NION ELECTRICAL AND MECHANICAL ENGINEERING CO LTD v. CHING KIN WAH

DCCJ 15825/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 15825 OF 2000

________

_________

(Consolidated pursuant to the Order of Acting Registrar S. Kwang dated 20th July 2001)

______________

JUDGMENT

______________

1. In this consolidated action the Plaintiff claims against the Defendant for the sum of $216,938.97. The Plaintiff says the Defendant has failed to account for this sum of money entrusted upon him whilst he was in the employ of the Plaintiff. The Defendant denies the Plaintiff's claim and counterclaims against the Plaintiff for $286,812.06 being outstanding wages and other sums due to him during his employment and upon his dismissal by the Plaintiff.

2. The trial was conducted in Chinese. In view of the evidence and issues involved, the parties have agreed for this judgment to be handed down in English.

3. The three box files adduced for trial namely, Plaintiff's Bundle of Pleadings and Witness Statement; Plaintiff's Bundle of Documents and Defendant's Bundle of Documents were marked as Bundles A, B and C respectively.

Background

4. The Plaintiff was incorporated in Hong Kong on 4th May 1998 and is engaged in the business of electrical and mechanical engineering. It has a factory called the Chun Wah Motor Machinery Factory in China ("the Factory"). The capital for setting up the Plaintiff and the Factory came from the shareholders of the Plaintiff, Madam Law Sook Ying ("Madam Law") and Madam Chow Ng So ("Madam Chow"). Madam Law and Madam Chow also became the directors of the Plaintiff on 25th May 1999.

5. The Defendant had known Madam Law and Madam Chow before the Plaintiff and the Factory came into existence in that the Defendant's sister is the daughter-in-law of Madam Chow and Madam Law used to work with the Defendant in the latter's family business. I am not concerned with the reasons as to why Madam Law or the Defendant left his family's family business. Whether the Defendant was, as Madam Law claims he was, forced to leave his family business due to financial improprieties matters not in this case. What is of relevance is that both Madam Law and the Defendant were parties to the conception of the Plaintiff and the Factory which took place in or about February 1998 or March 1998.

6. The Defendant was appointed as technical consultant of the Plaintiff at a monthly salary of $30,000. As the title suggests, the Defendant was responsible for all technical aspects of the Plaintiff including the setting up of the Factory. It is not disputed that the Defendant received his first salary on 1st May 1998. What is in dispute is whether he was entitled to the salaries for March 1998 and April 1998. I shall deal with this in due course. It is the Plaintiff's case that, from time to time, cash was given to the Defendant and that cheques were deposited into accounts either by the Defendant or specified by him. These cash and cheques were given to the Defendant for him to set up the Factory. It is these monies that eventually led to the dismissal of the Defendant culminating in the present claim and counterclaim.

The claim

7. The Plaintiff claims that a total of $1,356,000 had been given to the Defendant on various dates between 14th April 1998 and 13th September 1998. Particulars of these payments are as follows:

Date	Payment	Amount
14.4.98	Cash	$150,000
23.4.98	Cash	$100,000
2.5.98	Cheque	$30,000
4.5.98	Cash	$250,000
12.5.98	Cash	$200,000
16.5.98	Cheque	$20,000
19.5.98	Cheque	$20,000
25.5.98	Cheque	$2,000
28.5.98	Cheque	$200,000
10.6.98	Cheque	$80,000
15.6.98	Cheque	$150,000
24.6.98	Cheque	$20,000
2.7.98	Cheque	$30,000
6.7.98	Cheque	$60,000
10.7.98	Cheque	$30,000
17.7.98	Cheque	$10,000
30.9.98	Cash	$2,000
13.9.98	Cash	$2,000

8. According to the Plaintiff, the Defendant has failed to account for $216,938.97 of the $1,356,000 given to him and is therefore seeking repayment of this unaccounted sum. In paragraph 5 of his Defence, the Defendant admitted to receiving a total of $580,000 only from the Plaintiff as particularized below:

Date	Payment	Amount
14.4.98	Cash	$150,000
23.4.98	Cash	$100,000
2.5.98	Cheque	$30,000
4.5.98	Cash	$250,000
16.5.98	Cheque	$20,000
19.5.98	Cheque	$20,000
25.5.98	Cheque	$2,000
17.7.98	Cash	$10,000
30.9.98	Cash	$2,000
13.9.98	Cash	$2,000

9. The Plaintiff's accountant Kwan Chun Kwong ("Mr. Kwan") made a witness statement and gave oral evidence explaining how the Plaintiff's claim for $216,937.97 was calculated. Mr. Kwan says the Plaintiff was not asking the Defendant to account for each individual payment made to him but was merely concerned with the total figure. If the total expenditures incurred for the Factory exceeded $1,356,000 the Plaintiff would reimburse the Defendant the excess. By the same token if such expenditures were less than $1,356,000 the Defendant had to reimburse the Plaintiff with the balance. According to Mr. Kwan the Defendant has hitherto been able to account for the sum of $1,139,061.03 only leaving an unaccounted balance of $216,937.97.

10. Notwithstanding his Defence that only $586,000 was received by him, having heard the evidence of Mr. Kwan and under cross-examination by the Plaintiff's counsel, the Defendant admits he had in fact received cash and cheques totaling $956,000 from the Plaintiff. According to the Defendant $370,000 of the $956,000 received by him had been passed on to the accounts department of the Factory. The Defendant maintains he had never received the sum of $200,000 cash on 12th May 1998 or the $200,000 cheque on 28th May 1998 as alleged by the Plaintiff. Although the Plaintiff's claim against the Defendant is for $216,937.97, in light of the Defendant's denial it is necessary to deal with the sums of $200,000 on 12th May 1998 and 28th May 1998 respectively.

11. Before doing so it is helpful to refer to the Plaintiff's general ledger for the period from 1st May 1998 to 30th June 1999 (pages 1 to 5 of Bundle B) and audited financial statements for the period from 4th May 1998 to 30th June 1999 (pages 6 to 20 of Bundle B). The capital contributions by Madam Law and Madam Chow appear under their respective capital and loan accounts in the ledger. According to the ledger, the capital contribution by Madam Law up to 30th June 1999 was $2,572,000 whilst that of Madam Chow was $2,513,000. These sums represent monies which were either given to the Defendant or paid into Mr. Kwan's personal account by Madam Chow and Madam Law before the Plaintiff had a bank account.

12. The Defendant had a current account with the Plaintiff wherein all the monies paid to him and disbursements made by him in the setting up of the Factory were recorded. Monies given to the Defendant were recorded as debits whilst the disbursements made by him were recorded as credits.

13. According to Mr. Kwan whilst preparing the Plaintiff's accounts for its auditors in about the second half of 1999, he discovered that the credits in the Plaintiff's current account was $216,938.97 less than the debits. He showed the Plaintiff's draft ledger to the Defendant and urged the latter to clarify the sum of $216,938.97 so that the Plaintiff's accounts could be audited in time. Mr. Kwan says both he and the Defendant went through all the receipts and vouchers submitted by the Defendant but they added up to $1,139,061.03 only leaving a shortfall of $216,938.97. Eventually the Defendant asked for the return of these receipts and vouchers saying he will resolve the unaccounted sum of $216,938.97. However, by the end of 1999 and with the approach of the deadline for the auditing of the Plaintiff's accounts, the Defendant remained unable to account for the sum of $216,938.97. This sum was ultimately treated as "others receivable" in the Plaintiff's financial statement.

14. According to Mr. Kwan he was informed by Madam Chow's daughter in-law that $200,000 in cash had been given to the Defendant by Madam Chow on 12th May 1998. This sum was treated as a capital contribution from Madam Chow. Mr. Kwan subsequently made a table setting out the respective capital contributions made by Madam Chow and Madam Law for the period from 14th April 1998 to 4th September 1998. A copy of this table was annexed to Mr. Kwan's witness statement (page 146 of Bundle A). Shortly after the compilation of this table, a few days after 4th September 1998, a meeting attended by the Defendant, Mr. Kwan, Madam Law, Madam Law's husband and Madam Chow's son and daughter in-law took place. Mr. Kwan says the purpose of that meeting, which he referred to as a shareholders meeting, was to clarify the contributions made by the respective shareholders. He gave a copy of the table to all those present and explained its content. Mr. Kwan says the Defendant did not query the content of the table nor did he challenge the entry of the $200,000 cash paid to him on 12th May 1998 during the meeting or subsequently. Mr. Kwan rejected the suggestion put to him by the Defendant that he (the Defendant) was not present at the meeting and had never seen the table before coming to court.

15. This sum of $200,000 cash from Madam Chow appeared under Madam Chow's capital and loan account in the ledger against reference 1182. The same sum also appeared as a debit in the Defendant's current account against reference 1223.

16. As with the other issues relating to the claim and counterclaim, whether the Defendant attended the meeting and had received the table prior to coming to court are factual issues to be determined in accordance to the evidence. When assessing the credibility and the evidence of Mr. Kwan, I remind myself that he cannot be regarded as an independent witness in that he was a relative of Madam Law and was in the employ of the Plaintiff at the time of his evidence. However, notwithstanding his relation with Madam Law and the Plaintiff, I find Mr. Kwan to be an honest and impartial witness who gave his evidence methodically and objectively. The Defendant cross-examined Mr. Kwan extensively on the entries in the Plaintiff's ledger and the financial statements. Despite being asked the same questions repeatedly, albeit couched differently, Mr. Kwan was able to give consistent and clear explanations. All the calculations made by Mr. Kwan, including the basis for such calculations, were supported and corroborated by documents.

17. I accept Mr. Kwan's evidence regarding the $200,000 cash payment made to the Defendant by Madam Chow on 12th May 1998 and his evidence regarding the shareholders meeting. There was no reason why Mr. Kwan would invent this payment if he had not been so informed by Madam Chow's daughter-in-law. I have considered the possibility of Mr. Kwan being misinformed by Madam Chow's daughter-in-law. However, I am satisfied on the evidence that this did not happen because I find that the Defendant was present at the shareholders meeting and had been given a copy of the table with entry of this $200,000 payment. Had there been any mistakes the Defendant would undoubtedly have raised it at the meeting. This, he did not do. Therefore I reject the Defendant's claim that he had never received the sum of $200,000 cash on 12th May 1998.

18. The second payment denied by the Defendant was a $200,000 cheque on 28th May 1998. Mr. Kwan says the Defendant telephoned him from China instructing him to pay $200,000 into the Po Sang bank account of a Yuen Yuk Kam whose account number the Defendant also provided. The reason given by the Defendant for this exercise was that the head of the village where the Factory was located needed Hong Kong currency and upon payment of $200,000 into the designated account he (the Defendant) would be paid the equivalent in Renminbi by the village head. Mr. Kwan did not think anything of this arrangement because the Factory needed Renminbi and this was one of the methods to acquire the currency. Mr. Kwan subsequently learnt from other sources that Yuen Yuk Kam was the younger sister of the village head and was a resident in Hong Kong. A copy of the cheque dated 28th May 1998 appears at page 36 of Bundle B. I am told that the reference "HKICL" on the cheque was a bank reference indicating that the cheque was cleared on 28th May 1998. Having paid the requested $200,000 into Yuen Yuk Kam's account, Mr. Kwan said he telephoned and informed the Defendant accordingly and the latter had confirmed receipt of the equivalent sum in Renminbi.

19. The Defendant denies he had ever requested Mr. Kwan to deposit $200,000 in this Po Sang bank account. I have already found Mr. Kwan to be an honest witness. I cannot think of any reason, nor was the Defendant able to suggest any, as to why Mr. Kwan would fabricate the Defendant's instructions or the payment regarding this cheque if it did not happen. The $200,000 in question was debited in the Defendant's current account and appeared in the ledger against reference 1236.

20. If the Defendant's evidence regarding the $200,000 cash and $200,000 cheque were true, it means his disbursements were $183,061.03 over and above the $956,000 which he said he received from the Plaintiff. That being the case one would expect the Defendant to seek reimbursement of the excess sum from the Plaintiff. However the Defendant had never sought such reimbursement nor is he seeking to do so in his counterclaim.

21. I have observed the Defendant closely when he was giving evidence and I do not find him a credible witness. He tailored his evidence in accordance to the evidence before the court and was evasive particularly when cross-examined about the payments made to him by the Plaintiff. On more than one occasion the Defendant tried to buy time to think of an answer by pretending not to understand what was a very simple and clear question. For instance, when counsel for the Plaintiff asked the Defendant if he had accounted for certain sum of money, the Defendant claimed he did not understand the meaning of the term "accounted for" ( 報銷 ). In fact the Defendant had himself used this term "accounted for" ( 報銷 ) on numerous occasions when cross-examining Mr. Kwan and Madam Law and when giving oral evidence in-chief.

22. For reasons given above I reject the Defendant's evidence that he had never receive the two payments made on 12th May 1998 and 28th May 1998 respectively totaling $400,000.

Judgment on the claim

23. The Defendant does not dispute he is accountable to the Plaintiff for monies received during his employment but merely dispute the amount received. On the evidence, I find that the Defendant had received $1,356,000 from the Plaintiff and had only accounted for $1,139,061.03 of this sum. In the circumstances the Defendant is liable to repay the Plaintiff the sum of $216,938.97.

The counterclaim

24. The Defendant counterclaims against the Plaintiff for various sums of monies following his dismissal by the Plaintiff. Particulars of the Defendant's counterclaim are as follows:-

a.	Wages in-lieu of notice	$30,000.00
b.	Arrears of wages	$114,193.51
c.	End of Year payment	$19,426.15
d.	Severance pay / long term service pay	$34,754.10
e.	Annual leave pay	$44,000.00
f.	Statutory holidays pay	$25,000.00
g.	Entertainment expenses	$5,043.80
h.	Meal expenses in China	$6,547.20
i.	Train fares	$4,100.00
j.	Mobile phone charges	$861.00
k.	China travelling expenses	$2,886.30

25. With the exception of the claims for annual leave pay and statutory holidays pay, all the other claims were transferred from the Labour Tribunal under claim no. LBTC 7354/2000 (page 44-45 of Bundle B).

26. The Defendant adopted his witness statements made on 11th April 2001, 19th April 2002 and 30th May 2002 respectively as his evidence and gave oral evidence. Two witnesses, Kwok Tai On and Wong Ming Chung, gave evidence on behalf of the Defendant.

27. As the Defendant's counterclaim relates to monies which he says were due to him by reason of his employment it is necessary to ascertain what, if any, were the terms of the Defendant's employment.

28. The Plaintiff's evidence regarding the Defendant's employment came from Madam Law. Madam Law adopted her witness statement as evidence and gave oral evidence-in-chief. She was also cross-examined at length by the Defendant. According to Madam Law no written contract existed between the Plaintiff and the Defendant because of the latter's relation with Madam Chow. With the exception of his monthly salary which would commence on 1st May 1998 no agreement, whether expressed or implied, was reached as to the Defendant's annual leave or entitlement to bonus payments. As far as the Plaintiff was concerned the Defendant's entitlement and benefits were as prescribed by the Employment Ordinance ("the Ordinance").

29. The Defendant accepts that he did not have a written contract with the Plaintiff but claims the existence of an oral agreement between him and Madam Law on his entitlement to annual leave. I shall come to this when dealing with the Defendant's claim for annual leave pay.

30. Having heard the evidence, I find that the employment relationship between the Plaintiff and the Defendant was informal in that the parties did not discuss the terms of the employment save for the Defendant's monthly salary and the date for its first payment. Such informality is not surprising given the relationship between the Defendant and the shareholders of the Plaintiff. I also find that the Defendant was not regarded as an employee in the usual sense, whether by the Plaintiff or himself. Large sums of monies were given to the Defendant upon his requests without any questions or formality. The Defendant's relationship with Madam Chow, through his sister and the fact that the Defendant was one of the founding members of the Plaintiff and the Factory no doubt had a part to play. It is also apparent from the evidence that the Defendant enjoyed much freedom in discharging his duties and that he carried on and conducted himself more as a boss than an answerable employee. Even the Defendant's witness, Wong Ming Chung, a former worker at the Factory regarded the Defendant as a boss.

31. Madam Law says in or about mid-1999 Mr. Kwan informed her of the unaccounted sum of $216,938.97. Upon learning this she pressed the Defendant to explain and provide the receipts for this sum of money. However not only did the Defendant not heed her demands he also began to avoid her. At about this time she also learnt from the staff at the Factory that the Defendant was frequently absent from work. Madam Law says that from about May 2000 the Defendant's whereabouts was unknown to the Plaintiff. The Defendant could not be found in the Factory during working hours nor could he be contacted by mobile phone. Staff at the Factory informed her that the Defendant would only return to his dormitory at the Factory in the evening. It was under such circumstances that Madam Law instructed Mr. Kwan to stop the Defendant's salary with effect from May 2000.

32. I do not accept the evidence of the Defendant's witness, Kwok Tai On, that he had seen the Defendant at the Factory everyday in May 2000. This contradicts the Defendant's own evidence that he was absent from the Factory after April 2000 because he was with the Plaintiff's supplier and major client, the Mass Transit Railway. The evidence of the other witness called by the Defendant, Wong Ming Chung, is that he had seen the Defendant once or twice in April 2000 and May 2000 when he went to the Factory in April 2000 and May 2000. This is not surprising given the fact that Wong Ming Chung shared the same room as the Defendant at the Factory's dormitory Factory. Neither the evidence of Kwok Tai On or Wong Ming Chung shed light as to the Defendant's whereabouts or his activities after April 2000.

33. I have heard and seen Madam Law in the witness box. She is clearly a very able lady who will not tolerate any impropriety by staff of the Plaintiff. I accept her evidence that the Defendant could not be contacted after April 2000 and that his whereabouts was unknown to the Plaintiff. I find the Defendant's absence was deliberate due to his failure to account for the sum of $216,938.97. Otherwise the Defendant would have contacted or query Mr. Kwan as to why payment for his salaries ceased after April 2000.

Wages in-lieu of Notice

34. The Defendant claims to be entitled to one-month salary since the Plaintiff has failed to give him one-month notice of his termination of employment.

35. I have already found that the Defendant has failed to account to the Plaintiff the sum of $216,938.97 entrusted upon him in his capacity as employee and that his whereabouts after April 2000 was unknown to the Plaintiff. In the circumstances there were justifiable grounds for the Plaintiff to dismiss him summarily under section 9 of the Ordinance and the Defendant is therefore not entitled to wages in-lieu of notice.

Arrears of wages

36. The Defendant claims $114,193.51 being wages due to him for the period from 27th March 1998 to 31st March 1998; 1st April 1998 to 30th April 1998; and 1st May 2000 to 20th July 2000.

37. According to the Plaintiff's employer's return filed with the Inland Revenue department for the year ended 31st March 1999 (page 245 of Bundle C), the Defendant's employment began on 1st May 1998. The Defendant had never challenged the accuracy of this document. Prior to these proceedings, the Defendant had also never claimed any arrears of wages for the period 27th to 31st March 1998 or for April 1998. On the contrary, in his claim against the Plaintiff at the Labour Tribunal, the arrears of wages sought by the Defendant were in respect of May 2000, June 2000 and 1st to 20th July 2000 only. The other claims made by the Defendant in the Labour Tribunal were also upon the premise that his employment with the Plaintiff began on 1st May 2000.

38. The documentary evidence supports Madam Law's claim that the Defendant's formal employment with the Plaintiff did not begin until 1st May 1998. Had it been otherwise it is unlikely that the Defendant would not seek payment for his pre-May 1998 wages until now. Accordingly the Defendant's claim for arrears of wages for the period 27th to 31 March 1998 and April 1998 is rejected.

39. The situation is different for the months of May 2000, June 2000 and 1st to 20th July 2000. The Defendant's entitlement to salary during this period is dependent on the date of his dismissal. The Plaintiff says 30th April 2000 was the dismissal date as opposed to 20th July 2000 claimed by the Defendant. However there was nothing in the Plaintiff's pleadings to this effect. Paragraph 8(b) of the Statement of Claim states that the Plaintiff stopped paying any further salary to the Defendant after April 2000. This was repeated in the Reply and Defence to Counterclaim. It was only in her witness statement that Madam Law mentioned the Defendant's dismissal in May 2000.

40. I am satisfied on the evidence that the Defendant was not dismissed on 30th April 2000 but was instead dismissed on 20th July 2000. In the Factory's notice addressed to the Defendant (page 9 of Bundle C) the date of dismissal was stated to be 20th July 2000. Likewise in the general notice, presumably issued to the staff of the Factory, the Defendant was said to have left on 20th July 2000 (page 10 of Bundle C). It was not suggested by the plaintiff that the dates in these notices were incorrect. On Madam Law's evidence, the Defendant used to return to his dormitory at the Factory in the evening despite his absence during the day. If the Defendant was in fact dismissed on 30th April 2000 there was nothing to prevent the Plaintiff from leaving a notice of dismissal at the Defendant's dormitory before 20th July 2000. For these reasons I find that the Defendant is entitled to be paid his wages for the months of May 2000, June 2000 and for 1st to 20th July 2000 in the sum of $79,354.80 ($30,000 + $30,000 + $30,000 x 20/31).

End of year payment

41. The basis for the Defendant's claim for this end of the year payment was because he had received these payments in previous years. There is no dispute that the Defendant was paid $15,000 on 23rd November 1999 for the year 1998/1999 and $30,000 on 15th January 2000 for the year 1999/2000.

42. The Defendant's claim for end of year payment in the sum of $19,426.15 was calculated on the basis that $2,868.85 was for the period from 27th to 31st March 1998 and $16,577.30 was for the period from 1st January 2000 to 20th July 2000. I have already found that the Defendant's formal employment with the Plaintiff did not begin until 1st May 1998 therefore any alleged benefits or entitlements prior to 1st May 1998 will be rejected.

43. According the Employer's Return (page 246 of Bundle C) the Defendant's salary for the year ended 31st March 2000 was $390,000, in addition there was a bonus payment in the sum of $15,000. Mr. Kwan's oral evidence is that the Plaintiff pays its staff an annual salary made up of thirteen months wages. This is consistent with the returns filed by the Plaintiff with the Inland Revenue department. The Defendant had already been paid the thirteenth month salary for the year ended 31st March 2000 therefore his entitlement is for the period 1st April 2000 to 20th July 2000 only. The sum of $9,123.30 ($30,000 x 111/365) is awarded to the Defendant as pro-rata thirteenth month salary.

44. As far as the entitlement to bonus is concerned, I accept the evidence of Madam Law that such a payment was discretionary and gratuitous in nature. In March 1998 when the Defendant was appointed as technical consultant, the formation of the Plaintiff was still in its early stage. At that time nobody, including the Plaintiff's shareholders, could predict whether the Plaintiff and the Factory will be successful. There is evidence that in the early months the Plaintiff was short of cash and the wages of the Defendant and other staff were not paid on time. Therefore it is unlikely that those in charge of the Plaintiff would agree to pay the Defendant a contractual bonus during such uncertain time.

45. Section 11A of the Ordinance excludes any payment or any annual bonus, or any proportion thereof, which is of a gratuitous nature or which is payable only at the discretion of the employer. In the circumstances no award is made for bonus payment for the period 1st April 2000 to 20th July 2000.

Severance payment / Long service payment

46. My finding that the Defendant was summarily dismissed necessarily means that the Defendant is not entitled to any severance payment under the Ordinance.

47. The Defendant's claim for long service payment is misconceived. Under section 31R of the Ordinance an employee is entitled to long service payment after having been employed for five years or more. The Defendant has not met the five years criteria. Accordingly the Defendant's claim under this head is dismissed.

Annual Leave pay

48. The Defendant says Madam Law agreed with him in March 1998 that he would be entitled to 60 days annual leave. The Defendant has prepared a table (page 143 of Bundle C) setting out the holidays which he had taken since he joined the Plaintiff. According to the table, he took 21 days leave in the first year of his employment (1st May 1998 to 30th April 1999); 55 days for the second year of employment (1st May 1999 to 30th April 2000) and 19 days for the third year of employment (1st May 2000 to 30th April 2001).

49. Madam Law gave evidence that there was no express or implied agreement with the Defendant on the question of annual leave. The Defedant was however entitled to the seven days annual leave prescribed by the Ordinance. I do not accept the Defendant's evidence that there was agreement for his entitlement to 60 days annual leave. I find that the Defendant had gone to Australia as and when he wished.

50. In the absence of any agreement, the Defendant's entitlement to annual leave can only be in accordance to the Ordinance. Under the Ordinance the Defendant was entitled to seven days annual leave. The table compiled by the Defendant shows that he had already taken more than his entitlements and his claim for annual leave pay is therefore dismissed.

Statutory holidays pay

51. The Defendant claims statutory holiday pay for three periods namely, 27th March 1998 to 31 December 1998, 1999 and 1st January 2000 to 20th July 2000.

52. The Defendant's claim for holiday pay prior to 1st May 1998 is dismissed since his employment with the Plaintiff did not begin until 1st May 1998.

53. The Defendant says that, with the exception of his holidays to Australia, he was required to work seven days a week without any rest and was not allowed any prescribed statutory holiday. Madam Law disagrees and says that although the Defendant was based in China he had statutory holidays in accordance to the Ordinance. The Defendant's witnesses Kwok Tai On gave evidence that those Plaintiff's employees who were based in China were entitled to statutory holidays except when the Factory was busy. On the occasion when such holiday was not taken no alternative holiday was given. However the evidence of the Defendant's other witness, Wong Ming Chung, is that the Plaintiff's employees who were based China had statutory holidays like their counterparts in Hong Kong in accordance to the Ordinance.

54. After listening to the evidence I form the conclusion that the evidence of Madam Law and Wong Ming Chung are to be preferred. I find Kwok Tai On to be a biased witness against the Plaintiff, his dismissal by the Plaintiff no doubt is an influencing factor. It is difficult to believe that the Defendant, regarded and carried on as the boss by all, was not permitted to have statutory holidays. If the Defendant was working during statutory holidays before May 2000 he did so on a voluntary basis. As for the statutory holidays between 1st May 2000 and 20th July 2000, I have found that the Defendant was not working for the Plaintiff though he was still under its employ. In the circumstances there will be no award for statutory holidays pay.

Entertainment

55. The Defendant seeks reimbursement of $5,043.80 as entertainment expenses incurred in China and produced three receipts dated 6th April 2000, 2nd May 2000 and 23rd June 2000 respectively in support (pages 30-32 of Bundle C). The receipts do not add up to the Defendant's claim and the Defendant has not been able to give particulars of such expenses. Even if the figures do add up, given the Defendant's failure to account for the money entrusted upon him and given his unexplained absence since April 2000, there is no evidence that the Plaintiff would have approved such expenses. Accordingly the claim for entertainment expenses is dismissed.

Meals in China

56. The sum of $6,547.20 is claimed by the Defendant as food and beverage expenses incurred in China. The Defendant produced at pages 34 to 84 of Bundle C receipts in support of these expenses. Some of the receipts were not dated.

57. There is no evidence that the expenses in the receipts produced were incurred by the Defendant or incurred by him for the Plaintiff or Factory. In addition and for the same reasons given with regard to the claim for entertainment expenses, there is no evidence that the Plaintiff would have approved such expenses. The Defendant's claim for these expenses is also dismissed.

Train fares

58. The Defendant produced tickets for the train rides taken by him in China (pages 85-93 of Bundle C). I have found that the Defendant was absent from the Factory after April 2000 and was avoiding the Madam Law. There is no evidence that such train rides were taken for the Plaintiff or the Factory and this claim is likewise dismissed.

Mobile Phone charges

59. The sum of $861 is claimed for mobile phone charges. A copy of the receipt for the charges is produced at page 142 of Bundle C. The receipt is in the name of the Defendant's classmate Cheung Cho Leung. Previous receipt submitted to and reimbursed by the Defendant was also in the name of Cheung Cho Leng.

60. The mobile phone charges for which the Defendant now claims is for May 2000, a time when I have found that the Defendant was absent from work. In the circumstances I refuse the Defendant's claim under this head.

China traveling expenses

61. The Defendant claims $2,886.30 being travelling expenses incurred in China. Receipts produced at pages 94 to 141 of Bundle C are said to be receipts in support of these journeys. However these receipts do not state the origin of the journey or its destination. I am not satisfied that these journeys were taken in connection to the Plaintiff or the Factory and the claim under this head is also refused.

Judgment on counterclaim

62. The claims for arrears of wages and end of year payment are awarded in the respective sums of $79,354.80 and $9,123.30. The other claims in the counterclaim are dismissed.

Conclusion

63. There will be judgment for the Plaintiff on the claim in the sum of $216,938.97. Interest on this sum at the rate of prime plus 1% from the date of Writ (18th November 2000) until judgment date (10th January 2003) and thereafter at judgment rate until payment.

64. An order nisi is made that the costs of the claim be to the Plaintiff with certificate for counsel. The order nisi will be made absolute within 14 days of the handing down of this judgment.

65. There will be judgment for the Defendant on the counterclaim in the sum of $88,478.10. Interest on this sum at the rate of prime plus 1% from the date of claim in the Labour Tribunal (3rd October 2000) until judgment date (10th January 2003) and thereafter at judgment rate until payment.

66. As the Defendant has succeeded on about 30% of his counterclaim, there will be an order nisi that 30% of the costs of the counterclaim be awarded to the Defendant whilst the Plaintiff is to have 70% of the costs of the counterclaim against the Defendant with certificate for counsel. The order nisi will be made absolute within 14 days of the handing down of this judgment.

67. The costs of the claim and counterclaim are to be taxed on party-and-party basis if not agreed.