TANG Yl v. EDMOND DE ROTHSCHILD ASSET MANAGEMENT HONG KONG LTD AND ANOTHER

HCA 942/2013

[2018] HKCFI 1050

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 942 OF 2013

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D E C I S I O N

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1.  This is an application by the plaintiff (“P”) for issue of letters of request under Order 39 rule 2 of the rules of the High Court. It originally requested for letters of request to examine 9 intended witnesses who reside in France. It now seeks to amend the summons by deleting 4 intended witnesses from and adding 1 witness to the summons. After the amendment, the number of requested witnesses will be 6. P also seeks to adduce his 3^rd affirmation made on 9 April 2018 in support of the application. This affirmation is to explain the need for amending the requested witnesses and to deal with the further discovery made by the defendants (“Ds”) in July 2017 and January 2018 in relation to this application. I allow both applications with costs order nisi that P do pay Ds costs of these summonses.

2.  The parties agreed that the purpose of this hearing is limited to the question of whether the court should grant leave for the issue of the letters of request.  The separate question of what questions should be asked of the witnesses, if leave is granted, will be determined separately.

3.  P was employed by the 2nd defendant (“D2”) as a fund manager from 2006 in France, and subsequently by the 1st defendant (“D1”) in Hong Kong. 

4.  P is making three main claims in the action.  First is for outstanding stock options; second for outstanding performance fees; and third for the reimbursement of outstanding expenses.

5.  The largest claim is for performance fees.  P claims that these fees were owed under an oral agreement made between him and Ds. The fees would come out of profits generated by funds managed by P and D1’s investment team and would be shared by P and the other members of the team. This application principally concerns P’s claim for these fees.

6.  The plaintiff pleaded his claim for performance fees in §§20 to 25 of the amended statement of claim (“ASoC”):

“Performance fees

20. In or about mid-2007, prior to the commencement of P’s employment with D1, Mr Couvrecelle on behalf of D2 (at least) verbally informed P that D2 had introduced a performance fee arrangement (the “Performance Fee Arrangement”) in respect of the funds managed by it, whereby: -

a) The performance fees generated by the relevant fund (including the Funds) would be shared 50/50 between D2 and the individual fund manager(s) responsible for the relevant fund.

b) The individual fund managers’ share of the performance fees would be paid over a 3-year period at the end of the fiscal year of the relevant fund.

c) All individual fund managers would cease all personal dealings in the funds they managed.

21. The Performance Fee Arrangement was introduced by D2 at a time when, in Paris, a number of fund managers were leaving D2 (including Mr Jean-Charles Meriaux, a fund manager who had launched Tricolor Rendement, D2’s most successful fund) in the hope of achieving higher remuneration, in particular with self-run hedge funds. D2 and the Parent Company were also concerned about insider dealing as a result of an incident in or about 2007 involving Mr Phillipe de Montreynaud, a junior fund manager then working for D2.

22. During the second half of 2007, while he was setting up the Hong Kong operation, P continued to discuss the introduction of performance fees with, inter alia, Mr Couvrecelle and Mr Vanier by telephone, by email and in person during his regular trips to D2’s offices in Paris. During these discussions, P was informed that the Performance Fee Arrangement would apply to D1’s investment team, including P, and future members of that team. The Performance Fee Arrangement remained applicable to fund managers, including P, who were employed by D1 and/or D2 from October 2007 until at least 7 December 2012.

23. During the course of the communications with Mr Couvrecelle and Mr Vanier referred to in paragraph 22 above, P also enquired when the Performance Fee Arrangement would be set out in a written document. He required this in part so that he could provide details of the Performance Fee Arrangement to prospective employees of D1. The initial response from Mr Couvrecelle and Mr Vanier was that a written agreement would be provided. P also raised this issue with Mr Uzan, co-CIO of D2, and Mr Thomas Gerhardt (“Mr Gerhartd”), D2’s head of Asia and emerging markets. Subsequently, Mr Couvrecelle and Mr Vanier informed P that D2’s management did not wish to set out the terms of the Performance Fee Arrangement in writing. This position was confirmed in or about May 2012 at an offsite in Chantilly, France, when Mr Gerhardt informed Ms Sheila Shao and Mr Gaud (who were representing D1’s investment team) that it was not D2’s policy to have a written performance fee agreement. This statement was recorded in a memo which P received. As far as P is aware, D1 and D2 did not ever set out the terms of the Performance Fee Arrangement in a written agreement. Subject to discovery and/or interrogatories, the Performance Fee Arrangement is evidenced by, inter alia, the following facts (that a performance fee structure was included in several funds, P was paid a bonus in respect of the performance of a Saint-Honore Asie Opportunities Fund at HK$126,283 and D2's marketing material (in August 2010 at least) included performance fees in the incentive payment system for portfolio managers).

24. In consideration of his remuneration, including the payments promised to him under the Performance Fee Arrangement, P remained in the employment of D1 and/or D2 from October 2007 to December 2012 and agreed in writing in or about the second half of 2007 and confirmed (approximately) annually thereafter that he would cease all personal account dealings in the funds he managed. ...

25. P is entitled to be paid the following amounts under the Performance Fee Arrangement: -

a) 50% of the performance fee generated on (the EdR Chinabsolute Fund for the year ended 31 March 2009, EdR China Fund for the year ended 31 March 2010 and EdR Chinagora Fund for the year ended 31 March 2011 in the respective sums of US$133,494.31, €2,277,300.21 and US$ 1,585,951.05)

(collectively the “Outstanding Performance Fees”).”
(emphases added)

7.  Ds denied that P was a party to any agreement concerning performance fees or that there was any promise made to pay him such fees.  Ds pleaded in §§16 and 17 of the re-amended defence (“defence”) that the performance fees charged and received by D2 as the management company of the funds were only payable to D1 as sub-manager pursuant to a Delegation Agreement commencing from 2009.  There was no agreement to pay to P and P, as an employee of D1, had no entitlement to be paid any such fees.  The fees were merely one factor that D1 would take into account in granting discretionary bonuses to its employees on an annual basis. Furthermore, insofar as there were discussions concerning performance fees with P, they were mere discussions between Mr Philippe Couvrecelle and P to explore the possibility of linking the performance fees received by Ds and the bonus pool for fund managers and their respective teams, and were not legally binding. 

8.  P’s pleaded case in the ASoC is that he had asked in 2007 when the performance fees would be set out in a written document, but was eventually told that D2’s management did not wish to do so.  P thus considered it highly likely that there was substantial internal documentation of Ds concerning the existence and nature of such fees.  P’s former solicitors had by letter dated 12 June 2015 (A/89-64 to 89-66) complained that Ds’ list of documents dated 23 March 2015 did not have any internal communication relating to this matter (A/89-67 to 89-69 and 89-70 to 89-72).  P’s former solicitors asked for discovery of a large number of documents which they said Ds should have which included communications relating to the implementation of individual performance fees.  Ds’ solicitors by a letter dated 24 July 2015 refused the request for discovery as “fishing”.  P says that this application was only taken out on 22 August 2016 because of the deficiency of Ds’ discovery. 

9.  Ds then made further discoveries in a supplemental list of documents dated 24 July 2017 and a 2^nd supplemental list of documents dated 15 January 2018.  P says these discoveries contained numerous emails directly relevant to the Performance Fee Arrangement and were within the scope of his original request.  They supported him that there was such an arrangement.  These discoveries also prompted amendments to be made by both sides to their pleadings in 2017 and early 2018. 

10.  P thus says that Ds’ obstructiveness in making discovery means that it is vital for him to examine the requested witnesses so as to provide the Court with the full picture.

The relevant legal principles

11.  Both France and China (Hong Kong SAR) have ratified the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters.  Hence, the letters of request, if granted, are likely to be executed by the French judiciary (Hong Kong Civil Procedure 2018 (“HKCP”) at §39/3/3 and Graeme Johnston & Paul Harris SC, The Conflict of Laws in Hong Kong (3^rd ed.) (“The Conflict of Laws”) at §11.052).

12.  The Court of Appeal has held in Kwan Chui Kwok Ying v Tao Wai Chun [2002] HKCA 304 at §12 that the issue of a letter of request is part of the inherent jurisdiction and discretion of the High Court:

“… the issue of letters of request is part of the inherent jurisdiction of the English Supreme Court. We do not see why our High Court whose duty is, similar to that of the English court, to administer justice in accordance with evidence, should not have the power within its inherent jurisdiction to issue letters of request to foreign courts for assistance in obtaining evidence. Support can also be found in Coch v Allcock (1888) 21 QBD 178 at 181 and Armour v Walker [1884] 25 Ch D 673 at 677 that the granting of a commission to take evidence abroad, similar to the purpose of a letter of request, was a matter of the court’s discretion, to be exercised according to the particular circumstances of each case. …”

13.  The applicant must satisfy the court that the evidence to be obtained is necessary and in the interest of justice.  It is important to consider whether the witness can give substantial evidence material to an issue in the trial.  Therefore, the court has to identify the issue that the evidence is said to relate to, and then consider whether the evidence sought is relevant to the issue (HKCP at§39/2/1, Warner v Mosses (1880) 16 Ch D 100, 102, Samuel Tak Lee v The Hong Kong Chinese Christian Church Union, HCAL 27/2008 (unrep., 25 September 2009) at §§16 and 21).

14.  The applicant should also show that the witness cannot reasonably be expected to come to Hong Kong.  If the witness is willing to give evidence but unwilling to come to Hong Kong, then the giving of evidence through video conference link should be considered (see The Conflict of Laws at §§11.056 and 11.062). 

15.  Even if the evidence may be relevant and the witness cannot reasonably be expected to come to Hong Kong, the court should also consider if it is suitable for the letter of request to be issued.  The applicant, before making the application, should make reasonable attempts to obtain the relevant evidence in other ways, e.g. through another witness in Hong Kong, by documents, by admission of the other side, by an order that evidence may be given on affidavit, and the giving of evidence from overseas through video conference link (HKCP at §39/3/1). 

16.  If the evidence is such that a full-fledged cross-examination is appropriate (e.g. it concerns disputed version of what an individual has said), that would weigh against the making of an order (The Conflict of Laws at §11.060). 

17.  The court must also be satisfied that the application is made bona fide and with such promptness as not to cause unreasonable delay before making the order (see HKCP at§39/3/1).

P’s submissions on relevance of evidence

18.  At the hearing, P’s counsel Mr Lee confined the necessary requested witnesses to Mr Philippe Couvrecelle, Mr Brun Vanier, Mr Philippe Uzan and Mr Marc Levy.

19.  Mr Couvrecelle was the Chief Executive Officer (“CEO”) of D1 from about 2007 until about July 2012 and CEO of D2 from about October 2007until about July 2012.  He is now the CEO at IM Square and living and working in France.

20.  Mr Vanier was the co-Chief Investment Officer (“CIO”) of D2 and head of emerging markets.  He appears to be the President of Gemway Assets in France.

21.  Mr Uzan was the CIO of D2.  He is still employed by D2 and lives and works in France.

22.  Mr Levy was the Secrétaire Général (equivalent to company secretary) of the parent company of D2.  He is now the President of La Maison De Gestion and is living and working in France.

23.  Regarding the question of whether the evidence of the requested witnesses is relevant to the issues, P has pleaded in the ASoC that Mr Couvrecelle had on behalf of D2, in or about mid-2007 and prior to his being employed by D1, verbally told him that D2 had introduced the Performance Fee Arrangement in respect of the funds managed by it.  Mr Couvrecelle explained to him the structure of the arrangement.  In the second half of 2007 when he was setting up D1 in Hong Kong, Mr Couvrecelle and Mr Vanier told him that the Performance Fee Arrangement would apply to D1’s investment team including him, future members of that team and fund managers who were employed by D1 and/or D2 from October 2007 until at least 7 December 2012.  They told him these by telephone, email and in person during his trips to D2’s offices in Paris.

24.  P has further pleaded that in these communications, he had enquired with Mr Couvrecelle and Mr Vanier when the Performance Fee Arrangement would be set out in a written document.  They initially told him that a written agreement would be provided.  Subsequently, they told him that D2 did not wish to set out the terms of the Performance Fee Arrangement in writing.  

25.  Mr Lee also submitted in §26 of his submissions that Mr Couvrecelle had central involvement in devising and implementing the Performance Fee Arrangement which is recorded in numerous recently disclosed emails (B/42-43, B/54, B/64-5 to 64-9).  He also referred to an e-mail from Mr Couvrecelle dated 15 September 2009 (B64-5):

“Outperformance fees were essentially introduced in the summer of 2007 and I formally discussed the matter of sharing between the Group and management teams with the Bank in the first quarter of 2009 … I am naturally willing to refine the system and follow the Group’s governance structure as I always have, but not to breach the moral commitment I made personally to the managers, who have been very flexible in agreeing to our recent changes.”

26.  P had also raised the Performance Fee Arrangement with Mr Uzan. 

27.  Ds have, in their defence, denied that P was a party to any agreement concerning performance fees or that there was any promise made to pay such fees to him.  Hence, the alleged promise to pay P such fees is a key issue on the claim for such fees.  Either way, it is obvious that Mr Couvrecelle and Mr Vanier are crucial witnesses who can give relevant and material evidence on this issue.  Such evidence is also necessary and should be obtained in the interest of justice. 

28.  In fact, Ds have filed an affidavit of Mr Pascal Pierre Charlot, D1’s CEO to oppose this application. Mr Charlot said that some requested witnesses were irrelevant as they did not have any role in the alleged oral agreements between P and Ds.  But Mr Charlot did not say that Mr Couvrecelle and Mr Vanier were irrelevant.

29.  Regarding Mr Uzan, Mr Charlot said that his involvement was limited to his attendance at the 2007 meetings as one of the fund managers as pleaded in §2 of the ASoC.  P also pleaded in §23 of the ASoC that he had allegedly made enquiries to Mr Uzan on the Performance Fee Arrangement.  But P’s case is that there were other people who made relevant communication to him which was recorded in a memo pleaded in paragraph 23 of the ASoC.  Hence, Mr Charlot said that P’s inquiry made with Mr Uzan is at best of peripheral significance to the alleged oral agreements and cannot qualify as substantial evidence that is material to those issues.

30.  However, Ds have changed their position.  They now say that they will call Mr Uzan as one of their witnesses and his evidence will cover the discussions that Mr Couvercelle had with the stakeholders concerning the performance fees and bonus allocations at the material times between 2008 and 2009 and the outcome of such discussions.  Hence, Ds have impliedly conceded that the evidence to be given by Mr Uzan is relevant to this action.  Mr Lee, counsel for P has agreed that if Ds should file a witness statement of Mr Uzan, he will withdraw him from the letter of request, if granted.

31.  Regarding Mr Levy, he was involved in devising and implementing the Performance Fee Arrangement for individual managers from the outset.  His involvement was recorded in many recently disclosed emails (B/42-43, B/49, B/54-55, B/64-5 to 64-7).  He was in particular a recipient of Mr Couvrecelle’s email dated 15 September 2009 which has been referred to above (B/64-5).  He should know if P was a party to the Performance Fee Arrangement or that there was any promise by D1 and/or D2 to pay P such fees.

32.  P, in seeking to prove that there was the Performance Fee Arrangement, also relied on a letter issued by D1 to him and dated 21 September 2009 (B/78).  The letter was signed by Mr Couvrecelle, but the e-mails disclosed recently by Ds show that its draft had been discussed between Mr Levy and Mr Couvrecelle and revised by both of them before it was issued to P (B/64-4).  The letter says:

“In view of the performance of the Saint-Honoré China fund (to 30 June 2009) that is managed by you, a decision has been made to award you a one-off gross bonus of €230,000 in March 2010. This bonus will be paid on the condition of your presence on the payroll on the date of payment.

…” (emphasis added)

33.  The Saint-Honoré China fund is also known as the EdR China fund.  It was one of the funds managed by P. Despite the wording of the said letter, Ds denied in §14(a) of the defence that the bonus of €230,000 was in respect of the performance of the EdR China fund with the reference period ending on 30 June 2009.  This is an important issue in the overall dispute on whether there was indeed the Performance Fee Arrangement and P’s entitlement to such fees.  Mr Levy’s evidence is relevant on this issue as he had revised the draft of the letter.  His evidence will also be relevant to the implementation of the arrangement and hence on whether P was a party to the Performance Fee Arrangement or that there was any promise by D1 and/or D2 to pay P such fees. 

34.  I do not overlook that Ds have also pleaded in §17(b) of the defence an alternative to their denial that the €230,000 was performance fee of the EdR China fund for the period ending on 30 June 2009.  They pleaded an alternative that if they were under any legal obligation to P under the Performance Fee Arrangement, such obligation would have been limited to the fees for the EdR China fund in 2009 of which P had already received the full amount. This alternative was added by re-amendment made on 5 December 2017.

Ds’ submissions on irrelevance of evidence

35.  Ms Sit, counsel for Ds submitted that:

(1) P’s employment relationship with D1 was wholly governed by the written Employment Contract dated 27 November 2007 which made no reference to performance fee.

(2) Throughout P’s employment with D1 from 2008 to 2012, he was paid on a discretionary basis substantial bonuses in cash at HK$10,641,283 and shares to the tune of €250,000 which were in addition to the stock options. 

(3) There were in 2007 discussions between P and Ds’ personnel to explore the possibility of introducing performance fees in the form of a structured scheme for bonus instead of discretionary bonus, but the contemporaneous documents disclosed show that they were no more than discussions. The proposed structured bonus scheme was subject to the approval of D1’s shareholders which was never given. 

(4) P knew that there was never any contractually binding performance fee arrangement.  Hence, he never raised any issue on unpaid performance fees throughout his employment from 2008 to 2012 despite his alleged oral agreement made in as early as 2007.  He also accepted discretionary bonuses without question. 

(5) On any view, there is no factual basis to allege D2 (parent company of D1) had any contractual relationship with P.

36.  Ms Sit further submitted that in the light of the contemporaneous documents, P cannot show that this application is necessary. Her reasons are: -

(a) reading §§2-5 of the ASoC and §19a of the re-amended reply and defence to counterclaim (“reply”) together shows that the Profit-sharing Arrangement was one and the same as the Performance Fee Arrangement.  P has, however, accepted in §13 of the ASoC that he had forfeited his entitlement under the “Profit-sharing Arrangement” by accepting the benefits in lieu granted in 2009 and 2010 on a discretionary basis.  Hence, the Performance Fee Arrangement had also been forfeited.  This position is consistent with the undisputed facts.

(b) the real issue on the “Performance Fee Arrangement” is not on whether there had been discussions on the same, but whether P could establish that there was a binding collateral agreement between him and Ds that he should be paid such fee.  P could not establish that given the objective facts that:

(i) P’s case that the agreement was supposed to be in writing but was never done or made part of the written Employment Contract;

(ii) the performance fee-linked bonus scheme was never approved by Ds despite the discussions in many e-mails.  Ms Sit further submitted in §16 of her submissions that the e-mails exchanged amongst Ds’ senior staff from July and September 2009 clearly revealed the factual position that Ds had ultimately decided not to approve the performance fee scheme and to keep bonus allocation discretionary (B/43 to B/78);

(iii) P’s acknowledgement of the letters dated 21 September 2009 and 15 February 2010 which stated that the profit-sharing principle had been superseded and bonuses were instead awarded on discretionary basis; and

(iv) P received bonuses awarded on a discretionary basis year-on-year and throughout his employment without complaint or any issue that Ds had departed from the “Performance Fee Arrangement”.

(c) In the circumstances, any evidence the requested witnesses may be able to give would not be substantial and directly material evidence relevant to the issues which the court will have to resolve at trial.

37.  Mr Lee submitted that the real issue is whether there was a Performance Fee Arrangement as pleaded in §§ 20 to 23 of the ASoC or at all.  P’s pleaded case is that the Performance Fee Arrangement had been agreed in 2007 in a conversation between Mr Couvrecelle and P in mid-2007 (ASoC §20) and in conversations that P had with Mr Couvrecelle and Mr Vanier in second half of 2007 (ASoC §§22-23).  These have been referred to in §10 of Ms Sit’s written submissions.  Therefore, Mr Courvecelle and Mr Vanier can give substantial and directly material evidence on this issue.  Regarding Mr Uzan and Mr Levy, it is immaterial that they were not in direct communication by email or in person with P.  They were either integral to the formulation and implementation of the Performance Fee Arrangement or were participants in meetings at which the arrangement was rolled out to managers.  It is vital to note that the arrangement applied not just to P but to all managers.  Their evidence is therefore substantial and directly material on this issue.  The application is thus not misconceived.

38.  Regarding the absence of the Performance Fee Arrangement from the written Employment Contract, Mr Lee submitted in his reply note that P’s employment was not wholly governed by the written employment contract as P’s claim for the Performance Fee Arrangement was based on what Mr Couvrecelle had on behalf of D2 promised him.  He further submitted that there was no entire agreement clause in the contract. Hence, the arrangement could have subsisted side-by-side with the contract.  That was the reason for suing D2. 

39.  Regarding the payments to P of discretionary cash and shares, Mr Lee referred to D1’s letters to P dated 26 May 2008 and 21 September 2009 (B/76 and 78) as evidence of payments to P pursuant to the Performance Fee Arrangement in 2008 and 2009.  That was also the reason for suing D1.  He pointed out that the contract was made by P with D1 whilst the arrangement was struck by D2 with P. 

40.  He also submitted that P’s silence about the non-payment of his fee under the Performance Fee Arrangement throughout the years is only a matter for cross-examination. 

41.  Regarding Ms Sit’s argument that P’s case on the Profit-sharing Arrangement was the same as the Performance Fee Arrangement and the former had been forfeited by P’s acceptance of the discretionary benefits in lieu granted in 2009 and 2010, Mr Lee submitted that the two arrangements are quite different creatures:

(a) Profit sharing was 15% profit sharing for a period of 3 years based on D1’s operational results (Confirmation Letter dated 25 October 2007 (B/74)).

(b) Performance fee was paid pursuant to an oral agreement made in second half of 2007 or early 2008 (§22 of ASoC and §3A of FBPs (A/26). It was generated by the relevant fund and would be shared 50/50 between D2 and the individual fund manager(s) responsible for the fund.  The individual manager’s share of fees would be paid over a 3-year period at the end of the fiscal year for the relevant fund.  All individual managers would cease all personal dealings in funds they managed.

42.  Mr Lee further referred to §13 of the ASoC, §§18 and 18B of the reply to show that only the Profit-sharing Arrangement was superseded by the New Bonus and Stock Options-in-lieu of Profit-sharing Arrangement and not the Performance Fee Arrangement.  Theforfeiture of P’s entitlements under the Profit-sharing Arrangement did not affect his entitlements under the Performance Fee Arrangement.

43.  Ms Sit submitted that the e-mails exchanged amongst Ds’ senior staff from July and September 2009 revealed Ds decision not to approve the performance fee scheme and to keep bonus allocation discretionary.  Mr Lee’s reading and understanding of these e-mails was to the opposite.  He submitted that these emails addressed the implementation of the Performance Fee Arrangement for the periods mentioned therein.  He also found direct reference in the e-mails to the Performance Fee Arrangement as an already-agreed structure and that Ds made a deliberate decision not to put the arrangement into written form.  He also pointed out that the e-mail chain ended as abruptly as it started and Ds failed to disclose any more relevant mail from October 2009 onwards.

Decision on relevance

44.  Ms Sit’s submissions are on the whole based on her subjective reading of P’s pleadings and the e-mails disclosed by Ds.  If Ds’ case as shown in the documents is indeed as strong as she submitted, one wonders why Ds have not applied to strike out the claim for performance fees from the action.  The differences between the submissions advanced by the two sides highlight the need for oral evidence from the people referred to in the parties’ pleadings and involved in the e-mails.

P hijacking Ds’ witnesses?

45.  Ms Sit also criticised P for making this application to hijack the proper procedure of identifying and calling witnesses.  Her reasons are that the parties have yet to exchange witness statements, the requested witnesses are Ds’ current or former employees and not third parties and Ds have indicated that Mr Uzan will be giving evidence for Ds. There is therefore no basis for P to allege that these witnesses would not be available at trial. 

46.  I would note that Ds’ stance as demonstrated in the affidavit of Mr Charlot was that Mr Uzan was not a relevant witness and should not be examined.  Ds only changed their stance recently (after P has made this application) and advised P that they will call Mr Uzan.  Apart from Mr Uzan (a current employee of D2 and admitted by Ms Sit to be giving evidence not voluntarily), Ds have not mentioned who else will come to Hong Kong to give evidence in this action.  If Ds’ former employees are unwilling to do so, I do not know how Ds can compel them to come here to attend the trial.  Mr Lee has also made it plain that if a witness statement by Mr Uzan is filed, he will drop Mr Uzan even if a letter of request is granted for his examination.  It is likely that he will do the same for other witnesses who would be called by Ds.  I therefore find this criticism by Ms Sit quite hollow.

Witnesses unwilling to come to Hong Kong

47.  P stated in his 2^nd affirmation that he had spoken to Mr Couvrecelle and the other requested witnesses and they had all indicated that it would be difficult for them to act as his witness in this action voluntarily (especially in the case of Mr Uzan who is a current employee of D2).  Mr Vanier had also informed P by email dated 5 April 2018 (A/89-60) that he was not in a position to help P on this case.  Mr Uzan and Mr Levy did not even reply to P’s e-mail to them dated 4 and 6 April 2018 respectively requesting them to assist P in this action. 

Viable alternatives?

48.  Ms Sit also submitted that P has failed to show the absence of viable alternatives to obtaining the necessary evidence.  She referred to (i) the substantial amount of contemporaneous documents concerning the performance fee/bonus issue, and (ii) the fact that P was able to locate and obtain evidence from other witnesses locally (eg Ms Sheila Shao) who attended the same meetings.

49.  Regarding the contemporaneous documents concerning the performance fee/bonus issue, I have already referred to the different interpretations adopted by the parties.  It seems that either side can put a gloss on them for their respective purposes.  I also reiterate that if Ds’ case on the documents are so strong, I can see no reason why they would not have applied to strike out this claim. 

50.  Regarding other available witnesses, Ms Sit could only name Ms Sheila Shao.  Ms Shao was recruited by P in Hong Kong to work for D1.  She only attended an offsite meeting held in France in around 2012 where the issue of Performance Fees was discussed.  She reported what was discussed in the meeting to P.  She said that D2 did not want a written fee policy.  She was not in Ds’ employ in 2007 and was was not involved when the Performance Fee Arrangement was alleged rolled out in 2007.

51.  P has also explained that he was unable to persuade the requested witnesses to give evidence for him as they were under a confidentiality covenant in their employment contracts and Ds have refused to waive this covenant to allow them to talk.  P’s former solicitors had in fact written to Ds’ solicitors on 18 August 2016 seeking a waiver of confidentiality requirements under the contracts of the requested witnesses (B/11-12).  Ds’ solicitors did not even bother to favour them with a reply. 

52.  I would add that for fund managers and senior officers of Ds, it is beyond imagination that their employment contracts would not have a comprehensive confidentiality covenant.  The fact that Ms Sheila Shao is prepared to give evidence for P (possibly in contrary to such covenant) does not mean that other officers or former officers of Ds would be prepared to do so too.  The existence of such a covenant would make the option of giving evidence in Hong Kong or by video-link from France unworkable. 

53.  I accept Mr Lee’s submission that an order of a French court compelling the requested witnesses to give evidence would avoid any of them from breaching the confidentiality covenant and would overcome their natural unwillingness to testify against a former or current employer.

54.  In the premises, I do not accept Ms Sit’s argument that P has not shown the absence of other viable alternatives.

Other grounds

55.  Ms Sit also criticised P for being non-selective and nonsensical in requesting for witnesses.  However, she maintained her opposition with the same vigour after P has proposed to amend the requesting witnesses by his amending summons.

56.  Ms Sit also submitted that the court looks upon an application least favourably if made by a plaintiff, because the plaintiff has chosen to litigate in Hong Kong.  But this is only in relation to an application by the plaintiff for the plaintiff himself/herself to be examined by a letter of request in a foreign jurisdiction.  In the present case, P is to be examined at a trial to be conducted in Hong Kong.  This criticism has no merit.

57.  Ms Sit also suggested that it is for P and his legal team to satisfy themselves before commencement of this action that P had the necessary evidence to substantiate his own claim in Hong Kong.  If they should have failed to do that, then the court should not exercise its power to request the assistance of a foreign court to come to P’s assistance.  If this ground is valid, no letter of request would be issued regardless of merit.

Delay

58.  Ms Sit finally submitted that there had been unacceptable delay on P’s part in making and prosecuting the application and P had not given any explanation.  The summons was issued on 22 August 2016.  It was after no less than 3 orders dated 22 July 2017, 24 August 2017 and 14 November 2017 directing P to fix the hearing date and not until December 2017 (i.e. 18 months later) that the summons was listed for hearing.  Hence, the Court should not exercise its discretion in favour of P. 

59.  Mr Lee made the following submissions in reply. Following the parties’ initial discovery, the matter was stayed for mediation. This application was only considered and taken out after P’s complaint that Ds had not made discovery of any internal communication on the Performing Fee Arrangement.  The application was thereafter followed by exchange of evidence.

60.  P’s 2^nd affirmation was filed on 22 February 2017 (A/146).  Ds then made discovery of some relevant emails on 24 July 2017. This prompted a round of re-amendment to the pleadings which took time.  The re-amendments to the defence and counterclaim were completed on 5 December 2017.  Furthermore, the action has not been set down for trial and witness statements have not yet been exchanged.

61.  Ds’ position was also conflicting.  Ds’ solicitors have in a letter dated 22 December 2017 (page 66 of “TY-3”) objected to this application on the basis that “it is plainly unnecessary in light of, inter alia, the documents disclosed by [Ds].  In the alternative, [Ds] take the view that the Application is premature as [Ds] intend to produce Mr. Phillippe Uzan as one of [their] witnesses”.  (emphasis added)

62.  In the light of the chronology of events, I am satisfied that the application is made bona fide and has not caused unreasonable delay.

Decision

63.  I have held against Ds on all their arguments in opposition to this application.  I order that a letter of request shall issue to the judiciary of France for the examination of Mr Philippe Couvrecelle, Mr Brun Vanier, Mr Philippe Uzan and Mr Marc Levy.  I further order that the action be stayed until the return of the said letter of request and examination.

64.  I also make a costs order nisi that the costs of and incidental to this application be in the cause save and except that the costs of argument of the application be to P to be taxed.