ROBERT MCCLELLAN STEWART, JR. AND OTHERS v. THE HONG KONG PHILHARMONIC SOCIETY LIMITED

IN THE COURT OF APPEAL

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JUDGMENT

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Fuad, J.A.:

1. The Hong Kong Philharmonic Orchestra has, over, the years, given a great deal of pleasure to the music-loving public of Hong Kong and, I think it can safely be said, is now recognised as one of the leading symphony orchestras in Asia. Unfortunately, nearly eight years ago something seems to have gone sadly wrong with the "man-management" side of the Hong Kong Philharmonic Society Limited, ("the Society"), the company which runs the Orchestra. Whatever may have been the rights and wrongs of the matter, a number of orchestral players felt that they had been badly treated and were clearly left with a burning sense of grievance. which they sought to air through the courts. Now that "tenure", as it is called, has been given to the members of the orchestra, Iam glad to say that these unhappy events are not likely to be repeated.

2. Some of the musicians first instituted proceedings under the Labour Tribunal Ordinance claiming damages for wrongful dismissal and breach of contract. These proceedings were withdrawn, and on 16 July 1979 an action was filed in the High Court by 15 of the players. By this action (No. 3031 of 1979) they claimed damages for wrongful dismissal. On 18 December 1979 O'Connor J. struck out the Statement of Claim on the ground that it did not disclose a reasonable cause of action, and dismissed the action.

3. Mr. Eddis, who appears for the players, tells us there was another action instituted by the musicians which was discontinued.

4. The action from which this appeal arises was instituted, again in the High Court, by the same 15 musicians on 11 April 1980, which one has to say was a very long time ago. By the time it came on for hearing before Nazareth J., nine of the original Plaintiffs had withdrawn their claims for one reason or another and only the 1st, 2nd, 3rd, 5th, 12th and 15th Plaintiffs were left in the action. As it happens, four of the players were in the wood-wind section of the Orchestra, and one each from the string and percussion sections. Their action was for damages for misrepresentation and I will refer to the nature of the misrepresentations later.

5. After a hearing which lasted 18 days, in a reserved judgment given on 7 July this year, Nazareth J. dismissed the claims of five of the remaining Plaintiffs. Only the 2nd Plaintiff succeeded, and he was awarded 2,000 Pesos as damages. All six Plaintiffs now appeal to this Court.

6. Each of the Appellants was engaged by the Society to play in the Orchestra for a period of two years, from 1 April 1977 to 31 March 1979, by contracts in writing. Only Mr. Yeung Siu Muk (the 15th Plaintiff) was employed on "local terms". The conditions embodied in the contracts of the five Appellants on "overseas terms" said this about renewal: "

7. On 12 December 1978, the General Manager of the Society wrote to all the members of the Orchestra in these terms:

 

In order that the change can be made for the next season, 1979-80, to start on 1st August, 1979, it will be necessary to renew your Contract with the Society for an additional 4-month period from 1st April to 31st July, 1979 (hereinafter called the Extension Period). The purpose of this letter is to request your formal agreement to this renewal as provided for in Clause 1C of the General Conditions of Contract (April 1977 - March 1979) and under the following terms:-

 

 

In accordance with Clause 1C of the General Conditions of Contract (April 1977 - March 1979) Agreement between the Society and yourself for this renewal must be reached on or before 31st December, 1978, and I should be grateful, therefore, if you would return the attached letter, duly completed, to this office as soon as possible but not later than this date.

 

 

The Society may offer you a new contract of employment for a period commencing 1st August, 1979, upon terms to be agreed between the Society and yourself. Agreement for this new contract will be required on or before 30th April; 1979."

8. At the end of December 1978, an announcement was made that a Mr. Ling Tung, then living in the U.S.A., would be coming to Hong Kong to take over as Music Director of the Orchestra. Early in 1979 some of the members of the Orchestra heard rumours which made them uneasy about their future.

9. Mr. Robert Stewart, Jr. (the 1st Plaintiff) was a member of the Players' Committee, and the judge found that when he expressed his disquiet (on behalf of himself and his colleagues) to Mr. McKenzie, the Chairman of the Society's Executive Committee, he was told by Mr. McKenzie in effect that neither his, nor the positions of the other players, were in jeopardy. This representation, the judge concluded, was made to reassure Mr. Stewart and the other players he represented.

10. The rumours persisted and Mr. Stewart approached Miss Maria Lui, the Deputy General Manager about them. The judge found that she stated correctly to Mr. Stewart that the new Music Director had authority only to fill existing vacancies, but that in the circumstances in which she spoke, Miss Lui must be taken to have intended to give reassurance to Mr. Stewart and the other players that they had nothing to worry about.

11. The Appellants' case in the High Court was perhaps largely founded upon the representations made by Mr. Duffus who arrived in Hong Kong on 3 March 1979 to take up the position of General Manager. He addressed the Orchestra after a rehearsal on 30 April and precisely what he said was hotly disputed. I note in passing, as did the judge, that in terms of the letter of 12 December 1978 which I have just read, this was the date by which agreement about any new contract to begin on 1 August 1979 had to be reached. The judge carefully reviewed and examined the evidence led about what was said on that occasion, given by the Plaintiffs and three other players present on one side, and by Mr. Duffus and two defence witnesses on the other. He reached the conclusion that while he doubted whether the precise words used by Mr. Duffus could be recalled, he would accept the evidence of the Plaintiffs and the other musicians who testified, that they were reassured by what Mr. Duffus had to say.

12. About the effect of what Mr. Duffus said at the meeting, the judge added:

13. In the event, five of the Appellants (and other players) received "non-renewal" letters dated 3 June 1979 from Mr. Duffus which began:

The letter addressed to Mr. Yeung (the 15th Plaintiff) said [for the same reason]"...... we are unable to offer you a permanent contract with the Orchestra for the 1979/80 session."

14. It was at a meeting of the Executive Committee on 16 March that the decision had been taken to defer consideration of the renewal or otherwise of the musicians' contracts until May, which would be after Mr. Tung's arrival in Hong Kong.

15. Nazareth J. went on to "find as a fact", as he put it, that Mr. Duffus had made statements at the meeting on 30 April 1979 to the following effect:

16. Referring to the pleadings, the judge said that the oral representations made (including those made by Mr. McKenzie and Miss Lui):

17. Thus, the musicians were partially vindicates but they were obviously dissatisfied that there was not a finding that they had been deliberately misled and, of course, they were not given the solace of damages.

18. In taking leave of this aspect of the case, the judge held that in the circumstances the representations could only reasonably have been construed as meaning that the contracts would be renewed, and that the players understood them in that sense, despite the fact that they were not totally convinced that this would happen.

19. The judge went on to consider whether the representations were deceitful or negligent. He noted that it had not been suggested that those made by either Mr. McKenzie or Miss Lui had been deceitful, and found that their representations had been made negligently and recklessly, regardless of any genuine belief either may have had about their truth.

20. As regards Mr. Duffus, after considering the evidence pointed to by the Plaintiffs as indicating deceit, the judge expressed the view that it fell short of establishing more than negligence on the part of Mr. Duffus when he made representations intending to give reassurance to the Plaintiffs.

21. The Appellants challenge this conclusion by the judge and say, that on his own findings that he ought to have gone on to make a finding " at the very least of fraudulent misrepresentation or of deceit" in their favour.

22. As will appear, I do hot think it is necessary to resolve this issue to dispose of this appeal. I say this in respect of all the Appellants, including the Appellant who was the 2nd Plaintiff and did succeed in his action; and was awarded damages. It seems to me that none of the matters urged before us as aggravating factors could have affected the amount of damages that the judge decided to award this Plaintiff.

23. Had enhanced damages been awarded on the basis of fraud (for deliberately misleading that Plaintiff) it would have been to punish the Society for the fraud practised on their behalf. This would, to my mind, have been an award of exemplary damages, which by recent amendments to the Rules of Court, must be specifically pleaded together with the facts relied upon. And the claim must, of course, be made in the body of the Statement of Claim and not in the prayer.

24. I am bound to say that, on any view of the facts, the players were fully justified in feeling that they had been stabbily treated, and I feel that I can say this despite the fact that we have not found it necessary to call upon Mr. Maxwell-Lewis.

25. I return to Nazareth J.'s judgment. In dealing with the question of damages, he remarked that the Plaintiffs had claimed as damages the loss of remuneration they would have received for up to two years under the renewed contracts they had expected. He noted that it had not been disputed that their claims were founded not in contract but in tort. The judge said that he accepted as a correct statement of the law, the sentence with which paragraph 1481 of MCGREGOR ON DAMAGES (14th Edition) concludes:

The parties conceded that this is a correct statement of the appropriate measure of damages and, therefore, there is no need to go into the authorities that were referred to us.

26. The judge concluded that the Plaintiffs' claims for loss of remuneration under the contracts they expected to be renewed were misconceived, for neither the loss of that remuneration nor the non-renewal of the contracts flowed directly or were in consequence of the representations. He pointed out that if the misrepresentations had never been made (or even if the Plaintiffs had been told the true position) their contracts would nonetheless not have been renewed.

27. I am sorry to have to say that the Plaintiffs' claim as presented in the Court below was misconceived. One looks at the Statement of Claim and finds, in paragraph 11B, the averment that the Plaintiffs were by the misrepresentations "induced to rely on the said representations and did so rely upon the said representations to their detriment particulars whereof will be furnished upon request." And then in paragraph 14, it is said:

28. When one turns to the Further and Better Particulars that were supplied, they demonstrate the extent to which the claim as advanced and presented was misconceived. First of all, we have the Further and Better Particulars provided on 27 May 1981, the final paragraph of which said this:

29. More Further and Better Particulars were provided on 22 March 1985 and those additional particulars averred that the amounts they lost should be computed from the time of their unfair dismissal by the Defendant company in July 1979. Then came a list of the earnings of the individual Plaintiffs from the employment they were able to obtain after their contracts were not renewed. And indeed even when this appeal was opened before us, there was a submission that the Plaintiffs had acquired a right to expect the renewals and possibly even a right of renewal, enforceable by action. This misconception of the basis of the Plaintiffs, claim had unfortunate results to which I will turn shortly.

30. Before examining the position of each of the Plaintiffs, Nazareth J. commented that virtually no attempt had been made to establish any actual loss or damage that they had sustained which they would not have suffered if the misrepresentations had not been made. After reviewing the relevant evidence, he found no basis upon which he could properly make any award of damages in favour of any of the Plaintiffs except the 2nd Plaintiff, Mr. Actarap, and as we have seen, the judge awarded him 2,000 Pesos. This was in respect of the deposit he had paid in relation to an intended purchase of a piece of land in the Philippines from which he had to withdraw when his contract was not renewed as he expected.

31. Nazareth J. mentioned that the Plaintiffs had claimed aggravated damages and said, referring to Cassell v. Broome [1972] 1 All E.R. 801 and to para. 5-36 of the 15th Edition of CLERK AND LINDSELL ON TORTS:

32. The Appellants say that aggravated damages should have been awarded but, once again, it is not necessary, in the light of my conclusions, to examine this complaint.

33. In respect of the damages claimed by the 1st Plaintiff, the judge was of the opinion that he had not attempted to establish any loss, expenditure or detriment that he would not have incurred had the representations not been made, or that he had lost any employment that he would otherwise have secured. While he would accept that his employment prospects were better early in the year, particularly in the United States, he felt that the probability was that he did not lose any employment opportunity whatever because he would not have secured employment anyway; his failure to obtain employment had resulted not from the misrepresentation but from the non-availability of positions for oboists, his demoralization and his decision to go in for free-lancing. Although his demoralization might have been contributed to or accentuated by the misrepresentations raising expectations of renewal, the judge said, it was primarily the result of the loss of employment on the non-renewal of his contract. He thought that in any event demoralization would have resulted in loss, not of the renewed contract earnings claimed, but of some other future earnings, the basis of which he had not attempted to establish. The judge held that his loss of employment and remuneration was not caused by the misrepresentations.

34. As regards the 3rd, 4th, 5th and 12th Plaintiffs, the judge observed that, with the exception of the forfeited deposit for which he awarded damages to the 2nd Plaintiff, the evidence had not disclosed that any of them had sustained any loss, expenditure or detriment by reason of the misrepresentations. They had led no evidence to suggest that had the misrepresentation not been made they would have taken earlier action to find other employment still less that they would have obtained such employment earlier. He noted, too, that there had been no evidence that they would have turned to the U.S.A. for employment, or that their prospedts of obtaining other employment would have been better in the earlier part of the year.

35. About the 15th Plaintiff, the judge said that, as the only local musician of all the Plaintiffs, he had clearly sustained the most severe blow from the non-renewal of his contract, both in terms of financial loss and mental distress. He had not been able to find alternative employment and even his private music teaching opportunities had diminished possibly because of the non-renewal of his contract. The judge went on to say that although it was to be regretted that he non-renewal of his contract could not have been accomplished in a manner that occasioned less distress to him, it had to be said that his loss and distress flowed, not from the misrepresentations, but from the non-renewal of his contract. In his view, had the misrepresentations not been made (or even if he had been told on 30 April that his contract would not be renewed), it was difficult to see what he could have done to avoid the hardships he subsequently had to endure. There were apparently no jobs for professional cellists in Hong Kong.

36. The Notice of Appeal, in reference to the measure of damages, said this:

And so, the misconception continued.

37. By their Supplementary Notice of Appeal, the Appellants say that the judge ought to have found that the timing and nature of the misrepresentations during January to March 1979 were such as to have deceived them into believing their contracts would be renewed and to have "disadvantaged" them:

Of course, these matters should have been pleaded. The Appellants go on to say that the judge should therefore have found that they, being thus disadvantaged, had suffered loss calculated, still it is said, in the manner set out in paragraph 4 of their Notice of Appeal which I have just read.

38. I think it is common ground that misrepresentation, in any of its forms, is a tort which depends on proof of damage to complete a good cause of action. This is why, of course, the actions of five of the Appellants were dismissed despite the judge's finding in their favour on the issue whether or not misrepresentations had been made. And in considering whether damage has been proved to form a basis for the assessment of damages, it can make no difference whether the misrepresentations were deliberate or negligent.

39. As we have seen, the loss claimed by the Statement of Claim is the deprivation of opportunities of seeking further employment. None of the Plaintiffs, except the 1st Plaintiff, gave any evidence on this matter at all. Mr. Stewart certainly did, but I have read and re-read his evidence and it is quite plain that although he mentioned that he hoped that he would have been given earlier notice if his contract was not to be renewed and that he would have taken steps to go to America or seek new employment (arid thus to avoid having the non-renewal letter) much of his evidence was directed towards the loss that he suffered in money terms by the non-renewal of his contract in Hong Kong. Even Mr. Stewart does not say anything about the prospects he might have had of succeeding in any of the applications that he might have made for vacant posts for players which appeared in the "International Musician".

40. Speaking for myself, I have some doubt whether the loss of an opportunity of seeking further employment can, without more, possibly be regarded as damage for the purpose of completing the cause of action for misrepresentation. But even if it can, it seems to me that without some evidence of the chances of success in the applications that he might have made, it was quite impossible for a Court to find damage and to quantify what the loss to Mr. Stewart would be.

41. I accept Mr. Eddis' submission, that just because damages are difficult to assess, this is no reason why they should not be awarded. There is ample authority for this. The Court will do the best that it can.

42. I would quote here, if I may, paragraph 217 from SPENCER BOWER AND TURNER ON ACTIONABLE MISREPRESENTATION (3rd Edition) for I think it is very apt for this case. This is what the paragraph says:

43. I think this paragraph is apt for two reasons. It emphasises the point made by Mr. Eddis. And, it seems to me, it was because this case was misconceived all along, in that it was presented on a mistaken view of the principles of quantum", that proper evidence was not led to prove detriment so that a monetary award however small, and however assessed (even by guesswork) could be given for the Plaintiffs' pleaded loss of opportunity of seeking further employment.

44. Mr. Eddis suggested that it was difficult after all this time to obtain the sort of evidence that might have made the task of the Court easier, but this was no fault of the Society. The onus was on the Plaintiffs.

45. I am quite unable to find any reason to disturb the judge's conclusions despite the valiant efforts of Mr. Eddis, for I am not persuaded that he was wrong in his finding that actual loss had not been proved by five of the Plaintiffs.

46. No one who has heard what happened could fail to have considerable sympathy for the Plaintiffs, but in my judgment the appeal fails.

Sir Alan Huggins, V.-P.:

47. The question which eventually falls for our decision is whether the trial judge was justified in finding that the Plaintiffs suffered no damage as a result of the misrepresentation made by the Defendant other than the small amount of particular damage proved by the 2nd Plaintiff.

48. The matter arises like this. The six Plaintiffs were employed by the Defendant as orchestral players in the Hong Kong Philharmonic Orchestra. They all had contracts which were due to expire on 31st March 1979. It was agreed that those contracts should be extended to 31st July 1979. There was a term of the substantive contract that:

49. The wording of the comparable term in the agreement for extension was slightly different:

50. Rumours began to circulate that changes in the management policy were under consideration and, not surprisingly, there was anxiety among some of the players whether their contracts would be renewed at the end of the, period of extension. The judge found that representations were made to the players on behalf of the Defendant to the following effect:

In the event the contracts of these Plaintiffs, inter alia, were not renewed.

51. The Plaintiffs initially brought an action for wrongful dismissal in the Labour Tribunal and subsequently an action for damages for breach of contract, it being their contention that they had a contractual right to renewal. The first action was dismissed and, on advice, they withdrew the second action and started the present action in which they sued in tort in deceit and, alternatively, for innocent misrepresentation. The representations alleged in para. 10 of the Statement of Claim were substantially those found by the judge, but the root of the difficulties experienced by the Plaintiffs in this litigation has been that this case in relation to damages was argued before the courts as one based upon a right of renewal or at least a right in equity to expect renewal. This can be seen from the Notice of Appeal: Ground l of the Grounds of Appeal expressly referred to the right to expect renewal and invited this court to say that Nazareth J. had misinterpreted the agreement for extension in that there was a material difference in meaning between the term contained in that agreement providing for a possible future contract and the comparable term in the original contract. Mr. Eddis concedes that he can find no material difference between them but urges that his clients thought there was. With respect, I do not see how a misconstruction of plain words by the Plaintiffs could justify a claim for damages against the Defendant. The Notice of Appeal has now been amended and, although Ground 1 still makes reference to the difference in the terms of the two contracts, it is conceded that there was no right of renewal and no right to expect renewal. The substance of the complaint can be shortly expressed thus: by representing that the Plaintiffs' contracts would be renewed the Defendant raised the Plaintiffs' hopes, led them to delay seeking other employment to start after 31st July 1979 and caused them greater disappointment when, in the event, their contracts were not renewed.

52. It has then been argued on the appeal that the Defendant failed to renew the Plaintiffs contracts in breach of a trade usage or custom that non-renewal for defects of musicianship or conduct would occur only when it had been recommended by the Orchestral Liaison Committee, a body consisting of representatives of the management and of the players of the Hong Kong Philharmonic Orchestra. This again seeks to introduce an alleged breach, of contract in an action in tort in which no such breach was pleaded in the Statement of Claim. Not unnaturally there was no evidence called to establish the trade custom suggested and it is difficult to believe that any such evidence could have been adduced.

53. The trial judge rightly perceived that the first question to be decided was whether a tort had been committed at all. There can be a technical breach of contract without proof of damage but there can be no liability in tort without proof of damage: McConnell v. Wright 1930 1 Ch. 546. The judge said:

and he said particularly in relation to the lst Plaintiff:

With respect, I am not sure that that was correct for, in the Statement of Claim, the Plaintiffs had alleged

The 1st Plaintiff is recorded as having said:

54. The implication is that he would have taken some action earlier and it necessarily follows that he would have suffered the loss alleged in para. 14 of the Statement of Claim. However, I think the real substance of the judge's finding was that that loss was incapable of quantification on the evidence, for he referred to the contention that the 1st Plaintiff was demoralized by the misrepresentations raising expectation of renewal and continued:

Then he said:

"There is accordingly in my view no basis upon which I could properly make any award of damages to him and, his claim must accordingly fail."

It is therefore the lack of evidence as to the value of the lost opportunity which forms the true basis of the judges decision.

55. The argument of Mr. Eddis is epitomized in his statement that:

If by that he meant some positive value, I am unable to agree. It was incumbent on the Plaintiffs to adduce evidence upon which some estimate, however general, could properly be made.. All we have here in respect of the 1st Plaintiff is evidence that various jobs as a principal oboist were available in the United States in the months of February to April, jobs which he might have applied for if the misrepresentation had not been made. There was then evidence that when he eventually did arrive back in the United States, after his engagement in Hong Kong was complete, he was still unable to obtain employment as a principal oboist. The reasons for that are said to have been

All except the first of those reasons would have operated against him if he had applied earlier in the year. One would not expect in a case of this kind that there would be evidence that the Plaintiff would have obtained a job if he had applied ac the material time, but one would expect there to be some evidence to assist the court in estimating the possibility of his obtaining a job. The judge took the view that the evidence was so deficient that he was unable to make any assessment of the value of the lost opportunity. Mr. Eddis suggested that any evidence which could possibly have been called would have been of very little weight and that there was no evidence that his client was an incompetent musician. In my view the burden was on the Plaintiffs to prove their loss and this was not a case where the judge was required to make an assessment however difficult that task might be. He was entitled to say that there was no evidence that the lost opportunity was worth anything at all. That is a conclusion which I reach with regret, because, even on the judge's finding, the 1st Plaintiff and, indeed, the other Plaintiffs were treated very shabbily.

56. The evidence to support the claim of the other Plaintiffs is even weaker than that adduced by the 1st Plaintiff. It follows that I see no reason to interfere with the judge's conclusion that, except to the extent that the 2nd Plaintiff was awarded the sum of 2,000 pesos in respect of the purchase of a house, the tort was not established.

57. Other matters were argued, namely that the damage was aggravated by the mental distress or demoralization already referred to and that that distress in turn is affected by the contention that the misrepresentation was fraudulent rather than innocent. I do not think the degree of distress could be affected by the existence of fraud, because the Plaintiff would not know whether the misrepresentation was fraudulent or innocent. The judge said that the aggravated damages were

He has found that the only substantial distress was caused by the non-renewal of the contracts and not by the misrepresentation, and I am not persuaded that we could upset that finding. There was, of course, no claim for exemplary or punitive damages.

58. For these reasons I, too, would dismiss the appeal.

Power J.:

59. I concur with what has fallen from my brother Fuad and from the Vice-President and have nothing to add.