TOP EXECUTIVE LTD v. ANTHONY CHIANG & PARTNERS (a firm)

DCCJ21804/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 21804 OF 2001

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JUDGMENT

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1. The plaintiff is an employment agency company while the defendant is a firm of solicitors practicing in Hong Kong.

2. The plaintiff claims against the defendant for employment agency fees in respect of the engagement of a corporate finance solicitor. The action was defended on the basis that the defendant had not entered into a contract with the plaintiff for the engagement of the solicitor in question. It is the defendant's case that the plaintiff should only be suitably remunerated with the payment of HK$50,000 in respect of the service provided. As the plaintiff has already accepted the defendant's cheque for payment of the sum of HK$50,000 the plaintiff's claim had been settled.

The Events

3. A large part of the evidence was not in dispute between the parties. Negotiations were carried out principally between Anthony Chiang (hereinafter referred to as "Chiang") of the defendant and Jackie Mak (hereinafter referred to as "Mak") of the plaintiff.

4. The defendant started to engage the service of the plaintiff in 1997 for the engagement of a commercial lawyer. In 2000 there was another placement contract between the plaintiff and the defendant. The 2000 placement turned out unsuccessful when the candidate declined the defendant's offer.

5. In June 2001 the defendant again requested the service of the plaintiff in the engagement of a conveyancing lawyer.

6. On 11/6/01, after negotiation, the plaintiff faxed to the defendant a 3-paged letter (at 18.34 hours) setting out the job description requested of the conveyancing lawyer and the plaintiff's proposed employment agency terms.

7. After Chiang had considered the letter, there were further discussions between Chiang and Mak about the fees payable. Parties agreed that if the monthly salary of the conveyancing lawyer was HK$70,000 or above the plaintiff's agency fees would be calculated at 12% of the annual package of the employee. Should the salary fall below HK$69,999 the defendant would be given a further 10% discount on the proposed discounted rate of 15%. During the discussion Mak indicated to Chiang that the terms of business (hereinafter called "T.O.B." for short) of the plaintiff would be faxed to the defendant for Chiang's execution to confirm the terms and conditions between them.

8. On 12/6/01 the plaintiff faxed to the defendant 9 pages of documents: (i) 4 pages of the plaintiff's T.O.B. of 2001; (ii) 3 pages of the 2001 "T.O.B." of the plaintiff's sister company Top Secretary Limited; (iii) 1 page of cover note; and (iv) 1 page containing the photocopied name cards of Mak and Jacqueline Lee of the plaintiff.

9. On 13/6/01 (at 12.17 hours) the defendant returned to the plaintiff by fax the 3-paged letter of the plaintiff of 11/6/01. On page 2 of the letter Ms Connie Lau, the office manager of the defendant appended marginal notes at the instruction of Chiang to indicate the amendment to the fees payable; i.e. the reduction to 12% and 10% off the proposed 15% agency fees for monthly salary of above and below HK$70,000 respectively. The 1st and 2nd pages of the letter were initalled by someone on behalf of the defendant while the 3rd page was not.

10. In the same facsimile message the plaintiff also received from the defendant 3 pages of the 2001 T.O.B. of "Top Secretary Limited" signed by Chiang on behalf of the defendant. In this 3-paged "Top Secretary Limited" T.O.B., hand written marginal notes appeared on the 2nd page noting the variation of the guarantee period. The marginal notes read, " Monthly salary below 69,999 six weeks guarantee and above 70,000 two months guarantee".

11. On 13/6/01 (at 15.56 hours) the defendant faxed to the plaintiff another copy of the 2001 T.O.B. of "Top Secretary Limited" signed by Chiang on behalf of the defendant. The T.O.B. faxed at 15.56 hours was the same T.O.B. faxed at 12.17 hours, except for the 2nd T.O.B. faxed to the plaintiff, the document was endorsed with the date chop of "13/6/01". When the plaintiff discovered Chiang had wrongly signed on the "Top Secretary Limited" T.O.B. rather than the T.O.B. of the plaintiff and the 3rd page of the plaintiff's letter had not been initialled, the plaintiff requested the defendant to sign and initial the pages again.

12. On 13/6/01 (at about 17.03 hours) the defendant faxed back the 1st page of the plaintiff's T.O.B. of 2001 signed by another partner of the defendant Mr. Cliff Wai-man Wong and the initialled 3rd page of the plaintiff's letter of 11/6/01.

13. A conveyancing lawyer was secured by the defendant on 18/7/01 through the plaintiff's introduction. Placement fees in respect of the conveyancing lawyer in the sum of HK$100,800 had been settled in full.

14. On 19/6/01 there was discussion between Chiang and Mak about the need of the defendant to engage a corporate finance lawyer. The content of this discussion was in dispute.

15. The plaintiff produced a printout of its internal computer record to show a job order was compiled as a result of receiving instruction from the defendant on 19/6/01 for the engagement of a corporate finance lawyer. According to Mak, she was told by Chiang on 19/6/01 that the defendant would have 2 major PRC deals coming up in 2001 and the defendant was looking for a corporate finance lawyer, preferably with initial placement offer (IPO) listing experience. The salary suggested by Chiang was between HK$100,000 and HK$145,000 per month, with a 13th month's bonus for a year.

16. Chiang did not agree with Mak on the content of their telephone discussion on 19/6/01. Chiang testified to say on 19/6/01 he instructed Mak to telephone Sandy Lee of Denton (hereinafter called "Sandy") solely for the purpose of ascertaining whether Sandy was interested in taking up alternative employment. When the answer was known, Chiang would speak to Sandy himself.

17. On 20/6/01 Mak selected 2 candidates, Tony Chow and Grace Chang (hereinafter called "Grace"), from the data bank of the plaintiff and faxed their resumes to Chiang. Chiang did not dispute the fact that resumes of potential candidates had been faxed by the plaintiff to the defendant's office.

18. According to Mak, Chiang got back to her on about 20/6/01 or 21/6/01 to indicate he was interested in interviewing Grace. An interview was arranged for Grace at 10 am on 22/6/01.

19. On 22/6/01 Grace was interviewed by Chiang. Chiang did not deny having interviewed Grace.

20. According to Mak, on 23/6/01, the plaintiff received instruction from Chiang to make an offer of employment to Grace for a monthly salary of HK$120,000 with a discretionary year-end bonus. In order to persuade Grace to leave her current employment, Chiang faxed to the plaintiff a "deal list" which showed the major deals the defendant company had in the year 1997 to enable Grace to see for herself the volume and quality of work expected in the defendant's firm. Grace declined Chiang's offer about 2-3 weeks later.

21. Chiang, on the other hand, gave evidence to say he was considering Grace as an alternative to engaging Sandy as there was no news about the availability of Sandy. Chiang was adamant that he never made an offer of appointment to Grace as he had not discussed with his other partners about making an offer to Grace. According to Chiang, Grace was indisposed at the time with illness; she would not be available until 6 months later and the defendant was not prepared to wait for 6 months in the engagement of their corporate finance lawyer.

22. On 30/6/01 the plaintiff faxed to the defendant the resume of another candidate Flora Wong.

23. In Mak's testimony, she had another telephone conversation with Chiang on 13/7/01 in which Chiang asked Mak to intensify her efforts to find a corporate finance lawyer for the defendant. According to the plaintiff's company records, it was recorded that Chiang had suggested the plaintiff should look for potential candidates from solicitors firms such as Zimmern, Victor Chu, Woo Kwan Lee & Lo. In the same note the plaintiff also recorded Chiang had mentioned he was familiar with Mr. Raymond Kwok, a partner of Denton and that Chiang was interested in considering "Sandy Ng" of Denton for the job. Chiang denied he instructed Mak to look for corporate finance solicitors from abovenamed firms. Chiang did not agree he had mistakenly referred "Sandy Lee" as "Sandy Ng".

24. According to Mak, the plaintiff was unable to find a "Sandy Ng" in Denton. After making an on-line search of the solicitors of Denton, the plaintiff identified "Sandy Lee". After informing Sandy over the phone that a local firm was interested in recruiting her, the plaintiff arranged an interview with Sandy at the plaintiff's office on 18/7/01.

25. Mak met Sandy on 18/7/01. On the same day Sandy completed and signed the "Terms of Agreement" of the plaintiff in which she agreed to inform the plaintiff of an employment accepted by her from the plaintiff's clients. During this meeting, after Mak ascertained Sandy's interest of changing employment, she informed Sandy of Chiang's interest to interview her. After getting Sandy's consent to an interview, Mak fixed an interview for Sandy at 5pm on 19/7/01.

26. On 19/7/01 (at 11.14 am) the plaintiff faxed Sandy's resume to Chiang together with the resume of Vincent Lai. Chiang did not dispute that resumes might have been sent by the plaintiff to the defendant.

27. On 19/7/01 Chiang interviewed Sandy at the defendant's office where they discussed the employment of Sandy by the defendant. After the interview, Sandy signed an employment agreement with the defendant on 20/7/01.

28. On 23/7/01 the plaintiff sent the resume of another candidate Keith Hung to the defendant. Chiang did not dispute that the plaintiff could have sent him further resumes of other potential candidates for the post of corporate finance lawyer.

29. On 21/8/01 Sandy commenced employment with the defendant at a monthly salary of HK$180,000 with a yearly bonus of HK$180,000.

Court's Findings

30. The issues to resolve are:-

Q1:	Was there an agreement between the plaintiff and the defendant for the engagement of Ms Sandy Lee?
Q2:	If an agreement had been concluded, what were the terms of the agreement?
Q3:	Was Sandy introduced or referred by the plaintiff to the defendant in the performance of an employment agency contract?
Q4:	Have parties reached subsequent settlement as a result of the plaintiff's receipt of the payment of HK$50,000 made by the defendant ?

(I) Agreement reached?

31. Chiang contended that he instructed Mak on 19/6/01 for the sole purpose of ascertaining Sandy's intention whether she was amenable to a change of employment.

32. However, from the evidence disclosed at trial, it is clear that the plaintiff had opened a job order page in its computer system as a result of receiving Chiang's communication on 19/6/01. Two to three days after the plaintiff received instruction from Chiang, the plaintiff provided the defendant with the resumes of 2 candidates. After considering the resumes, Chiang decided to interview Grace. An interview was arranged by the plaintiff for the defendant and Chiang interviewed Grace on 22/6/01.

33. With such a course of conduct, it is beyond reasonable comprehension to suggest: (i) that the plaintiff had not been given a general instruction to secure a corporate finance lawyer for the defendant, or (ii) that the defendant had designated Mak solely with the task of contacting Sandy Lee to secure her intention to take up alternative employment. If Chiang had instructed Mak with the sole mission to ascertain Lee's availability, it is beyond logical understanding why Mak made no note of the reference of "Sandy" by Chiang in the 19/6 conversation; that Mak would have made no effort to get in touch with "Sandy"; in lieu Mak provided Chiang with the 2 other candidates; or that Chiang would not enquire with Mak about the intention of Sandy before interviewing Grace.

34. From the action of the plaintiff and the response of the defendant, it is quite incredible to suggest the plaintiff had simply acted in an over-zealous manner in ascertaining the various potential candidates and in providing the service as a gratuitous gesture of good will or as an unsolicited act. I accept, on balance, as a fact finding of this court that Chiang had on 19/6/01 given Mak of the plaintiff a general instruction to secure a corporate finance lawyer for the defendant without naming Sandy of Denton.

35. Chiang denied having made an offer of appointment to Grace. After weighing the defendant's evidence and the plaintiff's evidence, I accept what was recorded in the business record of the plaintiff reflected the true position and that Chiang had in fact made an offer to Grace on or about 23/6/01 and the offer was subsequently declined by Grace.

36. Chiang suggested he had no intention to enter into an employment agency contract with the plaintiff in respect of the employment of their corporate finance lawyer. It is trite law that an objective test ought to be adopted in ascertaining the parties' contractual intention.

37. From the course of conduct between the parties, it would be illogical for anyone to argue on an objective standard that a reasonable bystander would not be aware of the fact that the plaintiff, in providing its service in the supply of the 6 candidates, is providing the defendant its employment agency service in response to an employment agency agreement. The plaintiff, had over a course of about a month secured 5 candidates from its data bank, interviewed the potential candidate, supplied the defendant with the credential and curriculum vitae of the 6 candidates and arranging for the appointments for interview for the 2 short-listed candidates. Any reasonable person in the position of the defendant should not have failed to recognize the fact that the plaintiff was performing its contractual service.

38. According to what transpired between the parties, it cannot seriously be disputed that the situation, when assessed objectively, indicated the subsistence of a contract for head hunting service between the plaintiff and the defendant since 19/6/01 in respect of the engagement of the defendant's corporate finance lawyer. Though the employment agency contract between the plaintiff and the defendant in respect of the engagement of the corporate finance lawyer was not reduced into writing, I accept the agreement was concluded through the course of conduct of the parties.

(II) Terms of the Agreement ?

39. I am satisfied on balance of probabilities that an employment agency agreement existed between the parties. The next issue to consider is: what are the terms of this contract?

40. At the first page of the 2001 T.O.B. of the plaintiff, right above the space for execution by the defendant, the following was printed

" Please note that any interviews with or engagement of candidates introduced by TOP EXECUTIVE LIMITED, irrespective of whether you have signed and chopped below, indicates that you have accepted our Terms of Business as set forth herein, as does your payment of our invoices upon presentation. These terms shall apply to any and all current and/or future engagement of any candidate introduced and/or referred to you by TOP EXECUTIVE LIMITED. You will be liable for full payment of our fees as well as for any other obligations set out herein."

41. The above term appeared both in the plaintiff's T.O.B. and the T.O.B. of "Top Secretary Limited", the latter was the document executed by Chiang. There is no dispute that Chiang had every intention to execute the "T.O.B." of the plaintiff, though a wrong document, namely the "Top Secretary Limited" T.O.B. was signed by Chiang instead. To confirm the defendant's agreement to the plaintiff's terms of business, the other partner of the defendant had subsequently appended his signature on the plaintiff's T.O.B. to re-affirm the defendant's intention to be bound by the terms stated therein.

42. Chiang argued that he did not read the plaintiff's T.O.B. in detail and he was not aware of the clause which stated that all future contracts with the plaintiff for the year of 2001 would be subjected to the terms and scale of charge stated in the plaintiff's T.O.B. of 2001. Firstly Chiang must have at least read through the T.O.B. of the plaintiff or that of the sister company of the plaintiff "T.O.B. Secretary Limited" (couched in the similar terms as the plaintiff's T.O.B.) for at page 2 of the document, amendments had been made to the guarantee period.

43. Further, in respect of the incorporation of conditions in printed standard documents, the rule has always been that falling short of actual knowledge of the term, the court has to consider if the party tendering the document did what was reasonably sufficient to give to the other party notice of the conditions. If the defendant was aware of the printed clause but had chosen not to read what was in the print, the document provider would have been considered to have given sufficient notice to the defendant ( Chitty on Contract, 28th Ed. Vol 1 para 12-013).

44. The term making reference to the plaintiff's standard charges in the plaintiff's term of business for all future contracts was placed right above the execution space. The clause is worded in clear terms. There is no non est factum claim by the defendant. Nor, on account of the defendant's own legal knowledge by reason of his training and occupation, can there be a claim of inability to appreciate the plain English meaning of the clause. One can also hardly argue that one would fail to notice a term printed right above the execution space when the clause was printed in normal font.

45. As sufficient notice of the said clause had been given by the plaintiff to the defendant, it is not open to Chiang or the defendant to avoid liability by arguing that the said provision had not been brought to the attention of the defendant. Though the corporate finance lawyer agency contract was not reduced into writing, the fact that a contract came into existence through the course of conduct of the parties does not render the contract less enforceable.

46. Defence counsel raised objection about the consideration of the conclusion of an agreement by reference to the conducts of the parties since counsel on behalf of the plaintiff never relied upon such argument. But the parties are only required to aver to the factual occurrence in their pleadings. Issues of law, if trite and non-controversial, though not relied upon by the parties, ought not be ignored by court when coming to a just resolution of the legal dispute between the parties.

47. The defendant had been given due notice of the charges and terms of business of the plaintiff for future job placement contracts when the plaintiff's T.O.B. was executed by the defendant on 13/6/01. Chiang gave evidence to the effect that he did not feel it necessary to negotiate for the agency fees for the engagement of the corporate finance lawyer. As the defendant had elected not to negotiate for specific discount of the agency fees payable in respect of the engagement of its corporate finance lawyer, the contract terms stated in the executed T.O.B. of the plaintiff should apply.

(III) Was Sandy introduced or referred?

48. Concerning the employment of Sandy Lee, Chiang testified to say he came to know Sandy in December 2000 when Denton and the defendant were negotiating a joint representation between the defendant and Denton in certain commercial transactions. Sandy was a consultant solicitor working in Denton at the time. In June 2001 Chiang discussed with his other partners of the defendant and agreed to approach Sandy for the post of senior corporate finance lawyer to head the corporate finance department of the defendant. Chiang telephoned Mak in June informing Mak that the defendant intended to recruit Sandy Lee of Denton as the senior corporate finance lawyer of the defendant. Chiang requested Mak to telephone Sandy for the sole purpose of ascertaining from Sandy if she was interested in taking up alternative employment. If Sandy was interested Chiang would telephone Sandy himself.

49. I accept, on balance, the summary of the events found in the plaintiff's company record correctly summarised the occurrence of the events and that the name of "Sandy Ng" was mentioned by Chiang to the plaintiff on 13/7/01. I accept the plaintiff did carry out their efforts to identify "Sandy Lee" from Denton and subsequently referred Sandy to Chiang on 19/7/01 by arranging for the subsequent interview.

50. Defence argued Chiang knew Sandy even before the plaintiff participated in the head hunting exercise in respect of the defendant's engagement of its corporate finance lawyer. Hence Sandy was not introduced nor referred by the plaintiff.

51. There may be room for argument that Sandy was not introduced by the plaintiff to the defendant. Yet one cannot possibly doubt the appropriateness of the situation being classified as a "referral", for Chiang did not make any active effort in ascertaining the credential of Sandy, nor had Chiang made a self-motivated move to contact or approach Sandy after Mak had honoured her promise to locate Sandy and ascertained Sandy's interest.

52. If it was the expressed agreement between Chiang and Mak that Mak should have nothing to do with the recruitment of Sandy and that Mak's instruction ceased at the point after Sandy had given indication of her intention to change employment, it is beyond reasonable comprehension why Chiang should not follow up the matter himself by contacting Sandy himself after clarifying with Mak that Sandy was available for consideration for appointment.

53. It is also beyond reasonable comprehension why the defendant accepted plaintiff's service in the plaintiff's arrangement for a subsequent interview if it was the agreement between Chiang and Mak that Chiang would himself contact Sandy after Sandy's intention was known. It is again beyond reasonable explanation why Mak compiled Sandy's credential for the defendant's consideration if Mak's instruction was solely to contact Sandy to ascertain her intention.

54. Even assuming for a moment that Chiang might have entertained the secret desire that he wished the plaintiff to take no part in the recruitment of Sandy, such desire was never communicated to the plaintiff or any staff of the plaintiff. Sandy was processed like any other potential candidate and was referred to the defendant by the plaintiff after the vetting process had been carried out and completed by the plaintiff as the defendant's employment agent.

(IV) Any settlement reached?

55. In a letter addressed to the plaintiff on 19/10/01 the defendant wrote "... we accept that you are entitled to be appropriately remunerated for services rendered in this matter. We suggest HK$50,000 which is, if not generous, fair to both parties in all the circumstances of this case. This offer is non-negotiable."

56. On 29/10/01 the defendant wrote to the plaintiff's solicitors in the following terms " Attached please find our cheque drawn in your client's favour for HK$50,000 which is, if not generous, commensurate with the limited services that your client has rendered to us in this matter. Kindly acknowledge receipt."

57. On 27/11/01 solicitors on behalf of the plaintiff wrote back to the defendant and said " We refer to your letter of 29th October 2001 and have now received instructions from our client that the cheque for HK$50,000 has now been cleared and our client accepts such entirely as partial payment in respect of the total amount of HK$280,800. We are instructed to issue court proceedings in respect of the balance."

58. The defendant's letters of offer were crouched in general terms. The acceptance of the plaintiff was made with the reservation that it would sue for the balance. One can hardly come to a fact finding that the parties had reached an intended full and final settlement of this claim with the plaintiff's acceptance of the HK$50,000 payment.

The Award

59. On the 2nd page of the plaintiff's terms of business, the placement fees was stated to be 25% of the gross annual salary, including commissions, bonus and allowances in respect of engagement of employees of monthly salary of HK$30,000 and above.

60. Clause 1 of the same page reads: "Placement fees are due upon presentation of our invoice. Failure to comply with our payment terms will avoid our Guarantee and any discount given." As the defendant has failed to comply with the payment terms to make payment, the discounted placement fees of 12% had been avoided and the defendant is liable to the plaintiff for the full placement fees of HK$585,000 (HK$180,000 x 13 months x 25%), less part payment made by the defendant in the sum of HK$50,000, and the amount owing by the defendant to the plaintiff is HK$535,000.

61. The defendant is also liable to payment of interest at the contractual agreed rate of 2% per month pursuant to clause 9 of the plaintiff's terms of business.

62. I award the plaintiff judgment in the sum of HK$535,000 together with the contractually agreed interest at the rate of 2% per month from the date of the writ to the date of judgment and thereafter at judgment rate until payment.

Costs

63. Costs order nisi is awarded in favour of the plaintiff with certificate for counsel.