WONG YIN MUI SANDY v. NEWPORT MAY

DCCJ 2477/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2477 OF 2004

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JUDGMENT

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1.  This case involves the owner of a travel company, Quin Continental Investments Ltd. (“Quin”), late Mr. William James Newport (the deceased), and his personal assistant Ms.Wong Yin Mui, Sandy (the Plaintiff “P”)who has served Quin for about 14 years at the time the deceased died.

2.  It is P’s case that the deceased had signed a personal cheque to P at the sum of $441,000 (“the Cheque”) as severance payment.  Before P could present the Cheque for payment, the deceased died.  The Cheque was subsequently presented for payment and was dishonoured due to the personal account of the deceased was by then a “deceased account”.

3.  P now claims for the sum of $441,000 dishonoured cheque.  The estate of the deceased challenges the genuineness and authenticity, in other words, the validity of the Cheque and that the deceased had signed under mistakes of private right and it was wrongly obtained by P’s misrepresentation/inducement. Further, there was no consideration on the deceased’s part and further or alternatively it was unenforceable in law or the agreement for severance payment was contrary to public policy or contrary to S. 70 Employment Ordinance. Cap.57.

Background

4.  The deceased was the owner and Managing Director of Quin. 

5.  Quin was a travel company that arranged inbound tours for foreign tourists staying in local hotels, including Hilton, Conrad, Island Shangri-la, Inter-continental (formerly known as the Regent).   Quin arranged local and Macau tours for these tourists.   In the early days, Quin had a shop at the shopping arcade at the Hilton Hotel (as it then was).

6.  The deceased had in the past served as chairman, vice-chairman and committee member of the Hong Kong Association of Travel Agents, Pacific Asia Travel Association, etc.

7.  P worked for Quin since about March 1989. P joined as an account clerk and in about 1990, she was promoted to the post of personal assistant to the deceased. As the deceased’s personal assistant, P accompanied the deceased to lunch at the American Club and arrange his driver to drive him home after lunch; attended conferences at the Hong Kong Tourist Association and other tourist associations, including Pacific Asia Travel Association; she liaised with the deceased’s personal banker and did the accounts and secretarial work. P also accompanied the deceased to Malaysia, Singapore, Canada, the United States, Europe and China for business trips.

8.  Further, P also took care of the deceased’s household matters outside office hours including arranging payments for the deceased’s household utility bills; arranging medical appointments; she even helped to take the deceased’s shoes for shoe repair and made appointments for the deceased’s dog to the veterinarian etc.

9.  By 1997, P’s earnings were at $17,000 basic salary.  The deceased was a very caring and generous employer.  On top of the basic salary, the deceased paid P a separate sum of $10,000 each month extra, which P described as “pocket money”.  On 3^rd September 1997, the deceased made a Will leaving P $1,000,000 as testamentary gift upon his death.  The deceased had also left testamentary gifts of $3,000,000 to his domestic helper and driver (“the Will”).  In the year 2000, the deceased caused Quin to pay $80,000 as education allowance to P’s daughter’s University education in Australia.

10.  In early 2000, the deceased met with an accident and was hospitalised for 2 months.  A part-time nurse Ms. Pang Mei Lan May (“May”), was employed to take care of the deceased.  May have since lightened some of the duties of P, for instance, May took over from P to accompanied the deceased to clinics and visited doctors. 

11.  P attended to the deceased’s needs. P worked outside office hours. Apart from 3 short visits to Australia, where P’s daughter studied, P had not taken any annual leave.  The deceased and P had developed a close relationship and according to P, the deceased had treated her as his own daughter.

12.  In the November 2001, the deceased married May.  May is also referred to as May Newport in these proceedings.

13.  The 1997 Will was revoked by this subsequent marriage.

14.  By January 2002, P was entrusted with the task to sign cheques for Quin.

15.  In about August 2002, Quin’s landlord notified Quin that its office lease at Tung Ming Building would be terminated by the end of December 2002 and it would not be renewed. The economic conditions were not favourable and the deceased considered closing down Quin’s business.

16.  It is P’s case that since there was a prospect of ending the business, the topic of P’s severance payment arose. After discussion, the deceased agreed to pay P the sum of $441,000 as severance payment.  The deceased drew a cheque in the amount of $441,000 from his personal account at the American Express Bank (“the AE Account”). 

17.  On 17^th September 2002, the deceased suffered a stroke and was sent to hospital. The Deceased eventually passed away on 2^nd November 2002 at the age of 91.

18.  On 18^th November 2002 a meeting was arranged at May’s solicitors’ office. P requested payment of the Cheque in the meeting.  She was asked to fax a copy of the Cheque with a brief description of the background leading to the issuance of the Cheque.  P did subsequently send the deceased’s estate’s solicitors the note as requested.

19.  P nevertheless did not receive payment of the Cheque from the deceased’s estate.  Upon her own solicitor’s advice she presented the Cheque for payment on 11^th January 2003. The Cheque was dishonoured and was marked “Deceased’s Account”. On that day, there was also insufficient fund in the AE Account.

20.  In February or by the latest April 2003 P’s employment with Quin came to an end.  P subsequently started the present proceedings.

P’s Claim

21.  P now claims against the deceased’s estate (D) for payment of a sum of $441,000 with interest and costs. P’s claim against D is based on dishonoured cheque and breach of contract.

22.  In substance, the two causes of action depend on the same factual matrix and the element of valuable consideration.

The breach of contact

23.  P asserts that the agreement was $441,000 in consideration of one or more of the following (“the Agreement”):

a. Benefit obtained by the deceased by discharging his own company’s liability to pay potential compensation;

b. P’s promise not to seek from Quin the compensation payable by Quin to P; and/or

c. P’s detriment in not claiming her overtime payment from Quin.

d. Alternatively, it is a compromise agreement in respect of the compensation payable by Quin to her.

D’s Defence

24.  On the dishonoured cheque:

a. P is put to strict proof of the authenticity of the Cheque.

b. The Cheque was not supported by consideration.

c. The Cheque is not payable for want of proper and timely notice of dishonour.

25.  On the breach of agreement:

a. P is put to strict proof of the agreement.

b. The agreement was not supported by consideration.

c. The agreement was vitiated by mistake of law and/or fact by the deceased.

26.  Mr. Ho, appearing for P, highlights that D has not pleaded fraud on the part of P for the Cheque. Mr. Mak, appearing for D, fairly concedes that D is not challenging the authenticity of the Cheque but puts P to strict proof for the circumstances of the signing of the Cheque. Accordingly, I proceed on the basis that fraud or authenticity is not in issue.

27.  At law, the elements of an action for the dishonored cheque are the followings :

1) The Cheque was issued by the deceased.

2) the Cheque was duly presented for payment.

3) the Cheque was dishonoured upon presentation.

4) the notice of dishonour.

5) the Cheque was supported with consideration (“the Consideration element”)

28.  The first three elements are not in dispute.

29.  Mr. Mak does not seek to challenge the notice of dishonour and in any event due to the fact there was insufficient fund in AE Account or alternatively it was a deceased’s account at the time of presentment of the Cheque, underS.50(2)(c)(iv) of the Bills of Exchange Ordinance (BEO) notice ofdishonour was dispensed with. Nichimen Company Ltd (No. 2) v Yick Chong & Anor [1965] HKLR 638 considered.

For Valuable Consideration

30.  The remaining element is consideration. Mr. Ho submits that under section 30(1) of the BEO, consideration should be presumed on P’s part because “every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value”.  D bears the burden to disprove as a matter of law and fact there is no consideration for the Cheque.

Summary of The Evidence

31.  The deceased was generous towards his employees.

32.  P since 2002, had the authority to sign cheques on behalf of Quin.

33.  Quin experienced financial difficulties by the second half of the year 2002, P had to be careful when issuing cheques for Quin as there may not be sufficient funds in the account.

34.  In August 2002, the deceased was indecisive as to whether to continue the operation of Quin after the expiry of the then existing tenancy at Tung Ming Building (December 2002). At that time, P was of the view that it was against commercial sense and it was unwise to incur further expenses to relocate Quin and to continue the business.

35.  P’s evidence of the events which led to the conclusion of $441,000 are as following:

a) Since there appeared to be a real prospect that the deceased would cease the business, P raised the issue of her employee entitlements, including long service payment, untaken annual leave and over time payment. She raised the subject with the deceased for a few times and eventually the deceased told her to do the calculations.

b) The deceased asked how P was to do the calculations. P informed the deceased that it would be difficult to do the exact calculation, but the calculations would be based on individual items such as long service payment, overtime, annual leave.  She told the deceased that she had worked for Quin since 1989 and for about 14 years.  P asked the deceased whether the pocket money of $10,000 per month should be taken into account as the base figure. 

c) P and the deceased discussed the items a few times. P raised the subject of over time payment and annual leave.  According to P, these exchanges were conducted in a friendly manner and the deceased told P to adopt $27,000 as the base figure, and there was “no need to calculate so much”. P understood the deceased to mean that he did not want to be bothered by minor details.  In return, P did not push for the over time payment.

d) Eventually, based on $27,000 x 2/3 x 14 = $252,000 (long service payment), $27,000/2 x 14 = $189,000 (Payment in lieu of untaken annual leave), P arrived at the figure $441,000.  The deceased accepted this figure.

36.  As by the year 2002 the deceased was already over 90 years of age, understandably, the deceased did not visit the office as often as he used to.  P had to make frequent visits to the deceased’s Shek O home at the end of each month to get the deceased to sign cheques. Most of the visits would take place at the Shek O Club instead of the deceased’s home.

37.  It is P’s evidence that it was on 6^th September 2002 that P typed the Cheque. After a few days, she handed it to the deceased at Shek O Club for his signature.  Which the deceased signed.

38.  P further states that the deceased instructed her to make an appointment with Ms. Nannie Shek (the deceased’s personal banker) on the 17^th September 2002 at Nannie Shek’s office to arrange for the transfer of money for the purpose of settling the Cheque. Unfortunately, on the 17^th September 2002 the deceased had a stroke and was admitted to Pamela Youde Nethersole Eastern Hospital.

The Issues

39.  Mr. Mak’s submissions as to the consideration element consists, in essence, four main points:

a). P failed to prove her case;

b). If the court finds there is an agreement, whether the deceased contracted personally or contracted on behalf of Quin? (“Agency Point”);

c). What was the true consideration of the Agreement? More importantly, was there valuable consideration? (“Consideration Point”); and

d). Whether this contract is enforceable in law (“Enforceability Point”)

Had P failed to prove case?

40.  Mr. Mak submits that, while stopping short from alleging fraud:

a). P is an unreliable witness.

b). The background of how and when the Cheque was drawn is suspicious.

c). P failed to prove the agreement alleged was entered into.

41.  It is clear that P’s case is that the consideration in support of the Agreement comes from:

a). The benefit obtained by the deceased in having his own company’s liability, potential or otherwise to pay the Compensation to P be discharged;

b). P’s promise not to seek from Quin the Compensation payable by Quin to her; and/or

c). P’s detriment in not claiming her overtime payment from Quin.

42.  Although there is a presumption of consideration and thus D bears the burden of disproving as a matter of law and fact that there was no consideration, Mr. Mak submits that if the Court does not accept that P has proved on a preponderance of probabilities that such circumstances took place, such presumption is in effect rebutted. I accept this submission to the extent that the burden of proof rests with D to disprove there was no consideration as a matter of law and fact. Thus, if D is successful in persuading the court that there was in fact no agreement or that the incidents as alleged by P leading to the signing of the Cheque were so suspicious or inconsistent that no reasonable court should accept, then the D should succeed on the element of consideration.

43.  I accept as Mr. Mak submits, even if the cheque is genuine, if consideration for the agreement is not proved there can be a myriad of possibilities leading to P’s possession of the Cheque. It could have been a loan, a gift, or a sum for another purpose.

P could not have got the deceased to sign the cheque?

44.  D challenges P’s evidence as to the signing of cheque at the Shek O Club.  D’s case is that as the deceased required assistance for walking the deceased was accompanied by May throughout their visit to Shek O Club. The Cheque could not have been signed without May’s knowledge. May’s evidence is she did not see the deceased sign any cheque on the alleged date at Shek O club. 

45.  P’s case was when P visited the deceased at Shek O, the deceased had often discussed work with P in May’s absence.  This is in line with May’s own evidence that she does not get involved in the deceased’s business.  P states that on that occasion, P waited for a time when May was not next to the deceased and asked the deceased to sign the Cheque.  May in examination fairly admits that in the Shek O club she did leave the deceased tosocialise with other club members.

46.  Since it is not D’s case that the signature appearing on the Cheque was not the deceased’s, on this issue I find that it is quite probable that the deceased had signed the cheque in the absence of May.

47.  I also take into account the fact that P was authorised to sign for Quin. If this had been a scheme of P, she could have easily signed a cheque herself rather than go through the trouble of fabricating the deceased’s signature.

The missing cheque stubs

48.  The chequebook in issue is missing. Mr. Mak submits that the entries in this chequebook, or more importantly, the order of the entries in the cheque stub would be of evidential value or probative of either the P’s avowed position or D’s suspicions.

49.  P’s evidence is that she does not know why that chequebook was missing. In fact, her evidence is that when D’s solicitors went to the office to take away various documents, she did not know whether D’s solicitors took away that chequebook. Later, when she was investigated by the police (whom subsequently closed their investigation without charges upon P), she asked D’s lawyers whether they had the chequebook. The evidence of Ms. Lau, the head clerk to the Probate section of Messrs. Ching & Kwan, solicitors, was that they did in fact check the documents in their possession, and also asked the accountants of D whether they had it. Their communication was only in form of telephone conversations and no written correspondence existed. D’s solicitors did not draw up a list of documents and items that were taken away by them from the office.

50.  Mr. Mak challenges P’s credibility based on P’s inability to produce the relevant missing cheque stubs. P alleged that the Cheque was typed out by her and signed by the deceased a few days after 6^th September 2002. However, on the evidence the rest of the cheques in the chequebook were mostly presented in March and April 2002.

51.  Mr. Mak draws the Court’s attention to the background of missing cheque stub: 

a). P is an accounting clerk by profession;

b). P does not have such habit of picking random cheques from a chequebook is evident from the account statements; and

c). the tidy, careful meticulous nature of P.

52.  P’s explanation is that she did randomly take out a cheque in the chequebook and proceeded to prepare it for the deceased’s signature.

53.  The Cheque number is 392818. D compiled a table of records of the Deceased’s AE Account. The records set out each cheque in ascending cheque numbers and Mr. Mak’s case is that if P is telling the truth that she just takes cheques randomly, the cheque dates should be all over the place. Mr. Mak proceeded to go through some of the cheque dates and prima facie appears that cheques were presented in sequence.

54.  It is unfortunate that for the relevant chequebook only 13 out of 50 cheque’s dates were made available. The presenting dates of all the cheques were provided.  From the cheque dates provided it is apparent that in the chequebook, P must have taken out 392818 (the Cheque) and 392819 in September 2002 while all the other cheques were taken out in March or April 2002. Hence there were two cheques left in the middle of the chequebook after March and April 2002. To this extent, it supports Mr. Mak’s submissions.

55.  Having said this, when on closer examination of the record of the chequebooks, of the 13 cheques that were listed with cheque dates, there were at least 5 that were not issued in sequence. Cheque 392840 was dated 27^th February 2002, 392843 dated 4^th February 2002 and 392849 was dated 2^nd February 2002.  Cheque 392813 was dated 27^th March 2002 whereas 392820 was dated 26^th March 2002.

56.  The lack of cheque issue dates for the majority of the cheques in the chequebook provides an incomplete picture.  From the limited cheques with issue dates that are before me, I am of the view that it is not improbable that P may have pulled the cheques randomly.  I also take into account the fact that P was an accountant clerk by profession, but not a professional accountant. I am unable to draw any adverse inferences in relation to the out-of-sequence cheque number of the Cheque.

57.  I accept P’s evidence that the reason why she did not present the Cheque earlier as she knew that the account did not have sufficient funds, and that was the purpose of P arranging for the deceased to go to their personal banker, Ms. Shek on 17^th September 2002.

58.  Since documents were taken from the office by D’s solicitors without a list being compiled, the documents have been further forwarded to the accountants by D’s solicitors.  I cannot rule out the fact that they may have gone missing in this process.  I am not prepared to draw any adverse inferences against P in relation to the missing chequebook. The evidence before me is insufficient to make such findings.

Having a stroke a day before meeting the banker

59.  It was unfortunate that the deceased had a stroke before the meeting with his banker. The deceased’s personal banker Ms. Nannie Shek has come forward and given evidence that a meeting with the deceased was arranged to take place at 17^th September 2002 for the transfer of money. Her evidence is not challenged. She has no interest to serve, and I accept Ms. Shek’s evidence and find that the 17^th September 2002 meeting was arranged before the deceased had a stroke.

60. Having carefully considered the evidence before me, there is insufficient evidence before me to prove that the circumstances surrounding the signing of the cheque was other than that as stated by P.  I have carefully observed P’s demeanor and find P to be a credible witness and I accept her account of the background and circumstances surrounding the signing of the Cheque. Accordingly, I find on the balance of probabilities that there was valuable consideration for the Cheque.

Did the deceased contracted on behalf of Quin? (Agency Point)

61.  Mr. Mak argues that if the deceased was contracting with P on behalf of Quin, then P should be suing Quin rather than the deceased. Mr. Mak’s submission is that based on the evidence the deceased did not intended to be personally liable on the Agreement.

62.  Mr. Ho submits that D is not entitled, as a matter of law and procedure to argue this point because it was not pleaded in the Re-amended Defence and D did not conduct their case along this line of defence during the examination and cross-examination of the witnesses. He relies on the authority of Mak Shiu Tong v Yue Kwok Ying & Anor (2004) 7 HKCFAR 228.

63.  I do not accept Mr. Ho’s submission as the material facts have been pleaded to give rise to such an argument.

64.  Mr. Ho submits that unless there is express indication of agency, when a person entered into a contract with another party, the person makes the contract personally rather than acting as an agent.

65.  It was not the first time the deceased had issued personal cheque to settle Quin’s expenses.  Quin was a small size Travel Company.  The deceased was in fact Quin.  The evidence is that the deceased had from time to time issued his personal cheques for settling the expenses, debts and liabilities incurred by Quin.  For instance, in 1994, the deceased issued his personal cheque to settle the long service payment of Quin’s former senior staff Ms. Teresa Luk.  I find that the deceased when signing the Cheque did not make any distinction between himself and Quin.  He must have intended to be personally liable for the Cheque.

On Consideration for the agreement (Consideration Point)

66.  Mr. Ho submits that P’s promise not to claim from Quin the compensation amounts to the consideration involved, and/or alternatively the benefit obtained by the deceased in having his own company’s liability, potential or otherwise, discharged, and/or P not claiming her overtime payment. Mr. Ho relies on the authority of Kao, Lee & Yip v Euro Treasure Ltd [1985] 1 HKC 46 (CA) where it was held by Roberts CJ that where a promisee suffers detriment at the promisor’s request even though no benefit conferred on the promisor, there is consideration.

67.  Further, the agreement between P and the deceased was a settlement or compromise agreement in respect of the compensation payable by Quin to P. Mr. Ho relies on Fosket QC’s The Law and Practice of Compromise (6^th Ed) paragraphs 2-16, and submits that it is well settled law that a party thereto cannot subsequently escape its consequence by alleging that the subject claim had no legal or factual foundation.

68.  Mr. Mak submits that the Court’s duty is to find out what is the true consideration in an agreement. He highlights the dicta of Denning J (as he then was) in Bob Guiness LD v Samlomonsen [1948] 2 KB 42 at 46:

“Forbearance is, in legal theory, described as consideration so as to conform to the rule that every promise needs consideration to support it, but as Parker J. pointed out in Wigan v English and Scottish Law Life Assurance Association, it often arises ex post facto. In such a case it is not a real consideration.”

69.  Mr. Mak further submits that the agreement is not a compromise because there was not any dispute or difference of view existing at the time of the Agreement. He submits that P did not make a claim and until Quin ceased practice, P did not even have the premise to start a claim, so any claim of employee entitlements was pre-mature. In P’s view, her employment would be terminated in December 2002 and there was no question of her not being paid long service payment etc. then, but in fact the liability of Quin had yet been incurred. Also, the deceased had not requested P to forgo or to waive or to forbear. It is not pleaded or canvassed in evidence that the deceased, in order to secure the P not to pursue Quin in the future, agreed to pay the sum and gave the Cheque to the P – hence forbearance or promise to forebear cannot be implied. Mr. Mak submits the consideration to be the discharge of a future contingent liability.

a). On the evidence express promised forbearance was not made so as to induce and persuade the deceased to agree, and if it was ever made it was an uncalled for gratuitous promise volunteered only after the deceased agreed and signed the Cheque. There was no actual express promised forbearance. In law, forbearance or promise to forbear can amount to consideration only for a promise that is induced by it – Wigan v English & Scottish [1909] 1 Ch 291 at 298.

b). It follows that P while obviously desired to get advance payment of her entitlements under the Employment Ordinance from the deceased, she expected not to ask Quin for payment after she received payment under the Agreement. However such desire and expectation cannot amount to consideration and Mr. Mak submits that it is not the Court’s task to turn P’s desire and expectations (avowed or not) into consideration.

c). Mr. Mak submits that even if there were a promised forbearance to sue, on the facts of the case such forbearance would not be forbearance. He submits that there was no existing claim and therefore there would not be forbearance.

Findings

70.  On the evidence I find that P and the deceased did have a dispute before arriving at their agreement. A dispute, or any confrontation, may not stand out in the evidence, or may not even be apparent to the P herself because the deceased and P’s (and other employees) relationship had certainly been extremely good. The deceased also had the trust of P, as he had previously been very generous to P and other employees. What however really matters is that the deceased and P had differences on how to compute the Compensation before arriving at the sum of $441,000, and those differences were only resolved after a number of discussions. The deceased may have been far more passive than P but in my view it is merely a matter of degree and that makes no difference to the legal implication.  P’s first proposal was $17,000 salary plus overtime and untaken annual leave. The deceased’s said “no need to calculate so much” and his counter-proposal was the $17,000 salary plus $10,000 pocket money. On the evidence, at the material time, the deceased did not recite his thoughts to P on what he thought P should be entitled to, and whether he always had in mind the final calculation method. In any event, it is clear that P waived her right for overtime to be calculated in the compensation in exchange for the pocket money sums to be calculated into the base figure.

71.  Since the evidence shows that the deceased and P only through discussion of calculation methods over a number of occasions did they agree to the final figure of $441,000. Upon arriving at this figure, the deceased did not agree to gratuitously give the monies to P. On the evidence, I find that the common understanding between P and the deceased was clearly that P would not pursue her Employment Ordinance entitlements up to December 2002 against Quin in exchange for the lump sum of $441,000. The employment benefits were very much in existence by the date of the agreement. P had suffered detriment by not pursuing the overtime payment and in return for early settlement. The deceased’s consideration is clearly that of settling Quin’s liability as employer to P, which was not contingent, as by then both P and the deceased knew P had worked for D for about 14 years and Quin was liable to pay overtime and upaid annual leave to P.

72.  I find that the Agreement was a valid compromise or settlement agreement.

On Enforceability

73.  Mr. Mak submits that the agreement is contrary to law and public policy and is not enforceable. Mr. Mak submits that the Agreement is unenforceable as it is contrary to section 70 of the Employment Ordinance (Cap. 57) (“EO”), and public policy. Which provides that :

“any term of a contract of employment which purports to extinguish or reduce any right, benefit or protection conferred upon the employee by this Ordinance shall be void”.

74.  Mr. Ho’s submission is that as the Agreement is a settlement or compromise agreement in which the subject matter is the promised forbearance to sue, it is not open for D to challenge its legal foundation. At the material time, the discussions about the compensation were made in contemplation of severance and other payments Quin would be liable to P when Quin ceases operation. In the Fosket Q.C’s The Law and Practice of Compromise (at pg 14):

“The assertions, denials and counter-assertions compromising the dispute need have no foundation in fact or in law provided they are made in good faith. If the party to a compromise attempts to escape its consequences by alleging that the claim had no legal or factual foundation, the court will decline to investigate such an allegation. In many cases, for example, a claimant will allege the fact of the defendant’s negligence, which the defendant denies. The law does not permit a defendant who has compromised a claimant’s claim for damages based on the alleged negligence to pursue the suggestion that he was not in fact negligence for the purpose of avoiding the compromise.”

75.  In arguing that the Agreement is contrary to law and public policy, Mr. Mak puts forward the following hypothetical scenario: assuming the sum of $441,000 was paid to P. Quin does not cease operation and continued to be run by D, and when P retires at the age of 55. P requests Quin to pay her statutory entitlements by reference to her actual date of termination of employment (subject to set-off of the sum she received). Then Quin refuses. Mr. Mak then poses the rhetorical question: Can P nevertheless go to the Labour Tribunal for relief against D? Mr. Mak submits ‘yes’ because: -

a. If the Agreement was made between Quin and P, it varied the contract of employment between Quin and P in that P agreed to take $441,000 instead of the statutory entitlements under EO. Hence, the Agreement would be a contract of employment under S.70 of EO, Insofar as it purports to extinguish or reduce the statutory entitlements, the Agreement is void under S.70 of EO.

b. Alternatively, as a matter of public policy, P’s future right to employee benefits under the EO is a matter of public concern, which the employee cannot barter away. The Agreement is therefore unenforceable.

76.  At the time when the Agreement was entered into, it was clearly within the contemplation of the parties that the business of Quin and thus P’s employment may terminate with the tenancy at Tung Ming Building by the end of December 2002. The Agreement must be construed with this factual matrix in mind. As at December 2002, the sum of $441,000 appears to exceed P’s statutory entitlements under EO or at least, there is no evidence that the agreement was lower than any statutory minimum entitlement. There is no evidence of any extinguishment or reduction of statutory entitlement under the Agreement if the contract come to an end by December 2002. Likewise, it would not be against public policy for there is no “bartering away” of employee benefits. The reality is the employment contract did come to an end latest by April 2003. Having considered the background and negotiations leading to the agreement, I am satisfied that P and the deceased did not intend the agreement to extinguish all future rights of the P’s statutory entitlement had the deceased decided to continued the operation of Quin after December 2002. It was still open to P to come back on the issue of employment entitlement if Quin did not close down and continued to operate after December 2002 or there about.

77.  Further, S.70, is to restrict employers and employees from contracting out of any legislative right in order to protect employees’ entitlement to minimum statutory employment benefit. See Halsbury’s Law of Hong Kong Vol. 10 (2) (2005) at paragraph [145.035]. I find the present agreement to have exceeded the statutory minimum for employment benefit and S.70 does not apply.

78.  I therefore find that the Agreement was made with consideration, valid, and legally enforceable.

79.  D pleaded mistake and misrepresentation. Mr. Mak fairly did not pursue this line of defence. I find that there is insufficient evidence to find that the Agreement was induced by misrepresentation and neither party was under any mistake. 

80.  I also find that the Cheque was issued with valuable consideration and the Plaintiff succeeds on her claim for the Cheque.

Judgment and Order

81.  Accordingly, I award the sum of $441,000 against D with interest from the date of the presentment of the Cheque.

Costs

82.  I make costs order nisi in favour of P against D to be taxed if not agreed with certificate for counsel. To be made absolute after 14 day from the date of this judgment.

83.  I wish to thank counsel for their able assistance.