement. 

26.  The Plaintiff also said that the Defendant’s products have been limited to 2 to 6 layers PCB productions.  When his customers ask for product that the Defendant could not provide, and to support his customers effectively in order to protect on-going orders to the Defendant in future, he has to give them as much help as possible.  He would suggest to them public information of the “right” factory and their contact persons and some customers successful placed their order with these factories based on his information.  But he denies that he has diverted business of the Defendant to competitors.

27.  The Plaintiff also denies that he has received the rebates from BoardTECH as alleged by the Defendant or at all.

28.  The Plaintiff said the Defendant was often late in paying him the commission.  He also noticed that the Defendant made questionable contact with the customers he served with defamatory comments.  And in about July 2004, the Defendant stopped paying him commissions.  He also noticed that the Defendant privately proposed to BoardTECH to by-pass him and gradually relieved him from normal contacts with his customers.

29.  By early August 2004, the Plaintiff decided to terminate the Agreement and gave a three months’ notice on 6 August 2004 in accordance with Article 6.1 of the Agreement.  And after his notice, the Defendant unilaterally stopped responding to all his e-mails, phone calls, and failed to settle all due commissions.

30.  When cross-examined by Mr. Poon, counsel for the Defendant, the Plaintiff admits there is a telephone conversation between him and Mr. Choy Wai Chow (“DW1”) on 6 August 2004.  He denies that DW1 has raised any accusation in the telephone conversation that he has secret business with Mr. Andrew Tsui. DW1 has only asked him to check some outstanding invoices of BoardTECH.  He denies that DW1 has dismissed him or terminated the Agreement in the telephone conversation.

31.  As the amount of commission payable has been agreed, I do not intend to go into the evidence on who introduced the said 3 companies to the Defendant, as it would no longer be helpful to any issue in dispute.

32.  The Plaintiff has not called any other witness.  Mr. Andrew Tsui who has given a witness statement has not attended Court and his witness statement would be disregarded.

The Defendant’s Evidence

33.  The first witness for the Defendant is DW1.  He claims that the Plaintiff has little experience in PCB business when he was first engaged by the Defendant in 2001.  And he said, initially, the Plaintiff was employed by the Defendant as a coordinator (Regional Representative as shown in his name card).  His duty is to look after the Defendant’s customers in North America and Canada at a monthly salary CAD$2,000.00 plus reimbursement of expenses including travelling and telephone expenses.  He has no commission.

34.  According to DW1, the Plaintiff is an employee of the Defendant, up to August 2003.  When cross-examined by Mr. Lam, counsel for the Plaintiff, the Defendant could only produced one tax return it filed for the year ending 31 March 2002.  It is a form for reporting to the Inland Revenue Department of remuneration paid to persons other than employees, and the position of the Plaintiff is put down as agent.  DW1 cannot explain why the form is used.  But he insists that until August 2003, when they enter into negotiation on the further relationship, the Plaintiff is an employee.  From August 2003 to when the Agreement has been signed, they have no relationship, as the Agreement is under negotiation.  And when it has been signed by the Defendant in January 2004, the relationship is governed by the Agreement.

35.  DW1 claims that when the Plaintiff was first employed, and when he became a freelance sale agent of the Defendant under the Agreement, he owes a fiduciary duty to the Defendant, in particular, not to –

(a)  solicit PCB orders from the customers of the Defendant; nor

(b)  place those orders with other PCB manufacturers.

36.  DW1 said on 7 July 2004, Mr. Andrew Tsui resigned and returned a notebook computer to the Defendant.  Subsequently, it has been retrieved from the computer some e-mails which shows that there are some secret deals between Mr. Andrew Tsui and the Plaintiff which is against the interest of the Defendant.

37.  DW1 claims that Mr. Andrew Tsui is in breach of his fiduciary duties with the Defendant.  He claims that Mr. Andrew Tsui has conspired with the Plaintiff and wrongfully declared the Plaintiff as an independent contractor to customer since 2002.  By reason of such false pretence, the Plaintiff had wrongfully and illegally requested for rebates from BoardTECH.  A number of paragraphs in the supplemental witness statement of DW1 are engaged to cover the point, with no cross reference to evidence on why he could say so.

38.  I note at this stage that there is no plead of conspiracy between the Plaintiff and Mr. Andrew Tsui to default the Defendant in the pleadings.  It is a very serious accusation.  There is no particular or details of the agreement to the conspiracy. 

39.  And on proof of the secret deal or conspiracy, DW1 admits in his supplemental witness statement that he only gets solid proof from the e-mails recovered from the said notebook computer of Mr. Andrew Tsui.  I shall come to the e-mails relied upon by the Defendant later. 

40.  In August 2004, the Plaintiff has demanded the Defendant for payment of outstanding commission.  DW1 claims that the Plaintiff has failed to carry out his duty to assist to collect outstanding payment from BoardTECH.  On 6 August 2004, in a telephone conversation with the Plaintiff, DW1 told him that he had full evidence of his wrongdoing with Mr. Andrew Tsui and reserved all rights, including termination of his service.  He agrees that the accusation has been denied by the Plaintiff.  DW1 said the Plaintiff asks for termination of the Agreement and he has no alternative but to accept the termination.

41.  He agrees that he has received the e-mails from the Plaintiff serving 3 months notice.  He has responded by an e-mail acknowledging receipt.  He said he believes the Agreement has been terminated in the telephone conversation. He also refers to subsequent e-mails to customers notified them that the service of the Plaintiff has been terminated.

42.  The second witness for the Defendant is Tong Lai Chu (“DW2”).  She was formerly employed by the Defendant as the IT Manager.  When Mr. Andrew Tsui resigned, he returned the notebook computer he used.  DW2 noticed that some files have been deleted.  She restored the deleted files, by using 2 programmes. 

43.  DW2 has not been introduced as an expert witness in file recovery of deleted computer files.  She has not explained the programmes she used to restore the files and the Court cannot assess how accurate would be the restoration. 

44.  DW2 said, after restoring the files, she gave the files in one folder to Lam Suet Ling (“DW3”).   She cannot recall if she gave the folder in the form of a DVD disc. 

45.  The last witness for the Defendant is DW3.  She has been employed as Personnel and Administration Manager of the Defendant before she left the Defendant in early 2005.  She has instructed DW2 to restore the deleted files and she confirms that she has received the folder of the restored files from DW2.  Later, she has printed out the hard copies.  The hard copies now produced in Court also have her written remarks.

46.  DW3 said she has kept one set of the print-out after she left the Defendant.  And the copies in Court are produced by her.  As for the notebook computer itself, she said it has been kept by the IT department and she does not know how they handle.  It is not disputed that it has been disposed of by the IT department.

Termination of the Agreement

47.  Before I move on to the counterclaim, I would first decide on the question of when the Agreement is terminated, and the mode of termination.  I shall start with the mode of termination.  It is helpful to set out Article 6.1 -

“This Agreement shall be effective upon signing hereof. The period for this Agreement shall be 6 (six) months and may be automatically renewed after expiration of the Agreement. If any party elects not to renew this Agreement, the party shall notify other party in writing three months before the expiration hereof. Then, this Agreement shall be invalid after the expiration. The commission will be paid and last for six month from date of notification.”

48.  For commission earned before 6 August 2011, it would be payable and this is not disputed, both in quantum and liability.  The Plaintiff claims that he is entitled to receive commission for another 6 months from 6 August 2011.  He relies on Article 6.1.

49.  Article 6 provides for the term of the Agreement, and termination.  On duration of the Agreement, it is provided that the Agreement shall be effective upon signing and be for a period of 6 months.  Then the agreement period may be automatically renewed after expiration.  While not so state, it must be renewed for the same period.

50.  There are provisions under Article 6 for termination when one party is in breach of the terms of the Agreement.  The provision under Article 6.1 for termination by serving 3 months’ notice is a break clause to determine the automatic renewal.  The following sentence in Article 6.1 is important –

“If any party elects not to renew this Agreement, the party shall notify other party in writing three months before the expiration hereof. Then, this Agreement shall be invalid after the expiration.”

51.  It is obvious that this provision is drafted for terminating the automatic renewal.  And the Agreement is not to be terminated on the last day of the notice, but upon the expiration of the existing term.

52.  According to the e-mail of the Plaintiff given on 6 August 2006, he expressly states that “the effective date of termination is November 4, 2004”. It is obvious that the Plaintiff is under the belief that the above provision is a break clause that entitles him to terminate the Agreement after serving 3 months’ notice. 

53.  Having heard the submission from counsel, I found that Article 6.1 is not a general break clause.  A notice under Article 6.1 only prevents stop automatic renewal and the term of the Agreement would be terminated on the end of the existing term.  The Plaintiff is not entitled to give 3 months’ notice to terminate the Agreement on a date which is not falling on the last day of the term.  Given the Agreement is dated 25 December 2003, as at August 2004, the term has been extended to 24 December 2004.  If the Plaintiff has to give a notice under Article 6.1, it must expire on 24 December 2004.  (And if the date of execution by the Defendant is used, the term has been extended to January 2005.  The notice is still wrong.)

54.  Further, I do not understand why he stated the effective termination date is 4 November 2006, which is 2 days less of 3 months’ period.  So in any event, no 3 months’ notice has been served.

55.  There is some argument if the Defendant is entitled to raise the nature of Article 6.1 as it has not been pleaded in the Defence.  First, this is the clause relied on by the Plaintiff to prove he is entitled to commission for another 6 months after notice of termination.  The burden rests on him to show the effect of the clause.  And secondly, the Defendant has denied the claim by the Plaintiff that the Agreement was terminated according to Article 5.1 and 6.1.  The Defendant is entitled to argue the effect of Article 6.1.

56.  By reason of the above, I found that that the Plaintiff has not served a proper notice under Article 6.1 to terminate the Agreement.  He cannot rely on Article 6 to claim 6 months’ commission from date of notice.

57.  Further, it is not disputed that the Plaintiff has not worked for the 3 months period and there would not be further commission earned.  It is his case that he has not been allowed to work for the Defendant.  This may at the highest be a breach on the part of the Defendant which may entitle him to claim damages.  But he cannot maintain a simple claim for payment of 6 months’ commission as from date of notice.  Since he has not pleaded the claim for damages, he would only be entitled to commission up to 6 August 2004.

58.  And even assuming that the Plaintiff has been in breach of the Agreement by serving the 3 months’ notice, this would not deprive him of the commission earned before the notice date. 

59.  I do not have to rule if the Plaintiff resigned with DW1, or was dismissed by DW1 in the telephone conversation on 6 August 2004 , for these would not affect his entitlement to commission before 6 August 2004.

60.  In conclusion, I found in favour of the Plaintiff only for commission earned up to 6 August 2004 in the sum of HK$330,078.49.  I now proceed to consider if the Defendant could establish any counterclaim to set off against the commission.

The Counterclaims

61.  The counterclaim against the Plaintiff is based on breach of fiduciary duties and receiving of rebates.  The first issue to assist is whether the Plaintiff has been an employee of the Defendant before the Agreement is executed. 

62.  Before the Agreement has been executed, the arrangement is oral.  The best evidence must be the tax return filed by the Defendant to the Inland Revenue Department, when the Defendant notifies the Government its relationship with the Plaintiff.  It clearly shows that the Plaintiff is not regarded as an employee.  DW1 cannot offer any explanation to the documentary record.  Accordingly, I found that the Defendant fails to prove the Plaintiff has been its employee as at any stage.

63.  By paragraph 31 of the Re-amended Defence and Counterclaim, the Defendant claims that the Plaintiff has solicited PCB orders from the Defendants’ customers.  The only evidence relied on by the Defendant is the e-mails re-constructed from the laptop computer returned by Mr. Andrew Tsui to the Defendant.

64.  I have ruled during the trial that the e-mails are admissible as evidence, subject to the weight I could attach to them.  It is not disputed that they are at best hearsay evidence.  The main complaint from the Plaintiff is that the notebook computer of Mr. Andrew Tsui has been disposed of and the Plaintiff could not verify if the contents of the copies of the e-mails printed out by DW3 is correct.  That is a factor that reduces the reliability of these e-mails documents as proof of the e-mails issued or received by Mr. Andrew Tsui.

65.  Further, it is the evidence of DW2 that she has used a number of computer programs to reconstruct the e-mails.  But she is not admitted as an expert witness in computer technology.  And we have not been told what programs she used.  Hence even if I accept that the copies are the print out from the re-constructed e-mails, I have to note with caution whether these reconstructed e-mails are correctly done and truly represent the e-mails sent or received by Mr. Andrew Tsui. 

66.  The burden rests on the Defendant to prove both that the Plaintiff has solicited business of the Defendant, and the loss the Defendant suffered. Since the Defendant is relying on the e-mails, it should refer me to the e-mails which suggest such misdeed.  Anyway, Mr. Poon could only point to one e-mail which could be said to suggest the Plaintiff solicited business of the Defendant.  But the e-mail is not at all clear on the arrangement.  It is not sufficient to show that the Plaintiff has diverted business of the Defendant and/or received rebates.

67.  Further there is no credible evidence on the loss and damages suffered by the Defendant.  A lot is the mere speculation of DW1.  The items diverted cannot be identified and there could not be conclusion on the loss.  I dismiss this counterclaim.

68.  Paragraph 33 of the Re-amended Defence and Counterclaim claims that the Plaintiff has divulged confidential information of the Defendant to PCB manufacturers.  Again there is no evidence on this counterclaim.

69.  Paragaraph 34 of the Re-amended Defence and Counterclaim says the Plaintiff had improperly used the confidential information of the Defendant to earn secret commission for himself.  Again, no evidence has been adduced.

70.  It is the remaining, and the main claim of the Defendant that the Plaintiff has wrongfully and unlawfully given improper discount to BoardTECH and has received rebates or kickback from BoardTECH. 

71.  In the Supplemental Witness Statement of the DW1, he claims that Mr. Andrew Tsui established his own business network during his 4 years of employment by the Defendant.  DW1 said he has not dismissed Mr. Andrew Tsui earlier because he has no solid proof of Mr. Andrew Tsui’s side business.  The only proof surfaced when Mr. Andrew Tsui resigned and returned his personal notebook computer to the Defendant.  All the data has been deleted and the hard disk reformatted.  The deleted files have been retrieved. 

72.  Coming back to these e-mails again, the e-mails appear to be evidence against Mr. Andrew Tsui only.  It has not been shown how this relates to the Plaintiff.  As mentioned above, there is no plea of conspiracy between the Plaintiff with Mr. Andrew Tsui.  And Mr. Poon in his closing submission repeatedly said the Plaintiff did have foul play with Mr. Andrew Tsui.  I do not understand what he means by foul play. 

73.  The allegations of DW1 based on the e-mails are not helpful to point to any unauthorized discount given by the Defendant.

74.  Further, it is not disputed that the Plaintiff cannot fix or agree the price with the customers.  As I quoted from the evidence, he has to seek approval from the Defendant.  If the suggested price is not profitable, the Plaintiff could simply refuse the deal.  I agree that the Plaintiff could make suggestion, even to reduce the price.  But the Defendant has the final say. The Defendant has failed to present any solid proof that the Plaintiff has given unauthorized discount to their customers.

75.  It is also the Defendant’s claim that the Plaintiff provided advantage to BoardTECH by price rigging.  But there is no evidence to support the claim. It is a deduction by DW1, and it is his evidence that BoardTECH must have received a similar benefit as the rebates to the Plaintiff (which I come to later), or otherwise he would not have paid the rebates.  There is no merit in this argument. 

76.  The other claim is on rebates from BoardTECH to the Plaintiff.  It is important to note that after the termination of the Agreement, DW1 visited the customers in North America including BoardTECH to maintain the relationship with them.  He said at that time, Mr. Dean Duckworth (“Dean”) of BoardTECH did not disclose that the Plaintiff had conspired with their company to (a) suppress their price and (b) divert orders to other PCB manufacturers.  Only in 2006, when Dean realized that the Plaintiff has conspired with Dean’s subordinate, one Bob Wennerstrand, to take away BoardTECH’s customer, Dean decided to expose the scam.  And Dean provided to DW1 evidence of the rebates and his purchase order which were diverted to other PCB manufacturers.

77.  Pausing here, Dean does not give evidence in Court.  And according to DW1, Dean has not disclosed the rebate payment when DW1 first approach him after the Plaintiff has left.  It is only after Dean discovered that the Plaintiff conspired with his staff to take away his business when he has a change of attitude.  What make him change his attitude, and how reliable could be his evidence, which is in conflict with his earlier communication with DW1? And Mr. Poon in his closing submission said “Dean had tried to assert pressures on the Defendant before he is willing to volunteer/vomit such evidence.  Dean is trying to “cash in” by not settling outstanding payments /prices of goods.” With all these, I cannot regard Dean as a reliable witness and I could attach no weight to his letter/e-mails and document given to DW1.  There is no evidence on the rebates received by the Plaintiff.

78.  Even if one reads the table and document produced by Dean, they are not helpful.  According to the alleged commission record sent to the DW1 by Dean, from November 2003 to July 2004, BoardTECH claims to have paid a total of US$42,413.28 to the Plaintiff as rebate or secret commission.  And in his 2^nd Supplemental Witness Statement, DW1 revised the figure and said, during the period from 4^th October 2002 to 30 December 2005, he verily believed that the Plaintiff received rebate or kickbacks from BoardTECH as secret remuneration for the Plaintiff to persuade or procure the Defendant to reduce the original price of PCB sold by the Defendant in the sum of US$49,711.60.

79.  Clearly the evidence of DW1 is based on the document present by Dean. And the accusation of the Defendant is a very serious accusation.  And what DW1 said is of little importance, as he is only interpreting the document he received from Dean.   At best, he tried to lean support by adducing account documents of the Defendant.  I cannot understand how he could increase the figure of Dean.

80.  And when one look at the commission tables, it is true that there are entries as D. Poon’s Commission.  But Dean has not given any other details to DW1, except it appears from his e-mails that D. Poon means the Plaintiff.  And in one of his e-mails to DW1, he said he was aware of some business between the Plaintiff and his staff.  I cannot be sure if these tables are prepared by Dean, or by his staff. 

81.  According to the tables, it appears that these rebates are paid by cheques, and there is no receipt of the Plaintiff.  From the e-mail of Dean, he promised to send over the cheques copies which may show to whom the cheques have been paid.  The cheques have not been produced and there is no explanation why the cheques have not been obtained from the bank.

82.  Given the above analysis, even the tables given by Dean are not clear on the purpose of these alleged payment, and whether they have been paid.  They are not credible evidence on rebates paid to or received by the Plaintiff.  Even if they are to be look at, on the balance, I am not satisfied that the Defendant proves BoardTECH has paid rebates or commission to the Plaintiff.  The counterclaim by the Defendant must fail.

83.  The Defendant fails to prove any of the counterclaim.  Finally, I should mention one matter.  It is the argument of the Defendant that the rebates received by the Plaintiff must be more than those disclosed by BoardTECH.  They seek to introduce a forensic accounting expert and a draft report has been prepared.  The matter has come before Mr. Registrar Lai who has disallowed the report.  And what DW1 did was to include the contents of the report in his Supplemental Witness Statement.  Mr. Poon suggests that I could draw inference. 

84.  In fact, I am surprised that those advising the Defendant took such a bogus step to include the “expert opinion” as part of the factual evidence of DW1.  This is in blatant breach of the order of Mr. Registrar Lai.  If they are not satisfied with the ruling, they should have appealed against the decision. Anyway, it is clear that this argument is a matter of opinion and DW1 as a factual witness would not be allowed to give such opinion.   

85.  In conclusion, I dismiss all the Defendant’s counterclaim and award in favour of the Plaintiff the said sum of HK$330,078.49 with interest thereon at 8% p.a. from date of writ until today and thereafter at judgment rate until payment.  There be an order nisi that the Defendant do pay the Plaintiff costs of this action with certificate for counsel to be taxed if not agreed, the order nisi to become absolute within 14 days.