DONALD WONG v. COLEX ELECTRONICS CO LTD

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

(Formerly Labour Tribunal Claim No. 2825 of 1984)

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BETWEEN

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JUDGMENT

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1. On 1st March 1984 the plaintiff, Mr. Donald Wong, began his career with the defendant company as Vice President in charge of marketing in South East Asia. By 30th July 1984 it was over.

2. His contract of employment had given him a very substantial salary and guaranteed commission and a number of other perquisites. It also entitled him to three months' notice of termination which was little enough, he thought, and had been whittled down from the six months he had originally asked for as a condition of leaving secure employment as Managing Director of Honeywells.

3. At a meeting on 30th July he was told by the chairman of the defendant, Mr. Liu, that financial circumstances could not support his continued employment as they could not that of other marketing personnel particularly in the United States of America where a number had been already dismissed. Mr. Wong mentioned the three months clause but was told that of the others, some had settled for less' some for none at all and others had been left to seek redress in the courts. Some compensation would be offered, he was told, which he could take or leave but if he refused, he could look forward to a battle in the courts with no quarter given and allegations of poor performance made against him which could only be detrimental to his career.

4. That version comes from Mr. Wong himself. It was not put in cross-examination to Mr. Liu which is regrettable but nonetheless, I accept it as true, and accurate and to its main components. The defendant would not be taken by surprise because something similar had been said by Mr. Wong to a member of the Labour Tribunal at a much earlier stage. The conversation with Mr. Liu was followed by a letter dated 30th July which is among the agreed documents. It reads:

"Dear Donald,

 

        This is to confirm our conversation this morning that in view of lack of sales and performance record generated by your service in the past five months with no potential sales prospect in sight, it is decided in the interest of both parties that your service with the company shall be terminated.

 

        We are prepared to work out a mutually satisfactory termination compensation package with you and we are open to your suggestion. It is understood that you are not report to work effective from tomorrow."

It is right that the letter did confirm what had been said to Mr. Wong about not to working out his notice even though Mr. Wong would have preferred, for obvious reasons, to have done so.

5. But Mr. Wong was not prepared to accept anything less than what he regarded as his entitlement and proceedings were begun in the first instance in the Labour Tribunal, which eventually, for reasons which need not concern me in this short judgment, have been transferred to the High Court. In these proceedings, Mr. Wong is claiming damages for wrongful termination of his contract of employment and good as his word Mr. Liu of the defendant company has made allegations that they were entitled to dismiss Mr. Wong summarily coupled with a claim for damages for breach of contract and for the detention of a computer, as to which more later.

6. Subject to liability, the plaintiff's claim for damages has been agreed as a figure at $115,148.00. In those circumstances, the onus is on the defendant which through counsel opened the case and attempted to bring home not only its justification for Mr. Wong's dismissal but the claim for damages also. If they have failed signally in a case with as little merit as any which it is ever been my lot to try, it is not the fault of counsel Mr. Yau who has stuck manfully to his task. And if I do have a word of criticism, it is not for counsel but it is for the defendant company and in particular for its chairman, Mr. Liu who has not behaved towards Mr. Wong as honourably as I think the circumstances required him to do.

7. It will be remembered that in the letter of 30th July which I have read out, there is no word seeking to justify the summary dismissal of Mr. Wong save for the general reference to lack of return from his services over the few months during which he had been in employment with the defendant. The ground presented to justify summary dismissal is one prayed in aid retrospectively. What is said is that Mr. Wong disregarded the company's procedures in engaging a firm of advertising agents or consultants, (I describe them in that alternative fashion for a reason which will become apparent,) because it said that in taking on a firm called Edelman in June 1984, Mr. Wong disregarded a company instruction contained in a memorandum which is to be found at p. 51 of the bundle of agreed documents. That, also, I shall read. It is from Mr. Liu and is dated the 26th April 1984. It is not addressed to the plaintiff in this action but he told me that he was aware of its contents - a matter which I may say inclines me even more readily to accept him as a witness of truth. It reads:

"This is to confirm the decision taken by the Executive Committee on 20th April 1984 that the attached policy is to be implementated effective from 10th May 1984. I will appreciate that you advise your various department heads regarding this very important policy which must be implemented and adhered to in the strictest sense. I hope you explain to your department heads that it is very essential to bring the financial control to the operation and to ensure the success of the company."

Attached to the memorandum is a schedule which sets out the limits of authorisation. The two material items are 7 and 8. No. 7 relates to consulting engineers. Under the remarks column it provides for approval by executive committee. No. 8 relates to purchase orders for advertising campaigns, etcetera and sets out the limits of expenditure which may be undertaken by various officials. Mr. Wong as a Vice President was limited to expenditure of US$3,000.00 or less and Mr. Liu, the Chairman to US$100,000.00 or less. All such expenditure was expressed to be subject to the approved budget. Now Mr. Wong had been given a budget which subject to other expenditure would have covered the engagement of Edelman at a retainer of HK&7,500.00, exclusive of any disbursements, but it is said that the engagement of advertising consultants had to be referred to the executive committee and secondly, that the overall expenditure fell outside the limits of that which Mr. Wong was entitled to incur without approval elsewhere.

8. The first matter is not pleaded, and that without amendment would be enough to dispose of it. But there would be no merit in the point even if pleaded. Let it be remembered that Mr. Liu was well aware of the engagement of Edelman as appears from the memorandum which was sent by Mr. Wong to his immediate superior copied to Mr. Liu. Indeed Mr. Wong told me and I accept that the question of engaging Edelman was discussed by him with Mr. Liu in some detail. Mr. Liu, I inter-pose is a man who is much concerned with detail. And so if it were never referred to "an executive committee" which would have included Mr. Liu the departure from authorised procedure is of a highly technical character and such as could not conceivably be counted a reason for immediate dismissal. Certainly it did not occur to be such to Mr. Liu who would otherwise have made it an excuse for dismissing Mr. Wong on 30th of July. The fact that it only occurred to him subsequently confirms my first impression that if it was a breach, which I very much doubt, it was by no means a sufficient breach to justify dismissal of a senior employee such as Mr. Wong.

9. The other matter as to the amount involved in the contract is I think is even more readily disposed of and if possible has even less merit. The monthly retainer for Edelman was HK$7,500.00. It so happens that a purchase requisition was put in for the first month's retainer. It shows on the face of the requisition that it is a retainer. Some criticism of Mr. Wong is made because it does not indicate in terms that there would be other bills coming in from time to time but I would have thought it was obvious from even a superficial glance at the document and from the use of word 'retainer'.  But be that as it may, that HK$7,500.00 was well within Mr. Wong's competence to authorise, and if it were not, and one has to look at the total expenditure involved it must be recalled that the matter had been referred to Mr. Liu who had the authority to authorize up to US$100,000.00. So the burden being upon the defendant to show justification for dismissing Mr. Wong without notice, I need only say it has failed but I do make it clear that in my view it has failed by a very wide margin indeed.

10. So I come to the counterclaim. The counterclaim falls into two parts. The first part relates to the Edelman contract. The second part relates to the computer. The defendant was, as I indicated cutting dorm its marketing operations not only in South East Asia but also as it appears in the United States of America. In those circumstances it  naturally wished to discontinue the services of Messrs. Edelman who had been engaged through Mr. Wong, in the circumstances to which I have referred. It broke its contract so I am told with Edelman and Edelman sued. The parties came to terms. There was judgment by consent. The defendant company claims to be entitled to an indemnity for the amount of the consent judgment. On what conceivable basis the claim is made is hard to see in the absence of any allegation of negligence and once it is accepted as I do that the engagement of Edelman was not in excess of authority. So that part of counterclaim fails, as does the second part for the following reasons. The defendant makes computers. Before Mr. Wong took up employment with the defendant he asked to have one of the defendant's computers at home, so as to familiarize himself with its operation. One was delivered to him and there it remained until after he was sacked. The defendant wrote to Mr. Wong asking him to pay for the computer at its original price. He did not respond to that invitation. The computer came into Mr. Wong's possession with the agreement of the defendant and it so remained and Mr. Wong was entitled to keep it until he was asked for it back. He was not, in fact, asked for it back until an amendment to the Defence and Counterclaim which, I think being generous to the defendant company, one may say amounts to a request for its return.

11. Mr. Wong says "You can have the thing back. Come and get it." No one has gone to fetch it. So the question is was it for Mr. Wong to deliver it to the defendant or for the defendant to collect it from Mr. Wong. I think in all the circumstances, bearing in mind that it had been delivered to Mr. Wong in the first place and he had been wrongfully dismissed it was for the defendant company to collect.

12. So there will be judgment for the plaintiff in the sum mentioned with costs, and the counterclaim is dismissed with costs.

13. I have forgotten to deal with a counterclaim for HK$334.40 being telephone expenses incurred by the plaintiff which is admitted. Although set off has not been pleaded, nevertheless the plain admission that the amount is due from the plaintiff to the defendant company coupled with the denial of the rest of the counterclaim and the claim itself is sufficient, I think, for me to leave undisturbed the original order as to costs.