CHAN CHI LING ELWYN v. RICHFIELD REALTY LTD

HCLA 9/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 9 OF 2013

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO 4103 OF 2012)

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J U D G M E N T

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I. INTRODUCTION

1. The defendant is a wholly-owned subsidiary of a listed company (“Listco”) that is engaged in inter alia property assembly and brokerage business for redevelopment purposes.  The Claimant is a qualified engineer with professional registrations and institute memberships and substantial experience in planning and property development.  He has held senior management positions with the Emperor Group and Paul Y Management Limited.

2. The claimant commenced employment with the defendant as their project director on 10 November 2008.  The following documents had contractual force in relation to the terms of his employment with the defendant (collectively, “Contract Documents”):

(a) a written contract (僱傭合約) dated 4 December 2008 (“Employment Contract”):

“僱傭合約

本僱傭合約由[the defendant](以下簡稱僱主)與[the claimant](以下簡稱僱員)於2008年11月10日訂立，雙方同意遵守下列僱傭條款及條件:

1.	受僱日期	:	由2008年11月10日起生效，直至任何一方終止合約為止。
2.	受僱職位/部門	:	寫字樓員工 : 項目總監
3.	公司地點	:	……
4.	工酬	:	(a)  每月底薪 : HK$35,000, (b)  房屋津貼 : HK$25,000, (a)及(b)在每月1號 – 7號發放。
5.	工作時間	:	……
6.	休息日	:	……
7.	試用期	:	……
8.	終止僱傭合約	:	……
9.	假期	:	……
10.	年終酬金	:	僱員工作滿壹年後，獲公司發放花紅，以不少於1個月底薪及房屋津貼計算。
11.	強制性公積金	:	……
12.	颱風時當值	:	……
13.	黑色暴雨警告	:	……

僱主及僱員雙方均清楚明白上述各項內容，並同意簽字作實。

雙方均須保存一份合約文本作日後參考。”

(b) a written supplemental employment contract (僱傭合約(補充條款)) dated 1 April 2010 (“Supplemental Employment Contract”):

“僱傭合約(補充條款)

本僱傭合約由[the defendant]與[the claimant]於2010 年4 月1 日訂立，雙方同意[the claimant]的日薪及津貼將由

月薪 : HK$35,000.00

津貼(租金) : HK$25,000.00

改為

月薪(連加薪3%，並取消每月租金津貼) : $61,800.00

新安排於2010年4月1日正式生效，其他條款不變。”

(c)     a staff handbook provided to the claimant (“Handbook”) that expressly stated it had contractual effect supplemental to the Employment Contract:

“二、為使閣下清楚瞭解受僱期內所須知道及遵守之事項, 公司特編此手冊, 各員工熟悉其內容, 並遵守冊內之僱傭條件及公司則例。” (前言)

“(五) 僱傭合約只扼要列出薪酬及工作時間, 其餘法則需參照員工手冊及公司通告。” (第一章)

“第二章 薪金、酬金、各項津貼

(一) 僱員可得的各項收入見下表:

項目/僱員
起止時間	發放時間	總寫字樓文員	市場部員工
花紅		不定時	隨僱主酌情發放”

(第二章)

“(六)此手冊為僱傭合約以外具法律效力的補充文件。” (第七章)

3. I note the following in respect of the Contract Documents:

(a) There was a time gap between the claimant’s commencement of employment (10 November 2008) and the Employment Contract (4 December 2008).

(b) It was the claimant who requested the defendant to execute the Supplemental Employment Contract.[1]

(c) The claimant in his evidence accepted the terms in the Handbook formed part of the terms of his employment with the defendant and were binding on him.[2]

(d) Pursuant to the Handbook, the defendant’s staff (including the claimant) would be entitled to receive inter alia a bonus at the discretion of the defendant.

4. From 2010 to 2012, the defendant paid the claimant the following sums (in addition to wages):

(a) On 21 January 2010, the defendant paid $1,000,000 as “site bonus” (地盤獎金) to the claimant.[3] Upon the claimant’s request, this was paid as consultancy fee to his company Vic Sword Company Limited (“Vic Sword”).[4]

(b) On 6 February 2010, the defendant paid another bonus (花紅金額) of $200,000 by cheque to the claimant.[5]

(c) On 28 January 2011, the defendant paid $1,400,000 to the claimant, which was referred to as “Annual Bonus” (年終花紅).[6] The claimant wanted to adopt the same documentation for this payment as per the “consultancy fee” arrangement in 2010, but was informed by the defendant it would be inappropriate due to concerns over breach of tax and listing requirements.[7]

(d) In early 2012, the defendant paid a further bonus (花紅金額) of $220,000 to the claimant.[8]

5. On 22 September 2012, the claimant resigned from the employ of the defendant.

6. It was the claimant’s case that: [9]

“他受聘時的條件包括項目紅利。 …… 經磋商後，雙方最終同意的待遇為$60,000月薪(包括房屋津貼)及不論任何買家的項目紅利，每個項目$100,000。 …… 被告公司在2010 年1月21日向他支付了$1,000,000項目紅利，並提供了10 個地盤名稱作紀錄，即每個地盤$100,000。 …… 不過及後被告公司未有再支付項目紅利。他雖曾向被告公司追問，但並不成功。 …… 雖然被告公司曾分別在2010 年2 月6 日支付$200,000，2011年1月28 日支付$1,400,000及2012 年1 月17 日支付$220,000。但以上只是年終酬金，並非項目紅利。 …… 而他有權以每個$100,000來計算紅利的項目 …… 已完成的地產項目。”

7. It is the defendant’s case that: [10]

“最終被告公司只以$60,000作底薪包括房屋津貼再加上酌情花紅聘請申索人，並無任何以地盤計算的佣金或花紅的條件。 …… 被告公司於2010年1月21日支付了$1,000,000給申索人作酌情獎金，同年2月6日被告公司再支付$200,000給申索人作的酌情獎金。 …… 被告公司在2011 年1 月28 日及2012 年1 月17 日分別支付了申索人$1,400,000及$200,000的酌情獎金。 …… 以上的酌情獎金全屬酌情發放與地盤項目無關。 …… 雙方在2008 年12 月4 日簽訂的書面合約和2010年4月1日簽訂的補充條款，並無有關項目花紅的條款。申索人亦並無提出加入有關條款的要求。 …… 申索人只在2010 年9月22 日遞交辭職信的當日時才首次提出有關項目花紅的追討。”

8. The crux of the dispute was (a) whether or not there was an oral agreement whereby the defendant agreed with the claimant to pay project bonus of $100,000 per construction project (“Oral Agreement”),[11] and (b) whether oral evidence would be admissible to vary, add to or contradict the Contract Documents.

II.  PROCEEDINGS

9. On 8 November 2012, the claimant filed a claim at the Labour Tribunal (“Tribunal”).  The claimant claimed for a sum of $11,247,600.93 comprising inter alia (a) project bonus of $4,100,000 for completed projects (ie $100,000 x 51 projects less $1,000,000 received) (“Claim B Bonus”), and (b) project bonus of $7,100,000 for 71 “落訂項目” (ie $1,000,000 x 71 projects) (“Claim C Bonus”).

10. On 5 July 2013, after an 8-day trial, the Deputy Presiding Officer (“DPO”) found for the claimant on his claim for the Claim B Bonus, and ordered the defendant to pay to the claimant $4,100,000 with interest and no order as to costs (“Determination”).

11. On 23 August 2013, the DPO handed down written reasons for the Determination (“Reasons”) which held inter alia that apart from the written contract of employment there was an Oral Agreement (which formed part of the employment contract) by which the defendant agreed to pay the claimant project bonus calculated on the basis of $100,000 per construction project.[12] On 29 October 2013, I granted leave for the defendant to appeal against the Determination.  The defendant contended that the DPO in finding for the claimant on the basis of the Oral Agreement committed fundamental errors of law and failed to discharge his statutory duty to investigate in a material way.

12. The appeal came before me for hearing on 4 April 2014 (“Appeal”).  Mr Chow SC (and Mr Wong with him) appeared for the defendant/appellant, and Mr Hung (and Mr Cheung with him) appeared for the claimant/respondent.  Since the Appeal concerned the Oral Agreement and Claim B (but not Claim C) Bonus, the reference to project bonus in this Judgment is to the Claim B Bonus.

III.  LEGAL PRINCIPLES

13. Hearings at the Tribunal are conducted in an informal manner.[13] The presiding officer may inter alia put to a party or witness such questions as he may think fit,[14] and shall investigate any matter which he may consider relevant to the claim, whether or not it has been raised by a party.[15]

14. A party’s right to appeal against an award, order or determination by the Tribunal is limited to questions involving points of law or excess of jurisdiction.[16] On such appeal, the Court of First Instance may draw any inference of fact, but may not (a) reverse or vary any determination made by the Tribunal on questions of fact or (b) receive further evidence.[17]

15. The applicable principles have been summarised by Au J in Wai Mei Lai Stella v Viya Pramita as follows:[18]

“(2) Finding of facts by the Tribunal is generally immune from challenge as it involves no error of law, unless such is perverse or irrational, or there is no evidence to support the decision or where the decision was made by reference to irrelevant factors or without regard to relevant factors: ……

(3) Further, failure to discharge the statutory duty to investigate is a ground of appeal.  However, it is trite that not every failure to investigate a relevant matter will give rise to an appeal.  The appellate court has to be satisfied that the subject matter of the complaint must not only be relevant but be of such a nature that the lack of investigation will give rise to injustice, in that, a fair and proper determination of the claim cannot be attained: ……”

IV.  DEFENDANT’S GROUNDS OF APPEAL

16. I gratefully adopt Mr Chow SC’s summary of the defendant’s grounds of appeal (“Grounds”) as follows:

“(1) The Tribunal committed errors of law in failing to apply the burden of proof correctly (Notice of Appeal §1) ……;

(2) The Tribunal committed errors of law in failing to apply the correct test for assessing the credibility of the Claimant’s evidence on the Oral Agreement as laid down by the Court of Appeal in Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corporation Ltd (2007) 3 HKLRD 439, §135 (per Stock JA) (Notice of Appeal §§2-3) ……;

(3) The Tribunal erred in rejecting the unchallenged evidence of Mr Au Wing Wa (“Mr Au”) and Ms Celia Wong (“Ms Wong”) of the Defendant (both directly relevant to the existence of the Oral Agreement) without giving any adequate explanation (Notice of Appeal §4) ……;

(4) The Tribunal’s dis-application of the parol evidence rule was based on a factual premise that is false, namely, that discretionary bonus was not provided for in the Employment Contract and that the parties intended their contract to be partly oral and partly in writing (Notice of Appeal §§5-8) ……;

(5) The Tribunal failed to take into account or failed to investigate into various inherent improbabilities or internal inconsistencies in the Claimant’s case regarding the existence of the Oral Agreement (Notice of Appeal §§3, 7, 9) …….”

For convenience, I shall refer to the five grounds of appeal as “Grounds 1, 2, 3, 4 and 5”.

17. Mr Chow SC submitted that the Grounds were against errors of law as to (a) how the DPO approached the evidence, (b) how he reached his conclusions, and (c) whether he discharged his statutory duty to investigate.  Should the defendant succeed on Grounds 1, 2, 3 and 5, it was said that the present case must be remitted to the Tribunal for retrial.  But should the defendant establish that the DPO failed to address the “anterior question” (as explained in Part VIII(a) below) under Ground 4, Mr Chow SC submitted that this court should allow the Appeal without retrial.

18. On the other hand, Mr Hung argued the essential dispute over the existence or otherwise of the Oral Agreement was narrow, fact‑sensitive and without any complexity.[19] The task of the DPO (being a professional tribunal) was to apply common sense to the evaluation of the circumstances of the alleged Oral Agreement and the defendant’s denial as elicited in the evidence (and to investigate, if necessary) to decide which of the two versions of fact put forward by the parties was more likely or less likely.  In the end, the DPO rejected the defendant’s version of events, accepted the claimant’s version of events as more likely, and found that the Oral Agreement did exist.  Mr Hung submitted there was no error of law and the Appeal should be dismissed with costs.

19. Since the underlying bases for the Grounds overlap, I propose to deal with the relevant legal principles and set out the parties’ respective contentions (dealing with any discrete matter if possible) before I discuss the overall merits of the Appeal.

V.  BURDEN OF PROOF (GROUND 1)

20. Mr Chow SC submitted the DPO’s approach in determining the existence of the Oral Agreement was wrong in law in that he failed to apply the burden of proof correctly as demonstrated by paragraph 68 of the Reasons when he stated “整體而言，雙方的案情以較高可能性的標準比較下，申索人的案情較為可信，為本席所接受。被告公司的案情則不為本席所接受”.

(a)  Legal principles

21. “The burden lies upon the party who substantially asserts the affirmative of the issue which he has to prove in order to succeed ……”[20] In an action on a contract, the burden of proving the existence of the contract lies with the claimant.[21] Here, the claimant sued on the Oral Agreement, so he bore the legal and persuasive burden to prove its existence.[22]

22. Mr Hung submitted there was nothing to suggest that the DPO was unaware of such trite principles.  He reminded there was no need for the DPO to recite such trite principles in the Reasons.[23] But Mr Chow SC’s complaint was not about this, but about the DPO mis-applying the burden of proof in his evaluation and analysis of the evidence.

23. In most cases, where a judge or tribunal of fact is faced with two conflicting versions of events, he/it will be able to decide which is probable and which is not, and make a finding on the issue accordingly.  The elimination of an improbable theory may lead to the acceptance of a competing theory that is not improbable where the available evidence supports this.[24]

24. Even though “[no] judge likes to decide cases on burden of proof if he can legitimately avoid having to do so”, “[there] are cases, however, in which, owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just course for him to take.”[25] This is explained by May LJ in Morris v London Iron and Steel Co Ltd as follows:[26]

“…… Judges and tribunals of fact should make findings of fact in relation to matters before them if they can. In most cases, although in some cases it may be difficult, they can do just that. Having made them, the tribunal is entitled to draw inferences from the findings of primary fact where appropriate. …… Judges should, so far as is practicable and so far as it is in accordance with their conscientious duty, make findings of fact. But it is in the exceptional case that they may be forced to reach the conclusion that they do not know on which side of the line to reach the conclusion. ……”

25. The principles have been summarised by Poon J in Big Island Construction (HK) Limited v Wu Yi Development Company Limited as follows:[27]

“19. If one version is found to be improbable, it does not necessarily lead to the acceptance of the other when, owing to the unsatisfactory state of the evidence, the court is not satisfied that the latter is probable. There are judicial utterances to the effect that in such scenario, the judge would be forced to say “I just do not know” on which side of the line the decision ought to be drawn.  However, such judicial utterances should not be understood to mean that the court will or should shy away from making a finding.  What the court will do is to resort to deciding the matter on the burden of proof: The Popi M, supra, per Lord Brandon at p.956A; see also Yau Wah Yau v Commissioner of Inland Revneue, supra, per Tang JA (as he then was) at paras.42 to 46.  Applying In re B (Children), supra, the court will treat the matter of which the party carrying the burden of proof but failing to discharge it, as having not taken place.

20. If neither version is improbable, rejection of one may justifiably lead to the acceptance of the other : Datec Electronics Holdings Ltd and others v UPS Ltd, supra, per Richards LJ at para.83 (upheld on appeal); Ide v ATB Sales Ltd, supra, per Thomas LJ at para.6.

21. Finally, a good dose of common sense is required when the court evaluates the evidence in determining the probability or otherwise of the conflicting versions of events.” (my emphasis)

26. Hence, where there are two improbable theories, the elimination of one does not automatically lead to the acceptance of the other equally improbable theory.  The judge or tribunal has open to him a third alternative, ie the party on whom the burden of proof lies in relation to any fact has failed to discharge that burden.  The judge must be satisfied on the evidence that a particular fact or state of affairs is more likely to have occurred than not.[28] May LJ in Morris said: [29]

“…… In any event, where the ultimate decision can only be between two alternatives …… then when all the evidence in the case has been called the judge or the tribunal should ask himself or itself whether, on that totality of the evidence, on the balance of probabilities, drawing whatever inferences my be thought to be appropriate, the alternative which is necessary for the plaintiff to establish in order to succeed is made out. If it is not, then the operation of the principle of the burden of proof comes into play and the plaintiff fails. ……

27. Mr Hung drew my attention to Kiani (as Personal Representative of the late Abdul Kiani) v Land Rover Limited & ors.[30] In that case, the court was faced with two alternatives as to the cause of death: accidental death or suicide.  A cleaner at the defendant’s plant was found dead although relatively uninjured in the sub-floor coolant tank.  The defendant unsuccessfully argued he should be held to have committed suicide as he had complained of insomnia and family difficulties and had given a valued ring to a colleague that day, and it was virtually impossible to fall through the tank hatch without sustaining some injury.  The English Court of Appeal held on the evidence the trial judge was entitled to find that suicide was “less than probable” and that accident was possible, so it was open to him to find that accident was the cause of death.  Waller LJ found there was evidence to demonstrate that an accidental fall was possible and went on to say:[31]

“…… As long as accident can be demonstrated to be possible, it is open to a court which has discounted any other possibility to be of the view that accident has been proved on the balance of probabilities. That must be particularly true where a breach of duty, a duty to guard against the very type of injury with whom the case is concerned, has been established. Third, I do not myself think that it is false logic to reason that where only two possibilities are under consideration both of which seem unlikely, if one seems much less likely than the other, the less likely an be discounted thus making the first likely to have happened in the balance of probabilities. ……” (my emphasis)

28. I note the court in Kiani considered the totality of the evidence to find that suicide was unlikely.  So even when there are only two possibilities, the court must consider the evidence advanced by the parties on the balance of probabilities before reaching its conclusion as to where the probability lies, and it only when the court concludes that the alternative suggestion put forward by a party is on balance improbable on assessment of the evidence that it is likely to fortify its conclusion that it is legitimate to find for the other competing alternative.  This is illustrated by the note of caution struck by HHJ Toulmin CMG QC’s judgment in Amsprop Ltd v ITW Ltd (trading as Hobart UK),[32] which concerned a fire at the Hard Rock café in London.  The learned judge considered Kiani amongst other authorities, and said “[if] I conclude that if out of only two possible causes of the fire, the flare up of food on the grill seems much less likely, I should discount that possibility and conclude that the fire was caused by a flame on the burner being drawn into the duct”,[33] but he went on to find, however, that:[34]

“…… I cannot, on the evidence, conclude that it was less likely, let alone must less likely, that the fire was caused by a flare up of food on the grill rather than by a flame from one of the burners being drawn into the duct. On the evidence as presented to me, it would be speculation to say which seems the more possible clause. As I have indicated, if I was forced to speculate, I should conclude that the flare up of food on the grill as a result of inattention by Mr Ogunniake was the more likely cause. I emphasise that this is speculation and is not a finding of fact against Mr Ogunniake.” (my emphasis)

29. On such basis, given the need to consider the totality of the evidence to determine where the probability lies, I agree with Mr Chow SC that the principles elicited in Kiani cannot be extrapolated to apply to competing evidence of individual witnesses.  It does not logically follow that rejection of the evidence of one witness that the evidence of another witness will be accepted.

(b)  DPO’s approach

30. Before I consider Mr Chow SC’s submissions that the DPO did not address the question as to whether the claimant successfully discharged his burden of proof, it is useful to start with the approach adopted by the DPO:

(a) He identified the issue as being whether or not the alleged Oral Agreement existed,[35] and referred to the legal principles for the parol evidence rule.[36]

(b) He found that prima facie (初步看來) there “exists a possibility” (存在……可能性) that the employment contract between the parties was partly oral and partly in writing  because the Employment Contract (i) made no reference to discretionary bonus and yet the same was paid to the claimant, and (ii) did not expressly incorporate the Handbook that contained the term relating to discretionary bonus:

“23. 申索人在2008 年11月10日入職被告人公司。不管是否如被告公司所說因要修改的關係，合約是在2008 年12月4日才簽署，當時雙方的重要合約條款包括待遇已以口頭協議方式落實。

24. 初步看來，本案確存在雙方以部份書面、部份口頭的形式達成合約或有附屬合約的可能性。因為根據被告公司的案情，他們曾口頭承諾給予申索人酌情花紅並曾實際支付，但有關的酌情花紅在書面僱傭合約中並沒有記載。

25. 雖然被告公司的員工手冊有提及總寫字樓的文員有酌情花紅，不過書面僱傭合約中亦並無明言將員工手冊納入為合約條款的一部份。

26. 本席認為申索人所聲稱的口頭承諾是否存在與口頭證據原則是否適用應一併考慮。” (my emphasis)

(c) The DPO went on to consider and raise doubt over the evidence of the defendant:

(i) Since the payment of $200,000 (花紅金額) in February 2010 was discretionary, the defendant’s contentions over the payment of $1,000,000 under a different label (地盤獎金) shortly before that in January 2010 were doubtful:

“33. 即使區先生體諒申索人未有收過花紅，本席認為也不急於一時。因為不久之後就是農曆年底，即被告公司慣常發給酌情花紅的日子。區先生又不是因申索人催促，短時間內發放兩個性質一樣的花紅實在奇怪。

34. 這個酌情花紅以地盤獎金為名，由區先生圈出10 個地盤為$1,000,000作紀錄，即每個$100,000。這個計算方法與申索人的項目紅利的要求竟然不謀而合。

……

37. 按成功地盤數目計算的獎金在被告公司的一直存在。這一點從被告公司2009 年1月14日及2010 年3月10日的通告可見。

38. 雖然名字不同，這個地盤獎金以地盤計算獎金的方法，與申索人所指的項目紅利的計算方法一致。

39. 既然被告公司已經有給予僱員酌情花紅的安排，何以到一定金額便要套上其他方式的獎金名義發放，令人費解。

……

41. 如果說是內部會計用途，被告公司未能完滿解釋。

……

44. 這個本應在會計列支為“薪金 – 花紅”的酌情花紅與地盤相關的顧問費屬不同性質，本席不明何以可以隨便轉換。不過若兩者都是個與地盤掛勾的獎賞則另當別論。而作為上市公司集團的成員，更不該如此隨便。”

(ii) The DPO doubted the evidence of Au Wing Wah (“Mr Au”) that the payments of $1,000,000 and $1,400,000 in January 2010 and January 2011 respectively were both year-end discretionary bonus, and he rejected the defendant’s explanation on the differentiation over bonus payments to the claimant in 2010-2012:

“47. 該$1,400,000的酌情花紅數目超過$1,000,000，若真有內部會計需要，理應與之前一年的安排，同樣以地盤獎金為名義及寶華發放及，但事實並非如此。

……

51. 本席認為被告公司未能解釋2010 年的$1,000,000與2011 年的$1,400,000發放為何有如此分別。”

(iii)   Mr Au in evidence said he had never heard of the term project bonus, and Celia Wong (“Ms Wong”) gave conflicting evidence on this aspect,[37] which the DPO rejected.

(d)    The DPO concluded “以上各點都令本席質疑被告公司證人的說法” and “本席感到被告公司以地盤獎金名義作酌情花紅的解釋牽強，不合常理，難以令人接受”.^[38]

(e)     Next, the DPO considered the claimant’s evidence but only on two points: (i) the claimant failed to protest against non-inclusion of the project bonus term in the Employment Contract, which the DPO considered “contradictory” and “unfavourable” to the claimant,[39] and (ii) the claimant was dilatory in chasing the defendant for his project bonus.[40] The DPO had reservations about the claimant’s case (故此申索人的案情亦有本席有所保留之處),[41] but he did not conduct any further analysis of the claimant’s evidence.

(f)     The DPO went on to consider three submissions by the defendant, ie the claimant’s failure to cross-examine Mr Au and Ms Wong, the claimant’s request by email for payment of the $1,400,000 bonus in January 2011 as consultancy fee, and the defendant’s suggestion that the project bonus term was unclear and unreasonable, and he found those matters inconclusive or at least not unfavourable to the claimant.[42]

(g)     The DPO held that by comparison the claimant’s case was more believable than that of the defendant, and he found in favour of the claimant on his claim for project bonus:

“68. 整體而言，雙方的案情以較高可能性的標準比較下，申索人的案情較為可信，為本席所接受。被告公司的案情則不為本席所接受。

69. 本席認為被告公司的$1,000,000地盤獎金，確是按地盤數目來計算的花紅，並非無特定計算方法的酌情花紅。

70. 申索人並非市場部的員工，本席認為被告公司支付地盤獎金的原因是雙方訂有相關的口頭合約。

71. 本席裁定雙方確實訂有項目花紅的口頭協議。”

(h)    The DPO then returned to the question of the applicability of the parol evidence rule, and from the premise of a prima facie possibility that the Oral Agreement existed in paragraph 24 of the Reasons he moved on to conclude in paragraph 72 of the Reasons that “雙方確有意圖不全部以書面形式訂立合約，而是部份書面及部份口頭，而這個口頭合約亦是主要僱傭合約的部份約因” because (i) “被告公司雖曾口頭承諾有酌情花紅，但僱傭合約中並無記載，亦無表明納入員工手冊作合約條款” and (ii) “再加上本席裁定雙方確實存在口頭合約”.

(c)  Claimant’s position

31. Mr Hung submitted that the DPO was faced with two diametrically different alternatives put before him by the parties, ie whether or not the Oral Agreement in respect of the project bonus existed, and there was no other conceivable alternative.  He argued the DPO was entitled to compare the parties’ assertions and on balance discount the defendant’s version of events as less likely, which therefore made the claimant’s case being the only other alternative to be more likely.  Hence, the DPO was entitled to accept the claimant’s case was proved and to reject the defendant’s case.  It was said that the Reasons showed this was what the DPO had done, and he could not be faulted for doing so.

(d)  Defendant’s position

32. Mr Chow SC submitted the DPO’s approach was wrong as it failed to address the basic question of whether the claimant had adduced sufficiently cogent evidence to discharge his burden of proving the existence of the Oral Agreement.  Since rejection of the evidence adduced by one protagonist would not necessarily lead to the acceptance of another protagonist’s evidence, the DPO should have focused on the claimant’s allegations/evidence and considered their credibility rather than to find in his favour by considering and rejecting the veracity of the defendant’s case.  Only then would the DPO be in a position to discount the less than probable alternative.

33. Mr Chow SC submitted the DPO erred in focusing on the defendant’s explanations as to why they paid $1,000,000 on 21 January 2010 as consultancy fee to Vic Sword for 10 projects under the label of “site bonus” (地盤紅利) when it was the defendant’s case that all paid bonus was discretionary bonus.  To properly understand such argument, it is useful to start with the relevant evidence:

(a)     It is the claimant’s own evidence that this particular mode of payment for the $1,000,000 bonus in January 2010 was for the purpose of tax avoidance.[43] The defendant did not dispute this save to say such mode of payment was made upon the claimant’s request for his personal tax reasons.[44]

(b)    The cheque for the $1,4000,000 bonus in 2011 was payable to the claimant personally, and notice of such payment dated 28 January 2011 by the defendant stated it was performance‑related year-end bonus (年終花紅).  The defendant adduced documentary evidence to explain that the claimant once again requested such payment to be made to Vic Sword as before for 14 projects, but such request was refused by the defendant’s accountant Roger Poon after consulting with the lawyers and auditors.[45]

34. Mr Chow SC submitted that on such evidence the rejection of the defendant’s explanation could not be a sufficient reason for the DPO to accept the claimant’s case because:

(a)   The DPO failed to consider whether tax avoidance was in fact the reason behind the using of the label “site bonus” (地盤獎金) for the payment of the $1,000,000 bonus in January 2010 so that such label had little meaning and would not show whether it was actually project bonus or discretionary bonus.

(b)   The DPO failed to consider the inherent improbability arising from the fact (as shown by clear contemporaneous documents) that the claimant’s request for the $1,400,000 discretionary bonus to be paid for 14 projects. If the claimant was entitled to both project and discretionary bonus as he claimed, there was no logical reason for him in March 2011 to ask for the $1,400,000 discretionary bonus received in January 2011 (in addition to his salary and project bonus entitlements) to be treated and paid as before (ie as “site bonus” for 14 projects) since such request would only serve to reduce his overall remuneration by $1,400,000.  It was said this was inherently improbable and militated strongly against the claimant’s case.

(c)   Given the above evidence, the DPO was wrong to take the use of such label for the payment of $1,000,000 bonus in January 2010 or the different modes subsequently adopted for the payment of bonuses as evidence supporting the claimant’s case regarding the existence of the Oral Agreement, and to find in favour of the claimant on the Oral Agreement simply on the basis of his not accepting the defendant’s explanations on the differentiation of those payments.

35. Mr Hung disagreed.  He submitted that the defendant’s notice of payment dated 28 January 2011 for the $1,400,000 bonus clearly specified such payment was performance-based year-end bonus.  When the claimant entered into email discussions with Roger Poon in March/April 2011 over the documentation for such payment, the caption for the series of emails referred to “Annual Bonus”.  Further, a fair reading of such emails would show the claimant was not asking for conversion of the discretionary bonus into project bonus; rather, the parties were discussing the mode and manner of recording the year-end bonus.

36. Mr Chow SC next submitted that the DPO’s evaluation and analysis in paragraphs 37-38 of the Reasons were wrong.[46] To understand Mr Chow SC’s arguments, it is necessary to first turn to the three circulars (“Circulars”). Even though the Circulars were for the defendant’s marketing department staff and not the claimant, nevertheless the DPO drew analogy from the Circulars:

(a)    The Circular dated 14 January 2009 (which the claimant had read) showed the amount of “獎金” was not fixed according to the number of projects (項目) but varied according to number of sites (地盤) as defined according to their value and a graded scale of bonus sums:

“ 有關新一年度獎金之計算方式，……

由1/1/2009至31/12/09同事只要完成四億或以上的地盤，將當作兩個地盤計算，換言之獎金會有三十萬。

地盤數目	獲發獎金	額外獎金	累積獲取
一個地盤	獎金10萬		10萬
二個地盤	獎金10萬	再多10萬	30萬
……

另外 : 組長在每完成一個地盤會額外多5萬元以示鼓勵。

而所有文員將會取消獎金制受，花紅制度則維持不變。 ……”

(b)    The Circular titled “市場部佣金及獎金分配” dated 1 March 2010 issued by the claimant showed that “獎金” was divided into “組長獎金” (ie “每個項目成交時，將額外獲得5萬元，截數日為每月25日”) and “項目成功獎金” which was to be shared equally by “全組參與同事”.  Again, the calculation of the “項目成功獎金” was according to a formula based on a graded scale of bonus sums and the number of “地盤” to be ascertained according to their value.

(c)    The Circular titled “佣金/獎金計算、分配及發放” dated 3 March 2011 issued by the claimant showed that “項目成功獎金(即: 地盤獎金)” was paid to a marketing group and not to individual staff members, and calculated according to a formula based on “成功地盤數量” to be determined by “地盤合約金額” and a graded scale of bonus sums.  It is significant that the formula was for that particular year (“現決定2010-2011 年度項目成功獎金如下”) and the amount of bonus was not fixed (“公司有權根據每年地產市況、市場部表現及公司財務狀況等[illegible]訂金額並按各組別成績派發，公司保留最終決定權”).

Mr Chow SC submitted that the Circulars would not provide useful analogy for any contractual entitlement to project bonus on the part of the claimant because (i) there was no fixed rate per project, (ii) the bonus calculation was determined on a year-to-year basis, and (iii) the bonus was distributed on a pooled basis.  Indeed, the Circulars suggested it was up to the defendant to decide how to award any project bonus to the marketing staff.  Mr Chow SC submitted the DPO’s view that “雖然名字不同，這個地盤獎金以地盤計算獎金的方法，與申索人所指的項目紅利的計算方法一致” was suspect.

37. Mr Chow SC submitted the fallacy of the DPO’s approach was further demonstrated by the fact that the Tribunal found in favour of the claimant despite his own observations that the claimant’s evidence on some material issues was “contradictory” and he also had “reservations” on the claimant’s case.[47] The correct approach, Mr Chow SC submitted, would be for the DPO to focus on whether the evidence as a whole supported the claimant’s case, but not just to consider the veracity of the defendant’s case, find it incredible and then go on to find in favour of the claimant by comparison.  Had the DPO correctly applied the burden of proof, he should have rejected the claimant’s evidence for the reasons that it was inconsistent with contemporaneous documents, inherently improbable, and materially self-contradictory.[48]

VI.  TEST FOR ASSESSING ORAL AGREEMENT (GROUND 2)

(a)  Legal principles

38. Mr Chow SC submitted the DPO also erred in failing to adopt the correct approach in assessing the claimant’s evidence on the Oral Agreement.  The correct approach was laid down by the Court of Appeal in Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd as follows:[49]

“…… I do not say that an assessment of the character of a witness plays no part in the fact-finding process, but it is a task that may sometimes be elusive even to the best trained eye and ear, and I would venture to suggest that the truth, in so for as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one could expect it to have been created, as well as to inherent improbabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known …… It is however to say that in this case the approach adopted to assessment of the facts placed far too much emphasis on character impression and too little upon what was suggested by the documentation and by the inherent improbabilities in their historical context. That documentation, as well as conflicts within the evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements – these are the factors which …… were likely to be of particular use in assessing the facts ……” (my emphasis)

39. In applying Esquire (Electronics) Ltd, To J in Hung Fung Enterprises Holdings Limited& anor v The Agricultural Bank of China made the following observations as to the proper approach in analysing the evidence:[50]

“……. I shall approach the evidence with caution and place special weight on documentation. I shall test the credibility of the assertion of any witness by reference to contemporaneous documentation where it exists, or to its absence and lack of explanation where one would expect it to have been created and to inherent improbabilities having regard to all the known facts and incontrovertible evidence. I shall consider the totality of the evidence and the context in which each piece of assertion arose. I also bear in mind the tenor of the parties’ case.” (my emphasis)

40. But findings of fact by the Tribunal are generally immune from challenge on appeal unless they involve error of law in the sense explained in Wai Mei Lai Stella citing Kwong Miles Services Ltd v Commissioner of Inland Revenue.[51] Bokhary PJ in Kwong Miles Services Ltd said:

“37. In any 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 is 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. ……”[52]

In Kaifull Investments Ltd v Commissioner of Inland Revenue, it was held the fact other inferences might just as plausibly be drawn from the available material was insufficient to establish that the first instance court/ tribunal acted unreasonably and had come to a conclusion that no court/ tribunal acting judicially could reasonably have made.[53] It is only where the lower court decision exceeds the generous ambit within which reasonable disagreement is possible and is in fact plainly wrong that an appellate court is entitled to interfere.[54]

(b)  Parties’ contentions

41. Mr Chow SC submitted that when assessing the claimant’s evidence relating to the Oral Agreement, the correct approach was to assess it against (a) the contemporaneous documentation, (b) internal conflicts within the evidence, (c) inherent probabilities and improbabilities, and (d) the totality of the evidence.

42. Mr Chow SC argued that whilst the DPO’s analysis was essentially based on his rejection of parts of the defendant’s evidence (ie their explanations regarding the payments made in 2010-2012), he did not examine and assess the claimant’s evidence critically against the totality of the evidence, in particular as to (a) the existence or absence of contemporaneous documents, (b) the inherent improbabilities or improbabilities, and (c) the inherent inconsistencies of his evidence.

43. Mr Chow SC submitted the DPO failed to take into account the fact that : (a) the contemporaneous Contract Documents (as well as the Circulars) coupled with the claimant’s admission that the Handbook constituted part of his employment terms were inconsistent with his assertions regarding the Oral Agreement, and since everything else except the project bonus term had been reduced into writing, the DPO should have challenged that evidence and explained why he rejected that evidence; and (b) the payments received by the claimant from the defendant in 2010‑2012 were entirely consistent with the terms of the Contract Documents, and did not support the existence of the Oral Agreement.  Mr Chow SC also repeated the point he made in paragraph 34(b) above.

44. On the other hand, Mr Hung submitted that the DPO was well aware of the issues, and had carefully assessed the relevant evidence before he concluded that the payment of the $1,000,000 bonus on 21 January 2010 was not inconsistent with the terms of the written contract and in fact supported the existence of the Oral Agreement.  The correctness of such conclusion was premised on proper inferences drawn from the primary evidence as to the context and manner of payment of the bonus made to the claimant.

45. Mr Chow SC next submitted there was lack of satisfactory explanation for the absence of contractual provision for project bonus in the written contract, which absence was all the more significant when the claimant’s own evidence showed he insisted on signing the Supplemental Employment Contract just to reflect a modest 3% increase of his monthly wages, and when it was the claimant’s own case that project bonus was by far the most important element of his remuneration package.  Mr Chow SC submitted it defied common sense to believe the claimant would omit (遺漏咗) the project bonus term from the Employment Contract[55] or would not insist on the same being added to the Employment Contract,[56] and this was especially improbable in view of the claimant’s own experience, education and background, and the defendant being a wholly owned subsidiary of the Listco and the claimant a member of its senior management.

46. On the other hand, Mr Hung submitted the DPO in fact had taken the above matters into account in paragraphs 44 and 61-63 of the Reasons.  In any event, the weight of these complaints taken together would not have suggested that the existence of the Oral Agreement was inherently improbable, and they would not be fatal to the Determination since the other matters resolved in the claimant’s favour in the DPO’s evaluation of the evidence sufficiently supported his decision.  Mr Hung relied on observations by DHCJ Reyes SC (as he then was) in Kaifull Investments Ltd as follows:

“87. On Mr Ho’s minor points, …… it is not the court’s function to review the weight attached to particular pieces of evidence, provided I am satisfied that overall, the Board’s decision is not unreasonable. I am so satisfied. The points which Mr Ho raises, seem to me merely to be matters of emphasis and de‑emphasis, over which differing Boards of Review may reasonably differ.”

I am not persuaded such observations assist Mr Hung since they concerned “minor points”.  Indeed, Mr Chow SC accepted that the relevant evidence that the tribunal of fact should have considered should be material, obviously relevant for fact-finding and one that cried out for analysis.

47. Mr Chow SC next submitted the DPO failed to take into account the internal inconsistencies in the claimant’s evidence in relation to the making of the Oral Agreement.  In particular, the claimant had at least twice changed his case regarding the involvement of Mr Au in relation to the making of the Oral Agreement:

(a) the claimant’s initial version was that he negotiated the terms of the Oral Agreement with Mr Au, and such Oral Agreement was confirmed by Mr Au on 10 November 2008;[57]

(b) the claimant’s second version was that Mr Au was not present during the negotiation of the Oral Agreement (確實在條款細節等洽商的階段 …… 老闆(區先生)確是不在場), but at the time of making the Oral Agreement (ie before 11 November 2008) the claimant orally asked Mr Au whether the agreement was required to be approved by Mr Au’s partners and Mr Au allegedly told him he would decide on the operation of the real estate department;[58]

(c) the claimant resiled from the second version in his oral evidence given on 25 February and 6 May 2013, and alleged that Mr Au had been involved in the negotiations before the conclusion of the Oral Agreement, and had subsequently confirmed the same.[59]

48. Mr Chow SC argued the DPO also failed to take into account the internal inconsistencies in the claimant’s evidence in relation to the contents of the Employment Contract that were inconsistent with the alleged Oral Agreement:

(a) the first version given by the claimant in his oral evidence (on 25 February 2013) was that Ms Wong had informed him the contents of the Employment Contract were for “administrative needs”;[60]

(b) the second version given by the claimant in his oral evidence (on 6 May 2013) was that he had asked Mr Au about the Employment Contract and Mr Au told him it was merely a “formality”;[61]

(c) but when challenged under cross-examination that the second version was not mentioned in his witness statements, the claimant came up with a third version, ie he had inquired with both Mr Au and Ms Wong in relation to how the Employment Contract was drafted,[62] and went on to say he had not requested for insertion of any provision relating to project bonus in the Employment Contract.[63]

49. Mr Hung submitted (a) a fair reading of the documents would not show the inconsistencies as alleged, (b) the attack on the claimant’s credibility was unwarranted, and (c) a study of the Transcript would show it was not the defendant’s case during cross-examination that the claimant was not to be believed because (i) Mr Au had never met the claimant before, on or after 10 November 2008 or (ii) alternatively even if Mr Au had met with the claimant during the relevant period they never negotiated on the claimant’s pay package or (iii) Mr Au and/or Ms Wong never told the claimant that non-inclusion of project bonus was for administrative reasons. Mr Hung reminded that paragraph 7 of the claimant’s statement of claim referred to “they” had informed him the signing of the Employment Contract on 4 December 2008 was for administrative needs, which evidence the DPO did not reject.

50. On the other hand, Mr Hung submitted the adjudication of witness credibility is fact-sensitive, and contemporaneous documents are only one of the matters to be considered.  He said it was inherently probable the defendant would encourage better performance by their senior management staff like the claimant by paying him project bonus for a fraction of their profit, and there was no documentation that made the claimant’s case inherently improbable, so the DPO was entitled to assess the parties’ contentions on the basis of the oral evidence of their respective witnesses.  Mr Hung further submitted Ground 2 was akin to asking this court to substitute its own evaluation of witness evidence and their credibility in place and stead of that by the DPO, which was not permissible. The Determination and Reasons were well within the general reasonable parameters for decision by the DPO, and the alleged errors did not make the DPO’s decision unreasonable.

VII. REJECTING UNCHALLEGED EVIDENCE WITHOUT REASON (GROUND 3)

51. Mr Chow SC submitted that the DPO rejected unchallenged evidence without giving reasons, which constituted an error of law such that the Determination should be set aside.

(a)  Legal principles

52. The Tribunal has a duty to give adequate reasons for rejecting unchallenged material evidence.  In Grabowski v Scott & anor, Jonathan Parker LJ observed as follows:[64]

“131. …… It is, of course, for the judge to decide what evidence to accept and what to reject. On the other hand, to reject unchallenged evidence without giving any reason for doing so may amount to a denial of justice: and in my judgment it certainly does in the instant case, where the deputy judge’s rejection of unchallenged evidence was the basis for his findings of fraud against both Mr Scott and Mr Conway.”

53. There is in general a requirement that a tribunal of fact must give adequate reasons if it decides to reject unchallenged evidence.  Mr Chow SC referred to Markem Corporation & anor v Zipher Ltd in which Jacobs LJ said as follows:[65]

“62. We are also satisfied that the judge’s reasons for the adverse findings were inadequate.  He did not find the witnesses to be liars by reason of their bearing or demeanour …… His reasons are quoted in para 46 above.  In paragraph 27 the “first reason” given is that …… But that cannot stand with the unchallenged evidence of Mr Allman which we have quoted.  The Judge’s second reason was the “nomination” …… “without apparent consultation with them”.  We think the nomination was entirely justified.  There was no need to consult them ……

70. The upshot of all this is that it was neither right nor fair to make any adverse findings about any of the Zipher witnesses. ……”

54. Mr Hung accepted there is a general rule if a witness is to be impeached on his credibility he should be given an opportunity of explanation which is open  to him, but he said the exception is where notice has been given or where the point is so apparent.[66] The position has been recently summarised by Lam VP in Pacific Electric Wire & Cable Company Limited v Texan Management Limited & ors as follows:[67]

“124. The rule in Browne v Dunn, as noted in Phipson on Evidence (17^th ed) at §12-12, is not an inflexible one. It is not broken even if a material matter is not put to a witness, if the witness can fairly and objectively be said to be on notice of it or where the point is so apparent (Flower & Hart v White Industries (QLd) Pty Ltd (1999) 163 ALR 744 at §§51 t 52; Fong Ka Yeung v Medical Council of Hong Kong, CACV 157/2007, §30(1)). ……

125. Nor does the principle in Browne v Dunn inflexibly require every point which might be used against a witness to be put to him.  In essence, the principle is breached if in all the circumstances an omission to cross-examine on a specific point is unfair to a witness (Kaifull Investments Ltd v Commisisoner of Inland Revenue [2002] 1 HKLRD 858 at §31(4)). ……”

(b) Parties’ contentions

55. Mr Chow SC argued that the DPO erred in law in rejecting the unchallenged evidence of Mr Au and Ms Wong without giving any adequate explanation.  Subject to Mr Chow SC’s arguments in paragraph 48 above, the claimant in his statement of claim stated he negotiated with Mr Au and Ms Wong such that both of them were privy to the Oral Agreement.  Both Mr Au and Ms Wong gave evidence to deny any Oral Agreement, but the claimant did not put questions to them during cross-examination in any material way.  In paragraph 65 of the Reasons, the DPO said “申索人並無法律代表，他又並非律師，即使不在盤問證人時與他們對質並不奇怪。這點不足以影響申索人的可信性”.  Mr Chow SC contended that given the claimant’s failure to cross-examine except to put a few immaterial questions to material witnesses giving evidence directly on the disputed issue, it was incumbent upon the DPO to explain why he rejected Mr Au’s and Ms Wong’s evidence in relation to the denial of the Oral Agreement and to investigate further and challenge them on such issue.

56. Mr Chow SC also submitted the DPO erred on the more fundamental point that the evidence of Mr Au and Ms Wong was relevant not only to the claimant’s credibility but also highly relevant to the existence of the Oral Agreement which formed the basis of the claimant’s claim.  While the DPO did comment unfavourably on one particular aspect of the evidence of Mr Au and Ms Wong, ie whether they had ever heard of the term “project bonus”, [68] this point was of peripheral relevance and could not be a sufficient reason to reject their evidence on the crucial issue as to whether they made the Oral Agreement. Mr Chow SC argued that upon reading the Reasons as a whole, the DPO simply failed to give any or sufficient reason/analysis as to why the unchallenged evidence of Mr Au and Ms Wong denying any formation of the Oral Agreement was rejected.

57. Mr Hung submitted that the fallacy of this complaint lied in the following: (a) the hearing at the Tribunal was an informal one where parties were not allowed legal representation so the absence of cross‑examination of Mr Au and Ms Wong did not mean their evidence was not challenged; (b) the defendant’s contentions ignored the fact that witness statements and documents already made available to the defendant clearly set out the claimant’s case; (c) the DPO was not bound to accept any particular piece of evidence merely because there was no cross‑examination on it; (d) the DPO had no obligation to advise witnesses or parties of the weight he intended to place on different pieces of evidence, to debate with witnesses on the weight to be attached to a piece of evidence, or to signal the weaknesses of a party’s evidence to such party or his witnesses, and indeed the rule in Browne v Dunne “does not import an obligation on a tribunal to tell a party in what respects documents adduced as evidence support or undermine a witness’ assertions”;[69] (e) the central factual issue was simple and straightforward, and (f) Mr Au and Ms Wong should have known that the DPO was skeptical about their assertions that they had never heard of the term “project bonus”,[70] so Mr Hung submitted there was no unfairness to Mr Au and Ms Wong when the DPO chose not to believe them in this respect.         

58. When this court queried how Mr Au and Ms Wong would have known the DPO was skeptical about their assertions that they had never heard of the term “project bonus”, Mr Hung drew my attention to pages 256O-256D and 270F-M of the Transcript.  Having reviewed such parts of the Transcript, even though the DPO did request Ms Wong to explain why her witness statement referred to “project bonus” when she said she had not heard of the term before, I am not persuaded the DPO had made known to Mr Au and Ms Wong he was skeptical about their evidence.

VIII.  PAROL EVIDENCE RULE (GROUND 4)

59. Mr Chow SC submitted that had the DPO properly directed himself to consider all the above matters, he ought to have concluded the parol evidence rule should apply and no extrinsic evidence should be admitted to add to or vary the written terms as contained in the Contract Documents.

(a)  Parties’ contentions – “anterior question”

60. It is useful to start with a synopsis of the dispute over what Mr Chow SC described as the “anterior question” before I discuss the legal principles.  Mr Chow SC submitted the DPO committed error when he decided to consider the question as to the existence of the Oral Agreement together with the question of applicability of the parol evidence rule.[71] In doing so, the DPO started with a prima facie possibility of a partly oral and partly written contract (premised on the flawed basis that not even discretionary bonus was part of the written contractual documents),[72] went on to (a) doubt the defendant’s evidence on the bonus payments in 2010‑2012, (b) criticise the claimant’s evidence, (c) consider three other submissions, and (d) compare the parties’ respective case before he came to the view that the claimant’s case was more believable than that of the defendant.[73] The DPO concluded “雙方確有意圖不全部以書面形式訂立合約，而是部份書面及部份口頭，而這個口頭合約亦是主要僱傭合約的部份約因” because (i) “被告公司雖曾口頭承諾有酌情花紅，但僱傭合約中並無記載，亦無表明納入員工手冊作合約條款” and (ii) “再加上本席裁定雙方確實存在口頭合約”, and held the parol evidence rule was not applicable.[74]

61. Mr Chow SC submitted the DPO should have decided the “anterior question” as to the applicability of the parol evidence rule first before deciding on the existence of the Oral Agreement, and on such “anterior question” he should have enquired whether the employment contract was intended by the parties to be partly oral and partly in writing, which would be different from the enquiry as to whether the Oral Agreement existed.  Mr Chow SC submitted that by (a) receiving extrinsic evidence to find the Oral Agreement existed, (b) going on to find that both parties intended the employment contract to be partly oral and partly in writing, and (c) then coming to hold the parol evidence rule did not apply, the DPO had adopted a circular and logically untenable argument that failed to recognise the need to first form a view on the justification for having a partly oral and partly written contract.  To deal with the two questions together would put “the cart before the horse” and defeat the very purpose of the parol evidence rule.

62. Mr Chow SC argued the proper approach should be to consider the matter in two stages, ie (a) the DPO should first ask the “anterior question” and determine whether the parol evidence rule would apply, and (b) if he concluded that the parol evidence rule did not apply, the DPO should then determine whether the extrinsic evidence would support the Oral Agreement.  At the first stage, the DPO should have looked at the documents objectively to ascertain whether the employment contract was intended to be partly oral and partly in writing.  It was only after he had found the parties intended their contract to be partly oral and partly in writing that he should move to the second stage to consider the extrinsic evidence regarding the existence of the Oral Agreement.  Such approach would avoid turning the parol evidence rule into a “circular argument” for otherwise the parol evidence rule could be displaced whenever it was asserted there was an oral agreement extraneous to the written document. 

63. Mr Chow SC submitted that had the DPO adopted the correct approach, he should have applied the parol evidence rule since the Contract Documents clearly showed the parties intended their agreement to be entirely reduced into writing.  First, the parties had carefully reduced their contract into writing, and the Contract Documents were detailed and appeared to be complete.  The Employment Contract contained a series of terms on virtually all matters that one would expect to find in an employment contract.  It was clear on the face of the Employment Contract (which was duly signed by both parties) it was not a mere note or memorandum but was intended to be the written contract between the parties.  There was no basis for the DPO to conclude the claimant had successfully rebutted the presumption that the Contract Documents were intended to include all the terms of their contract.  Secondly and more importantly, it was the claimant’s own evidence that he insisted on the execution of the Supplemental Employment Contract to reflect a modest increase of his wages by 3% in April 2010,[75] which clearly showed the parties (especially the claimant) intended to have the terms of employment to be entirely reduced into writing.  Otherwise, the claimant would not have bothered to insist on signing the Supplemental Employment Contract to reflect such small increase of his wages.  Further, Mr Chow SC argued that by April 2010, he had just received payment of the $1,000,000 and $200,000 bonuses in January and February 2010, which according to the claimant were project bonus and discretionary bonus respectively, and no plausible reason was offered as to why the project bonus term was not included in the Supplemental Employment Contract.

64. Mr Chow SC submitted that if he were right that the DPO had failed to deal with the “anterior question”, then there would be no need to remit the case to the Tribunal for retrial for no purpose would be served.  He argued this court could simply look at the documents objectively and would then be able to come to the view that the parties intended to have an exclusively written contract.  Mr Chow SC reminded that on the Appeal this court would be able to draw inferences of fact pursuant to section 35(2) of the Ordinance.

65. On the other hand, Mr Hung submitted that in considering the applicability of the parol evidence rule, the court had to objectively ascertain the intention of the parties from all the circumstances and to draw inferences from the primary facts elicited from the oral evidence and documents, which was what the DPO did.  He said it is therefore not wrong at all for the DPO to consider the two questions of the applicability of the parol evidence rule and the existence of the Oral Agreement together, and there was no error in his consideration of the evidence for determining the applicability of the parol evidence rule.  Mr Hung submitted that even if these two questions were considered separately, the Tribunal would have made similar evaluation and analysis and would have come to same conclusion that the employment contract was partly oral and partly in writing.  Hence, the parol evidence rule would not apply because it was not the intention of the parties to confine themselves to the written contract.  After all, the DPO in his Reasons considered the defendant’s explanation on the matter of the project bonus against the contextual background, and he noted the important fact that the Employment Contract was signed about a month after the commencement of the claimant’s employment (which led to his view of a prima facie possibility of a partly oral and partly written contract)[76] before proceeding with “證據及案情分析”.  There was evidence from Ms Wong that there was discussion of the terms of employment in October/November 2009,[77] so even on the defendant’s own case there must have been an oral agreement (which was in line with the DPO’s view of a prima facie possibility of a partly oral and partly written contract).[78]

66. I am not with Mr Chow SC in his suggestion that the conceptual approach adopted by the DPO (being a matter distinct from his evaluation and analysis of the relevant evidence) in relation to the applicability of the parol evidence rule was faulty.  My reasons appear in the analysis of the legal principles in Part VIII(b) below.

(b)  Legal principles

67. In Bank of Australasia v Palmer, Lord Morris accepted that “…… parol testimony cannot be received to contradict, vary, add to or subtract from the terms of a written contract, or the terms in which the parties have deliberately agreed to record any part of their contract” (my emphasis).[79]

68. The rule so stated (without further explanation) can be quite misleading.  The Law Commission of England acknowledges that the parol evidence rule is “a proposition of law which is no more than a circular statement: when it is proved or admitted that the parties to a contract intended that all the express terms of their agreement should be recorded in a particular document or document, evidence will be inadmissible (because irrelevant) if it is intended for the purpose of adding to, varying, subtracting from or contradicting the express terms of that contract”.[80]

69. The Law Commission also notes that some misunderstandings have arisen because of concentration on the effect of the rule rather than when it is to be applied.  The effect of the rule is to exclude extrinsic evidence or to cause the judge to ignore such evidence if given.  As to the application of the rule, Lord Morris’ statement in paragraph 67 above makes clear that the rule can only be applied where the parties have entered into a “written contract” or, to put it in another way, evidence is extrinsic only where the contract has been “integrated” in the document. Since parties can only be said to have entered into a written contract when the writing is intended by the parties as a contractual document that contains all the terms of their agreement,[81] the effect of such a document is to integrate the bargain in written form.

70. But if the contract is not entirely in writing, it is quite simply not a written contract.  There is no room for the parol evidence rule to apply because it only applies when the contract is entirely in writing.  Since parties are generally free to state their contractual terms in whatever form they please and a contract can be made partly orally and partly in writing,“[it] cannot therefore be asserted that the mere production of a written agreement, however complete it may look, will as a matter of law render inadmissible evidence of other terms not included expressly or by reference in the document” (my emphasis).[82]

71. If one party alleges that the written document is the final expression of their agreement and the other party denies that it is, the question before the court will be to determine if the written document is or is not the final integrated expression.  This is an issue of fact for resolution on the balance of probabilities, and any evidence relevant to this issue must be considered by the court (eg evidence about the transaction and the parties’ agreement, the words used, the background to the transaction and the parties’ common or even subjective intentions, expectations and hope).  No agreement, just by existing, even if signed, proves that it is the parties’ final expression: there has to be evidence to show that it is.[83]

72. Then, if it is proved that the written document was not intended to set out all the terms on which the parties had actually agreed or, to put it in another way, if it is proved that the parties intended their contract to be partly oral and partly in writing, then the parol evidence rule does not operate because the court will, be definition, have found that the contractual terms are partly to be found in what was agreed orally as well as in the document in question.  This is also recognised by Trietel: The Law of Contract: “…… the admissibility of extrinsic evidence, where it is proved that the document was not in fact intended to contain all the terms of the contract, does not turn the rule into a merely “circular statement”  ……”[84]

73. If the court holds the written agreement is the parties’ final expression, it is unnecessary to say extrinsic evidence is excluded because the court will have found that all the terms of the contract have been set out in the document in question.  “In this context, the conclusion that the evidence is inadmissible is a kind of retrospective conclusion, made after the effect and relevance of the evidence have been assessed.  Used in this way, the statement that the evidence is inadmissible is unobjectionable, though it retains the capacity to confuse”.[85]

74. The above approach to the parol evidence rule has been applied by Roskill LJ in J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd as follows:[86]

“…… But that doctrine, as it seems to me, has little or no application where one is not concerned with a contract in writing …… [but] with a contract which, as I think, was partly oral, partly in writing, and partly by conduct. In such a case the court does not require to have recourse to lawyer’s devices such as collateral oral warranty in order to seek to adduce evidence which would not otherwise be admissible. The court is entitled to look at and should look at all the evidence from start to finish in order to see what the bargain was that was struck between the parties. …… one should look at the totality of the evidence. When one does that, one finds …… The defendant gave such a promise, which to my mind against this background plainly amounted to an enforceable contractual promise. …….” (my emphasis)

75. Locally, Mr Recorder H Wong SC has also adopted this approach in Feco Development Corporation v Bonny Forward Company Limited:[87]

“53. As a starting point, I accept Miss Cheung’s submission that she is not prevented by the parol evidence rule to rely on extrinsic evidence to show that the Termination Agreement was intended by the parties as an agreement partly oral and partly in writing. ……

54. The parol evidence rule only becomes relevant if the Court, after considering the evidence, is satisfied that the parties intended the written document to contain the whole of the contractual bargain between them. It is only after the Court has come to such conclusion that the parol evidence rule would operate to prevent extrinsic evidence from being admissible to contradict the written document.

55. Although the Defendant is not prevented by the parol evidence rule to rely on extrinsic evidence, when all the evidence is examined, I have no doubt that the Express Oral Term does not constitute part of the terms of the Termination Agreement.” (my emphasis)

76. Confusion arises because of suggestions (as Mr Chow SC also submitted) that where there is a document that looks to be contractual it should be presumed to be the contract, and the parol evidence rule is applied to exclude evidence to the contrary.[88] Under this suggestion, one must determine that the written agreement appears to be, in some sense, incomplete before one can turn to consider evidence of prior communications of the parties.  This does not sit well with the modern version of the parol evidence rule discussed above which places emphasis on the need to demonstrate that the parties actually intended to reduce their agreement into writing as a pre-condition to the application of the rule, and that in determining whether the parties actually did so intend, all evidence of their prior communications relevant to this issue, oral, written or otherwise, is admissible.

77. But even if the approach propounded by Mr Chow SC is accepted, it only raises a presumption (no matter how strong) which may be rebutted.  In Gillespie Brothers & Co v Cheney, Eggar & Co, Lord Russell CJ said as follows:

“…… although when the parties arrive at a definite written contract the implication or presumption is very strong that such contract is intended to contain all the terms of their bargain, it is a presumption only, and it is open to either of the parties to allege that there was, in addition to what appears in the written agreement, an antecedent express stipulation not intended by the parties to be excluded, but intended to continue in force with the express written agreement. ……” (my emphasis)

78. Chitty on Contracts also says that “[no] doubt, in practice, where a document is produced which appears to be a complete contract, a party will experience considerable difficulty in proving, on the balance of probabilities, that further contractual terms were agreed outside the written terms of the document …… [but] extrinsic evidence of such terms is not ipso facto excluded”.[89] Likewise, Trietel: The Law of Contract also says that “[when] a contract is reduced to writing, there is a presumption that the writing was intended to include all the terms of the contract; but this presumption is rebuttable” (my emphasis), and goes on to explain that the court will:[90]

“attach importance to the appearance of the document: if it looks like a complete contract to one of the parties taking a reasonable view of it, then the rule will prevent the other party from relying on extrinsic evidence to show that the contract also contained other terms. ……Where a document looks like a complete contract, the party relying on it does not have to prove that he has such a belief: he can rely on a presumption to that effect which it is up to the other party to rebut. As laymen are known to attach greater importance than the law does to writing in a contractual context, it will be hard for the party relying on extrinsic evidence to rebut the presumption that the written document was an exclusive record of the terms agreed. …… The presumption which applies in the case of an apparently complete contractual document …… prevents a party from relying on evidence of intention that was …… simply not recorded in the document.” (my emphasis)

79. In my view, the fallacy of Mr Chow SC’s submissions in respect of the “anterior question” as to the applicability of the parol evidence rule lies in his attempt to confine the need (as he accepted) to objectively ascertain whether the parties’ bargain was intended to be partly oral and partly in writing to an exercise of viewing the written document.  But as explained above, the court should and will look at the totality of the evidence to see what bargain was struck between the parties, ie what was agreed and intended by the parties.  On this matter, I need only add the following salutary words of caution in Grubb and Furmston, The Law of Contract:[91]

“However, even viewing [the parol evidence rule] as a ‘presumption’ must be treated with caution. It may be said that ‘the rule has no application unless it is first determined that the terms of the agreement are wholly contained in a written document’ and:

‘In reaching a conclusion as to whether a document which looks like a complete contract was the whole contract, the court does not apply any presumption of law. Rather it will reach its conclusion on the evidence tendered, applying to its judgment the prima facie possibility derived from its experience of how people normally behave in a given situation.’

It may be viewed as an ‘important factor to be placed in the scales … that businessmen did not ordinarily put their names to written contracts when they intend a different bargain’.”

(c)  Parties’ contentions - approach to the evidence 

80. The Reasons showed the DPO was alive to the parol evidence rule, but Mr Chow SC submitted the DPO fell into error in holding that such rule would not apply to the facts of the present case.  He drew attention to paragraphs 23-26 and 72 of the Reasons.[92] Mr Chow SC argued that on the indisputable documentary evidence before the DPO, there was no factual basis for saying that prima facie (初步看來) there “exists a possibility” (存在 …… 可能性) that the employment contract between the parties was partly oral and partly in writing (which formed the basis of his dis-application of the parol evidence rule):[93]

(a)     the payment of “bonus” (花紅) was expressly provided for in the Handbook, which expressly stipulated its terms were to have contractual effect supplemental to the Employment Contract;

(b)    the claimant accepted the Handbook formed part of the contract of employment between the parties and was binding on him;

(c)     the claimant further accepted that payment of “discretionary bonus” to staff was made pursuant to the Handbook.[94]

81. Mr Chow SC turned to the claimant’s evidence that explained why the oral project bonus term was not included in the Employment Contract.  At first, the claimant admitted he did notice the omission of such term in the Employment Contract, but he only asked Ms Wong why it was necessary for him to execute the Employment Contract; Ms Wong replied it was for administrative needs but he did not seek further clarification.[95] Later in his evidence, the claimant claimed he did ask Mr Au why the project bonus term was not included in the Employment Contract, but was told the Employment Contract “係俾嗰啲文職formality，每個月出糧啫”.[96] He went on to say that even though the project bonus was more significant than his basic salary in terms of his remuneration package, he did not insist on including the project bonus term in the Employment Contract because up till 2012 Mr Au assured him the project bonus would be paid.[97] Upon cross-examination by the defendant’s representative, the claimant admitted he omitted to ask for inclusion of the project bonus term in the Employment Contract.[98]

82. In the Reasons, the DPO did not accept the claimant’s aforesaid explanations:

“61. 當申索人被問他曾否就合約欠缺項目花紅條款發問，他說問過黃芳人小姐，不過只是問為何要簽該合約，並無提及欠缺項目花紅條款。而未有發問的原因是他相信老闆。不過後來他卻說他曾向區先生及黃芳人小姐問及為何未有項目花紅條款。

62. 本席同意申索人在這方面的證據前後矛盾。若果申索人從未提出合約欠缺項目花紅條款確是不利於他的證據。”

83. Mr Chow SC submitted that the DPO committed two errors:

(a)     Under the parol evidence rule, the claimant bears the burden to displace the presumption against the admissibility of evidence extrinsic to the written contract, so the DPO ought to have determined (or must be satisfied on the balance of probabilities) that the parties intended the employment contract to be partly oral and partly in writing.  Since the applicability of the parol evidence rule (and hence any reference to extrinsic evidence) turned on such finding, the mere “existence of a possibility” that the agreement was intended to be partly oral and partly in writing was no ground to dis-apply the parol evidence rule.

(b)    The DPO’s premise for finding the discretionary bonus was not contractually provided for was contrary to undisputed evidence in that (i) the Contract Documents (eg the Handbook) clearly provided in writing that payment of bonus (花紅) was discretionary,[99] and (ii) as a matter of fact the claimant accepted the Handbook formed part of the employment contract, [100] so the DPO started on a wrong footing when he considered whether the bargain between the parties was partly oral and partly in writing.  Mr Chow SC submitted that but for such error the DPO would not have gone forward to consider whether there was any oral term.

84. Mr Chow SC submitted the DPO did not explain why the employment contract was partly oral and partly in writing except for the matters set out in paragraph 24 of the Reasons,[101] which had been shown to be flawed, and there was nothing in the evidence to demonstrate the parties intended their contract to be partly oral and partly in writing when they took care to put other terms into writing in the Contract Documents.  Mr Chow SC submitted that since the preliminary possibility of the Oral Agreement was grounded on a flawed premise, the DPO’s eventual findings in paragraphs 71-72 of the Reasons and his conclusion that “故此本席認為口頭證據原則在本案並不適用” in paragraph 73 of the Reasons could not be supported.[102]

85. On the other hand, Mr Hung submitted that the only question before the DPO was whether in addition to the Contract Documents (including the Handbook) there was the Oral Agreement, and the DPO carefully evaluated and analysed the evidence in paragraphs 26-76 of the Reasons, and gave valid reasons for rejecting the defendant’s contentions.  It was wrong for the defendant to ask this court to explore the surrounding circumstances and substitute its own evaluation of the evidence, and then conclude it would be improbable for the Oral Agreement to exist and to hold the DPO was wrong to dis-apply the parol evidence rule.  Mr Hung further suggested that the defendant’s contentions flied in the face of indisputable contemporaneous documents:

(a)     Mr Hung started by saying the Employment Contract did not contain any entire agreement clause, but having reviewed the Reasons I am unable to find any indication that the DPO had considered this matter.

(b)    Mr Hung submitted that the Employment Contract and the Supplemental Employment Contract could not be said to be detailed when compared with Ms Wong’s letters of appointment as director of Joys Management Limited dated 1 July 2008 and as director of Richfull Consultants Limited dated 10 November 2009.  I am not persuaded this is a pertinent consideration. First, the DPO made it quite plain in paragraph 52 of the Reasons that “考慮到黃小姐在被告公司及集團的資歷及職級與申索人有一重大差距，申索人難以與她相提並論。故此本席最後認為將她的待遇與申索人聲稱的作比較並不恰當”.  Secondly, such companies came under the umbrella of the Listco and Ms Wong’s directorships would have to comply with listing compliance requirements.  How such requirements would impact on the comparison between the claimant’s Employment and Supplemental Employment Contracts and Ms Wong’s letters of appointment as director had not been explored in the Reasons.  Thirdly, Ms Wong’s letters of appointment clearly provided in clause 4.02 that “[in] addition to the fixed salary set out in Clause 4.01, the Appointee shall be entitled to a few times discretionary bonus in such amounts (if any) and payable as such times as the Board may in its absolute discretion determine”[103] without mention of any project bonus.  Fourthly and more significantly, the DPO did not rely on this factor (ie comparison of the fullness of Ms Wong’s written letters of appointment as against the alleged lack of detail of the Employment and Supplemental Employment Contracts) for concluding that the Oral Agreement did exist and/or the parol evidence rule should be dis-applied.

(c)     Mr Hung submitted the Supplemental Employment Contract was confined to how monthly salary and allowance would be paid, and could not be said to be detailed.  I am not persuaded this argument takes the claimant’s position any further.  First, the Supplement Employment Contract was not a stand-alone contract; rather, it was a written variation of the Employment Contract signed by both parties.  One cannot ignore the Employment Contract (which remained effective subject to such variation) and the Handbook (which remained part of the Contract Documents).  Secondly, this point had not been directly canvassed in the Reasons, and the DPO had reservations about the claimant’s case for his failure to protest against the non-inclusion of the project bonus term in the written contract.

(d)    Mr Hung submitted the DPO was alive to the fact that the Employment Contract was signed on 4 December 2008, ie about a month after the claimant commenced employment with the defendant on 10 November 2008, and found there was a prima facie possibility that certain contractual terms had been concluded orally before the signing of the Employment Contract.  However, in coming to this preliminary view, the DPO said “不管是否被告公司所說因要修改的關係” and made no finding at all as to the reason for the aforesaid time gap.

86. On the other hand, Mr Hung argued the DPO’s reasons for finding that the Oral Agreement did exist and for dis-applying the parol evidence rule were logical and in line with the approach as explained in J Evans & Son Portsmouth Ltd.  Instead, the defendant’s contentions were premised on an erroneous conflation of timeline.  There was no dispute the Handbook was given to the claimant on 4 December 2008, and the defendant paid to the claimant a sum of $1,000,000 in January 2010 and a further sum of $200,000 as discretionary bonus in February 2010, but these payments could not be related to the Supplemental Employment Contract (which concerned increase in salary and removal of allowance) signed only on 1 April 2010.  Mr Hung submitted the DPO’s reasoning in paragraph 72 of the Reasons, ie “被告公司雖曾口頭承諾有酌情花紅，但僱傭合約中並無記載，亦無表明納入員工手冊作合約條款” and “再加上本席裁定雙方確實存在口頭合約” could not be faulted.

(d)  Estoppel by convention

87. Mr Hung further submitted that by reason of the doctrine of estoppel by convention, the defendant was estopped from denying the basis assumed by the parties in relation to the project bonus.[104]  However, there is no need for me to consider this since the DPO did not canvass or rely on such contention, which is also not a matter of pure law and of mixed fact and law.

IX.  FAILURE TO DISCHARGE STATUTORY DUTY TO INVESTIGATE (GROUND 5)

88. Mr Chow SC submitted the DPO clearly failed to discharge his statutory duty to investigate highly relevant and material issues.

(a)  Legal principles

89. The relevant principles that underlie the Tribunal’s statutory duty to investigate have been summarised in Chan Suk Bing Angie v Harbour Phoenix Ltd & anor:[105]

“ Section 20 of the Ordinance provides that hearings at the tribunal shall be conducted on an informal manner. This is mainly due to the prohibition against legal representation in the tribunal. This in turn, brought about s 20(3) which provides that ‘the Presiding Officer shall investigate any matter which he may consider relevant to the claim, whether or not it has been raised by a party’. …… Presiding Officers should not allow themselves to derogate from this statutory duty under any circumstances, if a fair and just disposition of the claim is to be ensured. The requirements of justice in a judicial system such as the tribunal is such that, the Presiding Officers are required to assume an active inquisitorial role in the proceedings. ……” (my emphasis)

In Chan Yat San v Future Luck (296) Ltd, Mimmie Chan J said as follows:[106]

“14. Further, the inquisitorial role of the Presiding Officer under s.20 of the Ordinance involves the duty to investigate relevant matters. Incidental to its performance of such a role and its duty to ensure a fair trial, in cases where there are disputes on facts and the credibility of witnesses is essential to the Presiding Officer’s determination, the Presiding Officer has the duty to raise with a party matters that require its clarification or elaboration, on which the Presiding Officer has queries and which may be determined against the party. This is in order to give the party an opportunity to deal with these matters and to all evidence on such matters.”

Mr Chow SC said the omission by the DPO to mention relevant matters in the Reasons might suggest he had not given consideration to relevant matters in accordance with his statutory duty to investigate.[107]

90. But the statutory duty to investigate is not an absolute one.  In Chan Suk Bing Angie, it is said that:[108]

“…… the Presiding Officers …… are only bound to investigate matters they ‘may consider relevant’. …… First, very often …… no conscious express determination of relevance would be made by the Presiding Officers, in which case no question of any prohibition under s 35(2) can arise. It is then, for the appellate court to determine if the matter alleged is a relevant matter which ought to have been investigated. Secondly, the relevance of a matter would inevitably depend on the issues of law and facts involved. The application of legal principles or the failure to do so in reaching a determination on the relevance, is a matter upon which an appeal can lie.

It is obvious that not every failure to investigate a relevant matter will give rise to an appeal for a failure to discharge a statutory duty. The relevant matter forming the subject matter of the complaint must not only be relevant but be of such a nature that the lack of investigation will give rise to injustice, in that, a fair and proper determination of the claim cannot be attained. All the circumstances of the case as well as all other findings must be given all due regard before such a complaint can be upheld. Further, not only is the total absence of investigation a ground of complaint, totally inadequate or useless investigation which amount to no investigation at all will also suffice. It is however, never sufficient for the appellate court to conclude that it would have preferred to approach the matter differently or that there is a better way to investigate the claim. It is not open to the appellate court to prefer its own views to that of the Presiding Officer’s as to the manner of investigation. To suffice, it must be a clear and obvious case that the inadequacy of the investigation will render an ordinary reasonable man on the tram to Shaukeiwan to conclude that injustice has resulted in that a fair and proper determination of the claim cannot be attained.

…… The insufficiency of evidence to support a finding or the inconsistency of a finding with the evidence, are matters that the appellate court can properly take into account to determine whether there has been a failure to conduct any or any adequate investigation of material facts relevant to such a finding. …… They are only matters which may give rise to a need for further investigation before a determination should be made. If there has been a proper and adequate investigation of the claim, no complaint can be made against any such findings of fact.” (my emphasis)

91. In 謝林及其他二十位訴陳德偉, Jerome Chan J explained that if the witnesses’ evidence is “清澈明確，明顯可信，或無可爭議”, to investigate further would be waste of resources.  Since the lack of investigation has to give rise to injustice, “所缺乏的調查須為對判決有重大影響者，以致任何合理人士皆會對判決不安”.  The learned judge also gave the following guidance on the statutory duty to investigate:

“(一) 審裁官所須承擔的調查查任，只限於“任何與申索有關事宜”。

(二) 此責任並非一絕對責任，審裁官只須就任何對判決或對事實的裁定有重大影響的事宜，作出適當合理的調查。

(三) 即審裁並無責任對任何與有關事宜，不論其重要性，不論其是否有合理論據或基礎，毫無選擇地盲目地作出不必要的調查。

(四) “與申索有關事宜”，有輕重之分，性質之別，絕不可一概而論，持一論而放諸四海。有效事宜，為對判決或事實的裁定“有重大影響”，即其影響力，並非必須對判決或事實的裁定起決定性作用，但須為重要的影響力，足可引致一個合理的審裁官對其判決或事實的裁定，產生合理疑慮，或認為有必要再作考慮。但調查責任不能引伸至一些較輕微，或少於上述程度的事宜。

(五) “作出適當合理的調查”: 同樣地，所須調查程度亦有深淺之別，形式之異。調查必須是適當而合理的調查，不可有任何偏見，不可有任何先入為主之差。調查形式及程度，須視乎事宜本身的合理需要，不可一概而論。唯一絕對的準則，為審裁官所持態度，必須中立持平，不可以任何一方代表律師為己任。他的任務乃找出事實真相，而非以破壞證人的可信性為目的。他只能在有合理的疑點時，對證人作出調查性的盤問，深入的追問，以求真相。他絕不應在毫無合理的疑點時，對證人作出無理及無必要的盤問。審裁官能保持角色中立，不偏不倚，絕無庖代餘地，實至為重要。”

(b)  Parties’ contentions

92. Mr Chow SC submitted the DPO clearly failed to discharge his statutory duty to investigate highly relevant and material issues in that he failed to take into account the inherent improbabilities and internal inconsistencies in the claimant’s case and/or to discuss, analyse and evaluate those matters, whether adequately or at all, in the Reasons.  All he did was to compare the two cases and said one was more believable.  What the DPO should have done was to test the oral assertions against the contemporaneous documents and to ask why the project bonus term was not documented and why there had been no payment of project bonus over the years since January 2010.

93. Mr Chow SC submitted the DPO’s failure to discharge its duty to investigate was further demonstrated by the fact that the defendant’s witnesses were not cross-examined on the crucial issue as to whether and how the Oral Agreement was made.  The DPO noted the lack of cross-examination in paragraph 65 of the Reasons, but he opined this would not affect the claimant’s credibility.  Mr Chow SC argued this demonstrated that the DPO misunderstood his “active inquisitorial role” by reason of the statutory duty to investigate, and that he was in breach of such duty in not seeking to find out the truth by questioning the defendant’s witnesses when the claimant failed to do so.  He ought to have made further inquiries and/or investigation, and to seek further elaboration from Mr Au and Ms Wong, so that proper findings of fact as to the existence of the Oral Agreement could be made.

94. Mr Chow SC further submitted the DPO also failed to take into account (a) the existence of contemporaneous documents which contained terms that were inconsistent with the Oral Agreement, eg the Supplemental Employment Contract that made no reference to the Oral Agreement, and (b) the claimant’s lack of explanation as to why the project bonus term was not included in the Supplemental Employment Contract other than an assertion that it was an omission,[109] (c) the inherent improbabilities against the existence of the Oral Agreement (eg the improbabilities of (i) no proper documentation of the remuneration package of the claimant as a member of the senior management of a wholly owned subsidiary of a listed company, (ii) a person of the claimant’s background would leave a substantial part of his remuneration package undocumented, and (iii) an absence of persistent efforts by the claimant to chase for his project bonus), and (d) internal inconsistencies of the claimant’s evidence over the Oral Agreement, eg whether and how the claimant made the Oral Agreement with the defendant and what explanation was given by him on the incomplete form of the written employment contract.

95. Mr Hung submitted Ground 5 had no merits.  He argued that the defendant’s complaints ignored the fact that the present case involved one simple issue, ie whether or not there was the Oral Agreement.  To discharge his duty to investigate matters which he might consider relevant to the claim, the DPO was entitled to consider the relevant context and approach different issues differently.  In any event, the Tribunal is not required to investigate where the testimony of a witness is clear, believable and/or undisputable.  The claimant had set out in detail the circumstances how the Oral Agreement was reached in his statement of claim, which was also part of his witness statements and which supported the DPO’s finding in his favour that the Oral Agreement existed.  Mr Hung submitted that even if there had been failure to investigate, any such error would not have affected the fair determination of the case.

X.  DISCUSSION

96. I start with a few notable matters in relation to the Determination and Reasons which may have relevance to a number of the Grounds, and then go on to discuss whether any of the Grounds have been made out.

97. First, in determining whether the Oral Agreement existed, a significant factual issue to be determined on the totality of the evidence and on the balance of probabilities is whether the Contract Documents were made/adopted with the intention of superseding all prior oral communications in relation to the employ of the claimant by the defendant or whether the Contract Documents were not intended to discharge a prior oral agreement.  On this issue concerning the parties’ intention, the circumstances of their communications over the draft Employment Contract when it was first produced and discussed, and the reasons why its eventual execution was deferred must be significantly and materially relevant to the aforesaid central issue.  Whilst the DPO did note the time gap of about a month between the commencement of the claimant’s employment and the date of the Employment Contract in paragraph 23 of the Reasons, he failed to consider, evaluate and make findings as to the reasons for this.  He actually shied away from doing so by saying in the same paragraph of the Reasons that “不管是否如被告公司所說因要修改的關係”.  But at the same time he relied on such time gap to say that (a) important contractual terms including the remuneration package had been confirmed by the parties by way of oral agreement and (b) this gave rise to the prima facie possibility that the employment contract between the claimant and the defendant was partly oral and partly in writing, but this still begs the question whether the parties have actually intended to have a partly oral and partly written contract. The reasons for the aforesaid time gap must be a significant and materially relevant consideration, and a simple reference to the time gap without exploring the reasons is an uncertain cornerstone for the DPO’s prima facie view let alone any firm foundation for his further views on the evidence.

98. Secondly, the claimant admitted and Mr Hung accepted that the Handbook was part of the Contract Documents and formed part of the employment terms binding on the claimant.  The DPO in coming to his view of a prima facie possibility of a partly oral and partly written contract in paragraphs 24-25 of the Reasons and also to his conclusion that the employment contract between the claimant and the defendant was actually a partly oral and partly written contract in paragraph 72 of the Reasons relied on the ground that the written contract did not record any discretionary bonus or incorporate the terms of the Handbook (that expressly provided for discretionary bonus) and yet the defendant did pay bonus to the claimant in 2010-2012.  The Reasons never mentioned that the claimant’s entitlement to discretionary bonus under the Handbook was part of his terms of employment.  Whilst it is true the Employment and Supplemental Employment Contracts made no reference to discretionary bonus or the Handbook, what is suggested in the DPO’s analysis in paragraphs 24-25 and 72 of the Reasons is this: since the contract in writing in the present case made no reference or incorporation at all in respect of “bonus” per se but nevertheless the defendant actually paid bonus to the claimant in 2010-2012, it must be an inexorable inference that parties had a prior oral agreement concerning bonus payments.  But, in my view, such reasoning may be challenged or neutralised by the undisputed fact that the claimant’s contractual entitlement to discretionary bonus is actually documented in writing.  In determining whether the parties intended the Contract Documents to supersede the parties’ prior oral communications, it must be relevant and necessary to evaluate and consider, amongst other evidence, whether the express written provision for (at least) discretionary bonus and the omission in writing for other forms of bonus (eg project bonus) may lead to an inference that (a) there was no other form of bonus and/or (b) the bonus paid in 2010-2012 was in fact discretionary bonus.  For the DPO merely to say the documents in writing made no reference to discretionary bonus and did not incorporate the Handbook without going further to acknowledge the written provision for discretionary bonus in the Handbook was part of the claimant’s contractual entitlement and to evaluate and analysis such fact against other evidence does give rise to concern.

99. Thirdly, as explained in paragraph 30(c)(i)-(ii) above, the DPO rejected Mr Au’s explanations that both the $1,000,000 and $200,000 bonuses paid in 2010 were discretionary bonus, and he further rejected Juan Wong’s, Silvia Chan’s and Roger Poon’s explanations for the accounting entries for such bonuses, and took the view in paragraph 34 of the Reasons that “這個酌情花紅以地盤獎金為名，由區先生圈出10個地盤為$1,000,000作紀錄，即每個$100,000。這個計算方法與申索人的項目紅利的要求竟然不謀而合” (or, to put in another way, the payment of the $1,000,000 bonus to Vic Sword as consultancy fee for 10 projects lends probability to the suggestion that such payment was for project bonus).  Indeed, in paragraphs 39 and 44 of the Reasons, the DPO expressed his perplexity as to why the $1,000,000 bonus was described as “site bonus” (ie “令人費解” and “本席不明何以可以隨便更換”), but nowhere in the Reasons did he refer to tax avoidance being the reason for this particular mode of payment.  Yet it is the claimant’s own case that the arrangement for such mode of payment with identification of 10 projects for the consultancy fee to Vic Sword was for tax avoidance purpose, and the defendant did not disagree save to say that it was for the claimant’s personal tax reasons.  Indeed, the DPO shied away from making any finding in this respect because he said in paragraph 46 of the Reasons that “假如被告公司的說法是事實，有實際需要以地盤獎金名義發放$1,000,000 ……” In my view, this must be a relevant and material matter because it may (or may not) offer an explanation why 10 projects were identified (eg to justify the consultancy fee allegedly paid for services rendered by Vic Sword in relation to such projects so as to achieve tax avoidance) and why the “site bonus” label was coined for accounting entries.

100. The aforesaid concern may also colour the analysis in relation to the payment of the $1,400,000 bonus in 2011, and may impact on the DPO’s consideration in paragraph 47 of the Reasons that if there were an accounting need the $1,400,000 bonus should be (but was not) disbursed and labelled in the same manner as for the $1,000,000 bonus, and his concern in paragraph 48 of the Reasons that “被告公司指其實申索人曾同樣要求他的個人公司代收，被告公司認為不妥故此只支付給他本人。不過這一點並不能解釋為何$1,400,000不再以地盤獎金發放”.  It is true that in paragraph 66 of the Reasons the DPO noted the claimant’s email request dated 26 March 2011 suggested that “指的安排是以申索人個人還是其公司收取款項的安排而已”, but had there been a proper evaluation of the issue of tax avoidance, question would have been raised as to whether the linkage between the 10 projects and the $1,000,000 bonus together with the label of “site bonus” was merely for the purpose tax avoidance, and whether the proposed linkage between the 14 projects and the $1,400,000 bonus (which is admittedly a discretionary bonus) was for the same reason.  If that were the case, and after all there is documentary evidence (ie the emails that passed between the claimant and Roger Poon in March/April 2011) that the eventual de-link between the proposed 14 projects and the $1,400,000 bonus was due to tax and listing concerns, it must be relevant and material to consider whether it is appropriate or not to infer that the $1,000,000 bonus is likewise a discretionary bonus or part of a year-end bonus similar to the $1,400,000 bonus.

101. Fourthly, although the Circulars were for marketing staff and not the claimant, the DPO in paragraph 36 of the Reasons relied on them to demonstrate that “地盤獎金在被告公司內有特定意思，指與地盤完成數目掛鈎的獎金”.  In paragraphs 36-37 of the Reasons, he relied on the Circular dated 3 January 2011 to say that “地盤獎金即項目成功獎金，按成功地盤數目計算”, and the other two Circulars to say that “按成功地盤數目計算的獎金在被告公司的一直存在”.  Significantly, in paragraph 38 of the Reasons the DPO concluded that “雖然名字不同，這個地盤獎金以地盤計算獎金的方法，與申索人所指的項目紅利的計算方法一致”.  But even though the DPO drew such analogy, he did not discuss the differences between the provisions for site bonus in the Circulars and the claimant’s contractual entitlement to project bonus under the Oral Agreement, and why such differences could be discounted in coming to the view that the calculation of “地盤獎金” or “項目成功獎金” under the Circulars and the claimant’s contractual entitlement for project bonus under the Oral Agreement is “計算方法一致”.  For convenience, I refer and rely on (and will not repeat here) the differences identified in paragraph 36 above.

102. Turning now to Mr Chow SC’s complaints, I agree with Mr Hung there were two conflicting alternatives before the DPO, ie whether or not the parties made the Oral Agreement.  I also agree it cannot be said that either alternative is an improbable theory.  But before one can say that the elimination of one conflicting theory would lend probability to the other alternative theory, more fundamental questions need to be answered, firstly whether the elimination of one theory (ie rejection of the defendant’s case that denied the existence of the Oral Agreement) is justified on the overall evidence, and secondly whether on the state of the evidence on the alternative theory is justified and probable.  In short, the DPO as the tribunal of fact must be satisfied on the totality of the evidence (and drawing inferences as appropriate) as to where the probability lies and also he must be satisfied that a particular fact or state of affairs is more likely to have occurred than not.  It is only then that the DPO again as the tribunal of fact would be in a position to discount the less probable alternative and find for the more probable one.

103. I accept that findings of fact are generally immune from attack unless there is an error of law in that the findings were “perverse or irrational” or made “by reference to irrelevant factors or without regard to relevant factors”.  I bear in mind that the first instance decision or finding has to be plainly wrong before this court can interfere and there is a generous ambit within which reasonable disagreement is possible.  And it is not for me to prefer a different conclusion, to re-assess the weight of relevant evidence, to weigh witness credibility, or to see whether other inferences can plausibly be drawn.

104. Here, the question is whether the DPO had considered and (if necessary, had investigated) all relevant and material aspects as to the circumstances of the Oral Agreement in carrying out the forensic exercise described in paragraph 102 above.  I am persuaded the four matters discussed in paragraphs 97-101 above are highly relevant and significantly material to the issue of the existence or otherwise of the Oral Agreement, and I think the DPO erred in law in failing to fully consider and evaluate the evidence in respect of those four matters before holding the Oral Agreement existed and survived the written contract.  I am also satisfied that upon such failure the DPO’s adverse findings against the defendant and his reasons therefore were inadequate, and such conclusion does not fall foul of section 35(2) of the Ordinance.

105. I note the DPO did not reject the evidence of the defendant’s witnesses, especially Mr Au and Ms Wong being the ones engaged in prior communications with the claimant, by reason of their bearing or demeanour, so the DPO’s evaluation of their evidence as well as the claimant’s evidence as against the totality of the evidence (including contemporaneous documents) take on importance in the discharge of his duty to ascertain where the probability lies.

106. In Part VI(b) above, Mr Chow SC raised multiple criticisms with a view to impugn the DPO’s approach in relation to the assessment of the claimant’s evidence relating to the Oral Agreement against the contemporaneous documents, internal inconsistencies, inherent probabilities and improbabilities, and totality of the evidence.  However, in light of my conclusions in relation to the aforesaid four matters, it is not necessary for me to go further to discuss all the detailed complaints raised by Mr Chow SC, which may well be matters which a presiding officer on the retrial of the present case may wish or need to consider.

107. Mr Chow SC also raised concern over the DPO’s rejection of the evidence of Mr Au and Ms Wong in respect of their prior communications with the claimant and their denial of the existence of the Oral Agreement, which he claimed was unchallenged since they had not been cross-examined in a material way.  I accept the rule in Browne v Dunn does not inflexibly require the claimant (or the DPO) to put every point to the defendant’s witnesses.  Here, whilst it would have been more desirable for the claimant to have cross-examined Mr Au and Ms Wong (or for the DPO to test their evidence when the claimant failed to do so) on the circumstances of making the Oral Agreement which is the heart of the dispute between the parties, I am not persuaded such omission to cross-examine is necessarily unfair on Mr Au and Ms Wong.  From their witness statements and their access to the claimant’s statement of claim and witness statements, they would have had notice of the substance of the claimant’s case although I am not persuaded they would have been aware the DPO was skeptical about their evidence.

108. I also acknowledge the DPO as the tribunal of fact was not bound to accept any particular piece of evidence simply because there was no cross-examination on it.  But what is worrying is how the DPO evaluated their evidence in the Reasons.  A review of paragraphs 23-76 of the Reasons shows that apart from a brief mention that Ms Wong rejected the claimant’s request for project bonus at the interview, the DPO essentially focused on the payment of bonuses in 2010-2012 and little (if at all) had been canvassed on how the Oral Agreement came about in the course of the parties’ prior communications and on the events that happened after the making of the Oral Agreement that led up to the execution of the Employment Contract.  Bearing in mind the DPO as the tribunal of fact was tasked to objectively ascertain the parties’ intention (ie whether the employment contract was intended to be written or partly oral and partly written) at the material time, his focus on ex post facto matters rather than on the evaluation of the evidence adduced by the parties on their prior oral communications that led up to the alleged oral contract and then up to the execution of the written contract gives pause for concern.  In my view, such evidence is highly relevant to the issue of the existence of the Oral Agreement which formed the fundamental basis of the claimant’s claim, and I agree with Mr Chow SC that insufficient reason was given as to why the claimant’s evidence on this crucial aspect was accepted and why Mr Au’s and Ms Wong’s evidence in this was rejected.

109. I accept that not every failure to investigate will give rise to a successful appeal.  The question here is whether the subject matter of complaint is not only relevant but material, and more importantly, whether the failure to investigate such matter gives rise to injustice such that the DPO’s conclusion that the Oral Agreement existed cannot be said to be fair or proper.  In my view, the four matters discussed in paragraphs 97‑101 above are highly relevant and materially significant matters that ought to be canvassed, clarified or elaborated upon, and lack of investigation into or consideration of these matters and the further matter in paragraph 108 above give rise to concern as to whether a fair and proper determination of the claim has been attained.  It is not enough to compare the parties’ respective case and conclude that one was more believable than the other without adequate evaluation of and deliberation over evidence that is significantly material to the crucial dispute.  Likewise, when the DPO found the claimant’s dilatory attitude towards chasing for his project bonus after 2010 was a factor unfavourable to his case, it would have been necessary to look at the other side of the coin and investigate and evaluate the claimant’s explanation as to why the defendant ceased making any payment of project bonus to him after January 2010 when they were perfectly willing to pay him substantial discretionary bonuses in 2011-2012 and to pay “地盤獎金”or “項目成功獎金” to marketing staff in 2010-2011, and then go on to either accept or discount such explanation ( if any) with reasons given.

110. I have carefully considered all the circumstances of the case, counsel’s submissions as well as the other findings by the DPO.  Even though the question of whether or not the Oral Agreement did exist is a question of fact, the DPO as the tribunal of fact has to sufficiently evaluate and analyse the material and relevant evidence, and to carry out appropriate investigation and to give sufficient reasons.  In light of the reservations that I have in respect of the DPO’s approach to the evidence and how he reached his conclusion, I am not satisfied he has sufficiently discharged the aforesaid duties even within the generous ambit allowed to him as the tribunal of fact.

XI.  CONCLUSION  

111. In the circumstances, the Appeal is allowed and the case is remitted to the Tribunal for retrial before another adjudicator.  In coming to such conclusion, I have carefully considered the spectre raised by Mr Hung of another 8-day retrial which he said would be disproportionate given the nature of the claim. But the Part B Bonus as claimed is not a small amount, and a fair and just determination requires proper adjudication on a principled basis as discussed above. I also bear in mind that the Part C Bonus is no longer part of the retrial, and I have set out the parties’ respective contentions in some detail (with cross-references to the primary material) in the hope they will assist the Tribunal to identify the relevant disputes and issues for the purpose of the retrial. It is unlikely that the retrial with dedicated focus by both parties and the Tribunal on the relevant issues will require 8 days.

112. There is no reason why costs should not follow event.  I therefore grant a costs order nisi that costs of the Appeal (including all costs reserved if any) be paid by the claimant to the defendant to be taxed if not agreed with certificate for two counsel.