YU TAI KEUNG TIM v. BILLION TOWN CORPORATE CONSULTANTS LTD

HCLA 22/2020 and 23/2020 (heard together)
[2022] HKCFI 2360

HCLA 22/2020

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 22 OF 2020

(On appeal from LBTC 3264/2018)

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AND

HCLA 23/2020

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 23 OF 2020

(On appeal from LBTC 3265/2018)

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J U D G M E N T

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A.  INTRODUCTION

1.  The respondents (“Mr Yu” and “Madam Wong”, respectively; and “Respondents”, collectively) were property agents formerly employed by the appellant (“Company”).

2.  The Respondents were involved in a project concerning acquisition of a building in Sai Ying Poon (“the Project”). They were tasked with procuring the owners of the building to sell their units to a third-party buyer, and they would receive commission from the Company. The Respondents brought their claims in the Labour Tribunal contending that they were entitled to a greater amount of commission than what they were actually paid.

3.  In their original claim forms and their written opening statement, the Respondents based their claims on a calculation method set out in a document entitled “(附件) 營業員佣金分配制度” (described in the Tribunal’s Decision as “Exhibit C-8”), which computed commission based on the employee’s work performance during 4 stages of the Project (“Stage-Based Method”).

4.  After the Respondents had finished giving their evidence, the Deputy Presiding Officer (“DPO”), on his own initiative, invited the Respondents to amend their claim forms to introduce a case based on a different calculation method, namely, by way of equal distribution amongst all employees who had participated in the Project (“Equal Distribution Method”). The amendment will be referred to as the “Disputed Amendment”.

5.  The DPO proceeded to rule in favour of the Respondents’ amended case and held that Exhibit C-8 was not binding on them. The DPO gave judgment to the Respondents. The Reasons for Decision were given on 26 January 2021 (“Decision”).

6.  This is the Company’s appeal. The Company complains that the DPO should not have allowed (let alone encouraged) the Respondents to change their case, in the middle of the trial. It went beyond the Tribunal’s inquisitorial power. The question as to whether Exhibit C-8 was binding on the Respondents was never in issue prior to the change of case. If the issue which was fact-sensitive was properly raised from the outset, it could have changed the entire course of the evidence. The permission to amend was also procedurally unfair as it caused severe prejudice to the Company. Further, there was no foundation for the DPO to rule that Exhibit C-8 was not binding on the Respondents who had adopted the calculation method therein in their original claim forms. The Company also asserts that Mr Yu who had left employment before completion of the sale and purchase agreements was not entitled to commission because of clause 1H of the Employment Agreement (“Clause 1H”).

7.  On 10 February 2021, this Court granted leave to the Company to appeal. By the time of this hearing, the appeal is confined to 3 grounds only:

(1)  That the DPO erred in law in repeatedly allowing the Respondents to amend the claim forms despite prejudice caused to the Company and in finding in the Respondents’ favour a case which was vastly different from that originally pleaded by the Respondents (“Amendment Ground”).

(2)  That the DPO erred in law in holding that the Stage-Based Method as set out in Exhibit C8 was not binding on the Respondents. Had the DPO properly directed himself as to the law and the evidence, he would have found that Exhibit C8 had contractual effect and/or created an estoppel (“Contract/Estoppel Ground”); and

(3)  That the DPO erred in law in his interpretation of Clause 1H and its applicability to Mr Yu’s claim (“Interpretation Ground”); this ground does not apply to Madam Wong.

B.  FACTUAL BACKGROUND

8.  The factual background as found by the Tribunal has been aptly summarized by Mr Chang SC, leading Mr Eugene Kwan, for the Company, and I gratefully adopt the same.

B1.  The Employment Agreements and the Project

9.  Mr Yu and Madam Wong were property brokers employed by the Company. They were involved in the Project concerning acquisition of Tsui Wah Building, 120-122 High Street, Sai Ying Pun (“Building”).

10.  The employment relationship between the Company and the Respondents was governed by Employment Agreements first signed on 1 April 2016, later amended by Supplemental Agreements dated 1 June 2017 (collectively “Employment Agreements”). Under those Employment Agreements, Mr Yu and Madam Wong were entitled to receive a base salary plus commission from the Company.

11.  The Project first began in March 2017. The Company’s objective was to procure the owners of the Building to sell their units to a buyer, Pro Shine International Inc. Limited (“Buyer”), so that the requisite threshold for a compulsory sale under s.3(1) of the Land (Compulsory Sale for Redevelopment) Ordinance (Cap 545) could be achieved.

12.  A total of 7 property brokers (including Mr Yu and Madam Wong) were involved in the Project:

(1)  Mr Yu first became involved in the Project on 27 March 2017. He was responsible for liaising with the owners of Flats 2A, 2B, 2C and 2D of the Building. His employment was terminated by the Company on 31 October 2017 (Decision, §§3 & 71).

(2)  Madam Wong first became involved in the Project on 9 October 2017. She was responsible for liaising with the owners of Flats 3A and 3B of the Building. She resigned from her employment with the Company on 7 July 2018 (Decision, §§4 & 71).

13.  By October 2017, various owners of the Building (including the owners of Flat 2A, 2B, 2C and 2D) had already signed provisional agreements to sell their units to the Buyer. However, the Buyer did not sign the provisional agreements until 8 December 2017. Therefore, as at the time of Mr Yu’s termination of employment with the Company (ie 31 October 2017), no provisional agreement for his responsible flats had yet been executed.

14.  The Project was eventually completed on 28 March 2018, whereupon the Company paid (i) HK$125,060.03 to Mr Yu for his work on the Project and (ii) HK$84,241.04 to Madam Wong for her work on the Project (Decision, §§3, 4 & 35).

B2.  Methods of Calculating the Amount of Commission Payable

15.  Clause 1 of the Supplemental Agreement provided that the amount of commission payable to the employees should be calculated using the “Equal Distribution Method”:

(1)  Total value of commission pool (the “Pool”): whenever a unit was sold, both the owner and the Buyer would pay a designated amount of commission to the Company. A percentage of the commission received by the Company would go into the Pool set aside for distribution to all employees involved in the Project.

(2)  Distribution amongst the employees: the Pool would be divided in the following manner: (i) 94% of the Pool would be split equally amongst all employees involved in the Project; and (ii) the remaining 6% of the Pool would be distributed to the employees based on the number of sales brokered by them.

16.  A different calculation methodology (ie Stage-Based Method) was provided for in Exhibit C-8. It involved taking into account each employee’s involvement in the 4 specified stages of the Project:

(1)  Stage 1: collection of information regarding the apartment unit and accounted for 20% of the Pool;

(2)  Stage 2: negotiations with the unit owners and accounted for 35% of the Pool;

(3)  Stage 3: closing the deal with the owners and accounted for 40% of the Pool;

(4)  Stage 4: follow-up work after the signing of the contracts and accounted for 5% of the Pool.

17.  The Remark (備註) of Exhibit C-8 stated that the commission payable to employees shall be determined based on their “work efficiency”:

“於收購過程中若涉及兩名或以上之營業員共同負責跟進該等收購工作時，即由公司按營業員實際工作效率而決定分配佣金之百分比”. (間綫後加)

18.  The DPO accepted the Respondents’ evidence that Exhibit C-8 was placed by the Company on the desks of the employees (including the Respondents) in October or November 2017 (after the Project had started but before Mr Yu was terminated) (Decision, §31). The Respondents had never signed Exhibit C-8 or acknowledged receipt of it.

19.  The amount of commission payable to an employee whose employment has been terminated was governed by Clause 1H.

C.  THE PARTIES’ RESPECTIVE CASE

20.  It is the Company’s case that:

(1)  The amount of commission payable to the Respondents should be based on Exhibit C-8. Accordingly, the Company had the power to determine the amount of commission payable to its employees based on their performance in the Project. The more an employee contributed, the more he would be rewarded (“多勞多得”).

(2)  As regards Mr Yu:

(a)  The effect of Clause 1H was that Mr Yu could only claim commission in respect of those provisional agreements which were executed prior to his termination. Since the provisional agreements signed by the owners of Flats 2A, 2B, 2C and 2D had not yet been executed by the Buyer at the time of Mr Yu’s termination, no commission was payable to Mr Yu. What the Company had already paid to him was merely a gratuity (恩恤金).

(b)  Even if Mr Yu was entitled to claim any commission from the Company, the amount already paid to him (ie HK$125,110.47) properly reflected his contribution to the Project.

(3)  As regards Madam Wong, she only became involved in the Project at a very late stage. The amount of commission paid by the Company to her (ie HK$84,074.04) properly reflected her limited contribution to the Project at Stages 3 and 4.

21.  Mr Chang SC points out that in this case, the Pool (about HK$3.5 million) has not changed under the 2 Methods. Exhibit C-8 just changed the stages of payment and the proportion to be received by each employee involved.

22.  As for the Respondents’ case, it has changed significantly in the course of the proceedings. Despite the complaint of repeated amendments in Ground 1, the Company’s main target was on the final, Disputed Amendment. Mr Chang SC describes their cases as based on Exhibit C-8 but changed to the Equal Distribution Method after the Respondents had closed their evidence. The amendment came about as a result of the prompting of the Tribunal.

23.  However, in my view, a more accurate description of the Respondents’ case based on their claim forms before the Disputed Amendment was that the Respondents relied on both Exhibit C-8 (for staged payments but without the Remark) and the Equal Distribution Method. Versions 1 and 2 of their claim forms were filed on 1 and 5 November 2018 respectively.

(1)  In respect of Mr Yu, the difference between Versions 1 and 2 was the amount in the Pool and the number of agents involved in the first 2 stages as defined by Exhibit C-8.

(2)  In respect of Madam Wong:

(a)  Version 1 claimed for Stages 3 and 4 only, primarily with the Pool divided among 7 employees.

(b)  Version 2 was based on a slightly different value in the Pool and that in respect of Stage 4, it should be divided among 6 employees.

(c)  Version 3 (re-amended on 2 June 2020, 7^th day of trial) was amended to claim for all 4 Stages, ie to include Stages 1 and 2 when she had not joined the Project yet.

24.  In their written opening submissions before the Tribunal, consistent with their stance in the claim forms, both Mr Yu and Madam Wong sought commission based on the Employment Agreement.

(1)  Mr Yu claimed that he should get all the commission for “Stages 1-3 at the rates of 20%, 35% and 40% (ie based on Exhibit C-8) and not just 5%, 10 and 10%” (§10.3). He did not dispute the distribution of commission for Stage 4 which he did not participate in (§10.6).

(2)  Madam Wong claimed to have done the first two items of work for Stage 3 and should get all the 40% commission whereas the Company only gave her 10% of the second item out of the 40%. She considered the ultimate distribution of commission to the agents to be “unfair and unreasonable”.

25.  On Day 2 of the trial, the DPO tried to clarify with both Respondents the bases for calculation of the commission.

(1)  Mr Yu at first claimed that there was a lot of information/messages passing in the office. There could be a lot of discussions without implementation. He could not have known when a measure would be implemented without signing (Transcript at B/439 K-O). Later on, Mr Yu confirmed that he should get what he was entitled to for Stages 1-3 but could leave out Stage 4 (Transcript at B/443 Q-R).

(2)  The DPO expressly stated that he himself (just like the Company’s representative) was not clear about the direction of Mr Yu. The DPO pointed out that Mr Yu had changed his claim form many times and was using the percentages of Exhibit C-8 in the claim form. The DPO also pointed out that the Respondents did not agree to the calculation of the 5% (presumably referring to Stage 4); that they said the term was not there at the time when the Employment Agreement was signed but the Company later added that term. The DPO asked the Respondents if they agreed to that arrangement and if they did not then what arrangement had they used at that time to calculate the commission. (Transcript at B/446 S-U to 447 A-C).

(3)  After the morning break, Mr Yu confirmed choosing Exhibit C8 as the basis for calculation because it was “all along used”. Despite the DPO saying never mind, he had to investigate anyway, Mr Yu confirmed using Exhibit C-8 (Transcript at B/447U-B/448). Madam Wong confirmed likewise (Transcript at B/457F-M).

26.  On Day 11 (ie 13 August 2020), after they had finished giving evidence and during cross-examination of the Company’s first witness,

(1)  The Respondents, for the first time, raised the issue that they had not assented to Exhibit C-8.

(2)  The DPO himself recalled that there had been discussion among him and the Respondents such that Exhibit C-8 could be used as the basis to calculated commission. In fact, the DPO himself expressly stated that he had all along thought that the Respondents had agreed to Exhibit C-8 (Transcript at E/1256 line I).

(3)  Madam Wong acknowledged that she had received Exhibit C-8 but had not signed it. When the DPO tried to confirm again if Exhibit C-8 applied, Mr Yu said he had always thought that the Equal Distribution Method applied. (Transcript at E/1234N-1235R, 1237Q-R).

(4)  After some exchanges, the DPO suggested that the Respondents should amend their claim forms to clarify their stance. Before adjourning to the following day, the DPO said that he had left the Respondents with some “homework”, ie that the Respondents had to compute the commission based on their Employment Agreements and their new stance. (Transcript at F/1256 I-O, 1256R-1257S).

27.  Prompted by the DPO, the Respondents amended their claim to the Disputed Amendment. This formed Version 3 of Mr Yu’s claim and Version 5 of Madam Wong’s claim.

D.  FINDINGS OF THE TRIBUNAL

28.  The DPO ruled in favour of the Respondents. His reasoning can be summarized in the following few paragraphs.

29.  The amendments were to “match the testimonies” of the Respondents and clarify their stance. Despite the Respondents having amended their claims more than once, the present amendment had little prejudice or unfairness to the Company. (Decision, §§8-10).

30.  It would be “unfair and unreasonable” to base the calculation of commission on the performance of the employees. The Company’s assessment was subjective and there was no proper mechanism (such as appraisal form) setting out the criteria for evaluating the employees’ performance (Decision, §§16 and 41(12)).

31.  Exhibit C8 was not binding on the Respondents as it was not signed by them. Its contents were not reflected in the written Employment Agreements (Decision, §26).

32.  The Company could have, but did not, incorporate Exhibit C8 into the Employment Agreements. In particular, the DPO pointed out that the Employment Agreement had previously been amended by way of Supplemental Agreement (Decision, §27).

33.  There was no indication that the Respondents had accepted the terms set out in Exhibit C-8. Exhibit C-8 was simply placed on the desks of the Respondents. The contents of Exhibit C-8 were never explained to them. (Decision, §31).

34.  Properly construed, Clause 1H did not preclude Mr Yu from claiming commission. The fact that the provisional agreements had not been signed by the Buyer at the time of Mr Yu’s termination was irrelevant. What mattered was that the sale of units 2A-2D was eventually completed. (Decision, §§42-45)

35.  The commission payable to the Respondents should be calculated based on the Equal Distribution Method (Decision, §§71-75). Consequently, Mr Yu and Madam Wong were entitled to commission in the amounts of HK$495,892.40 and HK$483,153.88 respectively (Decision, §76).

E.  AMENDMENT GROUND

36.  Section 20(1) of the Labour Tribunal Ordinance, Cap 25 (“the Ordinance”) provides that the hearing shall be conducted in an informal manner.

37.  Section 20(3) of the Ordinance provides that the Tribunal has a duty to investigate any matter relevant to the claim, whether or not it has been raised by a party.

38.  Despite these provisions, there is nothing that prevents the Tribunal from identifying the issues between the parties and properly managing a case.

39.  For a claim based on contract, one can accept that a litigant at the Tribunal may not know whether certain documents form part of the employment contract or whether certain variations to the terms are valid. If that is the case, it is all the more important for a party to identify the documents that may constitute or contain terms of the contract and set out (if necessary, with the guidance of the Tribunal) his alternative case(s). There is nothing, of course, to prevent a party from confining his case to one instead of alternative cases, or from abandoning issues. The Tribunal will conduct its inquiry based on the case advanced by the parties.

40.  Amendment for the purpose of determining the real question in issue between the parties may be allowed. Any amendment should be done as early as possible. In deciding whether to grant permission to amend, the Tribunal would, of course, need to consider if the amendments would give rise to prejudice to a party and afford that party an appropriate opportunity to prepare his case in answer. Amendment after a party has closed his evidence should be sparingly allowed, save for clerical or arithmetical errors.

41.  In the present case, the DPO’s grant of leave to the Respondents to amend their claims was unfair in the light of the procedural history set out in paragraphs 23-26 above.

42.  Firstly, the Disputed Amendment arose after the Respondents have closed their evidence out of the need (as stated by the DPO) “to match the oral testimony” of the Respondents. That approach was to put the cart before the horse and should not have been allowed.

43.  The Respondents had been given the opportunity to file witness statements, submit evidence and make opening submissions on calculation of commission. On Day 2 of the trial, the methodology of calculation of commission was brought starkly to the attention of the Respondents and they were asked to state their positions. They were given an adjournment to consider. There was no suggestion that the DPO gave them any time pressure. The Respondents voluntarily chose to rely on Exhibit C-8. The DPO himself expressly acknowledged that all along he thought that the Respondents had agreed to Exhibit C-8. The Respondents could not resile from their position.

44.  Secondly, the amendments gave rise to a new line of inquiry as to whether Exhibit C-8 formed part of the employment contract. The change in methodology of calculating commission was a fundamental change to the Respondents’ case and was not just clarification.

45.  In this appeal, both Respondents submit that they had told the Tribunal that they relied on the Employment Agreements for calculating the commission.

(1)  Mr Yu claims to have all along insisted that he had not confirmed acceptance of the Stage-Based Method. It was discovered during the trial that it was not possible to do the calculation, that it was unfair and hence he suggested using the Equal Distribution Method, which was the easiest. With respect, that was impermissible. Calculation should be based on the contractual terms, not on what a party or the Tribunal considered fair. It was possible to do the calculation, as demonstrated by the calculations put forth by the Respondents and the Company before the Disputed Amendment.

(2)  Madam Wong submits in this appeal that the transcripts read out by Mr Chang SC only covered Mr Yu’s acceptance of Exhibit C-8, whereas she had always maintained before the Tribunal that her commission should be calculated on the basis of her Employment Agreements (J2110). J2110 was an attachment to Version 5, wherein she expressly stated that she disagreed with the Stage-Based Method but insisted on the Equal Distribution Method; she was merely assuming the truth of the Company’s version to calculate the commission by 4 stages. By 2 June 2020, Madam Wong started giving evidence. She testified that the Company had all along told her that the Equal Distribution Method would be used. Hence the Company should have known that even though in her amended claim form of 2 June 2020 she set out the calculation on the bases of 4 Stages, she had also insisted that the Equal Distribution Method applied.

46.  With respect, the Respondents’ submission supports Mr Chang SC’s submission as to fundamental change of their case between Day 2 and Day 11. On Day 2, Mr Yu and Madam Wong confirmed their reliance on Exhibit C-8 without reservation or assumption as Madam Wong alleged (paragraph 25(3) above).

47.  Thirdly, the amendments in the present case effectively amounted to a withdrawal by the Respondents of their admissions to the binding effect of Exhibit C-8 on them. The Tribunal should not have allowed such withdrawal of admissions at such a late stage of the proceedings: Re Ng Wai Jing [2016] 2 HKLRD 1460 §§19-21, Kwan JA (as she then was).

48.  Fourthly, the DPO erred in finding that there was no prejudice to the Company occasioned by the amendments (Decision, §10). The Company had proceeded to cross-examination on the basis that there was no dispute as to the binding effect of Exhibit C-8. Had the binding effect of Exhibit C-8 been in dispute, the Company might have looked for other evidence, eg witnesses who had explained Exhibit C-8 to the Respondents, or searched for documents indicating the Respondents’ agreement to Exhibit C-8. This could have brought substantial changes to the evidence.

49.  Fifthly, the DPO has failed to afford a reasonable opportunity for the Company to cross-examine the Respondents following on the amendments. The Company’s representative had requested for re-opening of the cross-examination of the Respondents. The DPO granted the request but insisted that the cross-examination should be done immediately (Transcript, F/1345-1346). The Company’s representative had thus proceeded to conduct cross-examination on the spot without the opportunity to prepare evidence to rebut the amended case. In my view, this insistence on cross-examination there and then had compromised fairness of the trial for the sake of time.

50.  For the foregoing reasons, the DPO has erred in law in granting permission to amend.

F.  CONTRACT/ESTOPPEL GROUND

51.  The fact that Exhibit C-8 was not signed, not reflected in the written Employment Agreements was irrelevant because a contract term could be added or varied without formality. That it was not explained to the Respondents was likewise irrelevant because Exhibit C-8 was in plain Chinese language and there was no suggestion that the Respondents had any difficulty understanding it.

52.  The issue was whether or not the Respondents had accepted Exhibit C-8 by raising no objection or relying on its terms in the claim forms.

53.  A party may accept a proposed variation by word or conduct. Silence and inactivity may constitute sufficient communication of assent depending on the circumstances. Mere mental assent is insufficient to constitute acceptance; and it is not even sufficient that there may be evidence of the offeree’s decision to accept which has not been communicated to the offeror, since in principle the offeror is entitled to know whether the contract has been concluded. It has also been said that the principal problem with silence as a means of acceptance is that it does not constitute a sufficiently unequivocal communication of the offeree’s assent: “silence and inaction are of their nature equivocal, for the simple reason that there can be more than one reason why the person concerned has been silent and inactive. However, this does not exclude all possibility of “silence and inaction” constituting communication of a person’s intention if, in the circumstances, the silence is not in fact unequivocal. Cartwright, Formation and Variation of Contracts, 2^nd ed, §§ 3-36 & 3-39.

54.  In the present case, the Tribunal has found, as a fact, that Exhibit C-8 was placed on the desks of the Respondents in October or November 2017 (Decision, §31). Whilst there was nothing to show that the Respondents had ever raised objection after reading it, there was equally nothing to show that the Respondents had accepted them before termination of employment or before the claim forms were filed.

55.  Mr Chang SC submits that the Respondents’ reliance on Exhibit C-8 for the calculation methodology in their original claim forms was a clear positive act of acceptance of its terms. I am unable to agree because, as stated in paragraph 23 above, the Respondents relied on both the Stage-Based Method and the Equal Distribution Method. That was not unequivocal acceptance of Exhibit C-8.

56.  On the evidence, the only positive act of acceptance occurred on Day 2 when the Respondents opted to rely on Exhibit C-8, way after Mr Yu’s employment had terminated.

57.  Mr Chang SC further submits that the DPO failed to consider that the Respondents were bound by the terms of Exhibit C-8 by reason of estoppel by representation or convention.

58.  The essential elements of estoppel by representation are:

(1)  A representation or conduct intended to induce a course of conduct on the part of the representee;

(2)  An act or omission resulting from the representation, whether actual or by conduct, by the representee; and

(3)  Detriment to the representee as a consequence of the act or omission.

Mo Ying v Brillex Development Ltd [2014] 3 HKRD 224, at §144, Recorder Eugene Fung SC.

59.  The essential elements of estoppel by convention are:

(1)  The parties must enter into some legal relationship on the basis of a shared assumption of fact or law;

(2)  The content of the common assumption must be sufficiently certain to enable the court to give effect to it;

(3)  The assumption must have been communicated between the parties and acted upon;

(4)  There must be an attempt by one party to depart from the common assumption which departure would be unjust; and

(5)  The other party would suffer detriment arising out of his having entered into the relevant transaction on the basis of the common assumption.

See: Unruh v Seeberger (2007) 10 HKCFAR 31, at §§133, 135, 138-9, 150, Ribeiro PJ

60.  Mr Chang SC relies on the same failure of the Respondents to object and their reliance of Exhibit C-8 in the original claim forms to show the representation. In addition, he submits that the Company would be deprived of the chance to safeguard its position by pursuing a restitutionary claim against other employees on the basis of mistake, as those employees might have spent part or all of the commission paid to them from the Pool.

61.  I only need to deal with the issue of estoppel briefly. As the first positive act of acceptance only occurred on Day 2, the Company could hardly show detrimental reliance on that acceptance when it had already distributed commission to the other employees. In any case, detrimental reliance was not explored at the Tribunal or dealt with in the Decision.

62.  However, even though the Respondents’ stance on Day 2 could be regarded as acceptance of Exhibit C-8, that was not the end of the matter. The DPO’s investigations regarding the “fairness or reasonableness” of the terms of Exhibit C-8 were misplaced.

63.  If a contract gives one party the power to exercise a discretion or to form an opinion as to relevant facts, it is not for the courts to rewrite the parties’ bargain for them, still less to substitute themselves for the contractually agreed decision-maker. Nevertheless, the party who is charged with making decisions which affect the rights of both parties must exercise the power in good faith and not arbitrarily, capriciously, perversely or irrationally: Braganza v BP Shipping Ltd [2015] 1 WLR 1661 §§18 & 102, applied in Cheung Li Ou v Sun Life Hong Kong Ltd [2021] HKCFI 3784, Au-Yeung J, §111.

64.  Accordingly, the DPO applied the wrong test in asking whether the terms of Exhibit C-8 were fair or reasonable. He should have asked whether the Braganza principles have been applied. He did not do so. The absence of appraisal forms, in itself, would not amount to lack of good faith or arbitrariness.

65.  What was also troubling was the use of the term 「多勞多得」 by the Respondents and the Company. That term connoted a quantitative approach, ie that commission would be proportionate to efforts. On the other hand, the Remark in Exhibit C-8 connoted a qualitative approach (按實際工作效率而決定)。 It was not clear if any “acceptance” of Exhibit C-8 by the Respondents was the result of some misstatement of the effect of the Remark.

66.  Accordingly, whilst the Contract Ground succeeds to the extent of there being binding effect of Exhibit C-8 (on the basis of the Disputed Amendment being disallowed), it was not clear if the Company had relied on the right interpretation of the Remark to decide upon the commission for each employee involved in the Project. The DPO’s investigation had erred in law due to failure to apply the Braganza principles.

G.  INTERPRETATION GROUND

67.  For the purpose of analyses, I break up Clause 1H into different limbs as follows:

“僱員在任何時間因任何情況被調離與該項基本業權收購或聯售無關的其他職務崗位或被公司暫停或終止委任，或任何方式離職或辭職或被公司革職解僱（“離場”），則公司依僱員離場之當時：按該項基本業權收購已簽妥有關買賣合約（或有） (“limb 1”)（一）基本業權其中單位業權數量（最終買家需達完成交易為準）相等於總業權分數的數量進度階段而作計算 (“limb 2”)，及或按（二）釘類單位（或有）已簽妥有關買賣合約成交價（最終買家需達完成交易為準）以作計算， （但本條文上述（一）及（二）項之單位的交易日期不限於僱員離場前或後的時間）(“limb 3”)； （一）基本業權受制於上述第一條文B ）項所規定計算分配方式，及依第一條文 C）項時間派發予僱員； （二）釘類單位受制於上述第一條文D ）項所規定計算分配方式，及依第一條文 E）項時間派發予僱員。僱員由離場當日之後任何時間與買家於屆時再有簽署任何有關買賣合約 (“limb 4”) 所購入該項基本業權收購或聯售及或釘類單位所產生之相關佣金均不作分配予僱員。” (underline added)

68.  In §§42-51 of the Decision, the DPO set out his analyses on Clause 1H:

(1)  That no provisional agreement was executed at the time of Mr Yu’s termination was irrelevant. Limb 2 applied to determine the amount of commission payable to Mr Yu (§§43-45).

(2)  The words “最終買家需達完成交易為準” in limb 2 indicated that the key condition for obtaining commission was that the transaction eventually proceeded to completion, which was met.

(3)  The DPO was reinforced in his conclusion by the words “(但本條文上述（一）及（二）項之單位的交易日期不限於僱員離場前或後的時間)” in limb 3. He considered that Mr Yu would still be entitled to claim commission (even where the relevant transaction took place after his employment had been terminated) (§§44-45).

(4)  The DPO rejected the Company’s argument that the words “再有” in limb 4 meant that Mr Yu was not entitled to claim any commission in respect of any provisional agreement signed after his termination (§§46-47).

69.  I am of the view that the DPO fell into clear error when construing Clause 1H.

(1)  Limbs 1 and 2 should be read together. As such, it was clear that at the time of termination of employment, the provisional sale and purchase agreement must have been signed by both the vendor and buyer, hence the words 簽妥.

(2)  Limb 2 merely made clear that even if there was a provisional sale and purchase agreement signed before termination of employment, that provisional agreement must still be completed (完成交易) before any commission was payable to the employee who was terminated.

(3)  Limbs 1 and 2, were cumulative requirements, but limb 3 could occur after termination of employment.

(4)  To say that an employee was entitled to commission so long as a transaction was completed even though no provisional sale and purchase agreement was signed before his termination was contrary to limb 1.

(5)  Limb 4 plainly referred to the situation after termination of employment, when the buyer further signed a provisional sale and purchase agreement. The necessary implication was that the buyer had already signed a provisional sale and purchase agreement before the employee was terminated.

70.  In the present case, the Buyer of Flats 2A to 2D only signed the provisional sale and purchase agreement after Mr Yu’s employment was terminated. Mr Yu could not be entitled to commission. The interpretation is established.

71.  I wish to make one comment on procedure. The Company submitted a counsel’s opinion to the Tribunal on the question of interpretation of Clause 1H. That was inadmissible and not fair play. Under section 23 of the Ordinance, a solicitor or barrister (who is not a party to the proceedings) has no right of audience. The Company could not circumvent section 23 by asking the solicitor or barrister to give his opinion in writing.

H.  DISPOSAL OF THE APPEAL

72.  In respect of the appeal concerning Mr Yu, the Interpretation Ground is sufficient to allow the appeal, regardless of whether Exhibit C-8 was binding on him. Mr Yu was not entitled to commission and the award as regards him must be set aside.

73.  In respect of the appeal concerning Madam Wong, the appeal should be allowed on the Amendment Ground and Contract Ground.

74.  The Court of First Instance, as a supervisory court over errors of law, should in general remit a case if there was a misdirection of law, except where the error could not have affected the outcome (ie it was immaterial), or where the Tribunal properly directed could have come to only one legitimate conclusion on the evidence and findings (including findings that the Court may make by inference pursuant to section 35(2)(a) of the Ordinance), and then only if one could be practically certain that the relevant evidence could not have been materially affected by the misdirection: Chok King Ming v Equal Opportunities Commission [2017] 2 HKLRD 521 at §70, G Lam J (as he then was).

75.  On the evidence, there was a misdirection of the Tribunal on the question of whether acceptance of Exhibit C8 was the result of some misstatement and in failing to consider the Braganza principles. The misdirection may have affected the outcome. In the premises, the claim of Madam Wong (including whether she had accepted the terms of Exhibit C8) should be remitted to the Tribunal for re-trial before a different Presiding Officer.

I.  COSTS

76.  The appellate court has unfettered discretion to award costs in an appeal. The fact that a respondent is an employee would not spare him/her from a costs order where one is justified.

77.  The appeal court may order costs to follow the event even though the respondents have not contributed in any way to the mistake of the Adjudicator: Diamond Property Management Co Ltd v First Class Fashion Co Ltd, HCSA 61 of 1996, 25 May 1994. In that case, the Adjudicator made a mistake on the issue of locus standi of the claimant and the case was remitted to the Small Claims Tribunal for trial. The Court ordered costs to follow the event as none of the respondents saw fit to indicate that he was not supporting the determination of the Tribunal. There was thus no justifiable reason for the Court to depart from the well-established principle that costs should follow the event.

78.  The Respondents submit that as former employees they were just claiming for commission that they were entitled to and the Court should only make an order for nominal costs against them.

79.  The present appeal arose due to the Respondents’ own change of stance which led to the Disputed Amendment, procedural unfairness in allowing late permission of amendment to the claims and wrong construction of Clause 1H by the DPO. However, Mr Yu and Madam Wong did not concede any issue in this appeal but maintained their stance before the Tribunal. I see no reason for departing from the general rule that costs should follow the event and be awarded to the Company.

80.  I have considered the costs statement of the Company and the written submission of the parties on costs. Despite the length of trial at the Tribunal and the voluminous transcripts and documents, this appeal does not involve difficult matters of law and procedure. Whilst this Court was greatly assisted by Mr Chang SC, I am of the view that this appeal does not justify the engagement of senior counsel both at the leave stage and the main appeal.

81.  I have taken into account the fact that the Respondents themselves claim to have each paid more than $150,000 for their lawyers.

82.  Accordingly, for the application for leave to appeal and the appeal itself together with costs of the application for stay of execution, I make an order nisi that costs summarily assessed in the amount of $300,000 should be borne by the Respondents in equal share.

Conclusion

83.  Accordingly, in respect of HCLA 22/2020 concerning Mr Yu, I order as follows:

(1)  The appeal be allowed;

(2)  The award of the DPO including the costs order dated 18 November 2020 be set aside;

(3)  Mr Yu’s claim in the Labour Tribunal be dismissed;

(4)  On a nisi basis, the costs of and incidental to the application for leave to appeal and the appeal itself be paid by Mr Yu to the Company, in the sum of $150,000; and

(5)  $395,766.37 paid into Court by the Company together with interests accrued thereon be paid out to the Company.

84.  In respect of HCLA 23/2020 concerning Madam Wong, I order as follows:

(1)  The appeal be allowed;

(2)  The award of the DPO including the costs order dated 18 November 2020 be set aside;

(3)  Madam Wong’s claim (including the question of whether she had accepted the terms of Exhibit C-8) be remitted to the Labour Tribunal for a re-trial before another Presiding Officer;

(4)  On a nisi basis, the costs of and incidental to the application for leave to appeal and the appeal itself be paid by Madam Wong to the Company, in the sum of $150,000; and

(5)  On a nisi basis, costs before the Tribunal in LBTC 3265/2018 be costs in the cause of the re-trial.

83.  I thank counsel for their assistance.