MA CHI HUNG v. BACCARAT FAR EAST LTD

HCLA 7/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 7 OF 2016

(ON APPEAL FROM LBTC 1172 OF 2014)

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D EC I S I O N

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Introduction

1.  This is an application by Mr Ma for leave to appeal against a decision of Mr Andy Cheng, Presiding Officer of the Labour Tribunal (“the Tribunal”) made on 14 March 2016 (“the Review Decision”) whereby the Presiding Officer, after a review hearing held on 22 February 2016, maintained his dismissal of Mr Ma’s claim on 7 October 2015 (“the Decision”) save that the costs payable to Barrarat Far East Limited (“Barrarat”) was reduced from HK$67,085 to HK$42,425.

2.  The Reasons for Decision in respect of the Review Decision was written in the Chinese language. The proceedings below and here were conducted in Cantonese. However, in view of the fact that the relevant employment contract, the emails which Mr Ma alleges gave rise to a variation of the contractual terms and the Grounds of Appeal were written in English, I find it convenient and appropriate to render my decision in English. This court can arrange this Decision to be explained to Mr Ma in Cantonese by a court interpreter should Mr Ma require such assistance.

3.  This application is made under section 32(1) of the Labour Tribunal Ordinance, Cap 25.  Mr Ma accepts that the application can only succeed on the grounds that the awards/orders of the Presiding Officer are either erroneous in point of law or outside the jurisdiction of the Tribunal. Accordingly, challenges as to findings of credibility and facts are not within the permissible ambit of appeals from the Tribunal.

The claim

4.  Mr Ma entered into a written employment contract with Baccarat on 7 December 2011 (“the Contract”). He agreed to be employed by Baccarat as Area Sales Manager commencing on 1 January 2012.  The Contract was terminated in late March 2014. He instituted proceedings against Baccarat in the Tribunal in April 2014 and his claim is for arrears of salary from 1 January 2013 to 30 March 2014 in the total sum of HK$30,000, year-end bonus for the year ending 31 December 2012 in the sum of HK$32,000 and commission in the sum of HK$1,236,894.00.

5.  Mr Ma’s claim is based on certain alleged terms of the Contract varied subsequently. He claims that the Contract was varied by an exchange of emails correspondence between Ms Chen on behalf of Baccarat and him on 15 and 16 April 2013. He alleges that pursuant to such variations his salary was increased to HK$34,000, his year end bonus was agreed to be HK$32,000 and his entitlement to a commission calculated at 2% on deals secured by Mr Ma for Baccarat (collectively “the Variations”).

6.  The following terms of the Contract were of relevance:

          (5.1)     Your monthly basic salary is HK$28,000 per month, payable in arrears, plus monthly guaranty commission HK$4,000 for the first year. And the commission scheme based on the achievement of the sales objectives which is to be set by Baccarat after the first year. Baccarat’s practice is to review salaries in January every year.

          (5.3)     You may be eligible to participate in Baccarat’s yearly bonus scheme subject to its terms and conditions from time to time.

7.  Mr Ma initiated the exchange of emails on 21 March 2013. First, he sent to Ms Chen on that day an email (“Email 1”) in the following terms:

“As per our discussion regarding my expected salary 2013, I had mentioned that I had accepted the offer from Mr Francois MAINETTI based on an agreement that my basic salary should be adjusted to a comparable level with the market rate from 2013 onwards. Therefore I attached two salary surveys from Robert Walters and Morgan McKinley for your easy reference.

FYI, my actual package = Basic Salary : 28,000 HKD + 4,000 HKD (Guarantee Bonus) x 13 months

As per my employment contract, the commission scheme should start from 2013. Therefore, I would like to propose the below package:

Basic Salary : 40,000 HKD x 13 months

Sales Commission : 2 % on each additional sales, example:

2012 Total Sales Volume = 1 M HKD,

2013 Total Sales Volume = 1.1 M HKD, Sales Commission 2013 = 0.1  M  HKD x 2 % =20,000 HKD.”

8.  Mr Ma sent another email to Ms Chen on 15 April 2013 (“Email 2”). The relevant contents of Email 2 are as follows:

“Further to our meeting on the 05 April 2013 in Hong Kong and taking into consideration of your comments, please find below the revised proposal:

1. Basic Salary : 35,000HKD x 13 months

2. Sales Commission :

a. 2 % on each additional sales (as explained in the email below ) with the existing market, i.e. : Indonesia, Philippines, Singapore, South Korea, Taiwan, Thailand

b. 2 % on each sales with the non-existing market, i.e. : all new markets not listed above

3. Bonus based on 2012 sales performance which should not be lower than 1 month basic salary plus guaranteed commission (or guaranteed bonus), i.e. 28,000HKD + 4,000HKD = 32,000HKD.

Since the scheme of commission and bonus prior (sic) the confirmation of my has been promised and as per the Hong Kong Employment Ordinance, an employment contract could be verbal or written. Therefore, I would appreciate that the management honor the agreement as unwavering as a gentlemen’s handshake.”

9.  Ms Chen replied by way of an email dated 16 April 2013 to Mr Ma (“Email 3”). Its relevant contents are as follows:

“In the contract it was stated there is a commission and bonus system, but not details. I understood from you that orally Francois didn’t confirm or promise any concrete commission and bonus system/amount.

As per my proposal to you below, we do offer commission system, and I confirmed to you last time in HK there will be a bonus for you for your work in 2012. I believe this is all in line with the contract, be it written or verbal.

I had discussion with Markus regarding your package.

Here is our final proposal:

- fix 34000/month x 13 (meaning 6.25% increase from the current total 28000 + 4000hkd, this is above the average of the increase of all staff; or 21.4% increase from the current fix 28000hkd)

- agree on the commission system

- OK for the bonus

I hope you can accept this proposal. We’ll make an appendix to the current contract. At the same time, please kindly draft a “job responsibilities” as Area Manager, to be attached to the contract too.”

10.  The last email which Mr Ma relies on to establish the Variations is the one he sent to Ms Chen on 30 April 2013 (“Email 4”):

“Francois has mentioned that:

1. My monthly salary will be adjusted to the market level from the second year onward.

2. The commission should be based on the sales result and shouldn’t be lower than the market level

3. The yearly bonus will not be less than one whole month package

The above is a verbal agreement from the management.

The salary at 34,000HKD is lower than the market rate. Thus, I would like to request my monthly salary to be adjusted at 35,000HKD.

Hope we can come to an agreement and conclude the contract.”

11.  Mr Ma contends that by reason of the exchange of the emails, Baccarat and he came to an agreement on the Variations. Despite the Variations, Baccarat still paid him the original basic salary plus guaranteed commission in the sum of HK$32,000 per month and hence he should be entitled to the differences in the sum of HK$2,000 from January 2013 to 30 March 2014.

Findings of the Presiding Officer

12.  The Presiding Officer went through all the four emails in the Reasons for Decision. He applied the basic contractual principles to determine whether an agreement was reached between the parties. He concluded that there was no agreement on the Variations at all. He further accepted the testimony of Ms Chen to the effect that after receipt of Email 4, she already told Mr Ma that there might be changes in the management of Baccarat and hence any further discussion about the adjustment of his remunerations had to be shelved pending the completion of the managerial changes.

13.  The Presiding Officer also relied on the fact that Mr Ma did not raise any queries about the unchanged salary payments despite the Variations to confirm his findings that no Variations was agreed at all. He further pointed out that the lack of documentation of the Variations was unreasonable and on balance of probabilities, the version of Ms Chen was more probable.

Grounds of appeal

14.  Mr Ma puts forth 8 grounds of appeal. He argues that the Presiding Officer construed the word “package” in his email incorrectly. He contends that a package should not be mistaken for a package deal. He further points out that clause 17.2 of the Contract provided that all contractual terms between the parties are severable. Hence, he submits that all the terms of his proposal is severable and each of them could be independently accepted by Baccarat.

15.  Mr Ma further argues that the Presiding Officer overlooked the fact that there was an existing and binding employment contract between the parties on foot when the Variations were under discussion. He says under those circumstances, the usual contractual principles relating to the creation of an agreement do not apply. 

16.  Mr Ma next alleges that the Presiding Officer misunderstood the nature of his commission under clause 5.1 of the Contract and his commission was mandatory and not subject to any discretion.

17.  Lastly Mr Ma complains that the Presiding Officer wrongfully refused to deal with his submissions in the review hearing on the credibility of Ms Chen by reason of the fact that he did not state such grounds in his Form 13. Mr Ma opines that the Presiding Officer did not properly exercise his power under section 31 of the Labour Tribunal Ordinance.

Discussion

18.  In the first place, whether the Variations were agreed by the parties is a matter of fact. I agree entirely with the analysis of the Presiding Officer and his factual finding cannot be faulted. I too agree with him on a plain reading of Emails 1 to 4, obviously no agreement was reached. Mr Ma’s proposal remained to be a proposal and had no contractual effect. So did the final proposal of Ms Chen in Email 3.

19.  Mr Ma says that Ms Chen in Email 3 already agreed to the commission and bonus system proposed by him previously. Though his proposed basic salary adjustment was not accepted in that email, his proposal albeit described as a package in Email 1 and revised in Email 2 indeed consisted of severable terms. Hence he argues that at the very least, he should be entitled to benefits under the agreed commission and bonus system.

20.  I cannot agree with him. In Email 3, Ms Chen expressly put forth the terms as the final proposal. The characterization of “package” in respect of Mr Ma’s own proposal in Email 1 is irrelevant to the consideration of the final proposal of Baccarat though I should make it clear that I disagree with Mr Ma’s interpretation. In any event, I am of the view that the three terms in the final proposal were to be accepted as a whole. All three of them related to the monetary benefits to which Mr Ma might be entitled under the Contract and they were inter-related. Undoubtedly, Baccarat came up with these terms in the final proposal after taking an overall view of the matter. Mr Ma could not cherry pick any of them and opt against the others. Email 4 cannot possibly be construed to be an acceptance of the final proposal.

21.  It should not be overlooked that the Presiding Officer accepted that after receiving Email 4, Ms Chen did tell Mr Ma that they would further discuss the adjustment of his remuneration after the change of the management. Mr Ma did not advance any ground to overturn this factual finding. In light of Ms Chen’s evidence, the factual conclusion of the Presiding Officer must be correct.

22.  I have read the email of Ms Chen dated 30 October 2013 and it cannot possibly assist Mr Ma at all. There, Ms Chen did not say anything pointing to an agreement of the Variations.

23.  The Contract was indeed still in existent when the emails were exchanged and the parties made their proposals therein. This does not mean that the established contractual principles ceased to be applicable to the issue as to whether there was a valid agreement to vary the existing terms of the Contract. I see no substance in Mr Ma’s contention.

24.  Lastly, I agree with the Presiding Officer that in Mr Ma’s Form 13, he merely set out the grounds to review the Decision in respect of costs only. Mr Ma is unfair in his criticisms about the Presiding Officer. Far from ignoring his submissions on the credibility of Ms Chen, as can be seen in the Reasons for Decision, the Presiding Officer conscientiously considered Mr Ma’s all other submissions relating to his claim.  I see no merit in this complaint at all.

Conclusion and Order

25.  For the reasons given above, Mr Ma fails to discharge the threshold onus to show an arguable case that the Review Decision and/or the Decision of the Presiding Officer is either erroneous in point of law or outside the jurisdiction of the Tribunal. I dismiss his application for leave to appeal accordingly.

26.  I make no order as to costs.