YUNG YING LING v. MIRAMAR HOTEL & INVESTMENT CO LTD

HCA196/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.196 OF 2001

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JUDGMENT

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1. The plaintiff, who retired from the defendant company ("Miramar") in 1996, is seeking a payment of $3,582,250 being his entitlement to a lump sum pension under Miramar's retirement fund scheme. The plaintiff joined Miramar in June 1968. The primary issue in this case is whether his service has been continuous for the purpose of his entitlement under the scheme. Miramar contends there was a break from 1978 to 1985 which, if correct, disentitles him to any such payment.

BACKGROUND

2. When the plaintiff joined Miramar in 1968 it was a family-run company. The Young family was the controlling shareholder. The head of the family and No.1 in the company was Young Chi Wan. His son, Albert Young was No.2. The court noted that six of the eight witnesses called by the defence were employees of 30 years or more service. It was the sort of company where loyalty was expected and rewarded.

3. The plaintiff had a close working relationship with Albert Young. His case is based on an oral agreement between himself and Albert Young, then No.2 in the company, in 1978. Albert Young became No.1 on his father's death in 1985. Albert Young himself died suddenly in November 1995.

4. The defendant company was not the only company run and owned by the Young family. Another was Yeung Chi Shing Mercantile Ltd ("YCSM Ltd"). Miramar and YCSM Ltd had a business relationship. The latter supplied goods and services to the former. In 1978 Albert Young was a director and manager of Miramar and the managing director of YCSM Ltd.

5. Also in 1978 the plaintiff started to receive his salary from YCSM Ltd. This continued until 1985, when Miramar resumed the position of paymaster. The plaintiff continued to work for Miramar for another 11 years.

SUMMARY OF THE PLAINTIFF'S CASE

6. The basis of the plaintiff's case was an oral agreement made between himself and Albert Young in May 1978. He had worked for Miramar for 10 years at that time. His evidence was that Albert Young asked him to transfer to YCSM Ltd on a "secondment". At YCSM Ltd he would work for both Miramar and YCSM Ltd. His salary would be paid by YCSM Ltd but his continuity of service with Miramar for pension purposes would not be affected. In fact there was no scheme available in YCSM Ltd by which his continuity of service could be protected. Whilst wearing the hat of YCSM Ltd Albert Young wanted him to explore and develop Miramar's business opportunities in China. He asked the plaintiff to keep this arrangement to himself. The plaintiff had been individually chosen by Albert Young to carry out this task. It was the plaintiff's belief in 1978 that Albert Young would honour this agreement when the plaintiff came to retire. Because of the close relationship between them and because of the loyalties within Miramar I am satisfied that, had he survived, the agreement would have been honoured and the sum claimed would have been paid.

7. The evidential difficulty now is that only one party to the conversation is alive. The defence challenge the plaintiff's veracity. They submit that Albert Young simply offered the plaintiff a better paid job at YCSM Ltd, which he accepted.

8. There are two ways of testing the truth of the plaintiff's case. Firstly, by assessing his credibility as a witness in the light of the fact that no other witness can contradict his version of what was actually said. Secondly, by examining the contemporaneous documentation or the absence of contemporaneous documentation.

THE PLAINTIFF'S EVIDENCE

9. The plaintiff was a reasonably good witness. There were times when his answers appeared to be tailored to meet his case but I do not think he was being dishonest. His own recollection of events and conversations 25 years ago might be better than others but would still be distant and prone to being polished up for the occasion. His answers were nonetheless, straightforward, clear and believable. This finding in itself goes along way towards a judgment in his favour because much of the defence case was based on the assertion that he was not being truthful.

THE EXISTENCE AND ABSENCE OF CONTEMPORANEOUS DOCUMENTS

10. The points in favour of the plaintiff's contention that he was merely seconded to YCSM Ltd without loss of pension rights are as follows :

(1) The plaintiff's employment record card :

11. This document records that in June 1978 he was "transferred" to YCSM Ltd and that in October 1985 he was again "transferred" back to Miramar. It does not say that the employment ended in 1978. Neither is there any document consistent with the suggestion that a new term of employment started in 1985.

12. The defence suggests that both entries were made at the same time in 1985 because the handwriting and colour of ink look as if they were written at the same time. To the amateur eye there is some merit in this contention. However no expert evidence was adduced and the author or authors of the entries did not testify. If the entries were made seven years apart the document is compelling evidence in the plaintiff's favour. If they were both made in 1985 it could be construed that no entry was made in 1978 because it was a private arrangement between the plaintiff and Albert Young and the entries made in 1985 merely clarified the true picture, albeit after the event. The court is not driven to draw a sinister inference adverse to the plaintiff.

(2) The plaintiff's application for Provident Fund in September 1985

13. A document dated 13 September 1985, signed by the plaintiff and Albert Young (who by then was the No.1 at Miramar) is titled "Statement as to Voluntary participation in the staff benefits under the Provident Fund Scheme of Miramar Hotel Investment Company Limited".

14. Paragraph 3 of the document reads :

"Any employee who participated in the provident fund scheme must have worked for the company for over 5 consecutive years (commencing from 20th June, 1968). Before they are eligible to receive all provident fund under his own name at the time of leaving his employment."

The date "20th June 1968" is the date the plaintiff first joined Miramar.

15. The plaintiff's witness, Mr To Chu Hung who was the acting General Manager of the Personal Department at the time, testified that, at the time, he had spoken to Albert Young who had confirmed that this date was specified as the date from which both Provident and Retirement benefits would run. Even if the document only relates to the Provident Fund it would make no sense for the plaintiff's continuous service for the Provident Fund to run from 1968 but for the Retirement Fund from 1985. I find however that it provides evidence of the commencement date of his entitlements for all purposes.

16. The defence rely on clause 6 of the same document which reads :

"Every employee is participating in the provident fund scheme on a voluntary basis. There are no rules and regulations compelling employees to participate (in the fund). However, those employees who have not participated in the provident fund will not be entitled to the company's Retirement Fund or other benefits of similar nature."

17. The defence submits that this clause defeats the plaintiff's claim in any event. The fact being that no contributions to the Provident Fund were in fact made between 1978 and 1985 and the plaintiff had withdrawn all the accrued fund up to 1978 when he went to YCSM Ltd. I do not agree with the defence submission. Put in context this document means that at the time of retirement the employee must be able to say that he had contributed since being asked to do so i.e. the date of the document. The "context" includes the oral agreement in 1978 and the fact that the document itself, in clause 3, states the commencement date of the plaintiff's entitlement. Thus I conclude that paragraph 6 should not be construed retrospectively so as to defeat the plaintiff's claim.

(3) Absence of document relinquishing right to Retirement Fund

18. Entitlement to the Retirement Fund in question was limited to those employees who joined the defendant before 1 January 1969. Employees who joined after that date were required to sign a form which relinquished their right to the Retirement Fund scheme. Had the plaintiff commenced a new term of employment in 1985 he would have been required to sign such a form. There is no such form.

19. The defence explanation for the absence of this form is entirely speculative. They offer two theories. Firstly, that it may have been an oversight by the personnel department. Secondly, the idea was floated that the plaintiff's brother who worked in the personnel department might have "arranged" things for his younger brother. It was first contended that the brother was the manager of the personnel department in 1985. However, the fact emerged that he only became a deputy manager in 1986. Mr Lam Sai Ying was the manager throughout the material time.

20. Both these theories are unattractive and unsupported by evidence.

(4) Provident Fund contributions at 11%

21. In 1989 the rates for contribution to the Provident Fund changed. The new rate varied depending on the length of service at the material time in 1989. The new rate for those employees who had continuous service of 14 years and 7 months or more was 11%. The plaintiff's deductions were set at 11% from 1989 onwards up to the time of his retirement in 1996.

22. The defence again point to the plaintiff's elder brother (now deceased) and again without any evidence. By 1989 the plaintiff's elder brother had become manager of the personnel department. This bare fact is the only basis of the defence's speculative suspicions of dishonestly in putting the plaintiff oon a higher rate than he had in fact earned by that time.

(5) Calculation of Holiday Pay in December 1995

23. This is another document consistent with the plaintiff's case. The plaintiff received $296,787 accumulated holiday pay on his retirement. The document setting out the calculation, dated 3 January 1996, is headed :

"Group Assistant General Manager, Yung Ying Ling, ID XXXXXX(X) from 1968 year 6 month 30th day onward employed until 1995 year 12 month 31 day retired ..."

It was signed by Eddie Lau, a director of Miramar.

THE REASON FOR THE "SECONDMENT" TO YCSM LTD

24. The plaintiff's evidence was that from 1978 he would be working for both YCSM Ltd and Miramar. Overtly he worked for YCSM Ltd but for Miramar, or rather for Albert Young, his work was, initially, more covert. He said he had good contacts in China and was able to develop Miramar's business in China for Albert Young. For example, in 1979, he arranged a visit by a group from Miramar to meet officials from the PRC Tourism Authority. Between 1980 and 1983 he arranged for top chefs from China to visit Miramar and attend food festivals. He said he was also involved in the negotiations for the construction and development of the Nan Hai Hotel in China of which Miramar became a joint venture partner in 1983. He said his involvement in this project went beyond 1983 up to 1985.

25. The secrecy of the "secondment" was, according to the plaintiff, because Albert Young did not want the Western Hotel Group, with which Miramar had a close business relationship, to know about their intended development of business in China.

26. The defence challenged the veracity of both what he did and the reason for the secrecy. The defence case was simply that he left Miramar in 1978. His alleged activities from 1978 to 1983 have been conjured up or exaggerated to suit his case. They say, his "return" to Miramar was in 1983 at the earliest, from when he was paid $2,000 a month for part-time work on the Nan Hai project. They say there was no need for a secret arrangement in 1978 because Miramar's relationship with Western Hotels had come to an end at about that time.

27. Because all these events were 20 to 25 years ago it is not possible to resolve the conflicts with a high degree of certainty. The difficulty for the defence was that they were unable to produce useful documents to contradict the plaintiff's account. They were only able to point to the unlikely nature of the arrangement.

28. Some time was spent, in evidence, on the Miramar stationery at the material time. Some documents at the material time did bear the Western logo (evidencing the existence of the business relationship), some did not. The plaintiff was able to point to one letter dated 1980 which bore the logo, suggesting that the business relationship was continuing at least till then. The defence on the other hand produced the glossy annual reports which included photographs of Western Hotels up to 1978 but not beyond.

29. I regard it unnecessary and unhelpful to set out all the minutiae on this issue. I am prepared to accept that the Western relationship was on-going in 1978 at the time Albert Young transferred the plaintiff to YCSM Ltd. It may well have come to an end soon after, but precisely when it is impossible to say. Furthermore I am prepared to accept that the plaintiff did do those jobs which he described between 1978 and 1983. He was also clearly involved in the Nan Hai project.

30. The details of what he did are relatively academic because I have accepted that Albert Young did engage the plaintiff to be Miramar's man investigating business in China, whilst on the payroll of his associated company YCSM Ltd. Unfortunately, due to his sudden death in 1995, his reasons and intentions can only be told to us through the plaintiff. In this light, I also accept the plaintiff's explanation for the $2,000 a month from 1983 to 1984. These were for expenses in China. Prior to 1983 his expenses had been paid in cash on an item-by-item basis. In 1983 it was decided to pay him a regular sum instead, but he still had to keep an account of his expenses. I find this to be a plausible explanation.

DID ALBERT YOUNG HAVE AUTHORITY TO BIND THE DEFENDANT IN 1978?

31. In 1978 Albert Young was a manger and director of the defendant. He was Young Chi Wan's eldest son and the only son working in the family business. He was No.2 in the company. He signed company documents. He was also the managing director of YCSM Ltd. It is entirely likely that he would be at the forefront of ideas to widen and develop the company's interests. The defence called some witnesses, who were junior members of staff in 1978 to say that the father was in charge. That is not disputed. What they were unable to say is what power the son Albert Young had. The high water mark of the defence evidence came from Li Cheuk Bun who, 25 years ago, was a waiter in the director's office. He overheard Young Chi Wan as the decision-maker. I have no doubt that Mr Li was an honest witness, a good waiter and a loyal employee. But, as a high water mark against the plaintiff's case that Albert Young had the necessary authority to bind the company, it is barely above low tide.

REMAINING ISSUES

32. Some other issues were ventilated which, on their face, lent some support to the defence case. They required an explanation from the plaintiff. The plaintiff gave an explanation. There was no evidence to contradict the explanation. The defence invited the court to conclude that the explanation was false. Such issues were :

(a) In 1978 the plaintiff withdrew the entire amount of his Provident Fund, a sum of $18,408.04. The defence submitted that this act is consistent with a man leaving his employment. The plaintiff explained that he was buying a flat at the time and needed the money to put towards the purchase price. It is true that it might have been more sensible to leave a nominal sum in the fund to keep it open. However, in view of his oral contract with Albert Young it would not have been deemed necessary to do so at the time. He did buy a flat at the time, in his wife's name, and there is no reason to disbelieve that this money went towards its purchase.

(b) The defence point to the fact that no contributions were made to the Provident Fund between 1978 and 1985. This factor is neutral. In fact it is not particularly surprising because the employee's contribution is deducted from salary and between those years the plaintiff had no salary from the defendant. In any event, the inference which the defence seek to draw is countered by the fact that in 1989 Miramar's Provident Fund record stated that the plaintiff had over 14 years and 7 months' service (see paragraph 21 above).

(c) The defence also sought to draw adverse inferences from the fact that the plaintiff's resignation letter was dated 15 November 1995 but it was not company chopped as being received until 2 January 1996. The plaintiff said he gave the letter personally to Albert Young, who sadly died of a heart attack on 27 November 1995. The defence theory is that the plaintiff decided to resign after his mentor died but backdated the letter to make it look as though he had decided to leave before his death. The argument being that without Albert Young around the plaintiff's position at Miramar would be less comfortable. In my judgment the defence have attached too much weight to the idea that the plaintiff decided to retire, and retire quickly, as a result of Albert Young's death. Had he not died, the plaintiff's case would have been no different. In his mind he still had his 25 years of service. He could have retired any time irrespective of Albert Young's death. In the absence of evidence to the contrary the defence theories cannot shed the mantle of speculation.

ANSWERS TO THE AGREED ISSUES

33. In view of all of the above, the issues, as framed by counsel, can now be addressed and answered :

"	(a)	Whether, for the purpose of determining the plaintiff's entitlement to the defendant's retirement scheme, the plaintiff began employment with the defendant since 1968 and continued until his retirement in 1995, amounting to over 25 years' employment by the defendant,
	(b)	Whether the aforesaid was agreed between Young Bing Ching Albert on behalf of the defendant and the plaintiff, such agreement being made or evidenced by:
		(i) an oral agreement between Young Bing Ching Albert on behalf of the defendant and the plaintiff in 1978;
		(ii) the matters set out in paragraph 3(i) to (v) of the Reply.
	(c)	Whether Young Bing Ching Albert had authority to enter into the aforesaid agreement on behalf of the defendant.
	(d)	Whether the aforesaid agreement did not bind the defendant on the ground that there was no intention to enter into a binding contract or there was no consideration.
	(e)	Whether clause 6 of the Chinese Agreement of 13th September 1985 bars the plaintiff's claim.
	(f)	Whether both the plaintiff and the defendant had at all times acted on the mutual basis that the plaintiff was to be regarded as still being the employee of the defendant, at least for the purpose of counting the plaintiff's years of employment by the defendant, even for the period when the plaintiff was paid a monthly salary by Young Chi Shing Mercantile Ltd. and not paid any salary by the defendant from 1st June 1978 to 1st September 1985 or 1st October 1985, and whether the defendant was thereby estopped, by estoppel by convention or otherwise, from denying that the plaintiff was its employee for that period for the purpose of determining the plaintiff's entitlement to the defendant's retirement scheme."

34. The court's findings of fact result in the following answers :

(a) Yes;

(b) Yes;

(c) Yes;

(d) No;

(e) No;

(f) Yes.

INTEREST

35. The plaintiff retired in 1996 the writ was issued in 2002. For much of the intervening time he lived in the USA. His Provident Fund payment was not made to him until 2000 (a sum of just under $4 million). Between 1996 and 2000 he had no funds or income from his former employer on which to live. On the other hand he did not seem to press his claim with much urgency.

36. In the exercise of my discretion I consider a date between the two extremes for the start of interest running, would be just.

37. Interest at prime plus 1% will accrue on the judgment sum of $3,582,250 from 1 January 1999. Costs against the defendant, to be taxed if not agreed.