LAW KEE ALICE v. KENYE LTD AND ANOTHER

HCLA 16/2025

[2026] HKCFI 799

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 16 OF 2025

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO 1589 OF 2024)

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DECISION

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INTRODUCTION

1.  In LBTC 1589/2024, after trial, on 17 January 2025, Deputy Presiding Officer Jennifer Ng allowed the claimant’s claims against the 1^st and 2^nd defendants under a number of heads.  One of them was the award of long service payment in the sum of $1,703,207.24.  The 1^st defendant now applies for leave to appeal against that award. 

2.  At the hearing on 6 November 2025, I granted leave to the 1^st defendant to amend its Form 14 dated 30 May 2025. 

3.  The amended Form 14 now contains five proposed grounds of appeal.

BACKGROUND

4.  The 1^st defendant is a Hong Kong listed company. 

5.  The claimant was employed by both the 1^st and 2^nd defendants.  Her employment commenced in August 2007 and her title then was “Assistant President”.  Her last day of employment was 8 April 2024 and her title was “President”.

6.  Since about 2021, the 1^st defendant experienced financial difficulties.  The claimant was requested to, and did, take a pay cut from $110,000 to $102,850 for her monthly salary.  However, the financial difficulties persisted.  The claimant was asked to take a further pay cut.  This led to negotiations which resulted in the signing of a supplemental employment letter dated 1 March 2022.  The letter was signed by Mr Zhang Li (張立)  acting on behalf of the 1^st defendant.  At that time, he was its executive director and chief executive officer.  Mr Gao Yang (高陽), Zhang’s personal assistant, was involved in the negotiation process.

7.  One of the terms agreed in the supplemental letter was that while the claimant’s monthly salary would remain at $102,850, she would only be paid the sum of $90,000 at the end of each month, with the difference payable at the end of the year or when the company served notice to terminate.

8.  The claimant’s case was that from October 2022, there had been late payment of her salaries.  For the present application, it is not necessary to go into the detail save to state that in the end, the claimant terminated the employment on 8 April 2024 under section 10A of the Employment Ordinance, Cap 57, on the ground that her salaries were not paid for more than one month.

THE CLAIMANT’S CASE

9.  The claimant testified at trial.

10.  Her claim for long service payment was calculated using the formula set out in clause 3 of the supplemental letter.  

11.  The clause read:

“In consideration of your agreement to enter into this letter, the Company hereby agrees and undertakes to pay you the severance payment/long service payment to be calculated on the following basis:

Amount equals to the severance payment/long service payment

=

Currently Monthly Salary

x 1

x

year(s)  of service (from the date first employed by the Company on 17 September 2007)

Provided always that the abovementioned severance payment/long service payment shall not be offsetting your mandatory provident fund benefits derived from the Company’s (as employer)  mandatory provident fund contributions.  The Company hereby undertakes that we will not offset your mandatory provident fund benefits derived from the Company’s (as employer)  mandatory provident fund contributions.” (underline added)

12.  The formula was more favourable to the claimant than under the Employment Ordinance in three ways (as highlighted above):

(1)  The current monthly salary, which exceeded the statutory upper limit, was used to calculate the long service payment.

(2)  The factor of “1”, which exceeded the statutory upper limit, was adopted.

(3)  The accrued MPF benefits derived from the employer’s contributions would not be used to offset the long service payment.

THE DEFENDANTS’ CASE

13.  Zhang gave evidence at the trial.

14.  The defendants contended that the supplemental letter was not valid and not binding on the parties.  It followed that the formula in clause 3 did not apply and the long service payment should be calculated in accordance with the provisions of the Employment Ordinance instead.  They put forward two reasons in support of that contention.  The intended appeal only concerns one of them, namely that the claimant failed to disclose the relevant employment legislation to Zhang before the supplemental letter was signed and that had the effect of invalidating the letter.

15.  More specifically, the defendants’ case was that Zhang had not read the terms of the supplemental letter before signing it and that he was not familiar with the employment legislation in Hong Kong.  At that time, he did not know about the statutory upper limits for calculating the long service payment.  Nor did he know that the accrued MPF benefits could be used to offset the long service payment.  He did not have an MPF account himself.  I shall refer to the statutory upper limits and the offsetting mechanism as “the relevant employment legislation” below.

16.  The defendants contended that the claimant did not act in good faith as she did not tell Zhang about the relevant employment legislation before the supplemental letter was signed.  Nor did she explain the terms to Gao in detail.  Also, within the company, only the claimant had signed the supplemental letter and no other staff had entered into agreements with similar unfavourable terms to the company.  Had Zhang known about the relevant employment legislation, he would not have signed the supplemental letter.

THE RULINGS

17.  The deputy presiding officer found in favour of the claimant on the calculation of the long service payment and upheld the validity of the supplemental letter. 

18.  She found the claimant to be an honest and reliable witness.  By contrast, she expressed serious doubt over the credibility of Zhang’s evidence (“本席對這名證人的證供可信性非常懷疑。”). She found his allegation that he had not read the terms before signing the supplemental letter to be completely unbelievable (“但張立說他沒有詳閱便簽署，這完全不可信。”).  Her concluding remark about Zhang was that his testimony was obviously unbelievable (“他的證供明顯不可信。”).

19.  The deputy presiding officer held that even if Zhang’s evidence was to be accepted, the defendants could not set aside the supplemental letter simply by saying that Zhang had not read the terms beforehand, applying the principle in Ming Shiu Chung v Ming Shiu Sum (2006)  9 HKCFAR 334, para 84.

20.  Finally, the deputy presiding officer did not accept the defendants’ allegation that the claimant was not acting in good faith when entering into the supplemental letter.

21.  It is necessary to reproduce her written reasons here:

“42. 張立於庭上作供指出，自己對香港勞工法例中有關於僱主可以累算權益抵銷遣散費/長期服務金的規定一無所知，尤其是他本人並沒有強積金戶口。再者，當時第一被告已面對財政危機，如果他知道有關抵銷的法例上限，便不會簽署該補充協議。

43. 本席對這名證人的證供可信性非常懷疑。張立作為前任上市公司執行董事及行政總裁，於美國接受過高等教育，在金融行業有豐富的工作經驗，但他卻聲稱在沒有閱讀條款的情況下簽署該補充協議，此說法本身已是不合常理。再者，張立為金融界專業人士理應對數字敏感，補充協議第3條條款明確列出了遣散費及長期服務金的計算方程式，如果翻閱這份文件，不可能不注意到該計算公式。但張立說他沒有詳閱便簽署，這完全不可信。

44. 張立在庭上的證供亦承認，第一被告於2021年尾要求管理層減薪，當時他向申索人提出減薪至9萬元，申索人並沒有向他提及遣散費及長期服務金不作對沖。… 其後他解釋，在簽署補充協議兩三個月後，他得知香港勞工法例對被裁員工的年資及月薪有上限，他認為即使協議計算多少也沒有用。

45. 申索人向張立指出，她與張立私人助理高揚曾經向張立解釋遣散費計算，並且指出張立在陳述書中說申索人是唯一簽署這些條款協議的人，並非事實。申索人指出，高揚與及張立均有簽署該補充協議。

46. 張立表示他沒有簽署該協議，而且他告訴高揚這協議對公司不公平，所以高揚同意不執行這份協議。其後他解釋，在簽署補充協議兩三個月後，他得知香港勞工法例對被裁員工的年資及月薪有上限，他認為即使協議計算多少也沒有用。換句話說，張立承認不單止代表第一被告與申索人簽訂該補充協議，亦與高揚簽署了該協議。他的證供明顯不可信。

47. 本席接納申索人為誠實可靠的證人。申索人指出，於2023年11月，張立再要求申索人減薪及重新簽另一份補充協議，當時行政經理Jade Leung已經向張立計算應賠償申索人的金額。雙方協商有關賠償問題，張立從來沒有提及2022年3月1日補充協議無效或不成立的說法。

48.  … 本席看不出有任何所指稱申索人的不合情理或非出於善意的行為。”

LEGAL PRINCIPLES

22.  An appeal from a decision made by the Labour Tribunal is limited to where the decision is erroneous in point of law or is outside the jurisdiction of the tribunal: see section 32 of the Labour Tribunal Ordinance, Cap 25.

23.  In an appeal on law only, the appellate court must bear in mind what scope the circumstances provide for reasonable minds to differ as to the conclusion to be drawn from the primary facts found.  If the fact-finding tribunal’s conclusion is a reasonable one, the appellate court cannot disturb that conclusion even if its own preference is for a contrary conclusion.  But if the appellate court regards the contrary conclusion as the true and only reasonable one, the appellate court is duty-bound to substitute the contrary conclusion for the one reached by the fact-finding tribunal.  The correct approach for the appellate court is composed essentially of the foregoing three propositions.  These propositions complement each other, although the understandable tendency is for those attacking the fact-finding tribunal’s conclusion to stress the third one while those defending that conclusion stress the first two: Kwong Mile Services Ltd v Commissioner of Inland Revenue (2004)  7 HKCFAR 275, para 37.

24.  The tribunal is under a statutory duty to investigate any matter which he may consider relevant to the claim, whether or not it has been raised by a party: section 20(3)  of the Labour Tribunal Ordinance.

THE PROPOSED GROUNDS OF APPEAL

25.  The thrust of the 1^st defendant’s proposed grounds of appeal is as follows.  At the trial, the defendants expressly made the contention that the claimant was under a duty to disclose the relevant employment legislation to them but she failed to do so. However, the deputy presiding officer did not deal with this point in her judgment and failed in her duty to investigate this matter.  The 1^st defendant now contends that, as a matter of law, the claimant was obliged to make the above disclosure as that arose from her duty to serve her employer with good faith and fidelity or, alternatively, from her role as an ad hoc fiduciary.

26.  The amended Form 14 contains five grounds of appeal.  Based on my understanding of the 1^st defendant’s case, I consider that it would be more logical to deal with ground 4 first to be followed by grounds 1, 2 and 3.  Ground 5 need not be dealt with as it is a generic ground with no particulars and in any event seems to overlap with the other grounds.  In fact, in his written submissions, Mr Axis Yu, counsel for the 1^st defendant, did not address ground 5 at all.

Ground 4

27.  Under ground 4, the 1^st defendant argues that the deputy presiding officer failed to discharge her duty under section 20(3)  of the Labour Tribunal Ordinance by failing to consider or investigate whether the claimant was, as a matter of law and fact, an ad hoc fiduciary vis-à-vis the defendants and had a duty to disclose the relevant employment legislation to them.  She failed to deal with this legal question.  The failure to investigate rendered her decision unfair and improper.

28.  I do not agree that the deputy presiding officer’s decision on the defendants’ contention that the claimant had a duty to disclose was unfair or improper. 

(1)  She explicitly and repeatedly referred to that contention in the written decision: see paras 26(ii), 32, 38, 39, 40, 42, 44 and 46.

(2)  The defendants’ defence in this regard was premised on the factual allegations that (a)  Zhang did not know about the relevant employment legislation at the time, and that (b)  had he known about it, he would not have signed the supplemental letter.

(3)  As quoted above, the deputy presiding officer expressed serious doubt over Zhang’s evidence and found his evidence to be obviously unbelievable.

(4)  It is true that she did not specifically state in the written decision that she did not accept the allegations in sub-para (2)(a)  and (b).  However, I find it reasonably plain from reading her written decision as a whole that she did not accept the entirety of Zhang’s evidence.  She did so for a number of reasons, as stated in paras 42 to 47 of her written decision, as quoted above.

(5)  The allegations in sub-para (2)(a)  and (b)  formed the factual premise of the defence.  As Zhang’s evidence was rejected, there was no factual premise on which to challenge the validity of the supplemental letter.

(6)  There was therefore no need for the deputy presiding officer to go on to decide whether, as a matter of law, the claimant was under the alleged duty to disclose.

(7)  She was entitled to find against the defendants’ defence based on her rejection of their factual case.

29.  Furthermore, I do not agree that the tribunal failed in its duty to investigate relevant matters.  The defendants’ contention regarding the duty to disclose was expressly put forward at the trial.  The evidence now relied on by the 1^st defendant in this leave application had already come out at the trial.  There does not appear to be any other matter which ought to have been further investigated.

30.  Ground 4 therefore is not arguable.

Ground 1

31.  Under ground 1, the 1^st defendant argues that when determining the validity of the supplemental letter, the deputy presiding officer erred in failing to consider and find that the claimant owed a duty to disclose the relevant employment legislation to the defendants and that duty arose (a)  as part of her duty to serve the defendants with fidelity and in good faith or, alternatively, (b)  in her capacity as ad hoc fiduciary.  The failure to disclose on the claimant’s part amounted to an implied representation that there were no material and relevant employment laws in the interests of the defendants to know and that representation was false.  Had the deputy presiding officer properly considered the above, she should have ruled that the supplemental letter was not valid or binding on the parties by reason of the misrepresentation.

32.  In terms of evidence, the claimant was then the President of the 1^st defendant.  There is no dispute that the claimant was in a senior management role within the 1^st defendant and exercised extensive functions over its affairs.  More specifically, it was she who requested the 1^st defendant to sign the supplemental letter and the terms were negotiated between her and Gao before the latter reported to Zhang.

33.  Mr Yu submits that the claimant’s duty as employee was to serve the defendants with good faith and fidelity: Robb v Green [1895] 2 QB 1 at 10, and that the claimant as a senior employee had a duty to notify the defendants that a course of action proposed would likely be damaging its interests if it proceeded: Sanders v Parry [1967] 1 WLR 753.  Insofar as the negotiation and signing of the supplemental letter is concerned, it is further submitted that the claimant’s duty entailed an obligation to disclose the relevant employment legislation to the defendants.

34.  Alternatively, Mr Yu submits that the claimant was an ad hoc fiduciary of the defendants by virtue of her senior position within the corporate structure and the specific duties assigned to her with regard to the task of negotiating the terms of the supplemental letter with Gao for the approval of Zhang.  She was therefore under a fiduciary obligation to disclose the relevant employment legislation to the defendants.

35.  In the discussion of ground 4 above, I have held that the deputy presiding officer was entitled to reject the defendants’ argument, which was based on the alleged duty to disclose, by rejecting their factual case.  It follows that it does not matter whether the alleged duty of disclosure arose as alleged.  This is because even if it did, the supplemental letter is not liable to be set aside as there was no evidence that Zhang did not know about the relevant employment legislation, or that if he had known about it at the time of the supplemental letter, he would not have signed it on behalf of the 1^st defendant.

36.  Hence, ground 1 becomes academic as even if it is arguable that the alleged duty existed and the claimant was in breach, it would not affect the final outcome of this case.  However, in case my conclusion on ground 4 is wrong, I will proceed to consider the alleged duty of disclosure.

37.  As regards the 1^st defendant’s primary position, I accept that as an employee, the claimant owed a duty to serve the 1^st defendant with good faith and fidelity.  However, I do not accept the submission that this duty would in turn give rise to the alleged duty of disclosure.  First, notwithstanding her senior position within the company, the claimant was negotiating her own employment terms with the 1^st defendant.  She had her own interest to look after.  Second, the 1^st defendant was represented by Zhang, with the assistance of Gao.  They should be responsible for protecting the company’s interests insofar as a senior employee’s employment terms are concerned.  In the circumstances, I fail to see why, as a matter of principle and common sense, the law should impose a positive obligation on the claimant to make the alleged disclosure.  Mr Yu has not been able to refer the court to any authority in support of such a positive duty.

38.  As regards the 1^st defendant’s alternative position, I am similarly unable to hold that the alleged duty of disclosure existed, as I am of the view that in the negotiation and signing of the supplemental letter, the claimant did not owe fiduciary obligation to the 1^st defendant as alleged.

39.  The approach which should be taken by the court in determining when fiduciary obligations arise and, if they do, the content of the obligations in the particular context of employment has been authoritatively set out in University of Nottingham v Fishel [2000] ICR 1462, which was recently applied by the Hong Kong Court of Appeal in High Fashion New Media Corporation Ltd v Leong Ma Li [2024] HKCA 1067.

40.  The core obligation of a fiduciary is the obligation of loyalty.  This has a precise meaning, namely the duty to act in the interests of another.  It is this fundamental feature which marks out the relationship as a fiduciary one.  A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.  When fiduciary obligations arise, the person subject to them are to act solely in the interests of the other person, even at the expense of his own interests: University of Nottingham at 1489H-1490D, 1491E; High Fashion at para 73.

41.  There are a number of relationships which can readily and universally be recognised as fiduciary relationships because the very essence of the relationship is that one party must exercise its powers for the benefit of another.  These include trustees, company directors and liquidators. 

42.  An employment relationship does not come within any settled categories of fiduciaries.  The essence of an employment relationship is not typically fiduciary at all.  The purpose of the relationship is not to place the employee in a position where he is obliged to pursue his employer’s interests at the expense of his own.  Fiduciary duties will not arise from the mere fact that there is an employment relationship.  They will however 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: University of Nottingham at1491C-H.

43.  The court’s approach should be, as explained by Elias J in University of Nottingham at 1493E-F, as follows:

“Accordingly, 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 interests of his employer.” (underline added)

44.  Another way of formulating the court’s approach to the question is to ask whether the circumstances of the relationship:

“are such that it is reasonable to expect that the first person (the fiduciary)  will subordinate his interests and act solely in the interests of the other (the principal)” (Snell’s Equity (35^th ed)  at para 7-008)

45.  I will make three further points about the court’ s approach in determining whether fiduciary duties should be imposed in the context of relationships which do not ordinarily give rise to fiduciary duties, including an employment relationship.

46.  First, it is generally recognised that fiduciary duties are onerous and rigorous duties and should not be lightly imposed.  The court should exercise caution before importing fiduciary duties into an essentially commercial relationship: Leung Cha See Pharmaceutical Ltd v Man Kam Ho [2025] HKCFI 2003, para 89.

47.  Second, in the employment context, it is generally accepted that an employee has a duty to act in good faith in the course of his employment.  However, the nature of that duty should be clearly differentiated from that of fiduciary duties.  In the former case, an employee has a duty to take into consideration the interests of another but does not have to act in the interests of that other.  By contrast, in the latter case, a fiduciary has to act solely in in the interests of another: University of Nottingham at 1492D-E.

48.  Third, as to the content (or scope)  of the fiduciary duties when they arise, it should be remembered that not all fiduciaries owe the same full range of fiduciary duties to their principal. Elias J said, at 1491B:

“… simply labelling the relationship as fiduciary tells us nothing about which particular fiduciary duties will arise.”

49.  Which specific fiduciary duties will arise is dependent on what specific circumstances have given rise to the fiduciary relationship in the first place.  Fiduciary duties may be engaged in respect of only part of the employment relationship: University of Nottingham at 1493F-G.

50.  Applying the above principles, my task in the present case is to identify with care the particular duties undertaken by the claimant (1)  in general and (2)  with particular regard to the signing of the supplemental letter, take into account all the surrounding circumstances, and ask myself the question whether she had thus placed herself in a position where she must act solely in the interests of the defendants. 

51.  The general role played by the claimant in the business of the defendants did not seem to be in dispute at the trial.  She held a senior management role and had extensive duties over many aspects of the operation and management of the defendants, including in respect of accounts, financial matters, and compliance with the stock exchange rules etc.  As regards the negotiation of the supplemental letter, she directly dealt with Gao, who was assisting Zhang in this matter.

52.  Contrary to Mr Yu’s submission, I am unable to come to the conclusion that the circumstances are such that the claimant had placed herself in a position where she was expected to act solely in interests of the defendants, preferring their interests to her own where there was any conflict, in the course of negotiating the supplemental letter. 

53.  Here, the claimant was negotiating her own employment terms with the defendants.  The 1^st defendant is a listed company.  It was acting through its executive director and chief executive officer, Zhang, assisted by his assistant, Gao, in the process.  The relevant employment legislation on which the 1^st defendant now relies are basic provisions of the labour law in Hong Kong.  The 1^st defendant was well-placed to look after its own interests in this matter.  In the circumstances, it is difficult to see why in the negotiation process, the claimant should be regarded as a fiduciary such that she was obliged to act only in the interests of the defendants, disregarding her own interests when necessary, with regard to the terms of her own employment.

54.  All that the 1^st defendant can point to is that she was a very senior employee.  However, that fact by itself is plainly not sufficient to justify imposing the onerous fiduciary duty on the claimant, as alleged.

55.  To conclude, the claimant was not under any duty to make disclosure of the relevant employment legislation to the defendants in the course of negotiating and signing the supplemental letter.

56.  Ground 1 is therefore not arguable.

Ground 2

57.  Under ground 2, the 1^st defendant contends that the deputy presiding officer erred in finding that the defendants changed their stance from their earlier witness statement dated 20 May 2024 to the later witness statement dated 18 October 2024 and erred in finding, for that reason, that their defence was by its nature not believable.

58.  This is a challenge to how the tribunal evaluated the evidence.  According to the well-established principles, the role of an appellate court is very limited.

59.  Having reviewed the contents of the two witness statements, I am of the view that the conclusion reached by the deputy presiding officer was a reasonable one. 

60.  The defence mounted at the trial was that the supplemental letter was not valid.  That was the stance explicitly stated in the later witness statement:

“本公司認為該補充協議屬於無效。”

61.  This stance was not mentioned at all in the earlier witness statement.

62.  It is true that it was mentioned in the earlier witness statement that the company’s MPF contributions could be used to offset any long service payment due.  It was also stated that the claimant had failed to disclose in full the relevant employment legislation to the directors.  The relevant paragraphs read:

“(3)  遣散費/長期服務金：公司多年來一直為羅琦繳納強積金及其他補充保險，累計金額約170萬元，可以沖抵羅琦的遣散費/長期服務金請求金額。

…

羅琦在工資補充協議過程中，沒有完整披露勞工法例給相關董事，…”[1]

63.  However, when the earlier witness statement is read as a whole, it is clear that the defendants’ stance as disclosed there was that they were encountering financial difficulties and making losses for the past few years but they were still trying their best to pay salaries to their staff, including the claimant whose salary was very high.  They were willing to make reasonable compensation to the claimant and asked the Labour Department to resolve the issue with reasonable regard to these circumstances. 

64.  In light of the above, in my view, the deputy presiding officer was entitled to take the view that there was a change of stance on the part of the defendants.  There is no room for this court to intervene with her evaluation of the evidence.

65.  Ground 2 is therefore not arguable.

Ground 3

66.  Under ground 3, the 1^st defendant says that the deputy presiding officer erred in disbelieving Zhang and wrongly relied on the principle of non est factum to rule against the defendants.  This is because the main part of the defence was that the claimant had failed to discharge her duty to disclose the relevant employment legislation in her capacity of ad hoc fiduciary.

67.  Insofar as the 1^st defendant is now taking issue with the tribunal’s evaluation of the evidence, he has failed to point to any error of law based on which this court can intervene.

68.  Insofar as the 1^st defendant is relying on the ad hoc fiduciary argument, this has been dealt with under grounds 1 and 4 above.

69.  Ground 3 is not arguable.

CONCLUSION

70.  None of the proposed grounds of appeal are arguable.

71.  I therefore refuse to grant leave to appeal and dismiss the amended Form 14.