CHUBB LIFE INSURANCE COMPANY LTD (formerly known as ACE LIFE INSURANCE CO LTD) v. SHING PUI KEUNG

DCCJ 932/2019

[2021] HKDC 1391

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 932 OF 2019

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JUDGMENT

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A. INTRODUCTION

1.  The Plaintiff claims for a sum of HK$2,080,070.83 (the “Debt”) with interest based on the express terms of written agreements it had entered into with the Defendant.  The Plaintiff avers that the Defendant was obliged to repay a percentage of the remunerations advanced to him by the Plaintiff if the Agent’s Agreement executed on 10 September 2012 (the “Agent’s Agreement”) was terminated within 4 years therefrom.  The Plaintiff says that the Defendant tendered a resignation on 11 May 2016, i.e. sooner than 4 years.  The resignation was duly accepted and demands for repayment was made.  The defendant has failed or refused to pay the Debt or any part thereof as at date of issue of the Writ of Summons.

2.  The Defendant says that the Plaintiff was in breach of implied terms of the Agent’s Agreement and therefore the express terms concerning repayment became unenforceable.  He also relies on oral representations made before and after execution of the Agent’s Agreement to oppose the Plaintiff’s claim.  For the counterclaim he says there was an oral agreement for him to be paid a special bonus amounting to $480,000 (“the Special Bonus”) but was not paid as promised. He also claims for loss and damages arising from the Plaintiff’s said breach of the implied terms.

The Plaintiff’s Case

3.  The Plaintiff is an insurance company incorporated in Bermuda carrying on business of providing insurance policies and related products in Hong Kong.  The Defendant is an insurance agent having worked in the insurance industry since 2000.

4.  By an offer letter signed by the Defendant and Ms Phyllis Wong, Assistant Vice President and Agency Manager of the Plaintiff (“Phyllis”) on 30 July 2012 (the “Offer Letter”), the Defendant was offered the position of sales manager with the Plaintiff (the “Offer”).  The Offer was made subject to proof of the Defendant’s credential and acceptance of the terms by the Defendant and was good for three months therefrom.  His expected income as set out in the Offer Letter included Personal Performance Bonus (PPB), Special Allowance (SA) and Manpower Growth Bonus (MGB).  It was further stated therein that “the terms and conditions regarding the validation of payment methods will be provided in the Financing Scheme upon confirmation of this appointment”. 

5.  On 9 October 2012 (the “Effective Date”), the Plaintiff entered into the following agreements with the Defendant (to be collectively referred to as the “Agreements”).

(a)  Agent’s Agreement[1];

(b)  Manager’s Agreement[2];

(c)  Remuneration Agreement[3]; and

(d)  Letter of Personal Performance Bonus[4].

6.  The express terms of the Agreements are not disputed.  The terms relevant to the main issues shall be set out below for discussion.

7.  It is the Plaintiff’s case that the Agent’s Agreement was terminated on 19 May 2016 upon the Plaintiff’s acceptance of the Defendant’s resignation and thus it was terminated after 3 years but within 4 years from the Effective Date.  Pursuant to a repayment clause in the Remuneration Contract (the “Repayment Clause”), the Defendant is obliged to repay a total of HK$ 2,080,070.83 to the Plaintiff. Details of which are set out below.

Remuneration Paid	Repayment Percentage	Amount Claimed (in HK$)
PPB 750,000.00	100%	750,000.00
SA 3,030,160.44	25%	572,530.72
MGB 2,290,122.89	25%	757,540.11
		__________
	Total	2,080,070.83

The Defendant’s Case

8.  As mentioned above, the Defendant takes no issue on his signing of the Agreements.  His case is that the Plaintiff was in breach of the implied terms of the Agreements by putting in new measures relating to the age requirement for new recruits (“New Recruit Policy”) and a new standard for assessment of their performance (the “New Assessment Policy”) (the “New Measures” collectively).  The Defendant further points out that the New Measures were introduced in bad faith with a view to forcing the Defendant to resign so that the Repayment Clause would be triggered for the Plaintiff to recover the paid bonuses from the Defendant.  For these reasons, the Plaintiff could not enforce the terms of repayment therein against him.

9.  It is the Defendant’s alternative case that Phyllis had made three representations to him before and after the execution of the Agreements.  The third one gave rise to a collateral contract and estoppel and the Plaintiff is therefore estopped from enforcing the Repayment Clause.

10.  In his counterclaim, the Defendant contends further that there was a promise from the Plaintiff made via Mr Jeffrey Woo that he would be paid a special bonus (the “Special Bonus”) if he could achieve the Million Dollars Round Table (the “MDRT”).  He obtained the MDRT award that year and was therefore entitled to the Special Bonus.  The New Measures also caused loss and damage to his remuneration. 

B. ISSUES

11.  Parties agree that these are the issues to be determined:-

(a)  Whether the Plaintiff is entitled to recover the Debt from the Defendant

(i)   Whether there exist any implied terms in the Agreements;

(ii)  Whether there was breach of the implied terms by conduct of the Plaintiff;

(iii) Whether the Repayment Clause had become unenforceable due to the breach; and/or  

(iv) Alternatively, whether the Defendant executed the Agreements relying upon the representations made the Plaintiff through its staff.

(b)  Whether the breach caused loss and damage to the remuneration of the Defendant.

(c)  Whether the Defendant is entitled to the extra bonus promised to him by Jeffrey Woo for and on behalf of the Plaintiff within or beyond his prescribed authority. 

C. EVIDENCE

12.  Relevant evidence shall be set out under different issues for easy reference.

Whether Implied Terms exist

13.  The implied terms as suggested by the Defendant include those set out below:-

(a)  The Plaintiff shall not conduct its performance evaluations in respect of the Defendant and/or exercise its right to amend the Agency Operation Manual in an irrational, perverse or arbitrary manner that was not bona fide (the “1^st Implied Term”);

(b)  The Plaintiff shall not administer its policy in relation to measure of the persistency rate and/or recruitment of new agent in an irrational, perverse or arbitrary manner that was not bona fide (the “2^nd Implied Term”); and

(c)  The Plaintiff is not entitled to recover the bonuses paid to the Defendant under the Repayment Clause if the Agent’s Agreement was terminated in consequence of the Plaintiff’s repudiatory breach (the “3^rd Implied Term”) (collectively, the “Implied Terms”).

Proper Construction

14.  I find Baroness Hale’s analysis on the different ways where terms could be implied in Geys v Societe Generale [2013] 1 AC 523 as cited in paragraph 44 of Tadjudin Sunny CACV12/2015 (20 May 2016) helpful.  There are terms implied because, on the proper construction of the contract in question, the parties must have intended to include them.  There are also terms which are implied into a class of contractual relationship.  They are so implied as a necessary incident of the relationship concerned unless the parties have expressly excluded it.  

15.  Relying on Kensland Realty Ltd v Whale View Investment Ltd & Another (2001) 4HKCFAR 381 at 401 Ms Ho submitted that in determining whether a term was implied into the contract on proper construction of the same, the Court will take the following cautionary approach:-

(a)  For a term to be implied into a contract: (i) it must be reasonable and equitable; (ii) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (iii) it must be so obvious that “it goes without saying”; (iv) it must be capable of clear expression; and (v) it must not contradict any express term of the contract[5];

(b)  Condition a(ii) above does not connote absolute necessity, but a term can only be implied if, without the term, the contract would lack commercial or practical coherence;

(c)  A term will not be implied into a detailed commercial contract merely because it appears fair or merely because one considers that the parties would have agreed to it if it had been suggested to them.

Necessity

16.  Mr Tsui, on behalf of the Defendant, asked the Court to read the Implied Terms into the Agreements as they are necessary to prevent or prohibit the Plaintiff from being abusive and acting on bad faith. Mr Tsui relies on Socimer Bank Ltd v Standard Bank Ltd [2008] Bus LR 1304, §§60-66, wherein the Court of Appeal reviewed some authorities on the contractual power to make decision and came to the conclusion that:-

“It is plain from these authorities that a decision-maker’s discretion will be limited, as a matter of necessary implication, by concepts of honesty, good faith, and genuineness, and the need for the absence of arbitrariness, capriciousness, perversity and irrationality. The concern is that the discretion should not be abused. Reasonableness and unreasonableness are also concepts deployed in this context, but only in a sense analogous to Wednesbury unreasonableness, not in the sense in which that expression is used when speaking of the duty to take reasonable care, or when otherwise deploying entirely objective criteria: as for instance when there might be an implication of a term requiring the fixing of a reasonable price, or a reasonable time.”

17.  Mr Tsui further relied on a passage in Chitty on Contract that the “willingness of the court to imply the term may also be linked to the substantive content of the term.  The more demanding the term, the less willing the court may be to imply the term.  Conversely, if the term requires only that the parties act honestly and with integrity, the court may be more willing to imply the term and, indeed, it may not be possible for the parties to exclude an obligation to act honestly.” [6]

18.  It was Mr Tsui’s submissions that by the 1^st and 2^nd Implied Terms the Defendant only seeks that “the discretion should not be abused by the Plaintiff”.  It is an appeal to the basic concept of honesty of the parties to a contract.  The 3^rd Implied Term is the natural result of the first two as it is trite that a party could not rely on his own wrong. 

19.  Ms Ho submitted that it was not necessary to imply the Implied Terms in the Agreements. She further referred the Court to read Lo Yuk Sui v Fubon Bank (Hong Kong) [2019] HKCA 261 at §32, citing the Privy Council in Nazir Ali v Petroleum Company of Trinidad and Tobago [2017] UKPC 2 at §7, “Necessity is not established by showing that the contract would be improved by the [implied term]… if there is an express term in the contract which is inconsistent with the proposed implied term, the latter cannot, by definition, meet these tests, since the parties have demonstrated that it is not their agreement”.

Inconsistency

20.  Ms Ho further argued that as a matter of law and contractual interpretation, the Agent’s Agreement did not contain any of the Implied Terms. Ms Ho said the Implied Terms are inconsistent with the express terms of the Agreements.  The 1^st and 2^nd Implied Terms are inconsistent with the wide discretions conferred on the Plaintiff in varying the Defendant’s entitlement to the Remuneration:-

(a)  Clause 1 of the Remuneration Agreement provided that the Defendant’s position will be reviewed periodically and determined by reference to the maintenance and promotion requirements as set out in the Agency Operation Manual or such manuals and memorandum of the Plaintiff in force and as amended from time to time.  Clause 3.4 of the Remuneration Agreement provided that on top of Clauses 3.1 to 3.3 therein, the Defendant’s entitlement to the Remuneration is conditional upon, inter alia, the Defendant attaining the Personal Persistency Requirements as defined in the Manual and the team attaining the Team Persistency Requirements as defined in the Manual[7];

(b)    In the Agency Operation Manual from 2012 to 2015[8], it was stated under “General Terms and Conditions” that “[The Plaintiff] shall have the right, at any time, to amend/delete part or whole of the contents of the Agency Operation Manual.  And the Company will normally serve a notice of changes, if any”.  In the 2016 Agency Operation Manuals, the Plaintiff made it clear that “[The Plaintiff] shall have the right, at any time, to amend/delete part or whole of the contents of this Manual, published and circulated to [the Defendant] from time to time at its absolute discretion”.

(c)     In the Agency Recruitment Manual from 2012 to 2016[9], it was expressly provided that “[The Plaintiff] shall have the right at any time to amend/delete part or whole of the contents of this Manual by giving notice of any changes”. 

21.  Ms Ho also submitted that the 3^rd Implied Term is inconsistent with the unqualified repayment obligation of the Defendant pursuant to the Repayment Clause:-

(a)  The Repayment Clause is clear that the duty of repayment by the Defendant is unqualified, it is applicable (a) when the Agent’s Agreement was terminated for “any reason” during the four-year period after the Effective Date, and (b) “must be repaid” to the Plaintiff immediately upon termination in accordance with the repayment table set out in Clause 4.1;

(b)  The ordinary and natural meaning of the Repayment Clause is clear - the parties intend the Repayment Clause to be triggered when the Agent’s Agreement is terminated within the prescribed period. The phrase “for any reason” means what it says and there is no ambiguity, and the Court will be very slow to reject the natural meaning of the provisions even though the consequences may appear hard for one side: Arnold v. Britton [2015] AC 1619 at §§14-23 (per Lord Neuberger); Sinoearn International Ltd v. Hyundai-CCECC Joint Venture (2013) 16 HKCFAR 632 at §§74-79 (per Ribeiro PJ).

22.  I have read the submissions and the authorities cited.  In the present case, the Defendant is not saying that the Plaintiff could not amend the manuals and implement new policies.  What is contended by the Defendant through Mr Tsui is that the Plaintiff could not exercise its rights as provided in the Agreements in a manner which amounted to “irrational, perverse or arbitrary or that was not bona fide”.  Putting aside whether the Defendant could prove his case on the alleged facts at the end of day, I do not see that the Plaintiff was running their case along the line that they had the intention to conduct their business in such a manner or that the Defendant had agreed to their so doing or be at liberty of so doing while parties were performing under the Agreements.

23.  Truly, in the Agreements, there are provisions appearing at appropriate junctures in different documents to say that the Plaintiff had the right to amend or delete the manuals at the Plaintiff’s “absolute discretion”.  In addition to what has been pointed out by Ms Ho, I also find the provision below relevant:-

(a)     Clause 3 of the Manager’s Agreement:-

“The Manger’s remuneration will be governed by the terms and conditions as set out in the Agent’s Reference Manual or such other manuals stipulated by the company as currently in force and as revised by the Company from time to time.[10] ” [Emphasis added by the court]

24.  From these provisions, apparently the Plaintiff has the rights to amend the manuals from time to time.  It was also clearly stated that the commissions were calculated or defined in the manuals which the Plaintiff could amend or delete from time to time.  They could not, however, in my view, have included an agreement that the Plaintiff could exercising their rights or discretion under those provisions irrationally and/or perversely. Abu Dhabi National Tanker Co v Product Star Shipping Ltd (The “Product Star”) (No 2) [1993] 1 Lloyd’s Rep 397 was cited in paragraph 52 of the Court of Appeal judgment of Tadjudin Sunny,

“….. Leggatt LJ (with whom Balcombe and Mann L JJ agreed) explained the basis of such implied term as follows:-

‘In my judgment, the authorities show that not only must the discretion be exercised honestly and in good faith, but, having regard to the provisions of the contract by which it must be conferred, it must not be exercised arbitrarily, capriciously, or unreasonably.”

25.  Ms Ho suggested that the phrase “for any reason” in the Repayment Clause is indeed wide enough to catch many scenarios under which the Defendant would have to make repayment pursuant to the Repayment Clause:-

Clause 4.1:-

“In the event of the Agent’s Agreement is terminated for any reason during the four year period after the Effective Date, all Remuneration or a percentage of the Remuneration paid to [the Defendant] (as the case may be) shall be treated as a debt owed by [the Defendant] to [the Plaintiff] and must be repaid to [the Plaintiff] immediately upon termination in accordance with the Repayment Table below

Repayment Table

Termination date	Remuneration Scheme
	PPB	SA	MGB
Between 3 and 4 years
Of the Effective Date	100%	25%	25%”

26.  The scope and purpose of the Repayment Clause is clear on the face of it.  When money under the three categories of the Remuneration Scheme was paid to the Defendant, such money would have to be repaid in accordance with the table.  While in two of them, the Defendant would have to repay at a sliding scale depending on the years he stayed with the Plaintiff, the one under PBB was at a flat rate of 100%.  Although I accept that the phrase “is terminated for any reason” is wide enough to catch many situations, I do not agree with Ms Ho that it remains operative no matter what; for instance, even if the termination was caused by a repudiatory breach on the part of the Plaintiff.    

27.  For reasons set out in the above, I find that the Implied Terms suggested by the Defendant could be incorporated into the Agreements on a proper construction of the same. 

Relationship

28.  On whether the relationship between parties contributed to the inclusion of an implied term of good faith, Mr Tsui referred the Court to Yam Seng Pte Ltd v International Trade Corp Ltd [2013] 1 CLC 662, where it was held that:-

“A paradigm example of a general norm which underlies almost all contractual relationships is an expectation of honesty. That expectation is essential to commerce, which depends critically on trust. Yet it is seldom, if ever, made the subject of an express contractual obligation. Indeed if a party in negotiating the terms of a contract were to seek to include a provision which expressly required the other party to act honestly, the very fact of doing so might well damage the parties’ relationship by the lack of trust which this would signify.” [§135]

“In addition to honesty, there are other standards of commercial dealing which are so generally accepted that the contracting parties would reasonably be understood to take them as read without explicitly stating them in their contractual document. A key aspect of good faith, as I see it, is the observance of such standards. Put the other way round, not all bad faith conduct would necessarily be described as dishonest. Other epithets which might be used to describe such conduct include ‘improper’, ‘commercially unacceptable’ or ‘unconscionable’.” [§138]

29.  On behalf of the Plaintiff, Ms Ho submitted that the Implied Terms would not arise from the relationship between the Plaintiff and the Defendant which is one of principal and agent[11]. Clause 18 of the Agent’s Agreement[12] expressly provided that there was no partnership or employer/employee relationship between the Plaintiff and the Defendant.  She said it is trite that there is no overriding duty under common law that in carrying out the terms of a contract, parties shall act bona fide in good faith towards, or act in the best interests of, the other party. She referred the Court to read GDH Ltd v Creditor Co Ltd [2008] 5 HKLRD 895 at §57 (per DHCJ Anthony To, as he then was).

30.  Further outside of “relational contracts” involving a long-term relationship and substantial commitments between the parties (eg joint venture agreement, franchise agreement and long-term distribution agreement), an implied term of good faith is unlikely to arise by way of necessary implication in a contract between commercial parties negotiating in arms-length, each entitled to act in his own commercial interests.  She relied on Greenclose Ltd v National Westminster Bank Plc [2014] EWHC 1156 (Ch) at §§150-151 per Andrews J (as she then was), qualifying the decision of Yam Seng Pte Ltd v International Trade Corp Ltd [2013] 1 CLC 662 at §§142-143 per Leggatt J (as he then was).

31.  She cited other authorities in support of her submissions that the Plaintiff as the principal does not generally owe duty of good faith to the Defendant as the agent.  Instead it is the principal who reposes trust and confidence in an agent.  She referred to Bowstead & Reynolds on Agency (22^nd Ed) at §7-001 at page 313.  In fact the passage does not stop there.  In the same paragraph at page 314, it goes on to say, after setting out authorities dealing with various situations, that “Notwithstanding the starting position outlined at the beginning of this paragraph, one also cannot altogether rule out a principal owing fiduciary duties to an agent on particular facts”.  It is also stated in the preceding paragraph that “Other terms implied in law can exist….. Normal contractual principles will also apply in the provision of remedies for a wrongful termination of the agent by the principal.  Other cases have had to consider when a term will be implied that the principal will not prevent the agent from earning commission”. 

32.  To conclude Ms Ho submitted that the Defendant cannot derive any assistance from Tadjundin Sunny.  The factual context of which was an employment relationship and is therefore different from the relationship in the present case.  It is well-recognised that there exists an implied obligation of mutual trust and confidence between an employer and employee, implied by law as an incident of the contract of employment.  She referred to the CFI Judgment at §§36-40 and CA Judgment at §§58-62.

33.  The Court noted that what relationship might give rise to a situation of duty of good faith has been discussed in Yam Seng, in which a distributors’ agreement between the parties was dealt with.  In Yam Seng, the court discussed different kinds of duty owed when required to act in good faith in different relationship, eg, duty to disclose information in a partnership and trusteeship which may require a high degree of communication, cooperation and predictable performance based on mutual trust and confidence and involved expectations of loyalty which are not legislated for in the express terms of the contract but are implicit in the parties understanding and necessary to give business efficacy to the arrangements.  Examples of such relational contracts might include some joint-venture agreements, franchise agreements and long term distribution agreements.

34.  What is to be expected from the relationship in the present case?  The Plaintiff as an insurance company who provided policies to be sold to interested clients.  Agents such as the Defendant promoted and sold those policies and to recruit new agents to do the same as he did.  In return, they received remunerations in terms of commissions and bonuses.  It was not an employment so the relationship could be terminated subject to terms agreed and not regulated by legislation.  What was expected of the Plaintiff was to measure the performance of the Defendant with a scheme he had accepted at the time he joined and when the Plaintiff exercised its rights to change the terms, it would not be in irrational, perverse and unreasonable.  This is the good faith behind.  To put in unreasonable amendments which prejudiced the remuneration of the Defendant in an arbitrary manner or with an ulterior motive is the opposite.

35.  The Court noted that it was not the Defendant’s case that the measurement of performance could not be adjusted or amended, it could not however be done irrationally and unreasonably, or for an ulterior purpose, that would amount to bad faith or contrary to good faith.  The Defendant’s case was that the implementation of the New Measures led to the downfall of his performance and on that basis the Plaintiff forced him to resign for the purpose of clawing back the remuneration made to him under the Repayment Clause.  Mr Tsui said that this was the basis of bad faith. 

36.  Having read Greenclose Ltd v National Westminster Bank Plc [2014] EWHC 1156 (Ch) at §§150-151 per Andrews J and considered the submissions made by Ms Ho in this regard as set out in paragraph 29 herein above, it is noted that the context of a case is vital as suggested by Andrew J (as he then was). It is also noted that the relationship in Yam Seng Pte Ltd is one of employer and employee, which is different from the one between the parties herein.  At paragraph 51 of the Court of Appeal judgment in Tradjudin Sunny, the court held that “Outside the employment context, the court has also shown a willingness to construe an apparently unqualified or unrestricted contractual power or discretion as being subject to some implied restrictions.”

37.  What is asked for by the Defendant here is not good faith in the sense that his interest is to be considered with priority when the Plaintiff is to exercise his rights as provided in the Agreements.  He asked that there should not be dishonesty or bad faith as he had defined above.  It is my finding that the Agreements contained the Implied Terms.

Effect of Entire Agreement Clause on the Implied Terms

38.  Ms Ho submitted that the Implied Term if exited at all would have been ousted by the entire agreement clause contained in Clause 21.3 of the Agent’s Agreement (the “Entire Agreement Clause”):-

“The Agent acknowledges that, in entering into this Agreement, he/she does not do so on the basis of and does not rely on, any representation, warranty or other provisions except as expressly provided in this Agreement, and all conditions, warranties and other terms Implied by statute or common law are by this Agreement excluded to the fullest extent permitted by law save that nothing in this Agreement shall be read or construed as excluding any liability or remedy as a result of fraud.”

39.  It was submitted by Ms Ho that an entire agreement clause that expressly excludes the implication of a term shall be given effect to by the Court: see Chitty on Contracts (supra) at §14-019.  Relying on the speech of Lord Neuberger in Marks & Spencer plc v BNP Paribas Securities Services [2016] AC 742 at §15 Ms Ho submitted that implied Terms (even if they exist) must belong to the first category of implied terms which came from proper construction or common sense of parties.  Such kind of implied terms can generally be excluded by parties through express provisions in the contract.

40.  Mr Tsui submitted that an entire agreement clause does not preclude the implication of a term necessary to make the contract work and to prevent commercial absurdity.  [Barden v Commodities Research Unit International (Holdings) Ltd [2013] EWHC 1633 (Ch), §§46-47].  It should be noted that the 1^st and 2^nd Implied Terms are negative in nature with the very purpose of preventing abuse.  To argue against implication of these terms would lead to the absurdity that the Plaintiff is entitled to do whatever it pleases even if it abuses its position.  I agree with Mr Tsui.

Whether the Plaintiff was in Breach of the Implied Terms

41.  It is the Court’s finding that the Implied Terms did exist, the next step is to see whether there was any breach on the part of the Plaintiff as claimed by the Defendant.  

42.  The Defendant said that the Plaintiff introduced the New Measures in an irrational, perverse and arbitrary manner, with an aim to deprive the Defendant of his entitlement for the group benefits and bonuses in the Agent’s Agreement by way of claw-back.  Such conduct and intention of the Plaintiff was in breach of the 1^st and 2^nd Implied Terms. As a result of this, the Plaintiff is not entitled to recoup the Debt by reason of the 3^rd Implied Term.

New Recruit Policy

43.  The Defendant complains that there was a draconian change in the recruitment policy under which he could no longer recruit new agents who were below the age of 25.  Since this is the Defence and Counterclaim[13], evidence on his side shall be set out before that of the Plaintiff’s which was in effect a reply.

Evidence of the Defendant

44.  The Defendant said that he had performed well after joining the Plaintiff in early 2012.  At the time he joined, it was ACE before the merging. He had achieved all set targets and was the top 5 sales of the Plaintiff.  However, after the merger with Chubb Life Insurance in 2014, the Plaintiff suddenly imposed the New Recruit Policy (no new intake below 25) and it was put into practice for agents to follow with immediate effect.

45.  He said the number of new agents recruited by an agent was one of the key indicators used by the Plaintiff to assess the performance of agents including himself.  Clause 4 of Section D of the 2012 Agency Operation Manual set out the minimum headcount that the Defendant had to retain for maintaining his position or promotion[14]. It would eventually affect his income as the MGB was measured by the number of new intakes he could make and old intakes he could keep[15].

46.  The Defendant further stated that it was very difficult to recruit persons who were aged over 25 as down-line agents because they usually had got stable jobs already.  It would thus be extremely difficult for the Defendant to meet the MGB targets set out in Clause 3.3[16] of the Remuneration Agreement[17] under the New Recruit Policy.  What made it more difficult was that the New Recruit Policy was introduced with immediate effect without any prior consultation, that gave the Defendant no time to respond or to build the necessary network to replace the existing one[18].  It is the case of the Defendant that his performance was seriously affected by the New Recruit Policy because about 40% of his down-line agents were under 25.  He had been holding several programmes between 2012 to 2014 to promote the insurance industry and to recruit fresh graduates from high schools.  He said that the programmes had been very successful.  This helped much in his recruitment and reaching the targets for getting the MGB every year.

47.  He said as a result of the New Recruit Policy he was unable to meet the minimum target set out in the Remuneration Agreement and had suffered loss of about HK$1.4 million within the period between October 2014 and September 2015[19].

48.  To show the irrationality of the Plaintiff in implementing the New Recruit Policy, the Defendant said that as far as he knew, there was no other insurance company which had implemented such a requirement[20]; and that the minimum age requirement imposed by the Hong Kong Federation of Insurer is 18.  He also said that he believed the New Recruit Policy was introduced in bad faith for purpose of clawing back from him the bonuses paid.

49.  The Defendant was cross-examined by Ms Ho. He agreed that he himself did not recruit anyone, below or above 25, since 2015.  He said that was due to the New Recruit Policy.  Ms Ho referred him to read 2015 ACE LIFE Agency Recruitment Manual effective January 1, 2015 (the “2015 Recruitment Manual”).  In page 8, it provides for the Age of Recruits in different categories. In paragraph 1.1, it says that “All Applicants with General Profile from age 18-21 are required to be interviewed by the Company.”[21]  Relying on the said clause, Ms Ho suggested to the Defendant that applicants under 21 were not rejected outright but were required to be interviewed by the Plaintiff.  The Defendant said that regardless of this clause, they were informed that as agent recruiters they could not recruit any new agents who were between 18 to 25 in practice. 

50.  He said the culture in the insurance industry was that leaders at a certain level managed their own office and their own team. Like bee-hives, there were leaders who run the origination.  In the team he joined, leaders such as Mr So and Jimmy Hon clearly told agents that they were not allowed to recruit people younger than 25.  He did not know what happened to those in other teams.  He confirmed there was nothing in writing about the New Recruit Policy within the team.  They relied on dialogue at meetings and there were no records of such meetings.   

51.  The Defendant was asked to read an email dated 25 February 2016 attaching the 2016 ACE LIFE Agency Recruitment Manual, effective January 1, 2016 (For manager)[22] (the “2016 Recruitment Manual”).  There was a Summary of Changes in the body of the email which included the launching of “Chubb Next Generation Program – Associate Financial Consultant” to take effect from 1 February 2016 for agents who are Age 18-22; ….”[23]  Under clause 2 for Target Applicant, it says “All applicants must be Aged of 18-22’[24].  He said he might not have read the document when it was sent to him at the time.  After reading the document, the Defendant said as he had said earlier, the team in which he worked was told not to recruit those under 25.  If it was not stated in the Recruitment Manuals that there was prohibition for recruiting people under 25, it only made him feel more upset as it was not fair to agents in his team.  It evidenced the arbitrariness.  The New Recruit Policy was devised to target against those who joined the Plaintiff with a package of bonuses (the “Bonus Package”).

52.  Ms Ho asked why he never mentioned this before.  He said he only learned about the content in the Recruitment Manuals when he was reading the witness statement of Ms Chow and documents referred by her.  That was a time close to trial.  He clarified to the Court by saying that to say that there was discriminative treatment targeting agents in his own team was because they joined with Bonus Package.  He said all agents in his team were affected.  Court asked him whether all of them joined with the Bonus Package.  He said not all, but most of them.        

53.  The Defendant was referred to read three application forms from candidates interested to be recruited as agents (the “Three Applications”).  The applicants were all under 25, two were under 20 and one was under 25.  It was suggested to the Defendant that he was still taking new recruits under 25 in the latter half of 2014.  He said these persons had shown interest some time before they were qualified to put in their application form.  It was Mr So who negotiated with the Plaintiff for their recruitment case by case.  He himself was not part of the negotiation.

54.  The Defendant was asked by Ms Ho to read a letter his then lawyer sent to the legal representative of the Plaintiff.  The letter was dated 5 July 2016.  In paragraph 5 (2) it was said that “in 2015, [the Plaintiff] unreasonably and unilaterally changed the rules in not accepting any person under the age of 25 as agent…”[25]. It was suggested to him that there in the letter he said the New Recruit Policy was implemented in 2015 while he said it was launched in mid 2014 in his witness statement and the Defence.  The discrepancy occurred because it did not happen as he alleged.  The Defendant did not agree.

Mr Ben So

55.  Mr So gave evidence for and on behalf of the Defendant.  They were colleagues when both were working for AXA, another insurance company.  In fact, the Defendant had all along been the down-line agent of Mr So.  He joined the Plaintiff shortly before the Defendant.  After they left the Plaintiff they joined FT Life and the Defendant is again his down-line.

56.  About the New Recruit Policy, he said there were such directions given at the meetings of team-leaders that agents should not recruit new agents who were under 25.  This was put in practice and followed by agents in 2014 and 2015.  It was only in 2016 the New Recruit Policy was relaxed after protests made by agents.

57.  Mr So was referred to read Three Applications to see that the applicants were all under 25.  Mr So said the same thing as the Defendant said (see paragraph 53 above).  He also said he was the one who negotiated with Phyllis and asked that the New Recruit Policy not to be applied on those three applicants.  That was the reason why these applications were approved by Phyllis.  He also denied that the protests from agents on the New Recruit Policy was not put in his witness statement because it was a new invention made up in the witness box. 

58.  Mr So also denied Ms Ho’s suggestion that there was no New Recruit Policy put into practice as alleged by him.  He said his evidence was supported by the document.  He referred to the 2015 May Recruitment Manual[26] and said that recruitment for people between age 18 to 21 was not mentioned, it therefore indicated that recruitment for agents under 21 was not allowed[27].  

Ms Chow of the Plaintiff

59.  The Plaintiff relied on documents and also called Ms Chow Sau Chun, the Vice-President of the Plaintiff, (“Ms Chow”) to rebut the Defendant’s case.  Ms Chow had no direct involvement in the execution of the Agreements and the negotiations prior to or after that.  She was not present when the alleged Representations were made.

60.  It was Ms Chow’s evidence both in her witness statement and in the witness box that the Plaintiff had not imposed the New Recruit Policy in the manner as alleged by the Defendant[28]. She said at all material times, the Plaintiff required new agents to reach the age of 18 because it was so required by the Insurance Agents Registration Board to be fit and proper to act as an insurance agent.  The Plaintiff did not introduce the alleged New Recruit Policy in 2014.  In fact, the Plaintiff continued to accept new recruits of age above 18 but below 25 from 2014 onwards.  In any event, the Defendant’s failure to obtain the group benefits or bonus under the Agent’s Agreement had nothing to do with the alleged introduction of the Alleged New Recruit Policy, as the Defendant had simply failed to recruit any new agents in the years of 2015 and 2016.

61.  Ms Chow referred the Court to read relevant documents in the Trial Bundles. 

(i)   Agency Recruitment Manuals from 2012 to 2016 show no prohibition in recruiting agents below the age of 25:-

Agency Recruitment Manual	Reference
2012	Pages 502-540 at Bundle D3
2013	Pages 541-574 at Bundle D3
2014	Pages 575-609 at Bundle D3
2015 January	Pages 610-650 at Bundle D3
2015 May	Pages 651-689 at Bundle D4
2016 January	Pages 690-734 at Bundle D4
2016 August	Pages735-780 at Bundle D4

(ii)     The Plaintiff had continued to accept new recruits under the age of 25 from 2014 onwards:-

(a)  Between 2013 and 2016, the Plaintiff recruited 494, 279, 171 and 170 agents who were aged 18 to 24 respectively[29];

(b)  The Three Applications received by the Plaintiff in 2014 showed that agents below the age of 25 have continued to be recruited for positions in the Plaintiff[30] . 

62.  Under cross-examination, Ms Chow disagreed with Mr Tsui’s suggestion that there was a drastic drop in the number of new recruits between age 18 to 24 and that was caused by the New Recruit Policy.  She reiterated that not only there was no drastic drop in number of new recruits, the table prepared by her showed that there were in-take of new agents who were under 25 years of age:-

Year	Age	No of New Recruits    of the Plaintiff	Total
2012	Age 18-24	236	595
	Age 25 & up	359
2013	Age 18-24	494	1116
	Age 25 & up	622
2014	Age 18-24	279	1039
	Age 25 & up	760
2015	Age 18-24	171	675
	Age 25 & up	504
2016	Age 18-24	170	572
	Age 25 & up	402

63.  The Court has also read the Agency Recruitment Manuals between 2012 to 2016 as referred by Ms Ho in paragraph 61 above to check on the guidelines for recruitment.  The summary set out below reflected the age requirements in respective years:-

(i)    2012 Recruitment Manual: He has attained the age of 18 for agents and 21 for Business Associates[31];

(ii)   2013 Recruitment Manual: all applicants with general profile from age 18 to 21 are required to be interviewed by the company[32];

(iii)  2014 Recruitment Manual: all applicants with general profile from age 18 to 21 are required to be interviewed by the company[33];

(iv)  2015 (January) Recruitment Manual: all applicants with general profile from age 18 to 21 are required to be interviewed by the company[34]; All recruits aged from 18 to 21 are interviewed by Agency Recruitment to ensure that the quality of the new recruits[35];

(v)   2015 (May) Recruitment Manual: All recruits aged from 21 to 25 are required to be interviewed by the Company[36]; All recruits aged from 21 to 25 are required to be interviewed by Agency Management[37];

(vi)  2016 (January) Recruitment Manual (For Manager): New programme launched to attract young talents between 18 to 22[38].

64.  The Recruitment Manuals do not support the Defendant’s allegation.  First there was no express prohibition of recruitment under 25.  The 2015 May version might have launched a change which affected recruitment under 21 if what was stated by Mr So was accepted.  He said that when it was not mentioned, that means the age category could not be recruited.  So when 18 to 20 was not mentioned that means they could not be recruited (see paragraph 46 above).  It however, on the other hand, proved that there was no prohibition against new recruit under 25 throughout the years.  The pleaded case of the Defendant was that he was prohibited from getting recruits under 25 since 2014[39]. Documentary evidence before the Court did not support this allegation.

65.  The Defendant asked the Court to draw an inference that the decrease in number of intakes under 25 proved that there was the New Recruit Policy in force.

66.  The Court noted that there was a decrease in over-all number of intakes from 1116 in 2013 gradually to 572 in 2016.  The percentage of decrease was higher in the category of those below 25 from 2013 to 2014.  On the other hand, however, I agree with Ms Ho’s observation that there was intake of agents below 25 throughout the years, even in 2015 there were 171 intakes when allegedly recruitment below 25 was prohibited for the whole year.  The Defendant’s evidence was contradicted by Plaintiff’s records.  Further his evidence that there might be a different practice running in his team could not stand either as it was his speculation not supported by any evidence.  He himself was not aware of such discrimination at the time.  There was no explanation why such practice was run in his team alone.  The defence is full of contradiction.  He produced no application turned down by his head of team or the Plaintiff.  He said his step son’s application was rejected but there were no details provided for this particular case.

67.  The figures shown in the table below do not support the Defendant’s allegation that it is extremely difficult to recruit people above the age of 25[40]. The above table showed that between 2012 and 2014 the Defendant recruited 11 agents above 25 and 8 below.  That was about 40% on average of his intake of below 25.  But if one takes a closer look at the figures, in 2012 and 2013, there were 0 and 2 under 25 whereas those above scored 1 and 7.  He did not take many more below 25 as opposed to the older ones as he said.  It was in 2014 that he recruited 9 in total and 6 of them were below 25.  Further in 2015 and 2016 there was no intake at all irrespective of age.

Year	Age	No of New Recruits of the Defendant
2012	Age 18-24	0
	Age 25 & up	1
2013	Age 18-24	2
	Age 25 & up	7
2014	Age 18-24	6
	Age 25 & up	3
2015	Age 18-24	0
	Age 25 & up	0
2016	Age 18-24	0
	Age 25 & up	0

68.  The Court is of the view that even if there was implementation of the New Recruit Policy, it happened in mid-2015 and not in 2014 as alleged; it affected recruitment of those between 18 to 20 not 18 to 25.  There was no express prohibition on recruitment of below 25 but they were required to be interviewed by the company.  If this was the change, there was no proof that it was introduced out of bad faith.  First, interviews had been adopted as part of the recruitment process as shown in the Agency Recruitment Manuals since 2013 (paragraph 63(ii) above).  There might be change in the level of management to be involved in the interviews.  There was however no evidence that these management people had conducted interviews irrationally. 

69.  After considering all relevant evidence the Court finds that the Defendant has failed to prove his case about implementation of the New Recruit Policy.  His evidence was contradicted by the Recruitment Manuals.  While it was pleaded that the Plaintiff had stopped the agents from recruiting agents below 25, they modified their evidence in the witness box to say that the practice was implemented in their own team only and that those below 25 would have to be interviewed instead of being recruited.  As to a strict ban on intake, at best Mr So could only point to some inconclusive evidence from the 2015 (May) Recruitment Manual saying that those below 21 were not considered. It must however be noted that it was pleaded in the Defence that below 25 were not allowed not 21 as Mr So said in the witness box. The allegation that the New Recruit Policy applied only in his team is a new invention and bears no weight in light of the documentary evidence. The discriminative treatment could be easily found out by the Defendant from relevant manuals. It would be odd if he did not check relevant manuals or official guidelines when he felt aggrieved. There was no evidence of his checking on documents.

70.  The Court finds that the Defendant has failed to prove his case in this regard.  The Court is of the view that the Defendant has failed to prove that his performance being affected and thus his income prejudiced by the New Recruit Policy imposed with no prior notice or consultation.

New Persistency Rate

71.  The allegation of the Defendant is that in about early 2015, the Plaintiff suddenly changed the persistency rate for evaluating the Defendant’s performance by persistency rate based on LIMRA 25 (“L25”) instead of the original basis of LIMRA 19 (“L19”) (the “New Persistency Rate”).  The Defendant said that as the Plaintiff’s computer system could only generate a persistency report based on L19 and not L25, it was therefore not possible for him to manage or improve his persistency rate based on L25.  He said the Plaintiff had issued several warning letters and verbal warnings to him based on L25.

72.  It is the Plaintiff’s case that that it had not imposed the New Persistency Rate on the Defendant as alleged.  All along, the persistency rate for policies sold by him was evaluated with reference to the L19 standard.  In January 2018, the Plaintiff introduced the L25 standard for the first time to all agents as an alternative, not a replacement, to L19[41]. The Defendant was however not affected as he had left the Plaintiff already by that time.  The Plaintiff did not issue any written or verbal warnings based on L25 to the Defendant giving him notice that his performance was not up to standard.

Evidence

73.  At the hearing, Ms Ho relied on 4 sets of documents to rebut the allegations of the Defendant that he was made subject to assessment based on L25.  The documents were, namely,

(i)    three remuneration letters (the “Three Remuneration Letters”)[42] and Monthly Statements[43];

(ii)   a memo dated 11 April 2016 (the “2016 (April) Memo”) giving notice of changes in 2016 (April Agency Operational manual) without copy[44];

(iii)  the 2016 (April) Agency Operational Manual (the “2016 (April) Manual”) sent to agents by an email dated 30 June 2016 (the “2016 (June) Email”)[45]; and

(iv)  the 2016 (April) Agency Operational Manual (Revised) (the “2016 (April) Manual (Revised)”) sent to agents on 12 September 2016 by email (the “2016 (September) Email)[46].

(i) Remuneration Letters and Monthly Statements

74.  In the witness box Ms Chow said that the Defendant’s entitlement of payment under the Remuneration Agreement were accounted for in the Three Remuneration Letters issued by the Plaintiff to the Defendant in October every year which covered his entitlement for the past 12 months.  There were also Monthly Statements sent out every month.   She referred the Court to the Three Remuneration Letters for the 3 years from 2012 to 2015[47]. It was stated in each of the 3 Remuneration Letters that the personal persistency and team persistency concerning the Defendant was measured by “L19”.  She disagreed categorically that the New Persistency Rate was imposed on the Defendant in 2015.

75.  When being cross-examined, the Defendant agreed that according to the Three Remuneration Letters, his performance was said to be assessed by L19.  By that standard, if the policies sold by him did not lapse sooner than 18 months, he was considered having passed the benchmark for assessment.  But in actual fact, he said, he had no idea what mechanism or standard was adopted for assessment behind the 3 Remuneration Letters because he had been given verbal and written warnings by the Plaintiff through Jimmy Hon that he had underperformed by the standard of L25.  Under L25, the policies sold by him should remain effective for a period of 24 months for him to pass the benchmark of assessment.  In reply to questions put to him by Ms Ho, the Defendant said the Three Remuneration Letters should have been sent to him but he could not tell whether he had read them in detail so as to note that “L19” was stated therein.

76.  The Court has also noted from the Remuneration Letter issued in October 2015 that he had achieved 100% of persistency rate under L19 for the past 12 months[48]. His achievement after October 2015 up to May 2016 could be seen from Monthly Statements issued after October 2015[49]. They also indicated that the persistency rate was 100%.  A summary could be seen in December 2015 for achievement in November and December 2015[50]. The May 2016 Monthly Statement summarised his persistency rate from January to May 2016[51]. They all showed that the Defendant had achieved 100% of persistency rate although the standard was not clearly stated as in the case of the Three Remuneration Letters.

(ii) The 2016 (April) Memo

77.  The 2016 (April) Memo highlighted changes to take effect in April 2016 while the relevant Agency Operation Manuals was being revised and soon to be issued.  In the 2016 (April) Memo, L19 was used as basis of measurement[52]. Ms Ho suggested to the Defendant that L19 was adopted as measurement for various purposes.  The Defendant disagreed and said that he and other agents were told that they would be assessed by L25.  He disagreed to the suggestion that the statement therein truly reflected that L19 was applied to all agents including him although he agreed that the 2016 (April) Memo was sent to all agents.  He said he had been told that L25 was applied to him and he had failed to achieve the requirement.  He said 400 agents were terminated in the team led by Jimmy Hon for similar reason.

(iii) Agency Operational Manuals

78.  Ms Chow said that as far as she knew, the Agency Operation Manual effective in July 2014 and January 2015 mentioned L19 only.  L25 was only mentioned in 2016 (June) Email highlighting the changes made to the 2016 (April) Manual.  That was the first time it appeared in an official document[53]. In the body of the 2016 (June) Email, it mentioned “LIMRA 25 Persistency formula”.  Section H Clause 18 (“Clause H18”), H19 and H20 were relevant parts of the 2016 Agency Operation Manual which explained the persistency rate.  H19 was about L19 while H20 concerned about L25.  The three clauses in Section H however only set out and defined the persistency calculation and the different basis for assessment.  It did not mention who would be affected.

79.  Under section H before it went onto Clause 18, it said “Persistency is measured based on the LIMRA 19 (18-Month) Persistency (L19) formula and the LIMRA 25 (24-Month) Persistency (L25) formula.”[54] Ms Chow said that existing agents were given an option to be assessed under L19 or L25.  On what basis the new recruits would be measured depended on their experience.  She added that this was an important factor to assess the agents’ performance which would reflect on their remuneration.  This could not be put into practice without anything in writing but on verbal instruction as alleged by the Defendant.  She said the Plaintiff had auditing system and everything had to be in writing for it to work.  She said there was nothing in the computer showing that agents’ performance would be or had been measured on basis of L25 at the time of 2015.

80.  Ms Chow further said that sometimes the provision was put down in the manual but whether and when it could be implemented would depend on other factors like whether the computer system was made to be compatible with the new formula.  She said the computer system was never ready for adopting L25 before the Defendant left in May 2016.  She referred the Court to read a table in the 2016 Manual (Revised).  Paragrpah.8.2 of Section D was about “Position Maintenance Requirement for Management Profession”.  She said it was clearly stated there that L19 was applied to all agents at managerial level at that time[55].

81.  The Court read another email sent out by the Plaintiff dated 12 September 2016 in which it said there was change in section J25 and thereby the 2016 (April) Manual was revised[56]. It was said that this change would take retrospective effect from 1 January 2015.  J25 was about Manager Renewal Bonus (the “MRB”) applicable to Branch Manager and above[57]. It is the observation of the Court that although under section J Clause 25 stated one of the requirement seemed to be persistency, it did not specify whether it was L19 or L25.  More importantly, there was no evidence that the Defendant was at the level/title of Branch Manager and was therefore entitled to this MRB.  The Court takes it that section J Clause 25 was not relevant to the Defendant.  In any event by that time he had left the Plaintiff for over 3 months already.  Even if it carried retrospective effect back on 1 January 2015 would not affect the Defendant in any event.

82.  The Court takes into consideration that the Three Remuneration Letters produced by the Plaintiff all showed that his performance was assessed at L19 level and he was thus paid accordingly.  The Defendant said he had not read those letters carefully.  In the circumstances, there was no basis for him to say that the content was not true.  In fact it was his case that he did not know how he was assessed because he was given verbal and written warnings that he did not pass the L25 standard.  His evidence on this is not believable.  It would be odd if he did not check whether his assessment and remuneration was adversely affected when he received the warnings. The Three Remuneration Letters and the Monthly Statements would have told him he was assessed on the basis of L19 had he taken a look at them. The Court has also considered the provisions in the 2016 (April) Manual and its revised version.  They named L19 as the current assessment standard.  When L25 was first mentioned in the 2016 (April) Manual) issued in June 2016, it did not specify who should be paid under this standard and by that time the Defendant had left the Plaintiff already. 

83.  The Court accepts Ms Chow’s evidence that when L25 was eventually launched in January 2018, existing agents were given a choice.  The Court also takes into consideration in the reply letter sent to the Plaintiff’s lawyer, there was no mention of the New Persistency Rate offending his rights.  The Court does not accept the allegation of the Defendant that he was affected by the New Persistency Rate.  

Resignation

84.  The Defendant claims that he was forced by the Plaintiff to resign by oral and written warnings given to him in early 2016.  It was said that he had underperformed and requested that he should improve within one month based on L25.

85.  In the pleading it was said that in about early 2016, Mr So told the Defendant that the Plaintiff would give the Defendant three options (the “Three Options”)[58]:-

(i)   To improve his performance within a month based on L25;

(ii)  To extend the Agent’s Agreement with the Plaintiff for 2 years; or

(iii) The Plaintiff would terminate the Agent’s Agreement.

86.  The Defendant told the Court that they were not real options so he felt he was left with no choice. He resigned.  He understood that by taking option (ii) he was not entitled to PPB, SA and MGB within the extended two years.  Further, if the Agent’s Agreement was terminated within the 2 extended years, the Defendant was still obliged to repay the Plaintiff 25% of the bonuses which had been paid to him; and more importantly the Plaintiff could terminate the Agency Agreement and the Defendant would still be subject to repayment.

87.  In the witness statement, he said that it was Mr So who told him that he was given the Three Options to elect[59]. In the witness box, the Defendant said that it was Jimmy Hon who told him about the Three Options and Mr So discussed about it with him.  He agreed that in his previous statement he did not mention Jimmy Hon but he did speak to him on more than one occasion in actual fact.  He agreed that Mr So did not show him anything in writing on the Three Options.

88.  The Defendant was asked the whereabouts of the warning letter(s) which he received.  He said he had thrown them away.  He was asked whether he knew there were any other agents being issued similar warning letters.  He said he did not ask around, perhaps 1 or 2 only and they said they did not receive any.

89.  Ms Ho asked if he was so aggrieved by the Plaintiff and had made complaints to Mr So and others in his up-line, why he mentioned nothing of these in his resignation letter.  He said the resignation letter was prepared by his secretary who adopted a template for him to sign.  He said he was very distressed at that time and did not want to handle this matter.

90.  Mr So has in his witness statement confirmed that the Defendant had received a warning letter.  After learning about that he spoke with Ms Vivian Ho, the Director of Agency.  He said, whilst speaking with Ms Vivian Ho, he was informed that a number of agents received the same warning letter and some were terminated while others were offered the Three Options to elect.  He then relayed the message to the Defendant.  Mr So said that at around the same time he received verbal complaints from his downlines about the New Measures but those complaints were not documented.

91.  The Plaintiff case is that it did not force the Defendant to resign not to say that was done for a purpose of getting a claw-back from him.  Ms Chow said in Court that there was no record in the office of the said warning letter or the Three Options being passed to the Defendant or other agents to elect.

92.  After hearing the evidence, the Court finds that the Defendant has changed his version on who had offered him the Three Options. His evidence changed from his being informed of the same by Mr So to by Jimmy Hon.  It was also his admission that he came to the belief that he was targeted so as to be forced to resign after reading Ms Chow’s statement.  His belief was speculative and without basis.  The Court also finds that the credibility of having received warning letters to be undermined by his not being able to produce any copy of them.  The Court prefers Ms Chow’s evidence that there was no record of warning letter being issued to the Defendant.  Had a warning letter been issued there should be a record in the office.  The purpose of giving a written warning is to have a record for future reference.

93.  The Court does not find the evidence of the Defendant and Mr So believable on the New Measures and the Defendant being forced to resign.  As the Defendant has failed to establish the New Measures and their alleged effects on him, the case of his being forced to resign could not stand either.  

The Representations

94.  This is the alternative case of the Defendant.  He said the Plaintiff is not entitled to demand for repayment under the Repayment Clause because of the representations made by Phyllis.  He relied on representations made to him by Phyllis on three occasions.  The Plaintiff denies that it has made any of the Representations to the Defendant, whether through Phyllis or otherwise.  The Plaintiff did not call Phyllis or other persons named by the Defendant to give evidence.  It relied mainly on documents and Ms Chow’s explanations to rebut the Defendant’s case.  Ms Chow had no direct involvement in the execution of the Agreements and the negotiations prior to that.  She was not present when the Representations were allegedly made.   

The Evidence

95.  The Defendant said that he was brought up in Canada and had stayed there for 30 years.  He was educated and could read and write both Chinese and English.  He was more conversant in English.  He served in the insurance industry since 2000. In about March or April 2012 he was invited to join the Plaintiff by Mr So.  In fact this was the 5^th insurance company he served in his career so far at that time.  They both joined the Plaintiff in 2012 eventually but Mr So joined in September while he joined in October.  They both left the Plaintiff and are now serving as agents in FT Life, this time the Defendant joined earlier.

1^st Representation

96.  Before the Defendant joined the Plaintiff there was negotiation on his remuneration package with Phyllis.  In the course of negotiation, the Defendant expressed his concern about whether a repayment clause would be included in his agreement.  His concern was caused by the fact that he had to repay HK$384,062.50 to AXA for his departure.  Phyllis, assured him that there would be no such repayment clause (“1^st Representation”)[60].  When cross-examined, he said Phyllis said to him “so long as you (the Defendant) continued to do what you were doing, there would be no repayment obligation.”  In Chinese 做翻你做緊嘅嘢就一定唔使還錢. 

97.  In or about July 2012, the Defendant received a letter (the “Offer Letter”) from the Plaintiff offering him the position of Sales Manager[61].  The Offer Letter did not contain any repayment clause.  In reliance of the 1^st Representation made by Phyllis he accepted the offer and signed the Offer Letter.  The Defendant later resigned from AXA in September 2012 and paid a sum of HK$384,062.50 to AXA pursuant to a repayment clause in the agreement with AXA.  The Defendant started working for the Plaintiff in September 2012.  In reply to Ms Ho’s questions, he said he knew that the Offer Letter was not final.

98.  Ms Chow was asked why the Repayment Clause was not included in the Offer Letter.  She said if there was an agreement to follow, it was not necessary.  Further although the Offer Letter was a legal document, the intended agent had 3 months to sign.  That was also to allow the interested person sufficient time to comply with the required qualifications in the profession and to provide documentary proof as required by the Plaintiff.  Her evidence was not seriously challenged by the Defendant.

2^nd Representation

99.  On 9 October 2012, Phyllis requested that the Defendant to go to her office to sign the formal contracts.  In the office, Phyllis handed some documents to him and asked him to sign.  Mr So was present.  Before he signed he asked Phyllis what they were about.  Phyllis said they were just some formal documents that the company required.  He asked what were the terms contained in documents.  She said that the terms were just the same as the Offer Letter (the “2^nd Representation”).  In reliance of the 2^nd Representation the Defendant signed the documents without reading the terms in detail.  It is not in dispute that those documents he signed were the Agreements.  He said he was not aware of the existence of the Repayment Clause when he signed them.

100.  Mr So’s evidence on the role played by him was that on the day the Defendant executed the Agreements, he was asked to witness the signatures of Defendant but he left soon after that.  What he could hear was Phyllis’ saying that the terms would be the same as that in the Offer Letter.  He said he did not know the terms of the Agreements in detail.

101.  The Defendant was referred to read the Letter of PPB in which it was stated that the advance payment of HK$750,000 was made on conditions set out in Clause 4 of the Remuneration Agreement which he signed on the same occasion.  He said he did not read the document carefully and did not bring home to read the same.  He said he was rushed by Phyllis to sign quickly. He signed as he thought there should be no problem.  He said he had signed similar documents in other insurance companies in the same manner.  He was referred to read the relevant passages in the Agreements by Ms Ho.  His answers were basically “I did not read them in detail”.  To wrap up he said had he known he had to repay, he would not have signed. 

3^rd Representation

102.  According to his witness statement the Defendant learned from Mr So that the Repayment Clause was included in the Agreements only about half a year later.  Mr So told him that the PPB was a “shake-hand” fee which was paid to him in advance so as to assist him in settling part of the termination payment that he had to pay to AXA and to compensate him for the loss of income caused by quitting AXA.  Mr So said that for the company's accounting purpose the Plaintiff would write off the PPB by 25% per year. So if he resigned between 3 and 4 years from the appointment, there would remain 25% for him to repay.  He was surprised about the repayment schedule as that was not what Phyllis had told him.  He therefore read the Agreements and found the Repayment Clause in the Remuneration Agreement[62].  He noted that he had to repay 100% of PPB to the Plaintiff if the Agency Agreement was terminated within 4 years from the Effective Date of the Agency Agreement.

103.  He then made a complaint to Phyllis about the existence of the Repayment Clause.  Phyllis said that the Defendant was bound by the Agreements and he had to make repayment to the Plaintiff if the Agency Agreement was terminated within 4 years.  Phyllis however said that the repayment percentages stated in the Repayment Clause was for the company’s administration purpose only.  She promised the Defendant that the Plaintiff would not enforce those percentages.  Phyllis said that the Repayment Percentage stated by Mr So was correct and that the repayment percentages of PPB between two and three years from the effective date was 50% and 25% for termination between 3 and 4 years (the “3^rd Representation).  The Defendant thought that since he had already resigned from AXA and started working with the Plaintiff he felt that he had no choice but to accept the terms stated by Phyllis.  Relying on the 3^rd Representation he decided to let the matter go without making further complaint about it.

104.  Mr So said in his witness statement that there was a repayment clause in his own agreement with the Plaintiff also.  The advanced amount he received was more than what was received by the Defendant.  He said the money he received in advance was subject to repayment on conditions.  He said the largest amount he received was the PPB.  The amount should be paid to him by 4 annual payments, 25% of the total in each year.  The whole sum was actually paid in advance to him and therefore was subject to repayment if his performance failed to achieve the requirement of the PPB or there was termination sooner than 4 years.  In the witness box, Mr So said he told the Defendant that the repayment scale of the PPB was 100% if he left the Plaintiff before the elapse of 4 years.  This is different from what he had stated in his witness statement where he said he had told the Defendant that the repayment of PPB would be reduced by year and in the 3^rd year until the end of the 4^th year, it would be a repayment of 25% of what he had received thereunder.  He was adamant that he told the Defendant that there would be 100% repayment.  He said he did not mention 25%.  He said he had misread his witness statement so he signed to verify the truth of the content.  Actually that was a misstatement. 

105.  Ms Ho’s submission is summarised below:-

(i)    On the available evidence before this Court, it is inherently implausible that the Representations have been made.

(a)  First, the contents of the Representations contradict the terms of the Repayment Clause.  The terms of the Agreements as stipulated in Clauses 3 to 4 in the Agent’s agreement set out the conditional nature of the Remuneration advanced.  There is no support that the percentages stipulated in the Repayment Clause are somehow only for “administrative purpose”:

(b)  Second, there is no documentary evidence which showed that the Representations had been made.

(ii)   The Offer Letter, whilst setting out the Defendant’s entitlement to Remuneration, has explicitly qualified the Defendant’s entitlement with the following statement at the end: “The terms and conditions regarding the validation and payments methods will be provided in the Financing Scheme upon confirmation of this appointment.”;

(iii)  Phyllis did not have the authority to waive the Repayment Clause altogether and/or to reduce the amount of PPB repayable by 75% where the authority of Phyllis as the Assistant Vice President of Agency Management was:-

(a)  limited to a maximum discount of 30% and $45,000 per case; and

(b)  any discount given is subject to the endorsement by the Chief Agency; Officer (ie Mr David Tam at the material times)[63].

(iv)  The Offer Letter was issued before the Agreements were executed and was thus subject to the non-reliance clause contained in Clause 21.5 of the Agent’s Agreement (the “Non-Reliance Clause”).

“The Agent acknowledges and agrees that in entering into this Agreement, and the documents referred to in it, he/she does not rely on and shall have no remedy in respect of any statement, representation, warranty or understanding (whether negligently or innocently made) all of any person whether a party to this Agreement or not) other than as expressly set out in this Agreement. Nothing in this Clause shall, however, operate to limit or exclude any liability for fraud.”

106.  Ms Ho further submitted that what the Defendant had said about the first two representations could be understood as that Phyllis did not say that the Agreements would not contain any repayment clause. Phyllis said to him “so long as the Defendant continued to do what he was doing, there would be no repayment obligation.”[64]  That did not mean that he did not have to make repayment when the prescribed situation so arose.

Assessment of Evidence in relation to the Representations

107.  The Court has to deal with the facts to decide whether the Representations had been made. In respect of the 1^st Representation, the Court does not think the Defendant could rely on it to disavow the Repayment Clause in the Agent’s Agreement which was signed 3 months after the Offer Letter because of the Non-Reliance Clause.  As Ms Ho has submitted, in the witness box, the Defendant did not say that Phyllis told him there was no repayment requirement at the preliminary meeting.  Further the quoted dialogue was only a very small part of the entire conversation, and was taken out of the context.

108.  I agree with Ms Ho that Phyllis did not say there was no repayment clause.  What Phyllis said in the 1^st Representation was that if he was to do what he was doing, there would be no repayment obligation.  Further the Court does not agree that he could borrow the Offer Letter in which there was no repayment clause to support his case that the 1^st Representation did take place or that the 2^nd Representation was believable.  The nature and purpose of the Offer Letter was for him to indicate whether he was interested in accepting the offer.  He was given 3 months to consider. Further it was clearly stated in the Offer Letter that “The terms and condition regarding the validation and payment methods will be provided in the Financing Scheme upon confirmation of this appointment”.  It is clear that it was not the formal agreement in full on the appointment.  In fact, the Defendant said in the witness box that he knew that the Offer Letter was not final.

109.  The Defendant said that the 2^nd Representation was made in the presence of Mr So.  Mr So’s evidence was however not forthcoming.  He said he was asked to go into the office at a time to witness the signature of Defendant.  It was only when asked further he said he heard Phyllis say to the Defendant that it was the same.  Again what he had heard, even if accepted by the Court, was taken out of context and could not be relied on.  Moreover, as mentioned, no advance payment was offered by the Offer Letter so it was only natural that it did not include a repayment clause.

110.  Back to the Defendant’s evidence that he would not have signed the Agreements had he known that he had to repay.  The Court does not find this believable.  The Court does not accept that he would rely on Phyllis and not to check for himself something so important.  He said he had bad experience on repayment with AXA and he was concerned.  This made his reliance on Phyllis more unbelievable.  He did not have a long term relationship with Phyllis according to him.  He had no problem reading the Agreements as he said he was more conversant in English than in Chinese.  He had finished tertiary education in Canada.  In fact, as an insurance agent, one of his daily routines was to explain insurance policies and contracts to his clients.  It is not accepted that when faced with 3 sets of agreements and was asked to sign on each of them, he would still think that they were the same as the Offer Letter which had only 2 pages.  He was not a young man who just left school for the first job.  He had been working in the insurance industry for over 10 years at the time of signing the Agreements.  Advance payment as golden hand-shake should not have been something he had never heard about.

111.  Last but not the least, the Court does not accept that when he received the advancement payment of the PPB in the sum of HK$750,000, it still did not raise his concern about repayment in certain circumstances.  The Court refuses his evidence.

112.  As to the 3^rd Representation, the Defendant said that he went to make a complaint to Phyllis after he checked and found that the repayment for PPB was 100%.  He could not explain why he would believe in Phyllis again when she said that although it was written on the Agent’s Agreement that the clawback was 100% throughout the first 4 years, the Plaintiff would only ask for repayment of 25%.  What she said was different from what was written down in black and white which he saw with his own eyes. It might be because Mr So had told him the same thing.  However, Mr So changed his evidence in the witness box and said he had never told the Defendant that it was 25% for repayment.  He said he had told him 100% was the repayment.  In that case, there was just no reason for the Defendant to believe in Phyllis again putting aside there was no reason why Phyllis would have to lie to him to induce him to join or to stay with the Plaintiff.  

113.  Mr Tsui asked the Court to consider in his final submissions that if the Repayment Clause was valid and effective according to the Plaintiff, there was no reason for the Defendant to resign only a few months before he would be exonerated from clawback.  Mr Tsui was actually asking the Court to speculate without going into the evidence and how legal principles should apply to the facts.

114.  To sum up, the evidence before the Court about how the Representations were made and what had been said was scanty to say the least.   The 1^st and 2^nd Representations were made in 2012.   None of the Representations were not documented.  The evidence of the Defendant was contradicted by his witness and documents produced by the Plaintiff specially the Agreements and the Manuals.  His evidence is at the least improbable if not implausible taking into consideration the circumstances and his personal background.  The Court is of the view that the Defendant’s evidence could not stand to prove that the Representations had been made and he had relied on the same.  

Application of Legal Principles

115.  Ms Ho also made submissions on law. Relying on Bank of China (Hong Kong) Ltd v. Fung Chi Kan (2002) 5 HKCFAR 515 at §51 (per Litton NPJ) Ms Ho submitted that it was no defence to say that the Defendant did not understand the contents of a legal document because he is not a lawyer. He took the chance of being bound by its terms, as he or she could take the precaution of not signing the document until its contents had been fully explained and understood.  In fact this was agreed by the Defendant when he was asked in the witness box.  He said with hind-sight, it would have been better had he asked for time to read the documents.  

116.  It was also her submission that it does not assist for the Defendant to say that he relied on the 1^st and 2^nd Representations and signed the Agreements without going through the terms in detail.

117.  The holding of the CFA in Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 at §§84-86 (per Ribeiro PJ) does not assist the Defendant:-

“(ii) The applicable principles

            …… Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory’s assent or adherence to what that document states.  Where such a person has signed a document which purports to have legal effect, the law has never regarded it as enough to show that he signed without knowing its contents for the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed.  But they are held to the documents which they have chosen to sign unless there is shown to be a recognized legal basis for concluding that their apparent consent has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity.”

118.  In Bank of China (Hong Kong) Ltd v Fung Chin Kan (2002) 5 HKCFAR 515 at 533, Litton NPJ acknowledged:-

“......the fundamental principle that, generally speaking, when a person signs a legal document, he or she is bound by the act of signature: As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood.”

119.  In conclusion, Ms Ho submitted that by signing on the Agreements, the Defendant shall be bound by all the express terms therein, including the Repayment Clause.

Doctrine of Promissory Estoppel and Collateral Contract

120.  On the doctrines of estoppel, it is Ms Ho’s submission that the legal requirements have been summarised by CFA in Luo Xing Juan Angela v The Estate of Hui Shui See, Willy (2009) 12 HKCFAR 1 at §55 (per Ribeiro PJ) [PLOA #18]:-

(a)  The parties are in a relationship involving enforceable or exercisable rights, duties or powers;

(b)  The promisor, by words or conduct, conveys or is reasonably understood to convey a clear and unequivocal promise or assurance to the promisee that the promisor will not enforce or exercise some of those rights, duties or powers; and

(c)  The promisee reasonably relies upon that promise and is induced to alter his or her position on the faith of it, so that it would be inequitable or unconscionable for the promisor to act inconsistently with the promise.

121.  In respect of estoppel by representation, Ms Ho submitted that the essential ingredients are:-

(a)  A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made;

(b)  An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made; and

(c)  Detriment to such person as a consequence of the act or omission.

122.  Mr Tsui also in his closing submissions agreed that it is very much a matter of credibility.

123.  Based on the above findings, there was no credible evidence to prove that the Representations had been made.  After applying the legal principles to the facts of the present case, the Court agrees with the conclusion of Ms Ho that the Plaintiff is not estopped from enforcing the Agreements.

Whether there is any collateral contract created between the Plaintiff and the Defendant by the 3^rd Representation

124.  The Defendant said that it would be very unfair and unjust for the Plaintiff to breach its promise and/or renege on its representation when they decided to recover 100% of the PPB from him.  Or alternatively because of the 3^rd Representation a collateral contract had been formed and the Plaintiff could only recover 25% of the PPB.  

125.  Ms Ho submitted that the defence based on collateral contract is unmeritorious.  She asked the Court to refuse the existence of the collateral contract, which seeks to vary the Repayment Clause, with heightened scrutiny. Legal principles from authorities such as Wai Kam Chiu v Chim Siu Fan (unrep, CACV 376/2007, 24 June 2008) at §23 (per Cheung JA); Huang Mucai v Cheng Zhen Shu (unrep, HCA 1237/2011, 17 September 2011) at §§19 to 21 (per DHCJ Lok, as he then was) are summarised as follows:-

(a)  The courts view such collateral contracts with suspicion, as any laxity would enable parties to escape from the full performance of the obligations of contracts unquestionably entered into by them;

(b)  The court requires strict proof of oral collateral contracts.; 

(c)  The court can find that the alleged collateral contract does not exist with reference to documentary evidence and conduct of the parties.

126.  On the other hand, Mr Tsui submitted that the Defendant had continued to work for the Plaintiff and that was the detriment required.  He said there was thus consideration flew from the Defendant to the Plaintiff.                                                                   

127.  Again, the Court already made a finding against the case of the Defendant on Representations.  The finding could dispose of this head of the claims. If it is wrong on the finding of facts, the Defendant’s case on collateral contract would still be defeated by the lack of consideration.  The Court does not agree with Mr Tsui that by staying and worked for the Plaintiff itself constituted consideration.  On his own evidence, he decided to accept the terms stated by Phyllis because he had already resigned from AXA and started working with the Plaintiff.  Relying on the 3^rd Representation, he decided to let the matter go and did not make further complaint about it[65]. He did not stay in reliance of the 3^rd Representation.  In the circumstances, it is the Court’s finding that the Defendant has provided no further consideration in support of the promise made by Phyllis that only 25% of the PPB shall be repaid notwithstanding the existence of Repayment Clause.

Effect of Entire Agreement Clause on the Representations

128.  Mr Tsui contended that the purpose of such clause in an agreement is to preclude any contractual terms not expressly contained in the written document. But such a clause does not preclude a claim in misrepresentation.  He made reference to Glory Gold Ltd v Star Play Development Ltd [2008] 2 HKLRD 416, §17] The Court agrees with this broad principle.  The problem with the Defendant is that he could not prove the facts in support of his claim.

The Defendant’s Counterclaim

129.  There are two limbs in the Counterclaim:-

(a)  Breach of the 1^st and 2^nd Implied Term:-

As a result of the breach, the Defendant was unable to meet the MGB target under the Remuneration Agreement and had suffered a loss of HK$1,039,112.31; quantum not disputed subject to determination on liability.  

(b)  An oral agreement made by Jeffrey Woo to pay the Defendant an extra sum of $480,000 on 10 June 2015.

130.  As the Court has already made a finding that there was no breach on the part of the Plaintiff, the first limb of the counterclaim must fail. 

131.  In regard to the Oral Agreement, the Defendant said that in response to his complaints about the New Measures in the first half year of 2015, Jeffrey Woo, Vice President and Chief Agency officer agreed that as a way to compensate his loss of bonuses, the Plaintiff would pay the Defendant an additional amount for a year provided that the Defendant could attain the status of MDRT (the “Oral Agreement”).

132.  The Defendant said the three of them ie the Defendant, Jeffrey Woo and Mr So met on 10 June 2015.  In the meeting, Jeffrey and the Defendant orally agreed that the Plaintiff would pay the Defendant a sum of HK$40,000 per month for a year, conditional upon the Defendant’s achievement of the MDRT target.  It was agreed that it would start from October 2015 (the “Oral Agreement”) for 1 year.  He said in compliance of the Oral Agreement, he did achieve the MDRT target in or before September 2015.

133.  Notwithstanding the Defendant’s having met the MDRT target in or before September 2015, the Plaintiff breached the Oral Agreement and failed to pay HK$40,000 per month for a year to the Defendant.  The Defendant therefore suffered loss and damage in the sum of HK$480,000 (being HK$40,000 X 12).  Mr So basically said the same thing.

134.  The Plaintiff does not admit that there was a meeting on 10 June 2015 or the Oral Agreeing being made.  It denies any obligation to pay the HK$480,000 to the Defendant.  Ms Chow said that there was no document, be it agreement or correspondence requiring arrangement for such payment to be made.  There was nothing in the Plaintiff’s record supporting the claim of HK$40,000 as compensation for his loss starting from October 2015.  Jeffrey Woo left in early June 2016.  The Plaintiff denies that the Defendant has made any demand or request for the above payment.

135.  Ms Ho submitted that in assessing whether an oral agreement exists, the Court is entitled to take into account relevant factors including:-

(a)  the inherent probabilities of the case;

(b)  any contemporaneous documentation or records;

(c)  any circumstantial evidence tending to support one account rather than the other; and

(d)  the overall impression of characters and motivations of the witnesses.

136.  She asked the Court to refuse the evidence of the Defendant.  There is a total absence of contemporaneous documents evidencing the existence of the same.  The Court agrees, not only there was no formal or official record produced by either parties, there was not even a piece of paper that any of them had scribbled on during the negotiation or at the conclusion of the said meeting.  The circumstantial evidence does not assist the Defendant either.  The evidence that Jeffrey Woo did not have the authority to approve payment of HK$40,000 must have worked against the Defendant’s case.  Further, the Court has found that the Defendant has failed to prove his case on the New Measures and his loss. This undermined his evidence that he had to make complaints to Jeffrey Woo.

Factual witnesses not called by the Plaintiff

137.  Mr Tsui criticises the Plaintiff for not calling any of the factual witnesses like Phyllis, Vivian Ho, Jimmy Hon and Jeffrey Woo.  He asks that adverse inference be drawn against that Plaintiff.  He relies on Ip Man Shan Henry v Ching Hing Construction Co Ltd (No 2 ) [2003]1HKC256:-

“(a) a prima facie case is made out, and if there is evidence available to the party against whom the case is established which could displace the prima facie case, and he omits to call such evidence, an inference could be drawn;

(b) however, the inference could be rebutted by a plausible explanation by the party who elected not to call the evidence;

(c) if an inference is to be drawn, it would be an inference that such available evidence, even if adduced, would not displace the prima facie case;

(d) it is also open to a tribunal of fact, upon the drawing of such inference, to take it into account in respect of a matter with respect to which the person not called as a witness could have spoken,

(i)   in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party;

(ii)  in deciding whether to draw inference of fact, which are open to them upon evidence which has been given.”

138.  Ms Chow has in her supplemental witness statement dealt with how the Plaintiff had endeavoured to contact the above people.  The Plaintiff’s solicitors were successful in reaching Phyllis and Vivian, both said that they could not recall details of the events or did not recall the event as alleged.  Phyllis refused to take phone call from Ms Chow.  Vivian refused to make any witness statement for the Plaintiff.  Jeffrey Woo could not be reached after letters being sent to his last known address and 20 phone calls made to his number.  There was no response after voice messages left asking him to return call.  The Plaintiff’s solicitors informed her that the 1^st letter sent to Jeffrey Woo was returned saying that there was no such person.  The 2^nd letter was sent out by Ms Chow and it was not retuned.  She made three attempts to call him by the phone but none was answered. Jeffrey Woo remained out of reach according to Ms Chow.

139.  First, there is doubt as to whether a prima facie case has been made out by the Defendant as he produced no documents in support and relied on his own assertion only.  His assertion was inconsistent with the written provisions set out in the Agreements.  Even if a prima facie case is made out, the Court is satisfied that Ms Chow’s evidence provides a plausible explanation for not calling those people. Given what Phyllis and Vivian had said in reply to the Plaintiff’s solicitors and the time lapse, the Court is satisfied that this is a situation where it could take into account what the intended witnesses could have spoken. The Court takes that the records of the Plaintiff’s solicitors are official records of their response and should therefore be given weight.

140.  The Court refuses to draw any adverse inference from their not being called to testify.  The Court understands that there was no request made by the Defendant to ask for contacts of these people for purpose of issuing subpoena to them.

CONCLUSION

141.  As mentioned above the Court has refused the defence of the Defendant that the Plaintiff was in breach of the Implied Terms and that there were the Representations made to invalidate or nullify the Repayment Clause.   The Court has also refused the Defendant’s assertion that there was a collateral contract made between the parties by the 3^rd Representation.  The argument on estoppel cannot succeed either.  The Court therefore enter judgement for the claim of the Plaintiff for an amount of HK$2,080,070.83.  On the same basis the claim for damages in the Counterclaim is dismissed.  As the Defendant’s evidence on the oral agreement on the Special Bonus has been rejected, his claim in this regard fails also.

142.  Pre-judgment interest shall accrue on the said sum at the rate of 1% above the prime lending rate from the date repayment fell due pursuant to the Clause 4.1 of the Repayment Agreement, ie 19 May 2016 until the date of judgment and at judgment rate thereafter until full payment.

143.  There is an order nisi that the Defendant do pay costs to the Plaintiff on indemnity basis pursuant to Clause 4.2 of the Remuneration Agreement.  Such costs are to be taxed if not agreed. The order nisi shall become absolute if no application to vary the same is received within 14 days from day of this Judgment.