THE PRUDENTIAL ASSURANCE CO LTD v. HO EDWARD

HCA1231/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1231 OF 2004

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R E A S O N S  F O R  D E C I S I O N

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1. This is an appeal by the defendant against the order of Master De Souza made on 28 June 2007 whereby the Master ordered that the defendant’s Interrogatories dated 20 March 2007 be withdrawn.

2. After hearing submissions by counsel for the parties, I dismissed the defendant’s appeal, ordered that the order of the Master to stand in its entirety and gave costs of the appeal to the plaintiff in any event and that the defendant’s own costs to be taxed in accordance with Legal Aid Regulations.

3. I indicated to the parties that I would give my reasons in writing later which I now do.

Plaintiff’s claim

4. The plaintiff claimed against the defendant (inter alia) for the repayment of two loans, termed as Goodwill Payment and Financing Debt upon the defendant’s service agreement being terminated by the plaintiff.

Defence and counterclaim

5. The defendant denied liability to the claim by the plaintiff saying that the plaintiff was in breach of employment contract.

6. The defendant counterclaimed against the plaintiff for damages for breach of employment contract and also for misrepresentation.

Case of the defendant

7. It is the defendant’s case that in 2000, the plaintiff, an insurance company, undertook a recruitment drive pursuant to a P3000 programme with the intention of recruiting 1,000 agents and managers.

8. The defendant was one such manager recruited by the plaintiff in September 2000.  As a result, the plaintiff and defendant signed a Service Agreement dated 21 September 2000 which was to run for twoyears.

9. Pursuant to the Service Agreement, the defendant was paid a Goodwill Payment of $159,100.  The Service Agreement provided that this “loan” would be waived by the plaintiff if the plaintiff completed 24 months of service thereunder.

10. On 11 July 2001, the defendant was asked to sign an “Agency Agreement” and a “Supplementary Agreement” by the plaintiff. These were back-dated to 1 October 2000 by the plaintiff.

11. Before the defendant had completed the 24 months of service, after only just 12 months, the plaintiff terminated the employment of the defendant without notice or payment in lieu on the grounds that the plaintiff did not meet his persistency performance.  Upon such termination, the plaintiff now claims for the repayment of, inter alia, the Goodwill Payment and the Financing Debt.

12. It is the defendant’s case that there are no provision giving the plaintiff a right to terminate the defendant on the grounds of failure to meet his persistency performance in the Service Agreement.  In this respect, the plaintiff relies on the terms of the Agency Agreement to justify the termination.  However, the defendant denies that there was any agreement between them to backdate the Agency Agreement.

13. It is also the defendant’s case that there had been misrepresentation by the plaintiff’s servant or agent inducing the defendant to enter into the Service Agreement at the time when the defendant was recruited.  The alleged misrepresentation was that the Goodwill Payment need not be repaid to the plaintiff provided that the defendant did not leave the plaintiff’s employment within the 24 months of the duration of the Service Agreement.  In this respect the defendant relies on the oral representation made to him by Marco Chan and the brochure shown to him before signing the Service Agreement and also the representation made to him by Vivian Choi at the time of signing.

14. The issue in dispute between the parties can be summarized as follows :

(a)	the defendant says that there was an employment contract between the parties which was for two years, but the plaintiff says that the Service Agreement incorporating the Agency Agreement and Supplemental Agreement was a service contract and not an employment contract;
(b)	the defendant says that since there is no provision for summary dismissal, the plaintiff could only dismiss him summarily under Part II of the Employment Ordinance, while the plaintiff says that it was entitled to dismiss the defendant without notice under the terms of the Agency Agreement and following from that the defendant is liable to repay the “loan”;
(c)	the defendant therefore says that the plaintiff is in wrongful breach of contract which is denied by the plaintiff; and
(d)	the issue of misrepresentation which the defendant says induced him into entering the contract with the plaintiff.

The Interrogatories

15. The Interrogatories sought by the defendant are as follows :

“	1.	Did the Plaintiff not as a result of the P3000 recruitment project recruited around 1,000 agents?
	2.	Did the Plaintiff not subsequently terminate the P3000 recruitment project?
	3.	State the date the Plaintiff terminated the P3000 recruitment project?
	4.	State out of the P3000 recruitment project how many agents (including manager grade) had been recruited by the Plaintiff?
	5.	State how many of the agents (including manager grade) recruited in the P3000 recruitment project still remained working for the Plaintiff by 31st March 2002?
	6.	State how many of the agents (including manager grade) recruited in the P3000 recruitment project had their contracts terminated before 31st March 2002 and how many of those agents had their contracts terminated by the Plaintiff?
	7.	State how many of the agents (including manager grade) recruited in the P3000 recruitment project whose contracts with the Plaintiff had been terminated before 31st March 2002 had been demanded by the Plaintiff to repay the Goodwill payment?
	8.	State how many of the agents (including manager grade) recruited in the P3000 recruitment project whose contracts with the Plaintiff had been terminated before 31st March 2002 the Plaintiff had issued bankruptcy notices to them?
	9.	State how many of the agents (including manager grade) recruited in the P3000 recruitment project whose contracts with the Plaintiff had been terminated before 31st March 2002 the Plaintiff had commenced bankruptcy proceedings against them?”

Decision

16. It can be seen from the interrogatories posed by the defendant that they relate to the other agents recruited under the P3000 project.  None of the interrogatories relate to the particular circumstances of the defendant.

17. Moreover they ask for general information.

18. The issues in this case concerns breaches of agreement between the plaintiff and the defendant.  It also involves allegations of misrepresentation made to the defendant.

19. What is sought by the Interrogatories are quite irrelevant to the issues in the case and can have no bearing on those issues.

20. At the hearing, it was made clear by counsel for the defendant that he was only seeking what is contained in the Interrogatories from the plaintiff.  He was not seeking to establish that the plaintiff had wrongfully terminated the employment contracts of other agents before 31 March 2002.  If that be the case, then even if he could establish that over 90% of the agents had their contracts terminated before 31 March 2002, but without establishing that the termination was wrongful on the part of the plaintiff, the rhetorical question that need be asked would be how can that assist the defendant in this case?

21. Nor am I for one moment suggesting that the defendant should try to establish that the other agents contracts had been wrongfully terminated by the plaintiff before 31 March.  In this respect it would be difficult if not impossible for the defendant to even attempt that since it is not possible to see how similar fact evidence could be admissible in a case such as this. That too would be irrelevant.

22. The only reason proffered by counsel for the defendant relating to the purpose for such interrogatories is that if it can be established that a large majority of the agents recruited had their contracts terminated such that they had to repay the Goodwill payment back to the plaintiff, then the plaintiff will have to explain that as between the plaintiff and the defendant in this present case.

23. I cannot see what it is that the plaintiff will have to explain if the question as to whether the termination of the contract in each case was rightful or wrongful was not gone into.

24. It appears that the defendant is really wanting to put his case on the footing that there was a great big scam initiated by the plaintiff under the guise of the P3000 recruitment programme.  After recruiting the 1,000 agents, their contracts were then prematurely terminated under various excuses and they were then asked to repay the Goodwill payment.

25. If that be the stance of the defendant, it would be tantamount to alleging fraud but without pleading it.

26. That is not permissible and is yet a further reason to disallow such Interrogatories.

27. It was for these reasons that the appeal by the defendant was dismissed.